The Copenhagen Stock Exchange The Luxembourg Stock Exchange The Frankfurt Stock Exchange The Düsseldorf Stock Exchange Euronext N.V. Oslo Børs ASA The Press 25 July 2007 Stock Exchange Announcement No. 10/2007 - FIH Interim Report January-June 2007 • Best ever net profit for the period of DKK 644.3 million • Satisfactory business segment growth • Excellent return on unlisted shares • Writedowns of loans continually modest Net profit for the period Net profit for the period amounted to DKK 644.3 million, an increase of DKK 68.3 million compared with the same period last year. Return on equity before tax came to 21.9 per cent against 24.0 per cent in the first half of 2006, and 17.8 per cent after tax against 19.4 per cent for the same period of 2006. Activities Lending activities continue to grow, and all lending segments meet or exceed ex-pectations and thus reported an increase of 6 per cent in total lending volume since the beginning of the year. Especially the new business segment Property Finance has shown a better-than-expected growth rate compared with the target for the first half of 2007. All lending units have benefited from the opportunity to offer even broader services to FIH customers as a result of the added synergies with the new FIH business segments. The volume of deposits has developed favourably for the first half of 2007 and has reached DKK 20 billion against DKK 6.6 billion at the beginning of the year. Within Capital Markets especially the Financial Solutions and Sales & Trading de-partments show positive earnings development. FIH Partners A/S performed well in the first six months and has carried out 12 transactions this year, which is above expectations. Key figures Income Statement DKK million H1 2007 H2 2006 Full-year 2006 H1 2005 H1 2004 H1 2003 Net interest and fee income 617 554 1,098 493 499 520 Market value adjustments 443 345 508 15 33 -22 Other operation income 41 40 89 55 3 3 Profit on net financials 1,101 939 1,695 563 535 501 Expenses and depreciation 317 259 540 140 119 105 Writedowns of loans and recei-vables etc. -10 -11 -17 9 17 48 Profit/loss from associates and group enterprises 3 18 6 3 37 41 Profit before tax 797 709 1,178 417 436 389 Tax 153 133 243 63 121 110 Profit after tax 644 576 935 354 315 279 Allocation of profit Shareholders 640 592 959 354 315 279 Minority interests 4 -16 -24 0 0 0 Loans 71,462 64,176 67,579 53,924 54,941 56,825 Total assets 112,913 84,997 95,998 72,366 66,079 69,124 Equity 7,296 6,383 6,695 5,433 6,367 5,917 Net interest and fee income Net interest and fee income amounted to DKK 617.1 million, up 11 per cent from the figure for the same period of 2006. Interest income from loans and other receivables rose by 33 per cent to DKK 1,916.4 million. The rise is mainly attributable to a higher average nominal interest rate on the loan portfolio compared with 2006. Interest on bonds came to DKK 347.4 million, up from DKK 206.4 million for the first half of 2006. Average bond holdings were considerably higher in 2007 and the coupon rate was also higher than in 2006. Interest on derivative financial instruments, mainly interest income and interest ex-penses linked to swaps, amounted to DKK 12.9 million against a negative DKK 69.0 million for the first half of 2006. FIH uses swaps to hedge interest rate risks and in the general management of interest rate risks and for trading with custom-ers. Overall, interest income increased by DKK 875.5 million, to DKK 2,541.2 million, compared with the same period in 2006. Interest expenses increased by a total of DKK 838.8 million, to DKK 2,006.8 mil-lion, compared with the first half of 2006. Fee and commission income increased by DKK 26 million, to a total of DKK 103.4 million, compared with the same period of last year. The increase in earnings may be attributed to the activities established in the investment banking area, as well as to higher commission income from credit approvals, etc. Overall, net interest and fee income rose by DKK 62.8 million to a total of DKK 617.1 million for the first half of 2007. DKK million H1 2007 H1 2006 Net interest and fee income Interest income: Due from credit institutions and central banks 260.5 85.6 Loans and other receivables 1,916.4 1,436.5 Contributions 3.0 4.2 Bonds 347.4 206.4 Total derivative financial instruments 12.9 -69.0 Other interest income 1.0 2.0 Total interest income 2,541.2 1,665.7 Interest expense: Credit institutions and central banks 278.8 159.5 Deposits and other debt 265.1 67.9 Bonds issued 1,406.7 909.2 Subordinated debt 52.0 31.4 Other interest expense 4.2 0.1 Total interest expense 2,006.8 1,168.1 Net interest income 534.4 497.6 Dividend from shares etc. 9.3 0.1 Fees and commission income 103.4 77.4 Fees and commissions paid 29.9 20.9 Net interest and fee income 617.1 554.2 Average interest-bearing assets and liabilities Interest-bearing assets 98,250.1 78,809.3 Interest-bearing liabilities 94,743.3 74,988.7 Average interest rate, per cent p.a. Total interest income/interest-bearing assets 5.2 % 4.2 % Total interest income/interest-bearing liabilities 4.2 % 3.1 % Average interest rate margin 0.9 % 1.1 % Net interest income/interest-bearing assets 1.2 % 1.4 % Loans to customers - interest rate margin Interest income on loans to customers 1,916.4 1,436.5 Average loan outstanding before provision for impairments 69,841.0 60,957.4 Average interest rate margin p.a. 5.5 % 4.7 % Market value adjustments Market value adjustments were DKK 442.6 million against DKK 344.9 million for the first half of 2006. Market value adjustments of mortgage loans were negative by DKK 13.7 million, which was off set by corresponding