Danske Bank A/s · OMXCOP:DANSKE
Danske Bank A/s — Debt Investor Presentation (June 2016)
34 slides from Danske Bank A/s's debt investor presentation, June 2016
Slide 1: Danske Bank debt investor update
Danske Bank debt investor update Claus I. Jensen Head of Investor Relations Nicolaj Verdelin Chief Funding Manager June 2016
Slide 2: Agenda
Danske FinancialBank debtfor results investor Q1 2013update Agenda Key messages 3 Overview 5 Financial results 9 Capital, liquidity & funding 18 Appendix 24 2
Slide 3: Key messages
Key messages Nordic universal bank — Solid foothold across all our four Nordic markets Well on track to meet ROE target of above 12.5% in 2018 at the latest Strong focus on cost management Significant improvement in credit quality Strong capital position, share buy-back programme in 2015 & 2016 3
Slide 4: Agenda
Danske FinancialBank debtfor results investor Q1 2013update Agenda Key messages 3 Overview 5 Financial results 9 Capital, liquidity & funding 18 Appendix 24 4
Slide 5: Overview: Danske Bank has a strong Nordic franchise
Overview: Danske Bank has a strong Nordic franchise Facts Danske Bank market share3 3.5 million customers1 300 branches2 15 countries Finland 19,272 full-time employees 10% Norway Sweden Business units Estonia 6% 5% Personal Banking Latvia 7% Business Banking Northern Denmark 2% Ireland Corporates &
Slide 6: Nordic footprint across sectors
Nordic footprint across sectors Total lending1; %; Q1 2016 Credit exposure by industry; %; Q1 2016 Personal customers 36 Denmark 52 Commercial property 12 Public institutions 8 Finland 9 Non-profit & Associations 6 Consumer discretionary 4 Sweden 12 Industrial Services etc. 4 Investment funds 3 Insu
Slide 7: 2015 was another year of solid progress
Danske Bank debt investor update 2015 was another year of solid progress RoE after tax; (%) Total Group expenses* (DKK bn) Group loan loss ratio, (bps) Capital ratios, Basel III/CRR (%) T1/T2 Common Equity Tier 1 21.4 21.0 19.3 23.8 11.6* 27 22.6 8.6* 20 21.8 15.1 16.1 5,0 14.7 0 2013 2014 2015 2013
Slide 8: Agenda
Danske FinancialBank debtfor results investor Q1 2013update Agenda Key messages 3 Overview 5 Financial results 9 Capital, liquidity & funding 18 Appendix 24 8
Slide 9: Executive summary – first quarter of 2016
Danske Bank debt investor update Executive summary – first quarter of 2016 Net profit & ROE Net profit of DKK 4.9 bn, corresponding to ROE of 13.1% Income Total income of DKK 11.5 bn — down 9% vs. strong Q1 2015 Expenses Expenses of DKK 5.3 bn, down 8% vs. Q1 2015 Impairments Net reversal of DKK 0.1
Slide 10: Net profit: DKK 4.9 bn, unchanged vs. strong Q1 2015
Danske Bank debt investor update Net profit: DKK 4.9 bn, unchanged vs. strong Q1 2015 Income statement & key figures (DKK m) Key points, Q1 2016 vs. Q1 2015 Q1 2016 Q1 2015 Index Q4 2015 Index • Return on equity of 13.1% Net interest income 5,259 5,301 99 5,279 100 • Total income down, reflecting hi
Slide 11: Banking units: lower expenses and net reversals drive profit higher
Danske Bank debt investor update Banking units: lower expenses and net reversals drive profit higher at PB and BB; C&I down vs. exceptionally strong Q1 2015 Pre-tax return on allocated capital, new capital framework (%) Financial highlights, Q1 2016 vs. Q1 2015 Q1 2016 Personal Banking • NII down ow
Slide 12: New business unit: Wealth Management
Danske Bank debt investor update New business unit: Wealth Management, with DKK 1,351 bn in AuM – Q1 affected by declining asset prices Income statement (DKK m) Financial highlights, Q1 2016 vs. Q1 2015 Q1 2016 Q1 2015 Index • Lower total income reflects lower-than-normal activity in Net interest in
Slide 13: New business unit: Northern Ireland
