Announcement to the OMX Nordic Exchange Copenhagen no. 06/2010 28 April 2010 Quarterly Report Q1 2010 GER-nr. 80050410 The BANK of Greenland Q1 2010 1/18
SUMMARY Satisfactory result for the first three months of 2010 for The BANK of Greenland The profit on ordinary activities at The BANK of Greenland was DKr 23.438m for Q1 as compared with DKr 20.282m for the same period of 2009. The return on shareholders equity at the start of the period was 13.5 %. The profit before price adjustments and write-downs was DKr 21.634m as compared with DKr 27.612m for Q1 2009. Net income from interest and charges fell by DKr 3.785m to DKr 54.686m when compared with Q1 2009. Low interest rates and decreased income from bond interest are the primary reasons for the decrease. Expenses and depreciation rose to DKr 34.717m as compared with DKr 31.576m for Q1 2009. Increases in depreciation associated with the start-up of the bank s new heads in 2009 and a slight increase in IT and staff expenses are the primary reasons for the increase. Price adjustments amounted to a plus of DKr 5.108m as compared with a minus of DKr 5.007m in Q1 2009. Write-downs on the bank s loans, advances, etc. amounted to DKr 3.304m as compared with DKr 2.323m for Q1 2009. During the, further DKr 2.151m was provided for in the guarantee to the Danish Sector Fund. In Q1 2009, DKr 900,000 was provided for in the guarantee. The level of write-downs remains modest. Loans and advances at The BANK of Greenland amount to DKr 2,868.262m or an increase of DKr 72.956m since the end of 2009. During the same period, deposits have remained essentially unchanged at DKr 3,226.053m. Liquidity at The BANK of Greenland remains at satisfactory levels with an excess coverage of 152.1 % in relation to statutory requirements for liquidity. The solvency ratio for Q1 at The BANK of Greenland is 19.2% The bank s individual solvency for Q1 is calculated to 8.7%. The Board of Directors at The BANK of Greenland finds the profit satisfactory. For the entire year of 2010, the profit before price adjustments and write-downs is expected to be in the range of DKr 95-115m The BANK of Greenland Q1 2010 2/18
TABLE OF CONTENTS Financial highlights and key figures... 4 Management Report... 5-8 Profit and Loss Account for 1 January 31 March 2010... 9 Balance Sheet as at 31 March 2010... 10 Shareholders Equity... 11 Notes on the profit and loss account... 12-13 Notes on the balance sheet... 14 15 Supplementary notes... 16 Statement from the Boards of Directors and Management... 17 Statement of review... 18 The BANK of Greenland Q1 2010 3/18
FINANCIAL HIGHLIGHTS AND KEY FIGURES FOR Q1 2010 (DKr 1,000) Financial Highlights First First Whole year First First First 2010 2009 2009 2008 2007 2006 Net income from interest and charges 54,686 58,471 237,457 57,735 52,300 47,474 Price adjustments 5,108-5,007 4,201-2,321 2,373-6,852 Other ordinary income 1,665 717 4,606-48 514 665 Staff costs and other adm. expenses, etc. 29,020 26,238 106,330 22,568 21,747 19,890 Depreciation & write-down of tangible assets 2,280 791 8,093 667 1,050 1,107 Other ordinary expenses 3,417 4,547 15,959 2,117 136 0 Write-downs on loans, advances, etc. 3,304 2,323 15,441 848-4,849 417 Profit on ordinary activities 23,438 20,282 100,441 29,166 37,103 19,873 Tax 7,453 6,449 31,888 9,262 11,792 7,374 Net profit for the 15,985 13,833 68,553 19,904 25,311 12,499 Selected account items: Loans and advances 2,868,262 2,654,815 2,795,306 2,343,213 2,067,037 1,687,789 Deposits 3,226,053 3,313,155 3,262,398 3,451,863 2,990,070 2,366,645 Shareholders equity 702,838 640,114 694,284 669,492 607,212 587,616 Balance sheet total 4,188,948 4,069,479 4,144,475 4,223,100 3,782,478 3,194,871 Off-balance sheet items 714,917 721,297 721,239 597,731 372,873 393,981 Key figures: Solvency ratio 19.2 18.0 19.6 16.7 20.5 Core capital ratio 18.5 17.3 18.9 16.0 19.4 Return on shareholders equity before tax 3.4 3.2 15.2 4.4 5.9 Return on shareholders equity after tax 2.3 2.2 10.4 3.0 4.0 Earnings per expense krone 1.62 1.60 1.69 2.11 3.05 Interest risk 0.8 2.5 1.2 4.1 4.3 Currency Position 0.8 0.0 2.4 0.0 0.0 Loans and advances in relation to deposits 90.6 81.6 87.3 69.3 70.8 Loans and advances in relation to shareholders equity 4.1 4.1 4.0 3.5 3.4 Growth in loans and advances for Q1 2010 2.6-1.3 3.9 4.2 3.9 Excess coverage in relation to statutory requirements for liquidity 152.1 157.9 161.7 248.8 288.1 Sum of major exposures 145.5 122.4 146.9 136.2 69.9 Write-down percentage for Q1 2010 0.1 0.1 0.5 0.0-0.2 Accumulated write-down percentage 1.9 1.6 1.8 1.6 2.1 Profit for Q1 per share 8.9 7.7 38.1 11.1 14.1 Equity value per share 396 356 386 374 338 Exchange price/equity value per share 1.1 0.8 1.0 2.0 2.5 The BANK of Greenland Q1 2010 4/18