income under market value adjustments of mortgage bonds issued. Market value adjustments of loans etc. were negative by DKK 340.6 million in respect of loans hedged by financial instruments. There was a negative market value adjustment of bonds totalling DKK 241.0 million against negative DKK 135.4 million for the first half of 2006. Shares were value adjusted by DKK 392.4 million against DKK 277.9 million for the first half of 2006, while market value adjustments of foreign currencies amounted to DKK 15.5 million against DKK 5.8 million for the same period of 2006. Investment properties (operating leasing) was fair value adjusted by minus DKK 28.6 million, which is largely equivalent to the repayment proportion of the lease payment recognised under the item “Other operating income”. There was a posi-tive market value adjustment of derivative financial instruments totalling DKK 369.4 million. Bonds issued refer to mortgage bonds issued as well as bonds issued and hedged using financial instruments. The market value adjustments totalled DKK 289.2 million. DKK million H1 2007 H1 2006 Market value adjustments Mortgage loans -13.7 -21.9 Other loans and receivables at fair value -340.6 -626.5 Bonds - 241.0 -135.4 Shares, etc. 392.4 277.9 Investment property -28.6 -37.9 Foreign currency 15.5 5.8 Derivative financial instruments 369.4 692.8 Bunds issued 289.2 190.1 Total market value adjustments 442.6 344.9 Other operating income Other operating income totalled DKK 41.2 million against DKK 39.7 million for the first half of 2006. Expenses Expenses rose by DKK 57.9 million to DKK 316.6 million. The increase in ex-penses should be seen in the context of the further development of the business segments Investment Banking and Capital Markets. The average number of employees was 314.6, up from 214.9 in the first half of 2006. DKK million H1 2007 H1 2006 Expenses Staff costs and administration expenses 297.9 241.1 Depreciation, amortisation and impairment losses for tangible and intangible assets 18.1 17.6 Other operating expenses 0.6 0 Total 316.6 258.7 Losses and Writedowns DKK 10.1 million has been recognised as income under the item “writedowns of loans and other receivables, etc.”. New writedowns totalled DKK 79.7 million for the first half of 2007, compared with DKK 71.0 million for the same period of 2006. Reversal of previous years' write-downs amounted to DKK 85.0 million, an increase of DKK 7.8 million compared with the first half of 2006. Net losses recorded for the period were DKK 0.4 million against DKK 7.2 million for the same period in 2006. DKK million H1 2007 H1 2006 Writedowns of loans and guarantee debtors Writedown balance, beginning of period 283.9 346.5 Writedowns, net 85.0 77.2 Writedowns during the period 79.7 71.0 Losses recorded 0.4 7.2 Writedown balance, end of period 278.2 333.1 Writedowns of loans and guarantee debtors -10.1 -10.8 Losses recorded 0.4 7.2 Amounts received on claims previously written off 4.8 4.5 Net losses recorded -4.4 2.7 Writedowns of loans and guarantee debtors as a per-centage of loans to customers and guarantees, end of year 0.0 0.0 Writedown balance as a percentage of loans to cus-tomers and guarantees, end of year 0.4 0.5 Net losses recorded as a percentage of the writedown balance, beginning of year -1.6 0.8 Investments in associates Investments in associates generated a gain of DKK 2.4 million compared with DKK 17.8 million for the first half of 2006. Balance sheet Before writedowns, total loans to customers including investment properties in-creased by DKK 3,879 million, or by 6 per cent, to a total of DKK 72,559 million. Bond holdings were DKK 20,447 million, up from DKK 12,139 million at the begin-ning of the year. Holdings of shares and investments in associates amounted to DKK 1,460 million up from DKK 1,068 million at the end of 2006. Under the item “intangible assets”, development projects were capitalised by DKK 16.0 million in 2007 compared with DKK 3.0 million for the first half of 2006, taking the balance after amortisation for the period to DKK 39.7 million. Bonds issued totalled DKK 62,553 million against DKK 55,704 million at the begin-ning of the year. DKK million H1 2007 H1 2006 Funding Due to credit institution and central banks 13,869 16,653 Deposits 20,018 6,597 Bonds issued 62,553 55,704 Mortgage bonds issued 757 888 Equity and solvency Equity totalled DKK 7,324 million at the end of June 2007 compared to DKK 6,735 million at the end of 2006. Subordinated debt amounted to DKK 2,994 million, an increase of DKK 1,412 mil-lion on the figure at the end of 2006. FIH has raised a subordinated loan in Q1 on EUR 200 mio which is the cause to the increase in subordinated loans. Inclusive of the net profit for the period the solvency ratio for the group was 11.5 per cent at the end of June 2007 relative to 10.0 per cent at the end of 2006. Simi-larly, the core capital ratio (tier 1) was 8.3 per cent which is the same as at the end of 2006. Credit risk Credit risk means the risk of loans or other claims not being paid off because the borrower is unwilling or unable to pay at the agreed time. At least once a year, individual credit facilities are reviewed. As part of this review, new financial information is examined and ratings are updated, among other things. Monitoring of credit facilities is undertaken centrally using FIH's credit system, con-taining all material information on the size and utilisation of facilities, collateral se-curity provided and estimated realisable value, etc. The Credit department continuously monitors the scope, diversification and quality of the loan portfolio, reporting its findings on an ongoing