Report on Danmarks Nationalbank's Accounts
Danmarks Nationalbank's accounts for 2006 show a profit of kr. 2.2 billion, compared to a profit of kr. 4.9 billion in 2005. The decrease in the profit by kr. 2.7 billion is due primarily to a decrease in value adjustments by kr. 1.9 billion and in other income by kr. 0.8 billion. After transfer of kr. 0.7 billion from the Value Adjustment Reserve to cover the negative value adjustments for the year, an amount of kr. 2.9 billion is available for distribution, of which kr. 0.6 billion is allocated to the General Reserves and kr. 2.3 billion is payable to the central government.
PRESENTATION OF DANMARKS NATIONALBANK'S ACCOUNTS
The accounts for 2006 have been prepared in accordance with the same accounting policies as in the previous year, cf. p. 123.
The accounts reflect that Danmarks Nationalbank issues banknotes and coins, holds substantial assets comprising the foreign-exchange reserve and functions as banker to the banks and the mortgage-credit institutes, and to the central government.
The profit from financial items was kr. 2,678 million, which is kr. 2,147 million lower than in 2005, and the total profit for the year is kr. 2,235 million, i.e. kr. 2,667 million lower than in 2005.
The balance sheet decreased from kr. 392.0 billion to kr. 364.9 billion.
The profit and loss account
Net income from interest
Net income from interest totalled kr. 3,368 million, which is kr. 248 million less than in 2005.
Income from interest on foreign assets fell by kr. 100 million to kr. 5,320 million. The decrease reflects a significantly smaller average foreign-exchange reserve, which is, however, by and large counterbalanced by increases in the level of interest rates.
Net interest to banks and mortgage-credit institutes (interest on deposits and certificates of deposit less interest on monetary-policy lending[1]) decreased by kr.347 million to kr. 1,885 million. The decrease is attributable to the banks' significantly lower average net position, which is partly offset by interest-rate increases during the year.
Danmarks Nationalbank's interest expenditure on the central government's deposit rose by kr. 125 million to kr. 1,298 million. The increase is due to the interest-rate increases during the year, which are partly offset by a significantly lower average deposit.
Interest on domestic bonds fell by kr. 357 million to kr. 1,342 million. The decrease is attributable to a lower average holding and to lower interest rates on reinvestment.
Value adjustments, etc.
Value adjustments resulted in a loss of kr. 690 million.
Value adjustment of Danmarks Nationalbank's gold stock gave a gain of kr. 759 million, which is related to the increase in the price of gold converted to Danish kroner by 11 per cent during 2006.
Value adjustment of foreign-exchange positions[2] resulted in a loss of kr. 780 million. The loss is due to a market-value loss of kr. 948 million, which is partly offset by an exchange-rate gain of kr. 168 million.
The market-value loss on domestic securities of kr. 669 million can be related to a market-value loss on domestic bonds.
Other income
Other income fell by kr. 801 million to kr. 48 million. The decrease is mainly due to income of kr. 800 million in 2005 relating to the restructuring of Danish Ship Finance as a limited liability company. Other income comprises revenue of kr. 41 million from the sale of coin sets and medals, and the reversal of kr. 7 million of a previous loss provision on Himmerlandsbanken.
Expenses
Total expenses decreased by kr. 235 million to kr. 569 million. The decrease is mainly related to the extraordinarily high expenses in 2005 as a consequence of a one-off payment of kr. 200 million to Danmarks Nationalbank's Pension Fund subject to winding-up, to cover Danmarks Nationalbank's pension commitment. Staff expenses decreased by kr. 16 million to kr. 309 million, and other expenses decreased by kr. 19 million to kr. 260 million. Other expenses comprise kr. 53.2 million for conversion and substantial maintenance of the Danmarks Nationalbank buildings, and represent a decrease of kr. 26.3 million compared to 2005.
In the period the average number of staff fell from 521 to 513.