MANAGEMENT REPORT FOR THE FIRST QUARTER OF 2010 The Profit and Loss Account Net income from interest decreased by DKr 4.027m to DKr 41.213m.This fall can be ascribed to low interest rates as well as a drop in the bank s interest risk. The interest on the bank s bond holdings was 1.9% points per year lower during Q1 2010 than during Q1 2009. This decrease alone is equivalent to a reduced income on interest during Q1 2010 of approximately DKr 2.3m. Income from charges and commissions was DKr 13.661m during Q1 2010 which is roughly the same as in 2009. Price adjustments amounted to an aggregate capital gain of DKr 5.108m as compared with a capital loss of DKr 5.007m during the same period of 2009. Of this amount, bonds amounted to a capital gain of DKr 3.728m and shares a capital gain of DKr 860,000. Total expenses and depreciation increased by DKr 3.141m to DKr 34.717m. This increase stems primarily from depreciation associated with the bank s new heads in Nuuk as well as minor increases in IT and staff expenses. The number of full-time employees is 103 at the end of Q1, as compared with 107 at the end of 2009. Write-downs on loans and advances, etc. amount to DKr 3.304m as compared with DKr 2.323m during the same period last year. During Q1 2010, a further DKr 2.151m in write-downs on the guarantee to the Danish Sector Fund was provided for. During the same period last year, DKr 900,000 was provided. Write-downs and provisions for loss on the bank s loans and advances remain very limited. The profit on ordinary activities was DKr 23.438m during the first of 2010 as compared with DKr 20.282m during the same period last year. The profit provides a return on the shareholders equity at the start of the period of 13.5%. Balance and Capital Loans and advances amount to DKr 2,868,262,000 at the end of Q1 2010. Loans and advances have thus increased satisfactorily by DKr 72.956m in relation to the end of 2009. During Q1 2010, the bank s bond holdings rose by DKr 10.540m and now amount to DKr 480.922m. The bank s aggregate sensitivity to price fluctuations when the interest level changes by one percentage point has decreased since the beginning of the year by DKr 2.730m to DKr 5.428m. Deposits, the most significant proportion of which is deposits on demand, remain at essentially the same level as at the end of 2009 and amount to DKr 3,226,053,000. The BANK of Greenland Q1 2010 5/18
MANAGEMENT REPORT FOR THE FIRST QUARTER OF 2010 The BANK of Greenland continues to maintain excesses of deposits and excess coverage of 152.1% in relation to statutory requirements. The total balance has increased by DKr 44.473m to DKr 4,188,948,000. The solvency ratio at The BANK of Greenland is calculated to be 19.2%, into which the profit for the period has not been included. At the end of Q1, the bank s individual solvency requirement is 8.7%. Since 1 January 2008, the bank has been using the standard method for credit and market risk as well as the base indicator method for operational risk. It is the bank s judgment that, at present, there is no need to use more advanced methods for calculating its solvency The total holding of shares in The Bank of Greenland held by the Boards of Directors and Management amounted to 7,093 shares at the end of Q1 2010. Selected highlights and key figures (DKr 1,000) First Fourth Third Second First Fourth Third Second 2010 2009 2009 2009 2009 2008 2008 2008 Net income from interest and charges 54,686 56,979 58,645 63,362 58,471 56,758 56,231 58,624 Expenses and depreciation 34,717 35,007 30,766 33,033 31,576 33,200 26,489 25,939 Profit before price adjustments and write-downs 21,634 22,894 29,389 31,786 27,612 24,193 30,323 33,606 Price adjustments 5,108 17,156-2,990-4,958-5,007-11,787-10,079-19,621 Write-downs on loans, advances, etc. 3,304 4,572 3,990 4,556 2,323 2,882 702 406 Profit on ordinary activities 23,438 35,478 22,409 22,272 20,282 9,524 19,542 13,579 Net profit for the period 15,985 24,197 15,282 15,241 13,833 6,180 13,328 9,295 Solvency ratio 19.2 19.6 17.5 17.5 18.0 17.9 17.0 17.3 Return on shareholders equity before tax 3.4 5.2 3.4 3.4 3.2 1.4 3.0 2.4 Earnings per expense DKr 1.62 1.90 1.61 1.60 1.60 1.27 1.73 1.52 The BANK of Greenland Q1 2010 6/18
