INVESTOR PRESENTATION September 2015

Executive Summary AAA/Aaa rated Danish Local Government funding agency, established in 1899 Association (membership organization) with direct, joint and several liability of all of the Danish Local Governments Strong guarantee structure based on the entire taxpaying population of Denmark Danish economy is strong with one of the lowest public debt levels in Europe 0% BIS risk weighting in several jurisdictions Closest proxy to Danish sovereign risk Conservative risk management No loan losses in more than 116 years of operation Strong liquidity position Leverage ratio year-end 2014: 3.1% LCR: Confirmed level 1 by the Danish FSA

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Agenda 1. Kingdom of Denmark and the Local Government Sector 2. Organization 3. Business 4. Funding 5. Appendix

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Kingdom of Denmark Fundamentals

2013

2014

2015E*

Kingdom – constitutional monarchy DK

Capital: Copenhagen Population: 5.6m

EU27

DK

EU27

DK

EU27

Real GDP Growth %

0.5

0.4

1.4

1.0

1.2

1.4

CPI %

0.9

1.8

0.7

0.5

1.4

1.2

Unemployment Rate

5.8

10.9

4.8

11.7

4.6

11.5

General Govt Balance

-0.9

-3.9

-1.5

-2.5

-3.1

-2.3

General Govt Debt *

44.7

88.5

44.1

96.0

44.9

95.4

Size: 44,000 km2 Credit rating: AAA/Aaa Currency: DKK EU member since 1973 – Exceptions: currency, defence and judicial cooperation

Economy

% of GDP * Source: European Commission, bank estimates Source: Ministry of Finance, Denmark and IMF

Strong fundamentals Low debt level and low budget deficit Danish government debt is stable compared to EUR countries

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Local Government Sector in Denmark Local government structure Danish Local Governments are defined by law and their autonomy is secured through the constitution and other legislation. The Local government system is divided into two levels: Regions and Municipalities.

Central Government

5 Regions

98 Municipalities

The current Local Government structure is a result of a reform in 2007. The objective of the reform was to create room for more efficiency by reducing the number of Municipalities and Regions and change the split of tasks between the different levels of Government.

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Local Government Sector in Denmark Central Government:

Local Government:

Foreign policy Defense Police Universities Major roads Railways Supervision of lower parts of government Equalisation between local governments

Municipal tasks Care for children Care for elderly Primary schools Public transportation Utilities Local roads Environment Employment Regional tasks Hospitals and health care Regional development Specialized social institutions

Municipalities and Regions are responsible for the majority of the services provided in the Danish welfare system. The Local Government Sector expenditures amount to 2/3 of total public expenditures and approx. 26% of GDP. 29 September 2015

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Local Government Sector in Denmark Revenues and supervision Main source of revenue is income tax

Income tax - 45.7%

The Local Governments are closely monitored and supervised by the Ministry for Economic Affairs and the Interior

Grants - 25.71%

Budget cooperation between Central Government and Local Governments

Property tax - 5.4%

Charges - 18.81%

Other - 2.2%

Balanced budgets required Corporate tax 1.67%

Equalisation system in place

New loans - 0.51%

Borrowing is highly regulated – only allowed for capital investments Default not allowed Low debt level – approx. 5.5% of GDP

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Agenda 1. Kingdom of Denmark and the Local Government Sector 2. Organization 3. Business 4. Funding 5. Appendix

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Organization Legal basis Association, established by special law in 1899. The law was revised in 2006

Guarantee structure KommuneKredit is by law organized as an association (membership organization) Membership is restricted to Danish Municipalities and Regions only Members are directly, jointly and severally liable for all of KommuneKredit’s obligations Municipalities have an unlimited right to levy taxes on income and property Currently all Municipalities and Regions are members of KommuneKredit and thereby represent the entire population of Denmark The guarantee of the members can be called upon any member without a preceding court decision – the guarantee has never been exercised No loan losses in more than 115 years of operation Substantial reserves Supervised by the Ministry for Economic Affairs and the Interior

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Agenda 1. Kingdom of Denmark and the Local Government Sector 2. Organization 3. Business 4. Funding 5. Appendix

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Business Mission Provide low cost funding for Danish Local Governments through the non-profit status of KommuneKredit Leading provider of financial products to Local Governments in Denmark

