Nykredit

Business model and value chain

Nykredit is a Danish financial services group serving personal customers, business customers and institutional customers in Denmark. The Group's business activities are predominantly in Denmark and comprise banking, mortgage lending, estate agency services, administration and management of investment funds, leasing and insurance mediation.

A central part of our business model and value chain is our partnerships through Totalkredit and Sparinvest. Together with the business partners in the Totalkredit partnership, Nykredit arranges mortgage loans across the country.

In Sparinvest, Nykredit collaborates with a large number of banks across Denmark on the distribution of wealth and investment products to personal and business customers.

The Group's upstream value chain includes a number of suppliers of goods and services for the daily operation of Nykredit's offices, such as IT systems. The Nykredit Group strives to have a strong capital structure and wants to be able to maintain its business activities throughout Denmark regardless of fluctuations in economic trends. Nykredit's 3,900 employees are tasked with the development and sale of financial products as well as customer advisory services.

Being customer-owned, Nykredit differs significantly from other Danish SIFIs as the Group pays dividend to its owners, including our main owner, Forenet Kredit.

Forenet Kredit can then make contributions to the Nykredit Group, which Nykredit and Totalkredit can give back to their customers. It is our customer-ownership structure that sets the Nykredit Group apart from other comparable financial institutions by highlighting our unique business model and approach to value creation.

The Nykredit Group's value creation lies in ensuring that homeowners and businesses across Denmark have access to competitive and reliable financing – through the good times and the bad. Through its advisory services, the Nykredit Group helps customers stay on top of their finances and provides financial security. At the same time, the Nykredit Group, as Denmark's largest lender, contributes to economic growth and development in society.

Primary business activities (downstream value chain)

Personal customers:

• Mortgage lending: DKK 921.6 billion
• Bank lending: DKK 21.1 billion
• Wealth management services with assets under management: DKK 498.9 billion

Agricultural sector:

• Mortgage lending: DKK 83.2 billion

Business customers:

• Mortgage lending: DKK 358.7 billion
• Bank lending: DKK 82.2 billion

Public and cooperative housing:

• Mortgage lending to public housing: DKK 84.7 billion
• Mortgage lending to housing cooperatives: DKK 35.6 billion

Other services:

• Investment portfolio administration for institutional clients: DKK 1,127.9 billion assets under administration
• Estate agencies (Nybolig, Estate and &LIVING) arrange sale and purchase of residential and commercial properties
• Non-life insurance through Privatsikring

Stakeholder involvement

Key stakeholders

Politicians, civil servants and authorities

• Formal and informal written enquiries, meetings etc
• Preparation of consultation responses
• Collaboration with authorities and politicians on new initiatives, studies and reports when they request views and knowledge etc from Nykredit

Trade organisations

• Coordination of shared viewpoints and advocacy via Nykredit's representation on boards, committees, working groups etc of trade organisations
• Cooperation on joint initiatives and proposals
• Sectoral collaboration on joint solutions

Purpose of stakeholder involvement

Through interest representation, Nykredit will contribute constructively to the drafting of new regulation (such as acts, technical standards, executive orders, guidelines and supervisory decisions or market standards). For this purpose, Nykredit is in close, ongoing dialogue with policymakers and authorities, ensuring that Nykredit is aware of their expectations and requests for Nykredit's business. Nykredit also ensures that it has the necessary expertise to comply with current regulation.

Nykredit participates in representing shared interests on behalf of the Danish financial sector in areas where, as part of the sector, Nykredit can make a positive contribution to society.

Interest representation of a unified financial sector is particularly relevant in areas where Nykredit's viewpoints do not significantly differ from those of the broader sector but are still aligned with Nykredit's interests.

Coordination across Nykredit

Ongoing coordination takes place across Nykredit's organisation and management in order to provide information on the views and interests of the relevant stakeholders.

Nykredit has clear internal procedures for managing upcoming or new regulation with the aim of ensuring a well-defined division of tasks and responsibilities across the organisation and providing timely, appropriate involvement of Nykredit's various management levels. This is done through established formal coordination forums within the organisation and ongoing collaboration across relevant departments.

Coordination across the organisation ensures that Nykredit can adapt to new political proposals and initiatives, new guidelines and recommendations from authorities, and requests from key partners etc.

Sustainability strategy

It is a natural part of Nykredit's responsibility as a mutual financial provider, the largest lender and one of the largest investors in Denmark to contribute to achieving the goals of society, including the UN's 17 Sustainable Development Goals (SDGs), the Paris Agreement and Denmark's ambitions in the area of the green transition.

That is why sustainability is embedded in the Nykredit's Group strategy, Winning the Double 2.0, with a clear objective regarding Nykredit's corporate responsibility:

"Nykredit wants to be the customer-owned, responsible financial provider for people and businesses all over Denmark."

This objective has been translated into three main themes:

E – A greener and prepared Denmark

As the largest lender in Denmark, Nykredit plays a role in building a greener Denmark. Our largest carbon footprint as a financial provider, or more than 99%, comes from the activities we finance and invest in.

By joining forces with our customers, we can take the greatest leap forward in the green transition. Nykredit was the first Danish financial provider to set emissions targets for real estate and owner-occupied dwellings. These targets are included in our ambition of delivering a net zero Nykredit by 2050.

Material impacts, risks and opportunities related to:

• Climate change mitigation and adaptation
• Owner-occupied dwellings
• Real estate
• Agriculture
• Investments in businesses and energy

S – A customer-owned Nykredit

Being Denmark's largest lender, Nykredit has a special role to play. We will be active in all of Denmark and support growth – in urban and rural districts alike. This is a pledge that places demands on the Nykredit Group's business model, profitability, capital structure and lending practices in the areas of banking and mortgage lending.

Nykredit has a responsibility for ensuring that advice, products and services are responsible relative to the individual customer and in a societal context. The Group is aware of our own direct impact through product terms and the processing of customers' personal data. As a financial provider, Nykredit also holds an advanced responsibility for ensuring that financial infrastructure and products support and promote a more sustainable transition of society.

Material impacts, risks and opportunities related to:

• Development and growth throughout Denmark at all times
• Responsible products, advisory services and processes
• People
• Diversity and inclusion
• Non-discrimination of customers and employees
• Privacy and the right to adequate housing

G – Responsible business practices

As a financial provider, Nykredit makes decisions every day that have long-term impacts on our customers and society.

It is therefore fundamental to Nykredit that our advice, products and services are responsible, both in a societal context and relative to the individual customer. We must be well organised across the Group to act responsibly and appropriately, complying with not only the letter, but also the spirit of the law. This calls for a strong management and corporate culture alongside rigorous due diligence processes and a robust defence against financial crime.

Material impacts, risks and opportunities related to:

• Responsible business conduct
• Initiatives to combat financial crime
• IT security
• Due diligence in lending, investments and suppliers
• Efforts to promote a healthy corporate culture