basis to the Executive Board and periodically to the Board of Directors. Rating models are used, along with individual customer credit ratings. Financial institutions are rated using a separate model, while the largest customer segment, corporate customers, is rated using the internally developed Corporate model. The Corporate model categorises customers into 12 rating classifications, 12 being the best. The model also calculates the probability that, within the next 12 months, the individual customer will be unable to meet his financial obligations towards FIH. Loan portfolio diversification by rating class exclusive of loans to the public sector is shown below. Rating classes 9-12 correspond to investment grade as defined by the credit rating agencies, while rating classes 4-8 are below investment grade, although being of acceptable credit quality. Rating classes 3-2 comprise customers with increased risk, corresponding to the single B segment defined by the rating agencies. Rating 1 comprises the weakest and most risky customers, corresponding to the C seg-ment as defined by the rating agencies. The chart below shows that the credit quality has decreased slightly for the first half of 2007. Average rating exclusive of loans to the public sector and banks (number of customers) 31/12 2006 31/03 2007 30/06 2007 5.95 5.96 6.01 Average rating, commitment weighted exclusive of public enterprises and banks (size) 31/12 2006 31/03 2007 30/06 2007 7.11 7.10 7.21 Market risk Market risk is the risk of a loss as a result of changes in market value of FIH's as-sets and liabilities and off-balance sheet transactions due to changes in market conditions. Market risk includes interest rate and exchange rate risks and risk re-lated to equity trading. The market risk related to the bank's total balance sheet (inclusive of the risk not related to the trading book), stated as Value at Risk for interest rate, exchange rate and equity trading amounted to DKK 19 million at the end of June 2007. The Value at Risk method looks at the whole portfolio in the calculation of markets risks associated with financial assets. As a result, not only the standard deviation, but also the correlation between the portfolio assets is taken into account. Conse-quently, the Value at Risk method summarises the total risk related to the bank's balance sheet by one figure and expressed in Danish kroner. Thus, Value at Risk indicates the maximum loss that FIH may be expected to suffer in a single day, at a 99 per cent probability. Funding and liquidity An important element of FIH's funding strategy has been to diversify the funding into new markets in Europe and into new investor segments. Special attention has been devoted to increasing the deposit base from existing and new customers. This activity has proven successful for the first half of 2007 tripling deposits from DKK 7 billion to DKK 20 billion. Deposits now account for approximately 21 per cent of FIH's total funding. While traditionally FIH has based long-term funding on Euro Market EMTN issues, the majority of the funding has been raised on new markets during 2007. For the first time in many years, FIH has issued large bond series on the Danish market. In addition, a relatively large fixed-rate GBP loan and issues in CHF and SEK have also contributed significantly to the long-term funding, which for the first half amounted to DKK 15.5 billion, corresponding to two-thirds of the required level for the entire 2007. Liquidity has also been increased considerably during the first half of 2007. The bond holdings and short-term deposits in other banks amounted to DKK 33 billion at the end of June 2007. The liquidity also consists of committed loan facilities of DKK 20 billion, including a newly established facility with ATP, the largest pension fund in Denmark. Thus the total liquidity resources amount to DKK 53 billion. Merger It has been decided to merge FI Holding A/S (parent company) with FIH Erhvervs-bank A/S in the second half year with effective date 1 January 2007. The merger provides an administrative relief. The merger will have no effect on FIH's financial statements and the expectations for 2007. Consequently, Kaupthing Bank hf. is the direct owner of FIH Erhvervsbank A/S. Other remarks The financial report for the first half of 2007 is unaudited. No particular uncertainty has effected the recognition and measurement in the in-terim report first half 2007. Expectations for FIH result full-year 2007. Earnings and the development of the bank's business activities have exceeded expectations for the first half of the year. The new business segments Investment Banking and Capital Markets develop fa-vourably. The number of business transactions is high and FIH Partners A/S has seen a high growth rate in business volume. The high level of activity is expected to continue. The return on the bank's portfolio of unlisted shares has been significant for the first half of the year, and this development is expected to continue in the second half of the year, thus the performance of unlisted shares for the year will exceed 2006 earnings. Expenses have risen for the first six months as a result of increased activity and the continued development of new business segments. The expenses for the full year 2007 are expected to exceed the 2006 level considerably. The Danish economy continues to perform well, which impacts the bank positively. At the same time the bank's loan portfolio develops as expected. In the first half of the year, FIH has reversed DKK 10 million worth of net writedowns and due to the favourable economic climate; losses and writedowns for 2007 are