Danske Bank A/S · OMXCOP:DANSKE
Danske Bank A/S — Debt Investor Presentation (2021)
46 slides from Danske Bank A/S's debt investor presentation, Nov 19, 2021
Slide 1: Debt investor update – first quarter 2021
Debt investor update – first quarter 2021
Slide 2: Agenda
Agenda 01. Financial update 2 02. Capital and funding 10 03. Covered bond universe and ratings 16 04. Appendix 19
Slide 3: We are a Nordic universal bank with strong regional roots
Debt investor update – Q1 2021 We are a Nordic universal bank with strong regional roots Norway (AAA) Finland (AA+) Challenger position 3rd largest Market share: 7% Market share: 10% Share of Group lending: 10% Share of Group lending: 7% GDP growth 2021E: 3.7% GDP growth 2021E: 2.2% Unemployment 202
Slide 4: Summary – Good customer activity drives total income up; significant decline in impairment charges
Debt investor update – Q1 2021 Summary – Good customer activity drives total income up; significant decline in impairment charges and progress towards cost-income ratio ambition Positive impact from retail deposit Continued lending growth driven by Diversified business model; capital repricing in De
Slide 5: Solid trading and fee performance combined with more normalised impairment levels
Debt investor update – Q1 2021 Solid trading and fee performance combined with more normalised impairment levels resulting in net profit of DKK 3,139 m Income statement and key figures (DKK m) Key points, Q1-21 vs Q1-20 Q1-21 Q1-20 Index Q4-20 Index • Total income up 17%, driven by the rebound in tr
Slide 6: NII: NII slightly down as increase in deposits and repricing partly mitigates negative effects
Debt investor update – Q1 2021 NII: NII slightly down as increase in deposits and repricing partly mitigates negative effects from lending; Q1 stable due to deposit repricing effect, days and FX Net interest income, Q1-21/Q1-20 (DKKm) Net interest income, Q1-21/Q4-20 (DKKm) 5,560 5,553 -58 -12 25 -2
Slide 7: Fee: Increase in fee driven by capital markets performance and AuM
Debt investor update – Q1 2021 Fee: Increase in fee driven by capital markets performance and AuM; Q1 impact from mortgage-related fees Net fee income, Q1-21/Q1-20 (DKKm) Net fee income, Q1-21/Q4-20 (DKKm) Q1 20 Q1 21 Q4 20 Q1 21 3,402 3,645 3,240 +5% -7% 3,402 -16% 1,590 +3% 1,333 1,293 1,333 -9% +
Slide 8: Trading: Rebound in trading income from difficult Q1 last year
Debt investor update – Q1 2021 Trading: Rebound in trading income from difficult Q1 last year; strong underlying trading income Q/Q driven by customer activity and favourable market conditions Net trading income, Q1-21/Q1-20 (DKKm) Highlights LC&I ex. xVA xVA P&BC NI Group Functions Trading income i
Slide 9: Expenses: Downwards trajectory according to plan
Debt investor update – Q1 2021 Expenses: Downwards trajectory according to plan, including lower costs for AML/Estonia and transformation Expenses, Q1-21/Q1-20 (DKKm) Highlights 51 272 215 Expenses adjusted for one-offs down 6% vs Q1-20 and 18% vs Q4-20 6,385 77 49 90 6,273 One-off of DKK 150 m rela
Slide 10: Impairments: Strong credit quality and low level of actual credit deterioration
Debt investor update – Q1 2021 Impairments: Strong credit quality and low level of actual credit detoriation; individual exposures affected by pandemic accounted for most of the impairments in Q1 Impairment charges by category (DKK bn) Loan loss ratio by business unit Credit quality deterioration: o
Slide 11: Capital: Strong capital base; CET1 capital ratio of 18.1%
Debt investor update – Q1 2021 Capital: Strong capital base; CET1 capital ratio of 18.1% (buffer of 4.9%) Capital ratios, under Basel III/CRR (%) Estimated capital buffer structure (%) Tier 2 Countercyclical capital buffer 23.4 Hybrid T1/AT1 23.0 23.2 Capital conservation buffer 22.7 Pillar II compo
Slide 12: Strong CET1 capital build-up since 2008
Debt investor update – Q1 2021 Strong CET1 capital build-up since 2008; Available Distributable Items (ADI) well in excess of DKK 100 bn Common Equity Tier 1, 2008 – Q1-21 (DKK bn) +DKK 67 bn 144 145 130 134 133 133 127 133 119 126 107 79 85 77 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 20181
Slide 13: Fully compliant with MREL requirement