Profit for the year
The result for the year is a profit of kr. 2,235 million, against a profit of kr. 4,902 million in 2005. The negative value adjustment of the year of kr. 690 million is covered from the Value Adjustment Reserve, which hereafter amounts to kr. 3,168 million. An amount of kr. 585 million, corresponding to 20 per cent of the profit excluding value adjustments, is allocated to the General Reserves, after which the General Reserves total kr. 48,659 million. Kr 2,340 million is payable to the central government, corresponding to 80 per cent of the profit excluding value adjustments.
The balance sheet
Gold
The stock of gold amounted to kr. 7.7 billion at the end of the year, compared to kr. 6.9 billion in 2005. The increase of kr. 0.8 billion is related to the increase in the price of gold converted to Danish kroner by 11 per cent during 2006.
Foreign assets
Assets amounted to kr. 164.6 billion at the end of the year, compared to kr. 204.2 billion in 2005. This is equivalent to a decrease of 20 per cent. The assets are placed in euro (72 per cent), dollars (15 per cent), pounds sterling (7 per cent) and Swedish kronor (6 per cent). The exchange-rate risk is restructured so that the exposure is mainly in euro. The positions are held mainly in highly-rated government bonds and government-guaranteed bonds, deposits with central banks and commercial banks, or as lending against collateral in government bonds and government-guaranteed bonds.
Foreign assets are the most significant item of the foreign-exchange reserve, together with gold, claims on the IMF and foreign liabilities.
Claims on the International Monetary Fund, IMF
This balance-sheet item comprises Denmark's IMF quota less the IMF's outstanding drawing right on Danmarks Nationalbank with addition of Danmarks Nationalbank's holdings of Special Drawing Rights, SDR, in the IMF. The account with the IMF is stated in SDR (Special Drawing Rights). During 2006 the IMF made deposits equivalent to SDR 68 million with Danmarks Nationalbank, and Danmarks Nationalbank increased its holdings of SDR in the IMF by SDR 149 million.
Loans for the Poverty Reduction and Growth Facility Trust, PRGF, accounted for SDR 100 million of this item in 2005, and were fully redeemed in 2006 as a consequence of the IMF's implementation of the Multilateral Debt Relief Initiative, MDRI, cf. p. 84f.
Net claims on the IMF have thus been reduced by SDR 19 million. Together with the value adjustments for the year this reduces the claim by kr. 0.4 billion to kr. 3.2 billion.
Monetary-policy lending
Monetary-policy lending is collateralised loans to banks and mortgage-credit institutes. This item increased by kr. 18.4 billion to kr. 153.7 billion.
Other lending
The loans of kr. 3.5 billion almost exclusively comprise lending to banks in connection with decentralised cash depots of kr. 3.0 billion and receivables from Danish Ship Finance A/S of kr. 0.4 billion.
Domestic bonds
The value of domestic bonds fell from kr. 34.3 billion to kr. 28.6 billion. The holdings comprise mortgage-credit bonds (kr. 15.4 billion), government bonds (kr. 11.0 billion) and Danish Ship Finance bonds (kr. 2.2 billion).
Banknotes and coins in circulation
Banknotes in circulation increased by kr. 3.3 billion to kr. 54.2 billion, while coins in circulation increased by kr. 0.3 billion to kr. 5.5 billion. Banknotes in circulation include Faroese banknotes at kr. 370 million. The increase in banknotes in circulation in 2006 is 6.5 per cent, compared to 8.3 per cent in 2005.
Monetary-policy deposits
The net deposits of banks and mortgage-credit institutes in current accounts and settlement accounts decreased from kr. 12.8 billion to kr. 8.8 billion, and deposits placed in certificates of deposit fell from kr. 207.6 billion to kr. 163.2 billion.
Other deposits
This item comprises the deposits of banks and mortgage-credit institutes in euro-denominated current accounts and securities settlement accounts totalling kr. 0.3 billion, as well as other deposits of kr. 1.1 billion, of which the account of Danish Ship Finance A/S amounts to kr. 0.7 billion.
Central government
The central-government deposit increased from kr. 56.4 billion to kr. 73.8 billion. The central government's share of the profit of Danmarks Nationalbank is included in this amount.