MANAGEMENT REPORT FOR THE FIRST QUARTER OF 2010 Government Guarantee Scheme In 2008, the Danish Government issued a two-year guarantee on all deposits and simple claims. The BANK of Greenland is participating in this scheme that runs until 30 September 2010. Subsequently, a law on a guarantee fund for depositors and investors is expected to come into effect with guarantee coverage of up to Euro 100,000 per depositor/investor. Despite its profit on deposits and in order to ensure stabile funding, the bank applied for and recently received a confirmation of an individual guarantee for issuing of up to DKr 1 billion from Finansiel Stabilitet (The Financial Stability Company is state-owned through the Danish Ministry of Economic and Business Affairs). Accounting Policies The ly report has been prepared in compliance with the Danish Financial Enterprise Act and the Executive Order on financial reports for credit institutions and stock broking companies, etc. Furthermore, the ly report has been prepared in accordance with supplementary Danish requirements for disclosure concerning ly reports for financial enterprises quoted on the Nasdaq OMX Copenhagen. The accounting policies employed remain unchanged from those used in the annual report for 2009. Tax, consisting of tax for the year and changes in deferred tax, is included in the profit and loss account as that amount referring to the profit for the. It is included directly in the shareholders equity as that amount referring directly to entries on the shareholders equity. Deferred tax assets are included in the balance sheet with the value at which such assets are expected to be realizable. Accounting Estimates Statement of the accounting value of certain assets and commitments assumes an estimate of the manner in which future events impact the value of these assets and commitments. The most important estimates concern write-downs on loans and advances, reserves for guarantees, statement of the current price of unlisted financial instruments and reserved commitments. The estimates made are based on assumptions deemed defensible by the management, but which are uncertain. Moreover, the bank is influenced by risks and uncertainties, which can lead to discrepancies between actual results and the estimates. Listed financial instruments which, in light of the current financial turbulence, have been priced on markets with low rates of turnover, can, at an even greater degree than previously, be associated with a degree of uncertainty when establishing the current price. The BANK of Greenland Q1 2010 7/18
MANAGEMENT REPORT FOR THE FIRST QUARTER OF 2010 For write-downs on loans and advances, there is a significant estimate associated with the quantification of the risk that not all future payments will be received. Furthermore, group write-downs continue to be made with a degree of uncertainty. For reserved commitments, significant estimates have been made concerning the rate at which future employee turnover takes place and a determination of the interest commitment on savings accounts with a built-in tax benefit. Outlook for all of 2010 The international financial crisis and market slowdowns have only impacted the economy of Greenland peripherally. Because of the Danish block grants and their stabilizing effect on Greenland s economy as well as a robust structure for financing homes, the negative effect of the crisis on the bank s customers, and thus the bank itself, continues to be evaluated as limited. In connection with the completion of the bank s construction of its new head offices, a dispute arose on the contract with the construction company, MT Højgaard Grønland ApS. This dispute is expected to be reconciled or brought to court in 2010. The annual report for 2009 allows for a risk, which the bank expects to be the maximum risk. The BANK of Greenland expects that basic banking business at The BANK of Greenland will continue to be satisfactory during the final three s of 2010. The BANK of Greenland s membership in the Danish Sector Fund will cost the bank a guarantee commission of DKr 10.3m in 2010. The bank believes that the credit worthiness of its loan portfolio is satisfactory. Regulation of its loans is therefore expected to be modest in 2010. However, there is some uncertainty about the risk of loss on the bank s guarantee to the Danish Sector Fund. The profit before price adjustments and write-downs is expected to be approximately DKr 95-115m. Financial Calendar: Six month report 11 August 2010 Nine month report 27 October 2010 Nuuk, 28 April 2010 Board of Directors The BANK of Greenland Q1 2010 8/18