Debt investor update – Q1 2021 Fully compliant with MREL requirement; expect to cover MREL need with both preferred and non-preferred senior MREL resources and requirements; Q1 2021; % of Group REA Overview of MREL Overview of MREL Senior <1Y Own funds The Group has to meet both an MREL requirement
Slide 14: Funding structure and sources: Danish mortgage system is fully pass-through
Debt investor update – Q1 2021 Funding structure and sources: Danish mortgage system is fully pass-through Loan portfolio and long-term funding, Q1 2021 (DKK bn) Funding sources (%) 63 63 2,214 Q4 2020 109 Senior & NPS bonds Q1 2021 1,828 Bank loans 621 1,129 Deposits Bank mortgages 399 168 Covered
Slide 15: Funding programmes and currencies
Debt investor update – Q1 2021 Funding programmes and currencies Covered bonds by currency, end-Q1 2021 Largest funding programmes, end-Q1 2021 Utilisation 0% EMTN Programme 46% EUR 21% Limit – EUR 35bn SEK 38% NOK Global Covered Bond 73% CHF Limit – EUR 30bn 41% ECP Programme 6% Total DKK 169 bn Li
Slide 16: Funding and liquidity: LCR compliant at 151%
Debt investor update – Q1 2021 Funding and liquidity: LCR compliant at 151% Changes in funding,* 2021 (DKK bn and bp) Long-term funding excl. RD (DKK bn)** Cov. bonds Senior Non-Preferred Senior Funding plan Completed 31bp 100 79 70-90 59bp 69 67 36 25 33 bp 81bp 5bp 104bp 8 8 8 35 bp 6 1 DKK 15 bn
Slide 17: Danske Bank covered bond universe, a transparent pool structure
Debt investor update – Q1 2021 Danske Bank covered bond universe, a transparent pool structure1 Residential mortgages from • Denmark, D-pool + • Norway, I-pool • Sweden, Danske Hypotek AB C-pool (AAA/AAA) • Finland, Danske Mortgage Bank Plc Finland Commercial mortgages from • Sweden and Norway, C-po
Slide 18: Danske Bank's credit ratings
Debt investor update – Q1 2021 Danske Bank’s credit ratings Long-term instrument ratings No rating actions on Danske Bank in Q1 2021 Fitch Moody’s Scope S&P AAA Aaa AAA AAA AA+ Aa1 AA+ AA+ Moody’s affirmed its rating and Stable outlook on Danske Bank on 18 December 2020 AA Aa2 AA AA Moody’s cite ass
Slide 19: Danske Bank's ESG ratings
Debt investor update – Q1 2021 Danske Bank’s ESG ratings We have chosen to focus on five providers based on their importance to our investors Q1 2021 31 Dec 2020 31 Dec 2019 31 Dec 2018 Range 1 B 271 companies, out of the 9526 analysed, made the B C C D- to A+ (A+ highest rating) climate change A Li
Slide 20: Appendix
Appendix 01. Sustainability 20 02. Business units 23 03. Credit quality 35 04. Macro and portfolio reivew 40 05. Outlook 43 06. Contact details 44
Slide 21: Sustainability is an integrated element of our corporate strategy and targets
Sustainability is an integrated element of our corporate strategy and our corporate targets What we want to accomplish by 2023 How we measure success The seven focus areas Sustainable "On average among the top 2 in customer 1 Sustainable ≤2.0 average CSAT rank investing finance satisfaction in every
Slide 22: Danske Bank aims to be a leading bank in the Nordics on Sustainable Finance
Danske Bank aims to be a leading bank in the Nordics on Sustainable Finance Fully committed to the Paris Climate Agreement Execution delivering results • Net Zero Asset Owners’ Alliance • #1 Nordic bookrunner for green, social and sust. bonds 20201) • Net Zero Asset Managers’ Initiative • #1 Nordic
Slide 23: Danske Bank is delivering effectively on its sustainability ambitions
Danske Bank is delivering effectively on it’s sustainability ambitions Sustainable finance Sustainable operations Impact initiatives Sustainable Sustainable Governance & Employee Environmental Entrepreneur- Financial investing financing integrity well-being & footprint ship confidence diversity Targ
Slide 24: Strong footprint within retail lending
Debt investor update – Q1 2021 Strong footprint within retail lending Lending by segment1 Q1-21 (%) Credit exposure by industry Q1-21 (%) Personal Customers DK Personal Customers 38 Personal Customer Nordic Public Institutions 13 Business Customers Commercial Property 12 Asset Finance Co-ops & Non-P
Slide 25: P&BC – Commercial momentum across Personal Customers Nordic