Foreign liabilities
The liabilities increased by kr. 1.3 billion to kr. 3.7 billion and comprise kroner deposits with Danmarks Nationalbank from supranational organisations and other central banks.
Counterpart of Special Drawing Rights allocated by the IMF, SDR
The allocation was unchanged during the year, and the adjustment of the item by kr. 0.1 billion to kr. 1.5 billion solely reflects the value adjustment for the year.
Net capital
The net capital amounts to kr. 52.1 billion, which is the net capital at the beginning of the year of kr. 52.2 billion with deduction of kr. 0.7 billion transferred from the Value Adjustment Reserve to cover the negative value adjustments for the year and the allocation to the General Reserves of kr. 0.6 billion of the profit for the year.
ACCOUNTING POLICIES
General
Danmarks Nationalbank's Accounts for the year 2006 are presented in accordance with the Danmarks Nationalbank Act. In all significant respects these accounting policies are in accordance with the sound policies for European central banks. Unrealised gains on foreign exchange and securities are recognised in the profit and loss account, however.
The accounting policies applied are unchanged from the previous year.
Accounting policies:
Income and expenses are recognised in the profit and loss account for the period which they concern. Income and expenses in foreign exchange are converted at the exchange rates prevailing at the time they are recorded in the accounts.
Premiums and discounts on Treasury bills and certificates of deposit, as well as forward premiums on forward securities and foreign-exchange contracts, are recognised as interest.
Both realised and unrealised gains and losses are recognised in the profit and loss account.
Income from shares, etc. is recognised in the year in which the dividend is declared.
Gold is stated at market value on the balance-sheet date.
Assets and liabilities in foreign exchange, including forward contracts, are entered at the official exchange rates and securities market prices prevailing on the balance-sheet date. Swaps and futures are stated at market value.
Bonds, including forward contracts, are stated at market value at year-end.
Repurchase agreements, etc. Securities sold in connection with repurchase agreements, and gold and securities made available in lending facilities, are included in Danmarks Nationalbank's holdings.
Shares, etc. Capital investments and equivalent investments and equity investments in associated companies (in which the ownership interest or voting rights are 20 per cent or more) are stated at acquisition value or written down to market value at year-end if this is assessed to be significantly lower.
Tangible fixed assetsare stated at acquisition price less depreciation and amortisation. Assets with an acquisition value of less than kr. 100,000 kr. are recognised as expenditure in the year of acquisition. Depreciation on a linear per-annum basis takes place over the expected useful lives of the assets.
The useful lives are assessed as follows:
| Bank properties | 100 years |
| Other properties | 25-50 years |
| Building improvements | 25 years |
| Technical building facilities | 10-25 years |
| Technical production facilities | 5-10 years |
| Other machinery and equipment | 3-5 years |
Pension commitments. For defined contribution pension plans the current premium payments to the pension companies are carried as expenditure in the profit and loss account, and the pension commitment hereafter passes to the pension companies. For defined benefit pension plans and declarations of support, provisions are made in the accounts of Danmarks Nationalbank for uncovered pension undertakings compiled according to actuarial principles.