expected to be modest. As a consequence of the positive result for the first half of 2007 and above expec-tations for the second half of the year, FIH Erhvervsbank A/S expects a profit for the full year of approximately DKK 1.2 billion, which is an upward adjustment of DKK 200 million compared with the announcement after the first quarter of 2007. Copenhagen, 25 July 2007 For the Board of Directors Hans Skov Christensen Chairman For additional information please contact Lars Johansen, tel +45 7222 5000 Appendices Income statement and balance sheet for the FIH Group and FIH Erhvervsbank A/S FINANCIAL STATEMENTS FOR THE FIH GROUP DKK million Income statement Q2 2007 H1 2007 Q2 2006 H1 2006 Full-year 2006 Net interest and fee income 313 617 268 554 1,098 Market value adjustments 230 443 186 345 508 Other operating income 20 41 21 40 89 Profit on net financials 563 1,101 475 939 1,695 Expenses and depreciation 161 317 167 259 540 Writedowns of loans and receivables etc. -14 -10 4 -11 -17 Profit/loss from associates and group enterprises -2 3 -7 18 6 Profit before tax 414 797 297 709 1,178 Tax 43 153 39 133 243 Profit after tax 371 644 258 576 935 Allocation of profit Shareholders 368.4 640.7 273.6 591.7 958.9 Minority interests 2.3 3.6 -15.7 -15.7 -23.4 DKK million Balance sheet (key figures) H1 2007 H1 2006 Full-year 2006 Cash and cash equivalents 13,000 4,204 6,660 Bonds 20,447 11,141 12,139 Shares 1,460 1,495 1,068 Loans 71,462 64,176 67,579 Other assets 6,544 3,981 8,552 Total assets 112,913 84,997 95,998 Deposits 20,018 5,778 6,598 Due to credit institutions and central banks 77,179 68,429 73,244 Other liabilities 5,102 2,294 7,486 Provisions 296 463 354 Subordinated loan capital 2,994 1,601 1,582 Minority interests 28 49 39 Equity 7,296 6,383 6,695 Total Liabilities and Equity 112,913 84,997 95,998 Ratios H1 2007 H1 2006 Full-year 2006 Return on equity before tax 21.9 24.0 18.9 Return on equity after tax 17.8 19.4 15.0 Statement by the Executive Board We have today discussed and adopted the interim report for FIH Erhvervsbank A/S for January - June 2007. The interim report have been prepared in accordance with IAS 34, Presentation of interim reports as regards the Group's financial statements, the International Financial Reporting Standards as adopted by the EU as regards the parent financial statements and the interim report has been prepared in accordance with addi-tional Danish disclosure requirements for interim reports of financial companies that are listed. We consider the applied accounting policies appropriate for the annual report to provide a true and fair view of the Group's and the Parent's financial position at 30 June 2007 as well as of the results of their operations and the consolidated cash flows for the first half of 2007. Copenhagen, 25 July 2007 Executive Board Lars Johansen Henrik Sjøgreen Managing director and CEO Board of Directors Hans Skov Christensen Chairman INCOME STATEMENT FOR THE FIH GROUP DKK million Note Q2 2007 H1 2007 Q2 2006 H1 2006 Full-year 2006 Interest income 2 1,321.2 2,541.2 858.3 1,665.7 3,689.1 Interest expense 3 1,063.7 2,006.8 607.0 1,168.1 2,687.3 Net interest income 257.5 534.4 251.3 497.6 1,001.8 Dividends from shares etc. 9.3 9.3 0.1 0.1 0.2 Fee and commission income 61.6 103.3 19.5 77.4 130.2 Fees and commissions paid 15.0 29.9 3.1 20.9 34.2 Net interest and fee income 313.4 617.1 267.8 554.2 1,098.0 Market value adjustments 4 230.0 442.6 185.7 344.9 508.6 Other operating income 19.9 41.2 21.4 39.7 89.6 Staff costs and administrative expenses 5 152.3 297.9 156.8 241.1 497.8 Amortisation, depreciation and write-downs, intan-gible and tangible assets 8.1 18.1 10.3 17.6 42.3 Other operating expenses 0.4 0.6 0.0 0.0 0.2 Writedowns of loans and receivables etc. 6 -14.2 -10.1 4.0 -10.6 -16.8 Profit from investments in associates and group enterprises -2.8 2.4 -7.2 17.8 5.8 Profit before tax 413.9 796.8 296.6 708.5 1,178.5 Tax 43.2 152.5 38.7 132.5 243.0 Profit after tax 370.7 644.3 257.9 576.0 935.5 Allocation of profit Shareholders 368.4 640.7 273.6 591.7 958.9 Minority interests 2.3 3.6 -15.7 -15.7 -23.4 QUARTERLY INCOME STATEMENT FOR THE FIH GROUP DKK million Q2 2007 Q1 2007 Q4 2006 Q3 2006 Q2 2006 Q1 2006 Interest income 1,321.2 1,220.0 1,089.3 934.1 858.3 807.4 Interest expense 1,063.7 943.1 835.8 683.5 607.0 561.1 Net interest income 257.5 276.9 253.5 250.6 251.3 246.3 Dividends from shares etc. 9.3 0.0 0.1 0.0 0.1 0.0 Fee and commission income 61.6 41.7 32.7 20.2 19.5 57.9 Fees and commissions paid 15.0 14.9 6.3 7.0 3.1 17.8 Net interest and fee income 313.4 303.7 280.0 263.8 267.8 286.4 Market value adjustments 230.0 212.6 108.4 55.3 185.7 159.2 Other operating income 19.9 21.3 29.0 21.0 21.4 18.3 Staff costs and administrative expenses 152.3 145.6 150.9 105.8 156.8 84.3 Amortisation, depreciation and impairments, intan-gible and tangible assets 8.1 10.0 14.9 9.8 10.3 7.3 Other operating expenses 0.4 0.2 0.3 0.0 0.0 0.0 Writedowns of loans and receivables etc. -14.2 4.1 -13.3 7.1 4.0 -14.6 Profit from investments in associates and group enterprises -2.8 5.2 0.3 -12.3 -7.2 25.0 Profit before tax 413.9 382.9 264.9 205.1 296.6 411.9 Tax 43.2 109.3 64.4 46.1 38.7 93.8 Profit after tax 370.7 273.6 200.5 159.0 257.9 318.1 Allocation of profit Shareholders 368.4 272.3 201.0 166.2 273.6 318.1 Minority interests 2.3 1.3 -0.5 -7.2 -15.7 0.0 BALANCE SHEET FOR THE FIH GROUP DKK million Note H1 2007 H1 2006 Full-year 2006 ASSETS Cash in hand and demand deposits with central banks 216.2 197.3 124.4 Debt instruments eligible for refinancing with central banks 5,395.5 0.0 2,596.2 Due from credit institutions and central banks 7,388.0 