(DKr 1,000 ) PROFIT AND LOSS ACCOUNT First Whole First year Notes 2010 2009 2009 1 Interest receivable 49,693 233,661 68,231 2 Interest payable 8,480 54,488 22,991 Net income from interest 41,213 179,173 45,240 Dividend on shares, etc. 0 3,818 0 3 Charges and commissions receivable 13,661 56,114 13,436 Charges and commissions payable 188 1,648 205 Net income from interest and charges 54,686 237,457 58,471 4 Price adjustments 5,108 4,201-5,007 Other ordinary income 1,665 4,606 717 5 Staff costs and administrative expenses 29,020 106,330 26,238 Depreciation and write-downs on tangible assets 2,280 8,093 791 Other operating expenses 3,417 15,959 4,547 8 Write-downs on loans, advances, etc., 3,304 15,441 2,323 Profit on ordinary activities 23,438 100,441 20,282 6 Tax 7,453 31,888 6,449 Net profit for the financial period 15,985 68,553 13,833 The BANK of Greenland Q1 2010 9/18
(DKr 1,000) BALANCE SHEET 31 March 31 December 31 March Notes 2010 2009 2009 ASSETS Cash in hand and claims at call at central banks 396,356 327,696 360,901 7 Claims on credit institutions and central banks 150,771 255,227 161,684 Loans, advances and other receivables at redeemed 8 Price 2,868,262 2,795,306 2,654,815 9 Bonds at current price 480,922 470,382 606,246 Shares, etc. 74,246 73,399 71,847 Total, property and buildings, premises 194,069 193,997 184,500 Other tangible assets 9,672 9,753 7,844 Other assets 11,670 15,384 17,394 Prepayments and accrued income 2,980 3,331 4,248 Total assets 4,188,948 4,144,475 4,069,479 LIABILITIES Debt to credit institutions and central banks 127,084 74,356 41,095 10 Deposits and other debt 3,226,053 3,262,398 3,313,155 Current tax commitments 21,355 13,902 11,791 Other liabilities 62,730 51,759 40,886 Accruals and deferred income 1,580 2,915 2,139 Total debt 3,438,802 3,405,330 3,409,066 Reserves for deferred tax 34,353 33,847 17,090 Reserves for losses on guarantees 12,955 11,014 3,209 Total reserved commitments 47,308 44,861 20,299 Shareholders equity 11 Share capital 180,000 180,000 180,000 Reserves for write-ups 25,952 24,867 25,343 Brought forward from prior years 496,886 489,417 434,771 Total shareholders equity 702,838 694,284 640,114 Total liabilities 4,188,948 4,144,475 4,069,479 12 Off-balance sheet items 13 Solvency 14 Related parties The BANK of Greenland Q1 2010 10/18
(DKr 1,000 ) SHAREHOLDERS EQUITY Share Capital Reserves for write-ups Profit brought forward Total Shareholders equity, 1 January 2009 180,000 25,050 421,172 626,222 Trade, own shares, net - 234-234 Regulation to current value, owner-occupied property 293 293 Net profit for the financial year brought forward to shareholders equity 13,833 13,833 Shareholders equity, 31 March 2009 180,000 25,343 434,771 640,114 Trade, own shares, net - 74-74 Regulation to current value, owner-occupied property - 476-476 Net profit for the financial year brought forward to shareholders equity 54,720 54,720 Shareholders equity 31 December 2009 180,000 24,867 489,417 694,284 Shareholders equity 01 January 2010 180,000 24,867 489,417 694,284 Trade, own shares, net - 8,516-8,516 Regulation to current value, owner-occupied property 1,085 1,085 Net profit for the financial year brought forward to shareholders equity 15,985 15,985 Shareholders equity 31 March 2010 180,000 25,952 496,886 702,838 The BANK of Greenland Q1 2010 11/18
NOTES ON PROFIT AND LOSS ACCOUNT First Whole First year (DKr 1,000 ) 2010 2009 2009 1 Interest receivable/premiums on Claims on credit institutions and central banks 1,211 8,833 4,422 Loans and advances 45,398 202,007 56,395 Bonds 3,507 23,662 7,359 Total derivatives - 423-841 55 Of which Currency contracts 0 7 10 Interest contracts - 423-848 45 Total interest receivable 49,693 233,661 68,231 2 Interest payable to Credit institutions and central banks 172 1,985 185 Deposits 8,308 52,503 22,806 Total interest payable 8,480 54,488 22,991 3 Charges and commissions payable Securities and depositories 521 2,501 727 Payment transfers 6,247 25,940 5,890 Charges on loan proceedings 1,579 8,319 1,643 Guarantee commission 2,326 9,985 2,277 Other charges and commissions 2,988 9,369 2,899 Total charges and commissions payable 13,661 56,114 13,436 4 Price adjustments of Loans, advances at current price 5,248 2,629 2,248 Bonds 3,728 1,768 6,433 Shares 860 652-11,834 Foreign currency 520 1,781 394 Derivatives - 5,248-2,629-2,248 Total price adjustments 5,108 4,201-5,007 The BANK of Greenland Q1 2010 12/18
