Jyske Bank A/s · OMXCOP:JYSK
Jyske Bank A/s — FY2015 Earnings Presentation
47 slides from Jyske Bank A/s's earnings presentation, Feb 23, 2016
Slide 1: Jyske Bank 2015
Jyske Bank 2015 23 February 2016
Slide 2: Jyske Bank in brief
Jyske Bank in brief Our vision is “to make a difference” and the strategy is to position Jyske Bank as a visible and distinct alternative to more traditional providers of financial services Banking: Mortgage: Leasing: Retail and commercial, Mortgage loans for real Leasing and financing of Asset mana
Slide 3: Jyske Bank in brief
Jyske Bank in brief 1967: Jyske Bank was founded through the merger of several local banks, some dating back to 1882 1970’s and 80’s: Jyske Bank grew through acquisitions of small and medium sized banks -> 2011: Organic growth while carrying out strategic initiatives Strategic initiatives: Valuebase
Slide 4: Jyske Bank's ranking within Top20 Danish banks
Jyske Bank’s ranking within Top20 Danish banks TOP20 DANISH BANKS MEASURED BY EQUITY DKKm 1967 1 Handelsbanken 657.2 TOP20 DANISH BANKS MEASURED BY EQUITY 2 Den danske Landmandsbank 643.4 DKKm 2008 3 Privatbanken 439.1 1 Danske Bank 104,355 4 Andelsbanken 234.4 TOP20 DANISH BANKS MEASURED BY EQUITY
Slide 5: Financial performance 1997-2015
Financial performance 1997-2015 Jyske Bank Group key figures Pre-tax Equity, ROE, Loans Pre-tax end of opening and Total Number DKKbn profit year equity advances Deposits assets of FTEs 1997 0.6 4.8 13% 36.6 41.5 63.1 2,671 1998 0.7 5.2 15% 39.7 43.8 76.9 2,772 1999 1.3 5.4 25% 49.8 49.8 92.6 3,013
Slide 6: Financial performance 1967-2015
Financial performance 1967-2015 Pre-tax profit (ROE on open. equity) 61% 166% 145% 40% 30% 20% 10% 0% -10% -20% -30% 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013 1967-2015: Average pre-tax ROE of 22% 6
Slide 7: Our history
Our history 2011: 2013: 1967: Acquisitions of Acquisition of Jyske Bank is Fjordbank Mors SparLolland founded and EasyFleet 1981: 1983: 1987: Acquisition of Acquisition of Jyske Bank Finansbanken Vendelbo- Gibraltar banken 2014: 1975: Merger Jyske Bank Merger & BRFkredit 1970: Byggeriets Mortgages f
Slide 8: Jyske Bank's market position
Jyske Bank’s market position • One of the four large financial institutions in Denmark – estimated market share of 8-9% and a Danish SIFI • Growth through acquisitions – Proven track record of successfully managing acquisitions: all acquisitions made at a discount (negative goodwill), fully integrat
Slide 9: Our targets
Our targets 2015 • Delivering an attractive long-term return on equity – Long-term target of pre-tax ROE of minimum 10% 11.6% – In 2015 a pre-tax ROE of 11.6% was achieved • Harvesting annual synergies of DKK 600m related to the Jyske Bank/BRFkredit merger – Expected 50/50 split between earnings and
Slide 10: 2015 highlights
2015 highlights • Danish economy continues its recovery as moderate economic growth persists although challenged by slowdown in exports and housing prices • Danish agriculture – in particular dairy and pig farmers – still face structural challenges • Negative interest rate environment persists and e
Slide 11: Merger - one year ahead of plan
Merger - one year ahead of plan • Annual earnings and cost synergies of DKK 600m expected to have full annual impact by 2017 – one year earlier than originally planned and 6 New home loan products months earlier than previously announced 70 DKKbn 60 • Synergies with full year effect of DKK 550m in p
Slide 12: Danish Macro Economy Q4 2015
Danish Macro Economy Q4 2015 12
Slide 13: The Danish structural financial features are strong
The Danish structural financial features are strong Current account surpluses since late 90s ..imply that foreign assets are increasing And public sector debt is low This is why Denmark is AAA 13
Slide 14: Turnaround for the Danish economy
Turnaround for the Danish economy The upturn is set to continue over the next years, but of Private sector is behind +2% increase in employment course depending on the global economy. 14
Slide 15: Positive housing consumption cycle
Positive-housing-consumption-cycle Consumer sentiment above average Increasing acitivity in the housing market Household consumption is rising House prices recovering after collapse in 08/09 15
Slide 16: Defaults are close to normalization
Defaults are close to normalization Unemployment is moderate and declining Forced house sales below 0,2 % per year And interest rates are at historic low Business bankruptcies are trending down 16
Slide 17: Turnaround and consolidation at the same time
Turnaround and consolidation at the same time - made possible by low interest rates and real wage growth The private sector is still saving up …so household debt is declining …and household net assets are considerable 17