4,007.0 3,939.6 Loans and other receivables at fair value 7 731.3 975.6 828.3 Loans and other receivables at amortised cost 7 70,731.1 63,200.5 66,750.6 Bonds at fair value 20,446.8 11,140.5 12,138.6 Shares etc. 1,396.6 1,209.4 978.3 Investments in associates 63.5 285.8 89.6 Intangible assets 38.7 78.5 27.6 Land and buildings: Investment property 1,096.5 1,258.6 1,100.3 Domicile property 1.9 1.4 1.4 Other tangible assets 39.2 32.2 39.7 Current tax assets 0.0 127.4 0.0 Other assets 5,286.1 2,447.9 7,330.7 Prepayments 81.7 34.5 52.3 Total assets 112,913.1 84,996.6 95,997.6 LIABILITIES AND EQUITY FOR THE FIH GROUP DKK million H1 2007 H1 2006 Full-year 2006 LIABILITIES AND EQUITY Debt Due to credit institutions and central banks 13,868.9 15,738.6 16,653.2 Deposits and other debt 20,018.4 5,777.9 6,597.4 Bonds issued at amortised cost 8 62,552.9 51,661.8 55,703.6 Other non-derivative financial commitments at fair value 8 756.7 1,028.4 887.5 Current tax liabilities 286.4 107.6 103.5 Other liabilities 4,794.5 2,155.5 7,356.8 Accruals and deferred income 21.2 31.0 25.8 Total debt 102,299.0 76,500.8 87,327.8 Provisions Provisions for pensions and similar commitments 3.5 3.5 3.5 Provisions for deferred tax 272.9 458.8 329.4 Provisions for losses and guaranties 19.9 0.8 20.7 Total provisions 296.3 463.1 353.6 Subordinated debt 9 2,993.7 1,601.2 1,581.7 Shareholders' equity interest 7,296.4 6,383.0 6,695.2 Minority interests 27.7 48.5 39.3 Total equity 7,324.1 6,431.5 6,734.5 Total liabilities and equity 112,913.1 84,996.6 95,997.6 Off-balance-sheet items Guarantees etc. 10 2,360.6 2,444.6 2,314.8 Other contingent liabilities 10 9,705.2 9,214.9 10,100.7 Total off-balance-sheet items 12,065.8 26,66 12,415.5 EQUITY STATEMENT FOR THE FIH GROUP DKK million H1 2007 H1 2006 Full-year 2006 Equity at 1 January 6,695.2 5,791.3 5,791.3 Net profit for the period 644.3 576.0 935.5 Share-based compensation 0.5 0.0 0.8 Revaluation, property 0.5 0.0 0.0 Total comprehensive income 645.3 576.0 936.3 Dividends distributed 0.0 0.0 0.0 Adjustments, minority interests -40.5 0.0 -55.7 Minority interests -3.6 15.7 23.3 Total changes in equity 601.2 591.7 903.9 Total shareholder's equity interest at 30 June 7,296.4 6,383.0 6,695.2 Minority interests' equity interest primo 39.3 0.0 0.0 Addition, minority interests -15.2 64.2 62.6 Minority interests' share of net profit 3.6 -15.7 -23.3 Minority interests' equity interest ultimo 27.7 48.5 39.3 Total equity at 30 June 7,324.1 6,431.5 6,734.5 SPECIFICATION OF CHANGES IN EQUITY Share capital, beginning of period 513.6 513.6 513.6 Share capital, end of period 513.6 513.6 513.6 Share option plan, beginning of period 0.8 0.0 0.0 Share option plan, during the period 0.5 0.0 0.8 Share option plan, end of period 1.3 0.0 0.8 Revaluation reserve property, beginning of period 0.5 0.5 0.5 Reserve for the period 0.5 0.0 0.0 Revaluation reserve property, end of period 1.0 0.5 0.5 Reserve for net revaluation by the equity method, beginning of period 0.0 8.2 8.2 Transferred 0.0 17.8 5.8 Other disposals, transferred to profit brought forward 0.0 -7.3 -14.0 Reserve for net revaluation by the equity method, end of period 0.0 18.7 0.0 Profit brought forward, beginning of period 6,180.3 5,269.0 5,269.0 Dividend 0.0 0.0 0.0 Transferred 644.3 573.9 929.7 Other additions, transferred from reserve for net revaluation by the equity method 0.0 7.3 14.0 Adjustment of minority interests -40.5 0.0 -55.7 Minority interests -3.6 0.0 23.3 Profit brought forward, end of period 6,780.5 5,850.2 6,180.3 Total shareholder's equity interest at 30 June 7,296.4 6,383.0 6,695.2 Minority interests' equity interest primo 39.3 0.0 0.0 Addition, minority interests -15.2 64.2 62.6 Minority interests' share of net profit 3.6 -15.7 -23.3 Minority interests' equity interest ultimo 27.7 48.5 39.3 Total equity at 30 June 7,324.1 6,431.5 6,734.5 CASH FLOW STATEMENT FOR THE FIH GROUP DKK million H1 2007 H1 2006 Full-year 2006 Cash flow from operating activities Interest received 2,484.3 1,789.7 3,583.9 Interest paid -1,573.2 -1,039.1 -2,341.9 Fees received and paid 99.3 63.9 100.7 Expenses paid -381.9 -271.1 -509.2 Other operating income 40.9 39.3 89.0 Received on claims previously impaired 4.8 4.5 7.4 Loans disbursed -14,628.0 -16,149.2 -29,385.4 Repayments on loans 10,168.3 10,461.0 20,215.5 Securities, purchase -9,061.3 -251.6 -5,323.6 Securities, sale 77.2 48.2 689.1 Dividend from shares and investments 24.8 105.5 535.9 Taxes paid -62.2 5.1 -107.5 Total -12,807.0 -5,193.8 -12,446.1 Cash flow from investments activities Net investment intangible and tangible assets -30.5 -70.3 121.3 Sundry assets 5,668.2 243.8 620.4 Total 5,637.7 173.5 741.7 Cash flow from financing activities New bank loans and bonds 42,045.2 37,644.9 77,270.9 Repayments on bank loans and bonds -37,914.3 -37,902.3 -69,148.6 Change in short-term funding 13,161.5 2,627.8 4,098.6 New subordinated debt 1,487.1 Repayment on subordinated debt -17.9 0.0 0.0 Adjustments, minority interests -43.6 0.0 -57.2 Changes of minority interests -11.6 48.5 39.3 Sundry liabilities -5,375.4 117.0 -243.6 Total 13,331.0 2,535.9 11,940.4 Net cash flow 6,161.7 -2,484.4 236.0 Cash balances, beginning of period 6,895.2 6,709.6 6,709.6 Value adjustments of liquid funds -52.4 -21.0 -50.4 Cash balances, end of period 13,004.5 4,204.2 6,895.2 Cash balances, end of period Cash in hand and demand deposits with central banks, etc. 5,611.8 197.3 2,720.6 Due from credit institutions, etc. 7,388.0 4,007.0 3,939.6 Bonds 4.8 0.0 235.0 Cash balances, end of period 13,004.6 4,204.3 6,895.2 Accounting policies: The financial statements as of 30 June 2007, which have not been audited, have