Danske Bank debt investor update New business unit: Northern Ireland - Profit before tax up 4% vs. Q1 2015, driven by lower expenses Income statement (DKK m) Financial highlights, Q1 2016 vs. Q1 2015 Q1 2016 Q1 2015 Index • Profit before tax up 4%, driven by lower expenses Net interest income 385 38
Slide 14: Expenses: Down 8% vs. Q1 2015
Danske Bank debt investor update Expenses: Down 8% vs. Q1 2015 owing to efficiency measures, lower guarantee contributions and lower intangible amortisation Total expenses ex goodwill charge, 2011-2015 (DKK m) Total expenses ex goodwill charge (DKK m) Restated** Reported Severance payments 25,826 De
Slide 15: Impairments: Loan loss ratio of –3 bp in Q1 2016
Danske Bank debt investor update Impairments: Loan loss ratio of –3 bp in Q1 2016 Group impairments, 2011 to Q1 2016 (DKK bn/bp) Impairment drivers, Q1 2016 vs. Q4 2015 Impairments Loan loss ratio* (rhs) • Impairments remained low at all business units as credit quality continued to improve across t
Slide 16: Bridge to above 12.5% ROE in 2018 with negative rates
Danske Bank debt investor update Bridge to above 12.5% ROE in 2018 with negative rates ROE 2015-18E, after tax (%) ROE 2015* 11.6% Adjustments** 0.2% Costs 0.5-1% Funding & ratings 0.5% Volume effect 0.5-1% Income initiatives 0.5% Loan losses 0.5% & other Capital effect 0.5% ROE 2018E Above 12.5% *
Slide 17: Net interest income: Up slightly when adjusted for FX and day effects
Danske Bank debt investor update Net interest income: Up slightly when adjusted for FX and day effects; small effect from rate hike in Denmark Change in net interest income (DKK m) 6 5,279 55 5,259 127 43 40 108 25 Q4 2015 Lending Lending Deposit Deposit Days effect FX effect Other Q1 2016 margin vo
Slide 18: Agenda
Danske FinancialBank debtfor results investor Q1 2013update Agenda Key messages 3 Overview 5 Financial results 9 Capital, liquidity & funding 19 Appendix 24 18
Slide 19: Capital: Strong capital base; CET1 ratio of 15.0%
Danske Bank debt investor update Capital: Strong capital base; CET1 ratio of 15.0% net of full share buy-back Capital ratios, under Basel III/CRR (%) Capital highlights, Q1 2016 Tier 2 Hybrid T1/AT1 Pillar II CET1 CET1 • Full DKK 9 bn share buy-back deducted in Q1 2016 21.0 20.1 • Total REA includes
Slide 20: Funding: Structure and sources
Danske FinancialBank debtfor results investor Q1 2013update Funding: Structure and sources; Danish mortgage system is pass- through Loan portfolio and long-term funding, Q1 2016 (DKK bn) RD funding topics 1,876 122 Senior debt 1,640 • Covered Bond issuer since Bank loans 563 812 Deposits 1851 • Base
Slide 21: Significant part of funding from deposits
Danske FinancialBank debtfor results investor Q1 2013update Significant part of funding (excl. RD) from deposits; exposure to short term funding very limited Funding sources excl. RD (%) Largest funding programmes (max size) Q4 2015 Q1 2016 EUR 35 bn EMTN Programme 54 EUR 30 bn Global Covered Bond E
Slide 22: Funding and liquidity: long-term funding issued in Q1
Danske Bank debt investor update Funding and liquidity: DKK 26 bn of long term-term funding issued in Q1; LCR compliant at 124% Changes in funding,* Q1 2016 (DKK bn and bp) Long-term funding ex RD (DKK bn) Cov. bonds Senior Tier 2 Tier 1 Funding plan Completed 94bp 95 93bp 70 60-80 64 33 57bp 29 39
Slide 23: Danske Bank's credit ratings
Danske Bank’s credit ratings Danske Bank’s long-term issuer rating and outlook Rating agency issues Moody’s S&P Fitch General comments Stable Stable Stable Standard & Poor’s change outlook to stable • On 13 July 2015 S&P’s reviewed the banks outlook from Aaa AAA AAA negative to stable. The changed o