Slide 18: Jyske Bank forecasts
Jyske Bank forecasts The Danish economy 2013-2017 2014 Real Growth in % Bn DKK 2013 2014 2015 2016 2017 Consumer spending 899 0.2 0.6 2.2 1.6 2.0 Public spending 512 -0.7 0.2 1.2 0.3 0.3 Fixed gross investment 371 1.1 3.4 1.0 2.8 4.7 Inventory investments** 15 -0.1 0.3 -0.5 0.2 0.0 Exports 1037 0.9
Slide 19: Jyske Bank Q4 2015 results
G JYSKE BANK Jyske Bank Q4 2015 results 19
Slide 20: Q4 2015 results
Q4 2015 results • Pre-tax profit of DKK 1.1bn (equal to ROE 15.6% p.a.) CORE PROFIT AND NET PROFIT FOR THE YEAR Index Index • Core income driven by DKKm 2015 2014 15/14 Q4 2015 Q3 2015 Q4/Q3 Net interest income 6,051 5,315 114 1,598 1,500 107 – Net interest income increases due to income from fixed-
Slide 21: New home loans continue to support NII
New home loans continue to support NII • NII is supported by: Net interest income – Continued growth in new home loan products 1,800 DKKm 1,600 – Increased margins in mortgage activities 1,400 1,200 – Mortgages for corporate clients begin to pick up 1,000 800 – Recognition as NII of DKK 96m related
Slide 22: Q4 seasonality in investment related fees
Q4 seasonality in investment related fees Net fee income • Net fee income in Q4 is up by DKK 123m compared to Q3 due to 700 Q4 seasonality DKKm 600 • Lack of performance-related fees from investment activities 500 make up most of the difference compared to Q4 2014 400 300 200 100 0 Q2 2014 Q3 2014 Q
Slide 23: Value adjustments volatile due to interest rate movements
Value adjustments volatile due to interest rate movements Value adjustments under core income • Interest rate development continues to drive development in 600 value adjustments and Q4 was characterised by: DKKm 500 400 — Continued volatility in especially DKK interest rates 300 — Rising long-term i
Slide 24: One-offs result in Q3 to Q4 increase in core expenses
One-offs result in Q3 to Q4 increase in core expenses • Core expenses increased by DKK 48m from Q3 to Q4 Q3 vs. Q4: Development in core expenses 2015. The increase is related to one-off costs, 1,400 DKKm namely: 1,350 — Costs of winding up Swiss banking operations DKK 35m in Q4 (DKK 50m in 2015) 1,3
Slide 25: Effect of lower number of FTEs shows
Effect of lower number of FTEs shows • Lower number of FTEs keep core expenses in 2015 2014 vs. 2015: Development in core expenses 5,600 in line with 2014 in spite of: 5,500 — Salary increase prescribed by collective 5,400 agreement – annual impact approx. DKK 60m DKKm 5,300 — New statutory Resoluti
Slide 26: Improved credit quality leads to net reversals
Improved credit quality leads to net reversals • Loan impairment charges under core profit of DKK -34m Loan impairment charges and losses (under core profit) • Management’s estimate of DKK 100m related to agriculture made in Q4 800 DKKm 700 • End of 2015 total balance of management’s estimates of DK
Slide 27: Increasing impairment ratios on dairy and pig farmers
Increasing impairment ratios on dairy and pig farmers • Agriculture, in particular dairy and pig farmers, is still in distress Loans, advances and Balance of loan Impairment ratio • No sign of relief to be found in commodity prices guarantees impairment charges DKKm/% 2015 2014 2015 2014 2015 2014 •
Slide 28: High credit quality in mortgage loan portfolio
High credit quality in mortgage loan portfolio Portfolio distribution by loan type Distribution of new lending (% of total new lending in 2015) 40% 37% 35% 34% 34% 30% 28% 25% 23% 21% 20% 15% 11% 11% 10% 5% 0% Q4 2014 Q4 2015 Fixed rate Variable rate 1-2Y Variable rate 3-10Y Others Portfolio distrib
Slide 29: Improved credit quality in mortgage loan portfolio
Improved credit quality in mortgage loan portfolio 90-days arrears (percent of outstanding lending) Repossessed properties (DKKm/#) 2,0% 450 140 Private Commercial properties 1,8% Commercial 400 Private properties 120 1,6% Subsidised # Private properties privat (rhs) 350 1,4% # Commercial properties
Slide 30: Tighter credit policies lead to lower losses in mortgage loan portfolio
Tighter credit policies lead to lower losses in mortgage loan portfolio Realised losses (%) by year of disbursement 5,0% 4,0% 3,0% 2,0% 1,0% 0,0% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 • Tightening of credit policies in 2008 and 2009 has led to a decreasing number of losses • Full in
Slide 31: Consolidation leads to increase in capital distribution
Consolidation leads to increase in capital distribution • Capital distribution: – The previously announced share buy-back programme has been raised by DKK 250m to DKK 750m (effective from 1 March 2016) Capital ratio – An ordinary dividend for 2015 of about DKK 500m proposed for AGM in 18 March 2016
Slide 32: Already compliant with CET1 requirements in CRD IV & Danish SIFI