PROFIT AND LOSS ACCOUNT FOR THE YEAR 2006
|
Note
|
2006 kr. '000 |
2005 kr. '000 |
||
| Income from interest, etc.: | ||||
| Interest on foreign assets | 5,320,054 | 5,420,336 | ||
| 1 | Interest on domestic loans | 3,690,915 | 2,159,247 | |
| Interest on domestic bonds | 1,341,924 | 1,698,753 | ||
| Commission and other income | 749 | 2,768 | ||
| 10,353,642 | 9,281,104 | |||
| Expenditure on interest, etc.: | ||||
| Interest on foreign liabilities | 59,538 | 43,681 | ||
| 2 | Interest on domestic deposits | 6,926,406 | 5,621,497 | |
| 6,985,944 | 5,665,178 | |||
| Net income from interest | 3,367,698 | 3,615,926 | ||
| Value adjustments, etc.: | ||||
| Value adjustment of gold | 758,900 | 1,817,511 | ||
| 3 | Value adjustment of foreign assets | -779,764 | -96,990 | |
| 4 | Value adjustment of domestic securities | -668,905 | -510,478 | |
| -689,769 | -1,210,043 | |||
| Profit from financial items | 2,677,929 | 4,825,969 | ||
| Income from shares, etc. | 114,833 | 67,510 | ||
| 5 | Other income | 47,606 | 848,495 | |
| Expenses: | ||||
| 6 | Staff expenses | 309,406 | 325,862 | |
| One-off payment to Danmarks Nationalbank's Pension Fund subject to winding-up | - | 200,000 | ||
| 7 | Other expenses | 259,792 | 278,467 | |
| 569,198 | 804,329 | |||
| 8 | Depreciation and write-down of tangible fixed assets | 36,036 | 35,513 | |
| Profit for the year | 2,235,134 | 4,902,132 | ||
| Distribution of the profit for the year: | ||||
| Profit for the year | 2,235,134 | 4,902,132 | ||
| Allocation to/from the Value Adjustment Reserve | 689,769 | -1,210,043 | ||
| 2,924,903 | 3,692,089 | |||
| allocated as follows | ||||
| Allocation to the General Reserves, 20 per cent | 584,981 | 738,418 | ||
| Payable to the central government, 80 per cent | 2,339,922 | 2,953,671 | ||
| 2,924,903 | 3,692,089 |
BALANCE SHEET AT 31 DECEMBER 2006
| Note | 2006 kr. '000 |
2005 kr. '000 |
|
| Assets | |||
| 9 | Gold | 7,700,396 | 6,941,496 |
| 10 | Foreign assets | 164,556,246 | 204,204,373 |
| 11 | Claims on the International Monetary Fund, IMF, etc. | 3,189,154 | 3,557,456 |
| Monetary-policy lending | 153,735,000 | 135,296,000 | |
| 12 | Other lending | 3,471,716 | 4,323,980 |
| 13 | Domestic bonds | 28,648,012 | 34,329,299 |
| 14 | Shares, etc. | 747,946 | 748,028 |
| 15 | Tangible fixed assets | 637,798 | 656,657 |
| 16 | Other assets | 2,164,268 | 1,916,771 |
| Accruals | 21,817 | 22,347 | |
| Total assets | 364,872,353 | 391,996,407 | |
| Liabilities | |||
| Banknotes | 54,248,974 | 50,953,341 | |
| Coins | 5,517,568 | 5,264,107 | |
| Monetary-policy deposits | |||
| 17 | Net current accounts | 8,823,577 | 12,840,588 |
| Certificates of deposit | 163,160,000 | 207,582,000 | |
| 18 | Other deposits | 1,453,696 | 2,187,401 |
| Central government | 73,789,214 | 56,428,399 | |
| Foreign liabilities | 3,728,915 | 2,391,166 | |
| Counterpart of Special Drawing Rights allocated by the International Monetary Fund (SDR) | 1,522,455 | 1,614,480 | |
| Other liabilities | 500,663 | 502,846 | |
| Total creditors | 312,745,062 | 339,764,328 | |
| General Capital Fund | 50,000 | 50,000 | |
| Statutory Reserve | 250,000 | 250,000 | |
| Value Adjustment Reserve | 3,168,141 | 3,857,910 | |
| General Reserves | 48,659,150 | 48,074,169 | |
| 19 | Total net capital | 52,127,291 | 52,232,079 |
| Total liabilities | 364,872,353 | 391,996,407 | |
| Off-balance-sheet items | |||
| 20 | Guarantees | 72,727 | 101,525 |
| 21 | Other liabilities | 56,970,612 | 56,749,682 |
| 57,043,339 | 56,851,207 |
NOTES TO THE ACCOUNTS FOR 2006
| Note | 2006 kr. '000 |
2005 kr. '000 |
|||||||||||||||||
| 1 | Interest on domestic loans | ||||||||||||||||||
| Interest on monetary-policy loans (collateralised loans) | 3,667,891 | 2,125,359 | |||||||||||||||||
| Interest on loans to other borrowers | 23,024 | 33,888 | |||||||||||||||||
