Danske Bank A/S · OMXCOP:DANSKE
Danske Bank A/S — UBS Global Financial Services Conference 2010
24 slides from Danske Bank A/S's conference presentation, May 12, 2010
Slide 1: Shaping the future in Northern Europe
UBS Global Financial Services Conference, New York Shaping the future in Northern Europe Peter Straarup CEO & Chairman of the Executive Board May 12, 2010
Slide 2: Danske Bank has a strong position despite a difficult 2009
Danske Bank has a strong position despite a difficult 2009 DKK bn Pre-tax profit DKK bn Impairments 4 10 9.2 2.3 1.4 8.0 2 1.1 1.3 0.0 6.6 6.2 0 5.0 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 5 4.3 -2 -4 -6 0 -7.1 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 -8 % Core tier 1 ratio and Solvency ratio DKK bn Long-ter
Slide 3: Denmark is not worse off than our Nordic peers in most areas
Denmark is not worse off than our Nordic peers in most areas 3
Slide 4: Indications of macroeconomic improvement, but the turnaround is still fragile
Indications of macroeconomic improvement, but the turnaround is still fragile % GDP, 2009-E2011 Public finances 8 2010 estimates 4 Gross publ. debt Budget bal. Sovereign % of GDP % of GDP rating (S&P) 0 Norway Denmark 42.0 -5.6 AAA Euroland Sweden 43.1 -2.8 AAA -4 Denmark Norway 26.0 12.0 AAA Sweden
Slide 5: Income declined to a more normal level; lower expenses and impairment charges led to net profit
Income declined to a more normal level; lower expenses and impairment charges led to net profit DKK m Q1 2009 Q1 2010 Index Q4 2009 Q1 2010 Index Net interest income 7,227 6,007 83 6,765 6,007 89 Net fee income 1,763 2,048 116 2,077 2,048 99 Net trading income 7,479 2,379 32 1,961 2,379 121 Other in
Slide 6: Improving lending margins in all markets except Norway, but pressure is emerging
Improving lending margins in all markets except Norway, but pressure is emerging Quarterly lending margins Q1 2009 – Q1 2010 % (loan stock) 2.5 2.0 1.5 1.0 0.5 0.0 Denmark * Finland Sweden Norway Northern Ireland Ireland Baltics * Incl. Realkredit Danmark. 6
Slide 7: Narrowing deposit margins because of lower short-term rates and stiff competition
Narrowing deposit margins because of lower short-term rates and stiff competition Quarterly deposit margins Q1 2009 – Q1 2010 % (deposit stock) 1.2 0.8 0.4 0.0 Denmark Finland Sweden Norway Northern Ireland Ireland Baltics 7
Slide 8: Net trading income returning to normal as market volatility subsides
Net trading income returning to normal as market volatility subsides Breakdown of net trading income VIX Volatility Index DKK m Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 90 Trading Activities 7,534 4,410 3,194 1,791 2,013 75 Group Treasury -589 297 567 -152 119 60 Institutional Banking (non-Nordic) 86
Slide 9: Loan impairment charges trending down
Loan impairment charges trending down Quarterly loan impairment charges bp DKK m 10,000 200 Total loan imp. charges in basis points 7,500 150 5,000 100 2,500 50 0 0 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Collective impairment charges Individual impairment charges 9
Slide 10: Upgrades/downgrades ratio improving, but Denmark lags
Upgrades/downgrades ratio improving, but Denmark lags % Upgrades / total internal rating changes on the corporate book 80 Downturn Upturn Downturn 60 Upgrades > downgrades Downgrades > upgrades 40 Outside Denmark Denmark 20 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 Q1 2010 Source: Moody’s and o
Slide 11: Nordic impairments: Charges still high in Denmark
Nordic impairments: Charges still high in Denmark DKK m DKK m 5,000 1,250 Acc. imp.* DKK 16,662m Acc. imp.* DKK 2,580m Denmark - individual 144bp Finland - individual 150 bp 4,000 1,000 216 bp 59% of Group’s lending - collective 22bp 9% of Group’s lending - collective 15 bp 127 bp 112 bp 114 bp 750
Slide 12: Much larger increase in bankruptcies in Denmark than in the other Nordic countries
Much larger increase in bankruptcies in Denmark than in the other Nordic countries Index Number of monthly bankruptcies in the Nordics (indexed, Jan. 1996 =100) 400 Denmark 300 200 Norway 100 Finland Sweden 0 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 Source: Eco
Slide 13: Other impairments: General improvement, most notably in Northern Ireland and the Baltics
Other impairments: General improvement, most notably in Northern Ireland and the Baltics DKK m DKK m 750 2,100 Acc. imp.* DKK 2,141m Acc. imp.* DKK 8,093m Northern Ireland - individual 365 bp Ireland - individual 966 bp 3% of Group’s lending - collective 63 bp 4% of Group’s lending - collective 105
Slide 14: The Four Cs: Strategic focus areas
The Four Cs: Strategic focus areas Capital Customers and new regulation Costs Credit 14
Slide 15: Cost management: Leaving no stone unturned
Cost management: Leaving no stone unturned Costs Optimise Streamline Reduce distribution organisation external capacity (head office) spending • Distribution • Head office • Over 30 networks at all functions • categories country units • Rent • Contact centres • Marketing • Travel • Other Optimise IT
Slide 16: Allocating resources according to customer needs: From branches to 24/7 access
Allocating resources according to customer Customers needs: From branches to 24/7 access Costs eBanking • No. of active eBanking customers up by about 247,000 over past 2 years • 44% of customers are active eBanking customers (39% 2 years ago) • DKK 1bn investment programme Contact Centre • Self-ser
Slide 17: Tangible results of intensified cost focus; momentum sustained into 2010
Tangible results of intensified cost focus; Costs momentum sustained into 2010 FTEs Trend in number of employees and branches Branches 25,000 850 24,000 Branches 14%* FTEs 800 23,000 8%* 22,000 750 21,000 20,000 700 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 * Change since Q2 2008. 17
Slide 18: Customer focus: Organic growth, competitive products and prices lead to higher value creation
Customer focus: Organic growth, competitive Customers products and prices lead to higher value creation BA Denmark BA Finland BA Northern Ireland Mature player BA Ireland BA Baltics BA Other Bus. units 18
Slide 19: Capital and new regulation: Still many unknown details
Capital and new regulation: Still many unknown Capital details Capital Gearing/leverage Liquidity/funding 19
Slide 20: Key points on Basel III / CRD IV
Key points on Basel III / CRD IV • Basel III will take ROE out of the banking sector • Potentially huge negative macroeconomic effect if fully implemented • Long-term liquidity rules and leverage ratio are expected to be watered down • Renewed focus on corporate governance • Danske Bank is in a rela
Slide 21: Outlook for full-year 2010
Outlook for full-year 2010 • Macroeconomic improvement, but upswing remains fragile • Robust income from banking activities • Lower trading and insurance income, dependent on market developments • Total expenses to decline in 2010; continued focus on cost management, but also investments in product
Slide 22: The Four Cs strategy is the key to creating long-term value
The Four Cs strategy is the key to creating long-term value Customer service strategy Cost programme Credit management Long-term value creation Capital and new regulation Improving macroeconomics Bank Package I expires at end-Q3 2010 22
Slide 23: www.danskebank.com/ir
- www.danskebank.com/ir Bank 23
Slide 24: Disclaimer
Disclaimer 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 or an inducement to enter into investment activity. No part of this presentat
Danske Bank — UBS Global Financial Services Conference 2010 on 6ix