Already compliant with CET1 requirements in CRD IV & Danish SIFI Total capital requirement by 2019 expected to be around 17-17.5 % (incl. worst case fully loaded countercyclical buffer*) - With a CET1 ratio of 13.5 – 14 % (11 % if Pillar II is filled by a high trigger coco AT1 or AT2) 18 0.5 2.5 0.4
Slide 33: Strong liquidity position
Strong liquidity position • Liquidity buffer DKK 73bn end of Q4 2015 (DKK 55bn end of 2014) Group Liquidity buffer • Stress scenarios an integrated part of daily liquidity risk 80 management and the limit structure since early 2007 DKKbn 70 • The Group’s liquidity reserves are conservatively calcula
Slide 34: A rare but regular issuer on the EMTN market
A rare but regular issuer on the EMTN market • Group issuance of senior debt will be from Jyske Bank A/S, Group redemption profile thus no new issuance of senior secured bonds from 9 DKKbn BRFkredit A/S 8 7 • Senior unsecured activity will depend on developments in 6 the balance sheet (funding gap)
Slide 35: Banking activities
Banking activities Pre-tax profit: SUMMARY OF INCOME STATEMENT Index Index DKKm 2015 2014 15/14 Q4 2015 Q3 2015 Q4/Q3 • NII increase due to recognition of DKK 96m related to fixed Net interest income 3,793 3,795 100 1,036 952 109 rate home loans issued at a discount Net fee and commission income 1,6
Slide 36: Mortgage activities
Mortgage activities Pre-tax profit: SUMMARY OF INCOME STATEMENT Index Index • NII supported by increase in margins as well as jointly DKKm 2015 2014 15/14 Q4 2015 Q3 2015 Q4/Q3 Contribution income, etc. 1 1,687 991 170 432 431 100 funded loans (= home loan products) Other net interest income 120 97
Slide 37: Leasing activities
Leasing activities SUMMARY OF INCOME STATEMENT Index Index Pre-tax profit: DKKm 2015 2014 15/14 Q4 2015 Q3 2015 Q4/Q3 • Stable NII Net interest income 451 432 104 112 113 99 Net fee and commission income -61 -27 226 -12 -19 63 • Net fee & commission income lower due to change Value adjustments 11 11
Slide 38: Additional information
G JYSKE BANK Additional information 38
Slide 39: Danish mortgage credit system
Danish mortgage credit system • The Danish mortgage system is based on the matched funding principle (balance principle) – The loan type, repayment profile, term, interest rate and currency thus determine which bonds the mortgage banks will sell. e.g. a mortgage bank issues and sells 30-year bonds w
Slide 40: The Danish mortgage credit system is robust
The Danish mortgage credit system is robust • Low credit risk Losses and impairment charges 1985 – 2014 (as a % of loans) – Mortgage loans are secured by a mortgage on the 3,0 borrowers property and loans are capped by statutory % Mortgage (PIT) Banks (PIT) LTV limits: 2,5 Mortgage (TTC) Banks (TTC)
Slide 41: Non-performing loans
Non-performing loans • As per end of Q3 2014 Jyske Bank submits information about non-performing loans (NPLs) to EBA • Jyske Bank has chosen to apply EBA’s technical standards as definition for NPLs • NPLs comprise exposures with individually assessed impairment charges and exposures with high or fu
Slide 42: NPLs – Jyske Bank Group
NPLs – Jyske Bank Group JYSKE BANK GROUP, DKKm 2015 Q4 2015 Q3 2015 Q2 2015 Q1 2014 Q4 Carrying amount 410,030 394,666 390,290 390,877 375,559 Balance of loan impairments charges and provisions for guarantees 6,713 6,762 6,778 6,717 6,361 Balance of discounts for acquired assets 1,548 1,878 2,105 2,
Slide 43: NPLs – Banking activities
NPLs – Banking activities BANKING, DKKm 2015 Q4 2015 Q3 2015 Q2 2015 Q1 2014 Q4 Carrying amount 160,563 154,199 158,453 163,378 158,301 Balance of loan impairments charges and provisions for guarantees 6,083 6,215 6,337 6,392 6,168 Balance of discounts for acquired assets 753 978 1,034 1,126 1,232 G
Slide 44: NPLs – Mortgage activities
NPLs – Mortgage activities MORTGAGE, DKKm 2015 Q4 2015 Q3 2015 Q2 2015 Q1 2014 Q4 Carrying amount 249,467 240,467 231,837 227,499 217,258 Balance of loan impairments charges and provisions for guarantees 630 547 441 325 193 Balance of discounts for acquired assets 795 900 1,071 1,212 1,392 Gross car
Slide 45: The Danish economy at a glance
The Danish economy at a glance The basics Population: 5.6 million (2013) Area: 43.098 sq km (0.4 % of USA) Currency: Kroner (fixed exchange rate policy to the euro) Flexible labour market Unemployment (latest) Denmark 6.0 % Among the rich Euro Area 10.4 % Denmark 10th richest country in the OECD USA
Slide 46: Questions
Questions 46
Slide 47: General legal disclaimer
General legal disclaimer • This presentation and the information contained therein is furnished and has been prepared solely for information purposes by Jyske Bank A/S. It is furnished for your private information with the express understanding, which recipient acknowledges, that it is not an offer,