been prepared in accordance with the IFRS accounting standards in force as at 30 June 2007. The accounting policies are unchanged from the last annual report. The financial report for the first half of 2007 is prepared in accordance with the IAS 34 Presentation of Interim Fi-nancial Reports, which entails that the presentation is limited compared to a full annual report. All related party transac-tions are made on an arm's length basis or on a cost recovery basis. Adjusting events have not occurred after the bal-ance sheet date. NOTES FOR THE FIH GROUP Note 1 - Segment information DKK million Segment financial statements based on the primary activities of the FIH Group are presented below: 1/1-30/6 2007 Banking Structured Finance Private Equity Other Group total Income statement Net interest and fee income 429.8 209.9 -9.9 -12.7 617.1 Market value adjustments 17.3 0.0 392.0 33.3 442.6 Other operating income 7.4 0.5 0.0 33.3 41.2 Writedowns and losses of loans and other receivables etc. 27.3 -37.4 0.0 0.0 -10.1 Operating costs 134.8 12.8 1.5 167.5 316.6 Profit/loss on equity investments 0.0 0.0 2.4 0.0 2.4 Profit before tax 286.0 235.0 383.0 -107.2 796.8 Tax 58.1 47.8 68.3 -21.7 152.5 Net profit for the period after minority interests 227.9 187.2 314.7 -85.5 644.3 Minority interests 3.6 Net profit for the period after minority interests 640.7 Balance sheet Loans 58,026.5 13,381.2 0.0 54.7 71,462.4 Bonds 1,516.0 0.0 0.0 18,930.8 20,446.8 Shares 0.0 0.0 1,134.7 261.9 1,396.6 Other assets 0.0 0.0 63.5 0.0 63.5 Total assets 1,008.8 87.6 0.0 18,447.4 19,543.8 Total liabilities 60,551.3 13,468.8 1,198.2 37,694.8 112,913.1 1/1-30/6 2006 Income statement Net interest and fee income 368.8 162.4 -13.3 36.3 554.2 Market value adjustments 22.6 0.0 277.7 44.6 344.9 Other operation income 8.3 0.5 0.0 30.9 39.7 Writedowns and losses of loans and other receivables etc. -0.2 -10.4 0.0 0.0 -10.6 Operating costs 123.1 8.8 0.4 126.4 258.7 Profit/loss on equity investments 0.0 0.0 17.8 0.0 17.8 Profit before tax 276.8 164.5 281.8 -14.6 708.5 Tax 76.6 47.0 12.1 -3.1 132.6 Net profit for the period 200.2 117.5 269.7 -11.5 575.9 Minority interests -15.7 Net profit for the period after minority inter-ests 591.6 Balance sheet Loans 53,068.0 11,089.4 0.0 18.8 64,176.2 Bonds 1,906.4 0.0 0.0 9,234.1 11,140.5 Shares 0.0 0.0 940.4 269.0 1,209.4 Investment in associates 0.0 0.0 285.8 0.0 285.8 Other assets 1,167.1 91.5 0.0 6,926.1 8,184.7 Total liabilities 56,141.5 11,180.9 1,226.2 16,448.0 84,996.6 Denmark is the main focus of the FIH Group's activities - approximately 85 per cent of all FIH loans are granted to customers in Denmark. Other activities are distributed between customers in the rest of the world. None of these geographical segments exceed the 10 per cent limit, cf. IAS 14. NOTES DKK million H1 2007 H1 2006 Full-year 2006 Note 2 - Interest income Due from credit institutions and central banks 260.5 85.6 247.0 Loans and other receivables 1,916.4 1,436.5 3,100.1 Contributions 3.0 4.2 7.6 Bonds 347.4 206.4 423.5 Derivative financial instruments 12.9 -69.0 -97.2 Other interest income 1.0 2.0 8.1 Total 2,541.2 1,665.7 3,689.1 Note 3 - Interest expenses Credit institutions and central banks 278.8 159.5 507.2 Deposits and other debt 265.1 67.9 183.8 Bonds issued 1,406.7 909.2 1,930.5 Subordinated debt 52.0 31.4 64.8 Other interest expenses 4.2 0.1 1.0 Total 2,006.8 1,168.1 2,687.3 Note 4 - Market value adjustments Mortgage loans -13.7 -21.9 -19.6 Other loans and receivables at amortised cost -340.6 -626.5 -605.6 Bonds -241.0 -135.4 -66.9 Shares, etc. 392.4 277.9 385.7 Investment property -28.6 -37.9 -49.4 Foreign currency 15.5 5.8 9.2 Derivative financial instruments 369.4 692.8 721.6 Liabilities 289.2 190.1 133.6 Total 442.6 344.9 508.6 Note 5 - Staff costs and administrative expenses Salaries and remuneration of Board of Directors and Execu-tive Board 7.6 6.3 16.6 Staff costs: Salaries 143.1 132.3 252.1 Pensions 8.9 5.7 13.4 Social security costs 15.8 7.9 17.8 Share-based payments 9.6 3.9 7.8 Total 177.4 149.8 291.1 Other administrative expenses 112.9 85.0 190.1 Total 297.9 241.1 497.8 Share and option plans Employee shares In February 2005, FIH launched a share plan for all employees. The shares were allocated in proportion to salaries and will be held in trust until and including 2010. A shareholders' agreement has been concluded with the parent company of FIH Erhvervsbank A/S, FI-Holding A/S, governing the right, respectively the obligation, of employees to sell the shares to FI-Holding A/S. FIH Erhvervsbank A/S is subject to no further obligations under the plan. Option plans Plan 1 In 2004, FIH Erhvervsbank A/S launched a share option plan for a broad group of employees. The options are allocated over a period of three years, with three tranches of a nominal value of DKK 6 million. Allocations are made individually for each employee in 2004, 2005 and 2006. The options may be executed as follows: tranche 1 may be converted in the years 2008-2010, tranche 2 in the years 2009-2010 and tranche 3 in the year 2010. In the years in question, options may be executed only during a 30-day period following the publication of the company's annual report. The conversion price will be revalued by 7 per cent a year starting in 2008. Plan 2 A supplementary plan was launched in 2006 for employees that were hired subsequently. Options under this plan are allotted over a three-year period in the form of three tranches of a nominal value of DKK 1.6 million. Options are allotted individually for each employee in 2006, 2007 and 2008. Options may be exercised in the following way: tranche 1 may be converted during