| 3,690,915 | 2,159,247 | ||||||||||||||||||
| 2 | Interest on domestic deposits | ||||||||||||||||||
| Interest on current accounts | 266,425 | 145,012 | |||||||||||||||||
| Interest on certificates of deposit | 5,286,420 | 4,212,589 | |||||||||||||||||
| Interest on the central government's deposits | 1,297,964 | 1,172,997 | |||||||||||||||||
| Interest to other depositors, etc. | 75,597 | 90,899 | |||||||||||||||||
| 6,926,406 | 5,621,497 | ||||||||||||||||||
| 3 | Value adjustment of foreign assets | ||||||||||||||||||
| Market-value adjustment | -948,045 | -806,116 | |||||||||||||||||
| Exchange-rate adjustment | 168,236 | 709,126 | |||||||||||||||||
| Value adjustment of shares | 45 | - | |||||||||||||||||
| -779,764 | -96,990 | ||||||||||||||||||
| 4 | Value adjustment of domestic securities | ||||||||||||||||||
| Value adjustment of domestic bonds | -668,905 | -511,341 | |||||||||||||||||
| Value adjustment of shares | - | 863 | |||||||||||||||||
| -668,905 | -510,478 | ||||||||||||||||||
| 5 | Other income | ||||||||||||||||||
| Income from sale of coin sets and medals | 40,865 | 48,495 | |||||||||||||||||
| Reversal of provision, etc. for Himmerlandsbanken | 6,692 | - | |||||||||||||||||
| Other income | 49 | - | |||||||||||||||||
| Income in connection with the restructuring of Danish Ship Finance as a limited liability company | - | 800,000 | |||||||||||||||||
| 47,606 | 848,495 | ||||||||||||||||||
| 6 | Staff expenses | ||||||||||||||||||
| Salaries and remuneration | 248,609 | 242,851 | |||||||||||||||||
| Other staff expenses | 60,797 | 83,011 | |||||||||||||||||
| 309,406 | 325,862 | ||||||||||||||||||
| In 2006 the average number of employees was 513 on a full-time basis (2005: 521) | |||||||||||||||||||
| 7 | Other expenses | ||||||||||||||||||
| Materials for banknote production | 27,611 | 28,149 | |||||||||||||||||
| Materials for coin production | 45,535 | 38,505 | |||||||||||||||||
| Real property, current expenses | 103,680 | 129,489 | |||||||||||||||||
| Data processing, etc. | 39,892 | 38,563 | |||||||||||||||||
| Other expenses | 43,075 | 43,761 | |||||||||||||||||
| 259,792 | 278,467 | ||||||||||||||||||
| 8 | Depreciation and write-down of tangible fixed assets | ||||||||||||||||||
| Properties | 12,282 | 11,857 | |||||||||||||||||
| Operating equipment | 23,754 | 23,656 | |||||||||||||||||
| 36,036 | 35,513 | ||||||||||||||||||
| 9 | Gold | ||||||||||||||||||
| The gold stock amounts to 66,550 kg (2005: 66,550 kg) | |||||||||||||||||||
| 10 | Foreign assets | ||||||||||||||||||
| Foreign bonds | 65,300,811 | 46,933,781 | |||||||||||||||||
| Claims on central banks | 1,815,916 | 4,216,278 | |||||||||||||||||
| Claims on foreign commercial banks | 37,790,772 | 38,535,078 | |||||||||||||||||
| Repo transactions against collateral in foreign bonds | 59,648,000 | 114,518,675 | |||||||||||||||||
| Other foreign assets | 747 | 561 | |||||||||||||||||
| 164,556,246 | 204,204,373 | ||||||||||||||||||
| 11 | Claims on the International Monetary Fund (IMF), etc. | ||||||||||||||||||
| Denmark's IMF quota | 13,983,185 | 14,828,405 | |||||||||||||||||
| The IMF's holdings of Danish kroner | 12,726,817 | 12,878,805 | |||||||||||||||||
| Reserve position with the IMF | 1,256,368 | 1,949,600 | |||||||||||||||||
| Holdings of Special Drawing Rights, SDR | 1,932,786 | 705,226 | |||||||||||||||||
| 3,189,154 | 2,654,826 | ||||||||||||||||||
| Loans for the Poverty Reduction and Growth Facility Trust | - | 902,630 | |||||||||||||||||
| 3,189,154 | 3,557,456 | ||||||||||||||||||
| 12 | Other lending | ||||||||||||||||||
| Banks and mortgage-credit institutes | 3,036,807 | 3,486,533 | |||||||||||||||||
| Receivable from associated company | 400,000 | 800,000 | |||||||||||||||||
| Other loans | 34,909 | 37,447 | |||||||||||||||||
