Danske Bank A/s · OMXCOP:DANSKE
Danske Bank A/s — Investor Day (June 2023)
17 slides from Danske Bank A/s's investor day presentation, Jun 7, 2023
Slide 1: Focused Nordic leader with strong profitability
Focused Nordic leader with strong profitability Investor update Copenhagen, June 7, 2023
Slide 2: Financial performance
Financial performance Stephan Engels, Chief Financial Officer 2
Slide 3: Proven ability to grow with commercial momentum picking up
Financial performance Proven ability to grow with commercial momentum picking up Grown income across segments Stabilised cost Strong capital and low loan losses Large +5% Core Common +12% Corporates OPEX1 -2% Equity 12.83 24.8 24.4 149 & Institutions 12.25 (DKK bn) Tier 1 (DKK bn) 133 +15% Business
Slide 4: Significantly ahead of our targets for 2023
Financial performance Significantly ahead of our targets for 2023 Cost to income1 Surpassing our original targets for 2023 of 61% 8.5-9% RoE and C/I of mid-50s 47% Normalisation of interest rates, with more favourable exposure in Denmark and Finland 2019 Cost NII Non-NII 2023 FY Q1 Streamlined the b
Slide 5: Accelerating our commercial momentum and profitability
Financial performance Accelerating our commercial momentum and profitability Focused ambitious growth Disciplined capital return and cost Capital distribution and low risk • Increase returns by targeting • Capital allocation towards most • Dividend policy of 40-60% of the most attractive segments pr
Slide 6: Main assumptions behind our 2026 plans
Financial performance Main assumptions behind our 2026 plans Interest rates, 3 month (%) Wage inflation (%) 4 15 3 10 2 1 5 ~3% Lending growth p.a. 2022 23 24 25 2026 2022 23 24 25 2026 Real GDP growth (%) Unemployment (%) 4 10 <1% 2 Deposit growth p.a. 5 -2 2022 23 24 25 2026 2022 23 24 25 2026 Den
Slide 7: Capital distribution
~45% Cost to income Our 2026 financial targets >16% 13% CET1 Return on Equity Capital distribution • Dividend potential from 2023 to 2026 of above DKK 50 bn (~40% of current market cap) • Accelerated dividend by H1 result targeting the higher end of the 40-60% policy range1 • Ambition for further di
Slide 8: Cost discipline enables increased investments and drive profit
Financial performance Cost discipline enables increased investments and drive profit Return on Equity, 2022-2026 <1% • Normalisation of FCRP <1% 13% and Compliance cost >2.5% 10-11% <1% >1% >1.5% • Increased digital and non- digital investments to drive productivity 6.5%1 • Income to increase from b
Slide 9: Improving profitability across all segments
Financial performance Improving profitability across all segments Return on Allocated Capital, 2022-2026 Large Corporates & Institutions* Business Customers Personal Customers >2pp >5pp >16pp >31% 29% 24% >23% 26% >20% 16% 16% 13% ~29% ~18% ~21% 2022 Q1 ’23 2026T 2022 Q1 ’23 2026T 2022 Q1 ’23 2026T
Slide 10: All segments contribute to income growth
Financial performance All segments contribute to income growth Income development, 2022-2026 (DKK bn) >56 51-53 42 2022 2023E NII Fee income Trading and Other income 2026T Insurance income Share of 2026 contribution PC – Growing in segments with Share of 2026 contribution PC – Increasing share of wa
Slide 11: Cost discipline allows further targeted investment levels
Financial performance Cost discipline allows further targeted investment levels Cost development, 2022-2026 (DKK bn) Stabilising FCRP and Compliance cost following completion of remediation programmes Continuing simplification and 26.5 digitalisation on back of cost ~26 reductions over past 18-24 mo
Slide 12: Increased level of digital and tech investments towards 2026 by DKK 1 bn p.a.
Financial performance Increased level of digital and tech investments towards 2026 by DKK 1 bn p.a. Investments per year, 2023 and 2026 (DKK) Additional investments Reinvested savings Funding baseline Increased funding envelope for +1 bn digital and tech investments next ~4 bn years by DKK 1 bn p.a.
Slide 13: Cost Income ratio improving to ~45%
Financial performance Cost Income ratio improving to ~45% Cost to Income development, 2022-2026 Cost efficiencies 63%1 offsetting inflation and cost of growth Income improvements from both NII and non- NII offsetting headwind from falling rates Targeted investments ~48% will underpin commercial mome
Slide 14: Expected impairment charges of ~8 bps through the cycle
Financial performance Expected impairment charges of ~8 bps through the cycle Loan impairment charges Allowance account (DKK bn) LLP (bps) Loan impairment charges (DKK bn) Stage 1-2 of which PMA Stage 3 22 22 20 19 34 6 6 ~8 bps through 4 3 7 the cycle 8 3 4 7 4 13 13 12 8 7 2019 20 21 2022 2 0 2 2
Slide 15: Strong capital position and ability to distribute
Financial performance Strong capital position and ability to distribute CET1 capital generation and usage (% of Risk Exposure Amount) CET1 requirement Buffer to requirement CET1 capital ratio expected to approach target through capital distribution and REA inflation from growth ~6% ~10% ~1.5% Pruden
Slide 16: Capital distribution
~45% Cost to income Our 2026 financial targets >16% 13% CET1 Return on Equity Capital distribution • Dividend potential from 2023 to 2026 of above DKK 50 bn (~40% of current market cap) • Accelerated dividend by H1 result targeting the higher end of the 40-60% policy range1 • Ambition for further di
Slide 17: Disclaimer
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 States, or an inducement to enter into