the years 2010-2012, tranche 2 during the years 2011-2012 and tranche 3 in the year 2012. The conversion price is revalued by 7 per cent a year starting in 2008. Kaupthing Bank hf. launched an option plan for all employees of the Kaupthing Bank Group in 2005. This plan covers the period 2005-2009 and includes 3.9 million options, all of which were allotted in 2005. Option holders may exercise up to one-third of the op-tions allotted during the period 20 January - 25 February in each of the years 2007, 2008 and 2009. At year-end 2006, Kaupthing Bank hf. launched a supplementary option plan for employees subsequently hired by the Group. This plan covers the period 2006-2010 and includes 1.1 million options, all of which were allotted in 2006. Option holders may exercise up to one-third of the options allotted during the period 20 January - 20 February in each of the years 2008, 2009 and 2010. DKK million H1 2007 H1 2006 Full-year 2006 Note 6 - Writedowns of loans and guarantee debtors Writedown balance, beginning of period 283.9 346.5 346.5 Writedowns, net 85.0 77.2 100.8 Writedowns during the period 79.7 71.0 91.5 Losses recorded 0.4 7.2 53.3 Writedown balance, end of period 278.2 333.1 283.3 Writedowns of loans and guarantee debtors -10.1 -10.8 -16.8 Losses recorded 0.4 7.2 53.3 Amounts received on claims previously written off 4.8 4.5 7.4 Net losses recorded -4.4 2.7 45.9 Writedowns of loans and guarantee debtors as a percentage of loans to customers and guarantees, end of year 0.0 0.0 0.0 Writedown balance as a percentage of loans to customers and guarantees, end of year 0.4 0.5 0.4 Net losses recorded as a percentage of the writedown balance, beginning of year -1.6 0.8 13.2 Note 7 - Loans Mortgage loans 731.3 975.6 828.3 Other loans 70,731.1 63,200.5 66,750.6 Total 71,462.4 64,176.1 67,578.9 Note 8 - Bonds issued Other bonds at amortised cost 62,552.9 51,661.8 55,703.6 Mortgage bonds at fair value 756.7 1.028.4 887.5 Total 63,309.6 52,690.2 56,591.1 Note 9 - Subordinated debt 4.80 % JPY 10-bn maturity 31.03.2032 533.3 578.6 582.2 Var. % EUR 30-m maturity 03.08.2009 230.6 239.8 236.0 Var. % EUR 100-m maturity 20.12.2012 744.2 745.9 745.6 Var. % EUR 200-m maturity 26.03.2013 1,485.6 0.0 0.0 Interest-free deposits from the Danish Ministry of Economic and Business Affairs in connection with Production, EM and HMI loan schemes. The deposits will be repaid in full in 2007 0.0 36.9 17.9 Total subordinated debt 2,993.7 1,601.2 1,581.7 Subordinated debt that may be included in the calculation of the capital base 2,847.7 1,495.6 1,392.9 DKK million H1 2007 H1 2006 Full-year 2006 Note 10 - Off-balance sheet-items Guarantees etc. Financial guarantees 849.7 473.9 722.0 Guarantees against losses for mortgage loans 1,321.3 1,232.2 1,223.6 Other guarantees 189.6 738.5 189.2 Total 2,360.6 2,444.6 2,314.8 Other liabilities Irrevocable loan commitments 8,877.3 8,587.0 9,301.8 Other liabilities 827.9 627.9 798.9 Total 9,705.2 9,214.9 10,100.7 INCOME STATEMENT FOR FIH ERHVERVSBANK A/S DKK million Note H1 2007 H1 2006 Full-year 2006 Interest income 1 2,444.7 1,628.5 3,616.4 Interest expense 2 2,014.3 1,150.9 2,656.5 Net interest income 430.4 477.6 959.9 Dividends from shares etc. 9.2 0.1 0.1 Fee and commission income 74.8 79.1 121.8 Fees and commissions paid 31.5 24.7 41.6 Net interest and fee income 482.9 532.1 1,040.2 Market value adjustments 3 55.9 264.7 333.4 Other operating income 74.1 41.5 131.6 Staff costs and administrative expenses 4 270.2 200.8 430.3 Amortisation, depreciation and impairments, intan-gible and tangible assets 17.2 17.7 42.3 Other operating expenses -9.6 -7.8 -13.6 Writedowns of loans and receivables etc. 353.4 88.6 151.6 Profit before tax 688.5 716.2 1,197.8 Tax 47.9 124.5 239.0 Profit after tax 640.6 591.7 958.8 BALANCE FOR FIH EHVERVSBANK A/S DKK million Note H1 2007 H1 2006 Full-year 2006 ASSETS Cash in hand and demand deposits with central banks 216.2 197.3 124.4 Debt instruments eligible for refinancing with central banks 5,395.5 0.0 2,596.2 Due from credit institutions and central banks 21,929.2 3.976.5 3,910.6 Loans and other receivables at amortised cost 5 57,430.7 63,427.3 66,833.4 Bonds at fair value 18,156.9 10,926.3 11,925.5 Shares etc. 322.9 573.2 336.4 Investments in associates 63.3 93.3 66.2 Investments in group enterprises 3,651.8 1,384.9 1,505.1 Intangible assets 38.7 48.5 27.6 Land and buildings: Investment property 1,096.5 1,258.6 1,100.3 Domicile property 1.9 1.4 1.4 Other tangible assets 39.1 32.2 39.5 Current tax assets 0.0 139.2 0.0 Other assets 5,313.8 2,401.5 7,324.2 Prepayments 52.9 34.0 51.9 Total assets 113,709.4 84,494.2 95,842.7 LIABILITIES AND EQUITY FOR FIH ERHVERVSBANK A/S DKK million H1 2007 H1 2006 Full-year 2006 LIABILITIES AND EQUITY Debt Due to credit institutions and central banks 14,913.0 15,738.6 16,653.2 Deposits and other debt 20,503.7 6,353.0 7,288.7 Bonds issued at amortised cost 6 62,552.9 51,661.8 55,703.6 Current tax liabilities 170.6 99.8 107.9 Other liabilities 4,839.9 2,158.5 7,367.4 Accruals and deferred income 19.5 31.0 25.8 Total debt 102,999.6 76,042.7 87,146.6 Provisions Provisions for pensions and similar commitments 3.5 3.5 3.5 Provisions for deferred tax 260.4 427.8 299.4 Provisions for losses and guaranties 59.6 36.1 60.6 Total provisions 323.5 467.4 363.5 Subordinated debt 7 2,993.7 1,601.2 1,581.7 Total equity 8 7,392.6 6,383.0 6,750.9 Total liabilities and equity 113,709.4 84,494.3 95,842.7 Off-balance-sheet items Guarantees etc. 9 2,733.6 2,867.4 2,721.8 Other contingent liabilities 9 8,929.4 8,621.1 9,335.7 Total off-balance-sheet items 11,663.0 11,488.5 12,057.5 EQUITY STATEMENT FOR FIH ERHVERVSBANK