Jyske Bank A/s · OMXCOP:JYSK
Jyske Bank A/s — Q2 2020 Earnings Presentation
35 slides from Jyske Bank A/s's earnings presentation, Aug 18, 2020
Slide 1: Jyske Bank Q2 2020
Jyske Bank Q2 2020 18 August 2020
Slide 2: Q2 2020 highlights
Q2 2020 highlights Jyske Bank delivered an annualised return on equity of 10.4% in Q2 underpinned by a continued strong cost focus, which helped reduce expenses 7% y/y in Q2. Additionally, financial markets Return on equity of 10.4% rebounded significantly, thus more than compensating for lower remo
Slide 3: Material COVID-19 impact followed by period of stabilisation
Material COVID-19 impact followed by period of stabilisation COVID-19 has increased unemployment by approx. 40,000 Danish consumer and business confidence remain subdued 200,000 3 180,000 2 160,000 1 140,000 0 120,000 -1 100,000 -2 80,000 -3 60,000 40,000 -4 20,000 -5 0 -6 Jul 1 Jul 8 Aug 5 Apr 15 A
Slide 4: Jyske Bank in brief
UF JYSKE BANK Jyske Bank in brief
Slide 5: Jyske Bank in brief
Jyske Bank in brief One of the largest financial Founded in 1967 by a merger of four local banks, some dating back to 1882, now a Danish SIFI institutions in Denmark with a total market share of approximately 12% following organic growth and successful M&A. Complementary segments The third largest b
Slide 6: Increasingly low risk business model
Increasingly low risk business model Risk of business model has been lowered Mortgage-like share of lending up 11pp since merger to 78% Increasing share of mortgage lending 100% 90% • Share of mortgage-like lending has increased 11pp to 78% (excl. repo) since merger with Jyske Realkredit in Q2 2014.
Slide 7: High share of mortgage lending improves resilience
High share of mortgage lending improves resilience Mortgage lending is relatively low risk, stable growth, margins Credit quality of mortgage lending significantly stronger (bp) Increases ability to withstand a new financial crisis 250 • Impairment charges have averaged 5bp for Danish mortgage credi
Slide 8: Shareholder yield in focus
Shareholder yield in focus Shareholders’ view Total payout ratio Book value per share has increased 39% since 2015, as the number of 90% shares outstanding was reduced 18%. 80% 70% Earnings per share increased 11% from 2015 to 2019 despite lower earnings. 60% 50% Total payout ratio has increased in
Slide 9: Financial highlights: Q2 2020
Financial highlights Q2 2020
Slide 10: Financial highlights
Financial highlights Net profit DKK 862m and return on equity of 10.4% in Q2 2020 Income statement and key figures (DKKm) • Net interest income down 2% y/y in Q2 2020, primarily due to the sale of Jyske Q2'20 Q2'19 Index Q2'20 Q1'20 Index Bank (Gibraltar) and higher funding costs. Lower bank lending
Slide 11: Outlook
Outlook Core income Lower in 2020 than 2019 level Unchanged in 2020 vs. 2019 level, incl. one-off effects of DKK -57m in 2019 and DKK 75m in Expenses 2020. FTEs to decrease by 150-200 and branches to be reduced by approx. 20% by mid-2021. Previously: Flat vs. 2019 level excl. one-off effects (DKK -5
Slide 12: Financial highlights: Business volumes
Financial highlights Business volumes
Slide 13: Business volumes
Business volumes Volume trends point to increasingly low risk business Business volumes (DKKbn) Q2 2020 vs. Q2 2019: Mortgage loans (nominal) • Assets under management up 3% y/y due to a positive net inflow. +2% • Bank lending down 9% due to sale of Jyske Bank (Gibraltar) and low demand for Bank loa
Slide 14: Total lending portfolio
Total lending portfolio 44% private clients/54% corporate clients/2% public (DKKbn) Balance of impairment charges by sector (DKKbn) 0.9% of loans, Personal clients 44% advances and Personal clients Real property 31% guarantees0.7% Real property Finance and insurance 8% 1.9% Finance and insurance Oth
Slide 15: Mortgage portfolio
Mortgage portfolio Loans and advances at fair value by property category (DKKbn) 90-day mortgage arrears as % of lending by segment 0.7% Owner-occupied homes 34% of total lending and guarantees Subsidised housing 11% 0.6% Private rental properties 11% 0.5% Office and business properties 7% Cooperati
Slide 16: Financial highlights: Income statement
Financial highlights Income statement
Slide 17: Other net interest income and deposit margin up in Q2
Other net interest income and deposit margin up in Q2 Comments Net interest income Q2 2019 vs. Q2 2020 (DKKm) Q2 2020 vs. Q2 2019: Net interest income down 2% y/y 1,340 -2% y/y • Higher mortgage lending counteracted by declining bank lending volumes. This 1,320 entails a lower margin/risk in additio