| 3,471,716 | 4,323,980 | ||||||||||||||||||
| Receivable from associated company is subordinated current and future other debt and liabilities in the company. The receivable is expected to be finally repaid in 2007. | |||||||||||||||||||
| 13 | Domestic bonds | ||||||||||||||||||
| Danish government bonds | 10,998,717 | 9,949,949 | |||||||||||||||||
| Other domestic bonds | 17,649,295 | 24,379,350 | |||||||||||||||||
| 28,648,012 | 34,329,299 | ||||||||||||||||||
| 14 | Shares, etc. | ||||||||||||||||||
| Capital investments and equivalent investments | 455,384 | 455,466 | |||||||||||||||||
| Equity investments in associated companies | 292,562 | 292,562 | |||||||||||||||||
| 747,946 | 748,028 | ||||||||||||||||||
| Capital investments and equivalent investments comprise capital subscription to the ECB and shares in the Bank for International Settlements (BIS), SWIFT, PBS Holding, SAS and Exhibition Centre Herning. | |||||||||||||||||||
Equity investments in associated companies comprise:
Danmarks Nationalbank's portfolio of shares, etc. at 31 December 2006 has an estimated market value of no less than kr. 2.3 billion. |
|||||||||||||||||||
| 15 | Tangible fixed assets | ||||||||||||||||||
| Properties | 572,006 | 582,048 | |||||||||||||||||
| Machinery and equipment | 65,792 | 74,609 | |||||||||||||||||
| 637,798 | 656,657 | ||||||||||||||||||
| At the most recent official assessment Danmarks Nationalbank's properties were valued at kr. 1,105 million. |
|||||||||||||||||||
| 16 | Other assets | ||||||||||||||||||
| The amount includes outstanding interest of kr. 1,881 million (2005: kr. 1,888 million) |
|||||||||||||||||||
| 17 | Net current accounts | ||||||||||||||||||
| Deposits in current accounts and settlement accounts | 77,715,972 | 120,597,236 | |||||||||||||||||
| Drawing on current accounts | 68,892,395 | 107,756,648 | |||||||||||||||||
| 8,823,577 | 12,840,588 | ||||||||||||||||||
| At 31 December 2006 Danmarks Nationalbank acts as full guarantor to VP Securities Services for kr. 29.2 billion (2005: kr. 74.5 billion) and to the Danish Bankers Association (Sumclearing) for kr. 45.7 billion (2005: kr. 42.6 billion) in connection with the banks and mortgage-credit institutes' payment settlements with 2 January 2007 as the value date. | |||||||||||||||||||
| 18 | Other deposits | ||||||||||||||||||
| Banks and mortgage-credit institutes | 337,571 | 199,700 | |||||||||||||||||
| Other depositors | 1,116,125 | 1,987,701 | |||||||||||||||||
| 1,453,696 | 2,187,401 | ||||||||||||||||||
| General Capital Fund and Statutory Fund |
Value Adjustment Reserve |
General Reserves |
Total | ||
| kr. '000 | kr. '000 | kr. '000 | kr. '000 | ||
| 19 | Total net capital | ||||
| Net capital 1 January 2006 | 300,000 | 3,857,910 | 48,074,169 | 52,232,079 | |
| Carried forward from the profit for the year | - | -689,769 | 584,981 | -104,788 | |
| 300,000 | 3,168,141 | 48,659,150 | 52,127,291 |
| Note | 2006 kr. '000 |
2005 kr. '000 |
|
| 20 | Guarantees | ||
| VP Securities Services, share of Guarantee Capital | 48,874 | 68,796 | |
| VP Securities Services, guarantee for errors by other account-holding institutions | 22,823 | 31,699 | |
| Other guarantees | 1,030 | 1,030 | |
| 72,727 | 101,525 | ||
| Danmarks Nationalbank has provided a guarantee for the obligations of Danmarks Nationalbank's Pension Fund subject to winding-up. | |||
| 21 | Other liabilities | ||
| Forward purchases of foreign exchange | 52,005,600 | 50,656,795 | |
| Market value of assets in currency swap agreements | 1,814,090 | 2,537,974 | |
| Futures | - | 242,164 | |
| Unutilised portion of credit facilities made available to the IMF (SDR) | 3,123,922 | 3,312,749 | |
| 56,970,612 | 56,749,682 | ||
|
Danmarks Nationalbank has established intervention agreements with the ECB.