A/S DKK million H1 2007 H1 2006 Full-year 2006 Equity at 1 January 6,750.9 5,791.3 5,791.3 Net profit for the period 640.6 591.7 958.8 Share-based compensation 0.6 0.0 0.8 Revaluation, property 0.5 0.0 0.0 Total comprehensive income 641.7 591.7 959.6 Dividends distributed 0.0 0.0 0.0 Total changes in equity 641.7 591.7 959.6 Total equity at 30 June 7,392.6 6,383.0 6,750.9 SPECIFICATION OF CHANGES IN EQUITY Share capital, beginning of period 513.6 513.6 513.6 Share capital, end of period 513.6 513.6 513.6 Share option plan, beginning of period 0.8 0.0 0.0 Share option plan, during the period 0.6 0.0 0.8 Share option plan, end of period 1.4 0.0 0.8 Revaluation reserve property, beginning of period 0.5 0.5 0.5 Reserve for the period 0.5 0.0 0.0 Revaluation reserve property, end of period 1.0 0.5 0.5 Reserve for net revaluation by the equity method, beginning of period 1.9 1.6 1.6 Transferred 0.0 4.3 4.8 Other disposals, transferred to profit brought forward -1.9 0.0 -4.5 Reserve for net revaluation by the equity method, end of period 0.0 5.9 1.9 Profit brought forward, beginning of period 6,234.1 5,275.6 5,275.6 Dividend 0.0 0.0 0.0 Transferred 640.6 587.4 954.1 Other additions, transferred from reserve for net revaluation by the equity method 1.9 0.0 4.4 Profit brought forward, end of period 6,876.6 5,863.0 6,234.1 Total equity at 30 June 7,392.6 6,383.0 6,750.9 NOTES FOR FIH ERHVERVSBANK A/S DKK million H1 2007 H1 2006 Full-year 2006 Note 1 - Interest income Due from credit institutions and central banks 533.5 85.7 247.9 Loans and other receivables 1,585.4 1,407.1 3,041.7 Bonds 309.1 204.1 417.8 Derivative financial instruments 15.7 -69.0 -97.2 Other interest income 1.0 0.6 6.2 Total 2,444.7 1,628.5 3,616.4 Note 2 - Interest expenses Credit institutions and central banks 295.1 159.7 507.4 Deposits and other debt 275.1 74.3 199.4 Bonds issued 1,387.1 885.1 1,883.4 Subordinated debt 52.0 31.4 64.8 Other interest expenses 5.0 0.4 1.5 Total 2,014.3 1,150.9 2,656.5 Note 3 - Market value adjustments Mortgage loans -296.4 -626.5 -605.6 Other loans and receivables at amortised cost -238.7 -135.7 -67.1 Bonds 5.8 197.1 209.0 Shares, etc. -28.6 -37.9 -49.4 Investment property 16.5 6.6 10.7 Foreign currency 321.8 692.8 721.6 Derivative financial instruments 275.5 168.3 114.2 Liabilities 55.9 264.7 333.4 Note 4 - Staff costs and administrative expenses Salaries and remuneration of Board of Directors and Execu-tive Board 6.8 5.6 15.2 Staff costs: Salaries 125.7 95.6 195.1 Pensions 8.7 5.5 13.0 Social security costs 13.7 7.4 15.8 Share-based payments 9.6 3.9 7.8 Total 157.7 112.4 231.7 Other administrative expenses 105.7 82.9 183.4 Total 270.2 200.8 430.3 Note 5 - Loans Loans 57,430.7 63,427.3 66,833.4 Total 57,430.7 63,427.3 66,833.4 DKK million H1 2007 H1 2006 Full-year 2006 Note 6 - Bonds issued Other bonds at amortised cost 62,552.9 51,661.8 55,703.6 Total 62,552.9 51,661.8 55,703.6 Note 7 - Subordinated debt 4.80 % JPY 10-bn maturity 31.03.2032 533.3 578.6 582.2 Var. % EUR 30-m maturity 03.08.2009 230.6 239.8 236.0 Var. % EUR 100-m maturity 20.12.2012 744.2 745.9 745.6 Var. % EUR 200-m maturity 26.03.2013 1,485.6 0.0 0.0 Interest-free deposits from the Danish Ministry of Economic and Business Affairs in connection with Production, EM and HMI loan schemes. The deposits will be repaid in full in 2007 0.0 36.9 17.9 Total subordinated debt 2,993.7 1,601.2 1,581.7 Subordinated debt that may be included in the calculation of the capital base 2,847.7 1,495.6 1,392.9 Note 8 - Equity Share capital Share capital, number of shares of DKK 20 each 25,678,625 25,678,625 25,678,625 Share capital, beginning of period 513.6 513.6 513.6 Share capital, end of period 513.6 513.6 513.6 No shares have special rights attached and there have been no movements in share capital in the past five years Own shares: Holding of own shares, beginning of period, number of shares 2,342 2,342 2,342 Sale to employees, number of shares 0 0 0 Holding of own shares, end of period, number of shares 2,342 2,342 2,342 Carrying amount, end of period, DKK ‘000 0 0 0 Nominal value, end of period, DKK ‘000 47 47 47 Percentage of shareholding 0 % 0 % 0 % Note 9 - Off-balance sheet-items Guarantees etc. Financial guarantees 940.7 526.0 991.6 Guarantees against losses for mortgage loans 1,603.4 1,603.1 1,540.9 Other guarantees 189.5 738.3 189.1 Total 2,733.6 2,867.4 2,721.8 Other liabilities Irrevocable loan commitments 8,877.3 8,587.1 9,301.8 Other liabilities 52.1 34.0 33.9 Total 8,924.4 8,621.1 9,335.7 Information about Parent Company and subsidiaries: Kaupthing Bank | Swift: KAUPISRE | Borgartún 19 | IS-105 Reykjavik, Iceland Tel (+354) 444 6000 | Fax (+354) 444 6009 | info@kaupthing.net | Server 4 Is the Parent Company of: FI-Holding A/S, Langelinie Allé 43, 2100 København O, Denmark. Which is Parent Company of: FIH Erhvervsbank A/S, Langelinie Allé 43, 2100 København O, Denmark. FIH Erhvervsbank A/S is included in the consolidated accounts for both companies. FIH Erhvervsbank A/S owns the following subsidiaries: DKK million Activity Holding Assets Equity Turnover Results Consolidated subsidiar-ies: FIH Realkredit A/S, Co-penhagen Mortgage loans 100 % 893.7 106.8 4.5 1.6 FIH Leasing og Finans A/S, Copenhagen Leasing and financing 100 % 445.8 400.8 9.0 10.3 FIH Finance A/S, Copenhagen Financing and investment 100 % 1,272.1 1,179.8 4.2 302.8 FIH PARTNERS A/S, Co-penhagen 1 Investment Banking 65 % 109.2 80.2 40.7 10.6 FIH Kapital Bank A/S, Copenhagen Financing and investment 100 % 16,597.4 1,834.6 75.7 34.6 1FIH PARTNERS A/S is consolidated into the results of the FIH Group as FIH PARTNERS A/S is controlled by FIH Erhvervsbank A/S.