Slide 24: Agenda
Danske FinancialBank debtfor results investor Q1 2013update Agenda Key messages 3 Overview 5 Financial results 9 Capital, liquidity & funding 18 Appendix 25 24
Slide 25: Nordic macro economy
Danske Bank debt investor update Nordic macro economy Denmark Sweden Norway Finland Real GDP, constant prices (index 2005 = 100) Inflation (%) 135 6 4 120 2 105 0 2006 2008 2010 2012 2014 2016 90 2005 2007 2009 2011 2013 2015 -2 Interest rates, leading (%) Unemployment (%) 6 10 5 8 4 6 3 4 2 1 2 0 0
Slide 26: Nordic housing markets
Danske Bank debt investor update Nordic housing markets Denmark Sweden Norway Finland Property prices (index 2005 = 100) House prices/nom. GDP (index 2005 = 100) 200 130 125 180 120 160 115 110 140 105 120 100 95 100 90 85 2006 2008 2010 2012 2014 2016 2005 2007 2009 2011 2013 2015 Apartment prices
Slide 27: Overview: Danske Bank Group Covered Bond Universe
Overview: Danske Bank Group Covered Bond Universe • Realkredit Danmark, which has been a Covered • Danske Bank A/S, • Danske Bank PLC, • New Swedish CB programme, Bond issuer since 1851 which has been a Covered which has been a Covered which is to be a Covered Bond Bond issuer since 2007 Bond issuer
Slide 28: Realkredit Danmark and the Danish housing market: Portfolio overview
Danske Bank debt investor update Realkredit Danmark and the Danish housing market: Portfolio overview Portfolio facts, Realkredit Danmark, end-Q1 2016 Stock of retail loans, Realkredit Danmark, end-Q1 2016 (%) • Approx. 372,000 loans (residential and commercial) Variable rate instalments Variable ra
Slide 29: Realkredit Danmark: Share of short-term variable rate loans has stabilised
Danske Bank debt investor update Realkredit Danmark: Share of short-term variable rate loans has stabilised; compliant with all regulatory requirements Key points Regulatory diamond for Danish mortgage institutions • Continued interest in long-term variable rate loans owing to steeper yield curve •
Slide 30: Credit quality: Positive trend continued in Q1
Danske Bank debt investor update Credit quality: Positive trend continued in Q1 Individual loan impairment charges* (DKK bn) Gross non-performing loans, ex Non-core (DKK bn) New Increased Reversal Individual allowance account Net exposure, in default Net exposure, not in default -27% 0.4 59 43 0.7 2
Slide 31: Credit exposure: Limited agriculture and direct oil-related exposure
Danske Bank debt investor update Credit exposure: Limited agriculture and direct oil-related exposure Agriculture exposure (2.8% of Group exposure) Oil-related exposure (1% of Group exposure) • Market conditions stayed weak in Q1; pig prices remained • Net exposure amounted to DKK 23 bn and related
Slide 32: New capital allocation framework
Danske Bank debt investor update New capital allocation framework: More capital allocated to business units based on REA and in line with CET1 ambition Allocated capital (average) and ROAC* (DKK bn/%) Comments Old Model New Model ROAC* (%) • The new capital allocation framework is based on a regulat
Slide 33: Contacts
Danske FinancialBank debtfor results investor Q1 2013update Contacts Christoffer Møllenbach Claus Ingar Jensen Head of Group Treasury Head of IR Direct: +45 45 14 63 60 Direct: +45 45 12 84 83 Mobile: +45 21 55 10 52 Mobile: +45 25 42 43 70 E-mail: chm@danskebank.dk E-mail: clauj@danskebank.dk Peter
Slide 34: Disclaimer
Danske Bank debt investor update Disclaimer Important Notice This presentation does not constitute or form part of and should not be construed as, an offer to sell or issue or the solicitation of an offer to buy or acquire securities of Danske Bank A/S in any jurisdiction, including the United State