|
|||
| Pension commitments Present and former employees of Danmarks Nationalbank have either a defined contribution or a defined benefit pension plan. For defined contribution pension plans Danmarks Nationalbank carries the ongoing premium payments to the pension companies as expenditure. Once the pension contributions for these plans have been paid to the pension companies Danmarks Nationalbank has no further pension commitments to employees. With regard to defined benefit pension plans, Danmarks Nationalbank is obliged to ensure the policyholder a defined pension benefit. For these plans, Danmarks Nationalbank bears the risk concerning the future development in interest rates, wages, inflation, mortality, etc. Danmarks Nationalbank is thus obliged to make the contributions necessary to ensure the fulfilment of the pension undertakings. Pension commitments for the defined benefit pension plans are calculated as the capital value of the future benefits payable under the plan. The pension undertakings are based primarily on the salary on retirement. The capital value is calculated on the basis of assumptions concerning the future development in e.g. wage levels, interest rates, inflation and mortality. In principle, the defined benefit pension plans are covered in Danmarks Nationalbank's Pension Fund subject to winding-up. |
|||
| Key figures for the accounts of the Pension Fund: | |||
| Pension commitments and other liabilities | 3,136 | 3,257 | |
| Fair market value of the assets of the Pension Fund | 3,680 | 3,700 | |
| Net capital of the Pension Fund | 544 | 443 | |
| Solvency requirement of the Pension Fund | 125 | 121 | |
| Other defined benefit pension plans are covered in a pension company, while provision is made in the Accounts for a plan concerning the Board of Governors. Pension commitments for defined benefit pension plans covered in a pension company amount to kr. 61.5 million at 31 December 2006, while the provision stated in Danmarks Nationalbank's balance sheet amounts to kr. 18.5 million. |
SIGNATURES
The Board of Governors have today considered and approved the Annual Accounts of Danmarks Nationalbank for 2006.
The Annual Accounts have been prepared in accordance with the Danmarks Nationalbank Act.
It is our opinion that the Annual Accounts give a true and fair view of Danmarks Nationalbank's assets, liabilities and financial position at 31 December 2006 and of the result of Danmarks Nationalbank's operations for the financial year 1 January-31 December 2006.
Copenhagen, 22 February 2007
Nils Bernstein Torben Nielsen Jens Thomsen
AUDIT REPORTS
Internal Auditor's Report
I have audited the Accounts of Danmarks Nationalbank for the financial year 1 January to 31 December 2006 comprising the Report on Danmarks Nationalbank's Accounts, Accounting Policies, Profit and Loss Account, Balance Sheet, Notes and Signatures. The Accounts have been prepared in accordance with the Danmarks Nationalbank Act.
Danmarks Nationalbank's Committee of Directors and Board of Directors' responsibility for the Accounts
The Committee of Directors and Board of Directors are responsible for the preparation and fair presentation of these Accounts that are free from material misstatement, in accordance with the Danmarks Nationalbank Act.