NOTES ON PROFIT AND LOSS ACCOUNT First Whole First year (DKr 1,000 ) 2010 2009 2009 5 Staff costs and administrative expenses Salaries and remuneration to Boards of Directors and Management Board of Directors 0 797 0 Board of Management 580 2,151 518 Total 580 2,948 518 Staff costs Wages and salaries 12,062 43,923 11,121 Other staff costs 917 3,467 642 Pensions 1,187 4,616 1,099 Social security costs 115 402 103 Total 14,281 52,408 12,965 Other administrative expenses 14,159 50,974 12,755 Total staff costs and administrative expenses 29,020 106,330 26,238 Number of full-time employees, average 104.7 107.5 106.0 6 Tax 30% 7,031 30,132 6,085 Paid dividend tax on Danish shares 0 864 0 6%-supplement 422 1,756 364 Total tax on profit of ordinary activities 7,453 31,024 6,449 Paid dividend tax 0 864 0 Total tax 7,453 31,888 6,449 Deferred tax 0 17,122 0 Tax to be paid 7,453 14,766 6,449 No corporate tax has been paid in this period. The BANK of Greenland Q1 2010 13/18
NOTES ON THE BALANCE SHEET 31 March 31 December 31 March (DKr 1,000) 2010 2009 2009 7 Claims on credit institutions and central banks Claims on notice at central banks 0 0 0 Claims at credit institutions 150,771 255,227 161,684 Total claims 150,771 255,227 161,684 8 Loans and advances Individual write-downs At the start of the period 48,403 45,722 45,722 Write-downs during the period 6,582 19,220 8,776 Reversal of write-downs made in prior accounting Years 2,925 12,911 6,992 Irreversibly lost (depreciated) previously individually written-down 0 3,792 8 Other movements - 332 164 488 At the end of the period 51,728 48,403 47,986 Group write-downs At the start of the period 4,996 993 993 Write-downs during the period 1,494 4,567 1,801 Reversal of write-downs made in prior accounting Years 3,372 480 429 Other movements -32-84 3 At the end of the period 3,086 4,996 2,368 9 Bonds Of which DKr 50,000,000 has been deposited as security at Danmarks Nationalbank 10 Deposits On demand 2,152,032 2,195,008 2,382,725 Deposits on notice 376,795 441,599 424,109 Time deposits 607,642 538,897 420,008 Special categories of deposits 89,584 86,894 86,313 Total deposits 3,226,053 3,262,398 3,313,155 The BANK of Greenland Q1 2010 14/18
NOTES ON THE BALANCE SHEET 31 March 31 December 31 March (DKr 1,000) 2010 2009 2009 11 Share capital The bank's share capital consists of 1,800,000 DKr 100 shares Own holdings Number of own shares 23,192 2,654 2,092 Nominal holding of own holdings 2,319 265 209 Percentage of share capital at end of period 1.3 0.1 0.1 12 Off-balance sheet items Financial guarantees 10,967 5,455 31,700 Loss guarantees on mortgage credit loans 303,004 280,104 234,643 Registration and conversion guarantees 109,681 141,723 190,056 Other guarantees 287,753 292,638 258,976 Total guarantees, etc. 711,405 719,920 715,375 Irrevocable standby letters of credit 3,512 1,319 5,922 Total other commitments 3,512 1,319 5,922 13 Solvency in accordance with the Danish Financial Supervisory Authority s executive order on capital Adequacy Risk-weighted items 3,579,166 3,537,922 3,474,453 Core capital after deduction in percentage of riskweighted items 18.5 18.9 17.3 The BANK of Greenland Q1 2010 15/18
SUPPLEMENTARY NOTES Note 14 Related Parties At the end of March, 2010, The BANK of Greenland entered into the following agreements with: Danske Andelskassers Bank A/S, Hammershøj Internal auditing The Chief Auditor at Danske Andelskassers Bank will carry out internal auditing tasks in accordance with an agreement on the implementation of tasks as described in Functional description for internal auditing and Auditing agreement for internal auditing at The BANK of Greenland. The bank will pay an annual fee based on a total budget centered on the expected consumption of man-hours for the coming year. Clearing - Danske Andelskassers Bank will be the clearing house for The BANK of Greenland. Sum-clearing, transfers abroad and settlement via VP Securities will be carried out via Danske Andelskassers Bank CD-ident. Monetary facilities The BANK of Greenland has accounts at Danske Andelskassers Bank in DKr and foreign currency to be used in