Clients Danish Regions and Municipalities Semi-public entities guaranteed by Regions or Municipalities (waterworks, waste incineration, district heating etc.) Cross-border lending not allowed Excellent asset quality as all lending to clients are considered extremely secure and 0% risk weighted In accordance with Central Government regulation clients are only allowed to take up loans for certain capital investments

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Risk Management Risk Management policy

Credit risk

KommuneKredit’s policy is to minimize financial risks and carefully identify, manage and control these risks

Market risk Strict hedging principles for lending and funding transactions Interest rate and currency risk is kept at a minimum Positive liquidity position across the curve required by the Ministry for Economic Affairs and the Interior Reserves are invested in plain vanilla bonds with short duration The Ministry for Economic Affairs and the Interior has set a fixed limit for maximum interest rate risk of 4.5% of equity

Lending only to Danish Local Governments and 100% guaranteed semi-public entities Conservative investment policy: Only highly rated investments with a minimum rating of AA-/Aa3 Derivatives for hedging purposes only and only with highly rated counterparties Transforming unilateral CSAs to new bilateral CSAs No loan losses in more than 115 years of operation No losses related to defaults in the financial sector

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Business Gross lending

(EUR/DKK: 7.4604)

EUR bn

Competition

6

KommuneKredit is the sole Local Government funding agency in Denmark KommuneKredit operates in full and open competition with banks and other lenders High market share – approx. 90% of total lending

5 4 3 2 1 0 2010

2011

2012

2013

2014

Outstanding loans and leases

Products offered to clients

EUR bn

25

Central Government regulates Local Government’s borrowing

20

Loans, overdraft facilities

15

Financial leasing Derivatives for hedging purposes only Debt advisory services

10 5 0 2010

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2011

2012

2013

2014 Page 13

Treasury Portfolio Current portfolio (as of end September 2015): DKK 27.9bn (EUR 3.7bn)

Maturity profile Issuer type

60%

%

50% Covered bonds

54%

Govies, supras etc.

22%

Agencies etc.

18%

40% 30% 20% 10%

Financials

6%

0% 0-3m

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3-6m

6-9m

9-12m

1-2y

2-3y

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Agenda 1. Kingdom of Denmark and the Local Government Sector 2. Organization 3. Business 4. Funding 5. Appendix

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Funding Budget The funding budget has been growing in past years due to increased lending volumes and new regulations from the Ministry for Economic Affairs and the Interior Maximum pre-funding position set by the Ministry for Economic Affairs and the Interior at 25% of the total loan portfolio Total long-term funding budget for 2015: EUR 6-8bn Sizeable short-term funding budget

Funding strategy Diversification on markets, currencies, products and investors Maintaining long-term investor relations Benchmark programme – plan to do one or two benchmark issue every year Public issues in other markets eg. Denmark, Switzerland, Japan Private placements that offer flexibility and meet specific investor demand Short term funding in the ECP market

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A selection of KK’s outstanding bonds

DKK issuance KommuneKredit is a frequent issuer in DKK Most liquid issues are: – Up to 5 years, fixed rate, bullet, not callable – Offered through auctions and according to demand from clients Other issues: – Long dated – up to 40 years, fixed rate, amortizing, callable ISIN

Coupon

Maturity

Issued Amount

DK0008927262

4%

01.01.2016

5.109bn

DK0008927502

2%

01.01.2017

1.954bn

DK000892310

2%

01.01.2019

0.938bn

DK0008923196

2%

10.11.2024

2.086bn

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Funding Strategic markets

Funding by markets in 2014

Benchmarks Denmark Europe Switzerland Asia, Americas other markets

Europe 55% Americas 29% Asia 9% Middle East & Africa 4%

Sources Public issues MTNs Uridashi Private placements, schuldscheine

Denmark 3%

Funding by currency in 2014 USD 58%

Documentation

DKK 20%

EUR 25bn EMTN Programme EUR 5bn ECP Programme Uridashi/Samurai shelf with sovereign status

GBP 10% JPY 6% Other 4% EUR 2%

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Agenda 1. Kingdom of Denmark and the Local Government Sector 2. Organization 3. Business 4. Funding 5. Appendix

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Import and Export – most important goods (2014)

Import

Export

12%

14%

10%

12% 10%

8%

8%

6%

6%

4%

4%

2%

2%

0%

0%

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Import and Export – main trading partners Exports, goods 25% 20% 15% 10% 5% 0%