Slide 18: Net fee income impacted by COVID-19 following strong Q1
Net fee income impacted by COVID-19 following strong Q1 Comments Net fee and commission income Q2 2019 vs. Q2 2020 (DKKm) Q2 2020 vs. Q2 2019: Net fee income down 27% y/y 700 • Normalising remortgaging activity in Q2 2020 following remortgaging wave starting in Q2 -27% y/y 2019 had significant impac
Slide 19: Rebounding financial markets in Q2 after turbulent Q1
Rebounding financial markets in Q2 after turbulent Q1 Comments Value adjustments (DKKm) Value adjustments up DKK 444m q/q 400 +339m y/y • Underlying value adjustments stayed positive during a turbulent Q1 and was significantly higher in Q2 due to rebounding financial markets. 300 • DKK 244m higher v
Slide 20: Strong cost focus helped reduce expenses 7% y/y in Q2
Strong cost focus helped reduce expenses 7% y/y in Q2 Comments Expenses Q2 2019 vs. Q2 2020 (DKKm) Q2 2020 vs. Q2 2019: Expenses down 7% y/y 1,400 -7% y/y • Number of full-time employees declined 7% y/y. • Sale of Jyske Bank (Gibraltar) in Q1 2020 lowered expenses. 1,350 • COVID-19 reduced expenses
Slide 21: Credit quality remains solid with NPL share at all-time low
Credit quality remains solid with NPL share at all-time low Comments Cost of risk (bp) Impairment charges down DKK 995m q/q to DKK 8m 100 0bp y/y • Cost of risk down 79bp q/q in Q2 2020, as management’s estimate related to 80 COVID-19 outbreak was booked in Q1. • Total management’s estimate of DKK 1
Slide 22: Business segments
Business segments Comments Profit before tax by segment (DKKm) Banking activities: Profit before tax up DKK 486m y/y 1,500 +74% y/y • Net interest income down 2% y/y, primarily attributable to sale of Jyske Bank (Gibraltar) and higher funding costs. Higher deposit margins offset lower bank lending.
Slide 23: Financial highlights: Capital and liquidity
Financial highlights Capital and liquidity
Slide 24: Solid capital position
Solid capital position Comments Capital ratio Capital ratio of 22.2% and CET1 ratio of 17.3% Q2 2020 vs. targets of 20-22% and 15-17% for 24% the next 2-3 years, respectively 22% • Positive earnings impact, partly counteracted by higher risk exposure amount. 20% • Total capital requirement of 15.1%
Slide 25: Liquidity and funding
Liquidity and funding Comments Maturity/call-date profile (DKKbn) Liquidity coverage ratio was 350% Q2 2020 vs. 253% end of 2019 (internal target: 12 >150%). 10 Leverage ratio of 5.3% at the end of Q2 2020, unchanged vs. the end of 2019. 8 Funding plans • Jyske Bank monitors the need for new capital
Slide 26: Sustainability
UF JYSKE BANK Sustainability
Slide 27: Sustainability
Sustainability Sustainability is ingrained in Jyske Bank’s vision “We have an ambition of running our business responsibly and in a way that promotes sustainability.” – Jyske Bank’s vision: To make a difference. Reorganisation furthers Investor Relations, CSR activities, and the Sustainability progr
Slide 28: History of Jyske Bank
UF JYSKE BANK History of Jyske Bank
Slide 29: One of the largest financial institutions in Denmark
One of the largest financial institutions in Denmark Banking activities cover advisory services relating to traditional financial solutions targeting personal Nationwide presence and private banking clients as well as corporate clients and also trading and investment activities Jyske Bank targeting
Slide 30: Jyske Bank financial results and key figures
Jyske Bank Financial results and key figures Loans and Profit before tax Shareholders' Total assets Year Net profit (DKKm) Return on equity advances Deposits (DKKbn) Number of FTEs (DKKm) equity (DKKm) (DKKbn) (DKKbn) 1997 584 443 4,772 9.6% 36.6 41.5 63.1 2,671 1998 710 511 5,173 10.3% 39.7 43.8 76
Slide 31: Macroeconomics
UF JYSKE BANK Macroeconomics
Slide 32: Macroeconomics
Macroeconomics Real gross domestic product (index 2010, y/y) Inflation rate (HICP, y/y) 10% 6% 5% 5% 4% 0% 3% -5% 2% -10% 1% -15% 0% -20% -1% 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 201
Slide 33: Macroeconomics
Macroeconomics Real estate prices, Denmark (y/y) House prices to disposable income 30% 140 25% 20% 130 15% 120 10% 5% 110 0% -5% 100 -10% -15% 90 -20% 80 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2
Slide 34: Forecast
Forecast Financial results and key figures DKKbn Real growth (%) Danish economy 2017-2021 2019 2017 2018 2019 2020 2021 Consumer spending 1,080 1.6 2.6 1.9 -2.6 2.9 Public spending 558 1.0 0.4 0.6 0.1 0.8 Fixed gross investment 515 3.0 5.4 2.9 -5.8 3.0 Inventory investment* 12 -0.1 0.3 -0.4 0.5 0.4
Slide 35: Disclaimer
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, recommendation