day-to-day clearing and transfers to foreign countries. These accounts receive Cibor 1 without deduction. At the end of Q1 2010, the total balance amounted to DKr 115.3m. Foreign payments The bank has entered into an agreement on handling and transfer of foreign payments to and from The BANK of Greenland. This agreement may not be terminated before 31 December 2011. After that time, the notice will be six months. Payment for this service will be made by means of an agreement whereby Danske Andelskassers Bank and The BANK of Greenland split the supplement/deduction on the Danish central bank s price for the foreign currency and set the price of a charge for handling these foreign payments. Exchange customer orders An agreement has been entered into on the transfer of stock exchange customer orders from The BANK of Greenland s stock exchange system as well as actual consultancy. This agreement may not be terminated before 31 December 2011. After that time, the notice will be six months. Payment for this service will be made by means of an agreement whereby Danske Andelskassers Bank and The BANK of Greenland share the pre-determined charge and brokerage fees. The BANK of Greenland Q1 2010 16/18
STATEMENT FROM THE BOARDS OF DIRECTORS AND MANAGEMENT The Board of Directors and the Board of Management have today reviewed and approved the Q1 report for 1 January 2010 31 March 2010 for The BANK of Greenland A/S. The Q1 report has been prepared in accordance with the Danish Financial Business Act. Furthermore, the Q1 Report has been prepared in accordance with additional Danish disclosure requirements for ly reports of listed financial institutions. The Management s Report gives a true and fair view of developments in the bank s activities and financial position and describes significant risk and uncertainty factors that may affect the bank. In our opinion, the accounting policies chosen give a true and fair view of the bank s assets, liabilities, and financial position as of 31 March 2010, and of the bank s activities during Q1 2010. Nuuk, 28 April 2010 The Board of Management Martin Kviesgaard The Board of Directors Bent H. Jakobsen Kristian Lennert Frank Bagger chairman deputy chairman Anders Brøns Gunnar í Liða Helle Mark Jørn Skov Nielsen Inger Poulsen Jette Radich The BANK of Greenland A/S, telephone +299 34 77 00 The BANK of Greenland Q1 2010 17/18
STATEMENT OF REVIEW The independent auditor s statement concerning its review of the ly report for 1 January 31 March 2010. To the Shareholders of the BANK og Grennalnd A/S We have reviewed the ly accounts for The BANK of Greenland for 1 January 31 March 2010 which comprise a statement from the boards of directors and management, the management s report, accounting policies, the profit and loss account, the balance sheet, the shareholders equity and notes. Our review does not include comparative figures for the same period of 2009. The bank s management is responsible for preparing and presenting a ly report in accordance with the Danish Financial Business Act and the executive order on financial reports for credit institutions and stock broker companies, etc. Our responsibility is to express an opinion on the ly report based on our review. The review We performed our review in accordance with the Danish auditing standard RS 2410 Review of an accounting period performed by the company s independent auditor. A review of a ly account involves posing questions primarily to individuals with responsibility for finances and presentation of accounts as well as performing analyses and other forms of review. The scope of a review is considerably more limited than an audit performed in accordance with Danish auditing standards. Therefore, it does not provide the same security as an audit that we have become aware of all significant information which could be discovered during an audit. We have not audited the accounts and therefore do not express an auditor s opinion on the ly report. Opinion During our review, we have not become aware of any circumstances that would lead us to conclude that the ly report has not been prepared in accordance with the Danish Financial Business Act and the executive order on financial reports for credit institutions and stock broker companies, etc. Nuuk, 28 April 2010 Deloitte State Authorised Public Accountants Anders O. Gjelstrup Claus Bech State Authorised Public Accountants The BANK of Greenland Q1 2010 18/18