Export, services

2007 2013

16% 14% 12% 10% 8% 6% 4% 2% 0%

2007 2013

Import, services

Import, goods 20% 15% 10% 5%

2007

0%

2013

16% 14% 12% 10% 8% 6% 4% 2% 0%

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2007 2013

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Income Taxes in Denmark (2013) The Local Governments can set the local tax rate freely Average tax rate (2013): 24.9% Ranging from 22.5% to 27.8%

Income taxes in Denmark

Rate

Central government taxes

19.83%

Local Government tax (average)

24.90%

”Top” tax

15.00%

Church tax (optional) Total tax rate

0.88% 60.61%

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Total Taxes 2013 600

500

DKK bn

400

300

200

100

0 VAT etc.

Property

Cars etc.

Personal income Corporate tax tax

Social security

Source: Statistics Denmark

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Central Government budget 2015

Revenues 2015 (DKK 661,9bn)

Expenditures 2015 (DKK 706,9bn)

Taxes on personal income 42%

Income transfers 36%

VAT 29%

Grants to local governments 28%

Taxes 20%

Defence, education etc. 27%

Corporate taxes 8%

Other expenditures 7%

Other income 0,4%

Investments 2%

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Key Financial Figures

EUR m

2014

2013

2012

2011

2010

Total gross lending

3,953

4,061

4,807

3,458

4,671

33

37

69

69

55

20,432

19,129

18,269

17,288

16,773

839

804

766

697

628

27,059

24,696

24,380

23,740

22,278

Profit after tax Lending Equity Total assets (Exchange rate: EUR/DKK 7.4604)

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Ratings KommuneKredit

Moody’s

Standard & Poor’s

Short-term

P-1

A-1+

Long-term in DKK

Aaa

AAA

Long-term in foreign currency

Aaa

AAA

Stable

Stable

Short-term

P-1

A-1+

Long-term in DKK

Aaa

AAA

Long-term in foreign currency

Aaa

AAA

Stable

Stable

Outlook

Kingdom of Denmark

Outlook

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Peer Group KommuneKredit Denmark

NWB The Netherlands

BNG The Netherlands

KBN Norway

Kommuninvest Sweden

Municipality Finance Finland

Benchmark currency

EUR/USD

EUR

EUR

USD

USD

USD

Rating

AAA/Aaa

AAA/Aaa

AAA/Aaa

AAA/Aaa

AAA/Aaa

AA+ /Aaa

Ownership

Membership by 100% Danish Local Governments

8% Central Government, 91% water-boards, 1% provinces

50% Dutch Central Government, 50% Local Government

100% Central Government

100% Swedish Local Government

30,66% Local Government Pension Institution, 16% Republic of Finland, 53,34% Finnish Local Government

Guarantee

Direct, joint and several guarantee from members (Danish Local Governments)

Local and Central Government owned company

Local and Central Government owned company

Government owned company

Jointly and severally guaranteed by members (Swedish Local Governments)

Guaranteed thorough Municipal Guarantee Board (jointly guaranteed by Finnish Local Governments)

Risk weighting

0%

20%

20%

20%

0%

0%

Purpose

Danish public sector lending only

Public sector lending and Dutch water control boards

Dutch public and semi-public sector lending

Norwegian public sector lending only

Swedish public sector lending only

Finnish public sector lending only

Profit orientation

Non-profit

Profit maximising

Non-profit

Slight profit maximising

Non-profit

Slight profit maximising

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More information Annual reports, rating reports, funding programmes etc can be found on web.kommunekredit.dk

Contacts Eske Hansen Senior Vice President, Head of Funding & Treasury

Lasse Vest Vice President, Funding

Trine Thomsen Vice President, Funding

Louise Rosentoft Vice President, Funding

Phone +45 33 69 76 07 [email protected]

Phone +45 33 69 76 70 [email protected]

Phone +45 33 69 76 83 [email protected]

Phone +45 33 69 76 81 [email protected]

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Disclaimer

This presentation has been prepared by KommuneKredit for investors generally and has not been prepared primarily for investors in any specific jurisdiction. Any information contained herein is neither an offer nor a solicitation of an offer to buy or sell securities. Any such offer is made only by the prospectus related to such securities. This document is subject to amendment and completion and should not be relied upon for the purpose of investment decisions.

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