Auditor's responsibility
My responsibility is to express an opinion on the Accounts based on my audit.
Basis of opinion
I have conducted my audit in accordance with Danish Standards on Auditing. Those standards require that I plan and perform the audit to obtain reasonable assurance that the Accounts are free from material misstatement.
The audit included an assessment of the Board of Directors and Committee of Directors' procedures and internal controls that are relevant to Danmarks Nationalbank's preparation and fair presentation of the Accounts, including an assessment of the risk of material misstatement. The audit also included evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Committee of Directors and the Board of Directors, as well as evaluating the overall presentation of the Accounts.
I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion.
My audit has not resulted in any qualification.
Opinion
In my opinion, the Accounts give a true and fair view of Danmarks Nationalbank's assets, liabilities and financial position at 31 December 2006, and of the result of Danmarks Nationalbank's activities for the financial year 1 January-31 December 2006, in accordance with the Danmarks Nationalbank Act.
Copenhagen, 22 February 2007
Jan Birkedal
Chief Audit Executive
Independent Auditors' Report
As auditors appointed by the Minister of Economic and Business Affairs we have audited the Accounts of Danmarks Nationalbank for the financial year 1 January-31 December 2006 comprising the Report on Danmarks Nationalbank's Accounts, Accounting Policies, Profit and Loss Account, Balance Sheet, Notes and Signatures. The Accounts have been prepared in accordance with the Danmarks Nationalbank Act.
Danmarks Nationalbank's Committee of Directors and Board of Directors' responsibility for the Accounts
The Committee of Directors and Board of Directors are responsible for the preparation and fair presentation of these Accounts in accordance with the Danmarks Nationalbank Act. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of Accounts that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.
Auditors' responsibility and basis of opinion
It is our responsibility to express an opinion on the Accounts based on our audit. We have conducted our audit in accordance with Danish Standards on Auditing. Those standards require that we comply with ethical codes and that we plan and perform the audit to obtain reasonable assurance that the Accounts are free of material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the Accounts. The procedures selected depend on the auditor's judgement, including the assessment of the risk of material misstatement in the Accounts, irrespective of whether such material misstatement is due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to Danmarks Nationalbank's preparation and fair presentation of the Accounts in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of Danmarks Nationalbank's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Committee of Directors and Board of Directors, as well as evaluating the overall presentation of the Accounts.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Our audit has not resulted in any qualification.
Opinion
In our opinion, the Accounts give a true and fair view of Danmarks Nationalbank's assets, liabilities and financial position at 31 December 2006, and of the result of Danmarks Nationalbank's operations for the financial year 1 January-31 December 2006, in accordance with the Danmarks Nationalbank Act.
Copenhagen, 22 February 2007
Svend Ørjan Jensen, Mona Blønd,
State-Authorised Public Accountant State-Authorised Public Accountant
SIGNATURES
These Accounts, audited in the manner prescribed by the by-laws of Danmarks Nationalbank, are hereby adopted by the Board of Directors at the meeting on 19 March 2007.
As at 1 March 2007 the Board of Directors comprises
Hans E. Zeuthen Elisabeth Arnold Helle Bechgaard Søren Bjerre-Nielsen Peter Bjerregaard
Niels Boserup Pia Christmas-Møller Kristian Thulesen Dahl Michael Dithmer Niels Fog
Svend Erik Hovmand Hans Jensen Johannes Fløystrup Jensen Niels Due Jensen
Lars-Emil Johansen Jette W. Knudsen Kjeld Larsen Michael Lunn Kirsten Nielsen
Kirsten Nissen Troels Lund Poulsen Jens Rostrup-Nielsen Kirsten Stallknecht
Villy Søvndal Helle Thorning-Schmidt
[1] The rates of interest for loans and certificates of deposit are identical, while the rate of interest for deposits has been lower than the other interest rates.
[2] Foreign-exchange positions comprise the foreign-exchange reserve, as well as unsettled foreign-exchange contracts, currency and interest-rate swaps, domestic foreign-exchange balances, and the liability counterpart of Special Drawing Rights (SDR) allocated by the IMF.
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