Debt investor update – Q1 2021 P&BC – Commercial momentum across Personal Customers Nordic; deposit repricing partly mitigated NII effect Highlights Personal Customers DK saw Good traction in Personal Launched new green loans Continued high inflow of low- a positive NII development, Customers Nordic
Slide 26: P&BC – Profit before tax significantly up from diversified income streams
Debt investor update – Q1 2021 P&BC –Profit before tax significantly up from diversified income streams in DK, lending growth in other Nordic countries and lower impairments Key figures (DKK m) Q1-21/ Q1-21/ Q1-21 Q1-20 (%) Q4-20 (%) Q1-21 vs Q1-20 Total income 5,975 -2% +6% • PBT significantly up d
Slide 27: Personal & Business Customers
Debt investor update – Q1 2021 Personal & Business Customers Income statement (DKK m) NII bridge (DKK m) Q1-21 Q1-20 Index Q4-20 Index 24 44 Net interest income 3,879 3,951 98 3,910 99 3,910 11 74 45 3,879 33 4 Net fee income 1,750 1,815 96 1,414 124 Net trading income 150 162 93 153 98 Q4-20 Lendin
Slide 28: Realkredit Danmark portfolio overview
Debt investor update – Q1 2021 Realkredit Danmark portfolio overview: 71% of new retail lending in Q1 was fixed-rate vs 48% of stock C&I lending volume (DKK bn) Retail loans, Realkredit Danmark, Q1 2021 (%) Portfolio facts, Realkredit Danmark, Q1 2021 Fixed rate (10 yrs-30 yrs) Interest only Variabl
Slide 29: LC&I – Strong activity in capital markets
Debt investor update – Q1 2021 LC&I – Strong activity in capital markets, supportive market conditions and good traction in Asset Management Highlights Capital Markets sustaining Customer activity was high Good momentum in Asset the positive trend; supported High level of green bond across the finan
Slide 30: LC&I: Good start to the year with commercial momentum and low impairment levels
Debt investor update – Q1 2021 LC&I: Good start to the year with commercial momentum and low impairment levels Key figures (DKK m) Q1-21/ Q1-21/ Q1-21 Q1-20 (%) Q4-20 (%) Q1-21 vs Q1-20 Total income 3,918 +68% -7% • PBT significantly up against Q1-20, as we saw a recovery in the financial markets an
Slide 31: Large Corporates and Institutions
Debt investor update – Q1 2021 Large Corporates and Institutions Income statement (DKK m) NII bridge (DKK m) Q1-21 Q1-20 Index Q4-20 Index 1,267 5 2 11 Net interest income 1,216 1,143 106 1,267 96 42 0 16 1,216 1 Net fee income 1,599 1,347 119 2,176 73 Net trading income 1,102 -154 -716 750 147 Q4-2
Slide 32: Positive result at Danica Pension; Northern Ireland held up well
Debt investor update – Q1 2021 Positive result at Danica Pension driven by improved life insurance result; Northern Ireland held up well despite subdued economic activity and interest rate drop Danica Pension, key figures (DKK m) Northern Ireland, key figures (DKK m) Q1-21 Q1-21/Q1-20 (%) Q1-21/Q4-2
Slide 33: Northern Bank
Debt investor update – Q1 2021 Northern Bank Income statement and key figures (DKK m) NII bridge (DKKm) Q1-21 Q1-20 Index Q4-20 Index 7 Net interest income 331 375 88 324 102 3 12 331 7 1 324 10 3 Net fee income 60 83 72 66 91 Q4-20 Lending Lending Deposit Deposit FX Days Other Q1-21 Net trading inc
Slide 34: Danica Pension
Debt investor update – Q1 2021 Danica Pension Income statement and key figures (DKK m) Asset under management (DKKm) Q1-21 Q1-20 Index Q4-20 Index H&A Life insurance Result, life insurance 784 453 173 569 138 Q1-20 386,567 402,669 Result, health and accident insurance -290 -274 106 -84 345 Return on
Slide 35: Non-core
Debt investor update – Q1 2021 Non-core Non-core loan portfolio, Q1-21 (DKK bn) Non-core, Q1-21 REA (DKK bn) Allowance account Non-performing credit exposure Performing credit exposure Non-core conduits etc. Non-core banking 8 7 2 4 2 5 5 4 2 1 3 5 1 2 4 4 3 1 1 2 0 1 0 Retail Commercial Public Cond
Slide 36: Credit quality: Low level of actual credit deterioration
Debt investor update – Q1 2021 Credit quality: Low level of actual credit deterioration Breakdown of core allowance account under IFRS 9 (DKK bn) Allowance account by business unit (DKK bn) P&BC N.I. Stage 1 Stage 2 Stage 3 LC&I Other (Non-core) 24.1 24.9 23.6 25.1 25.9 24.6 22.6 22.5 23.5 23.3 7.1
Slide 37: Oil-related exposure: Q1 saw impairment charges at a lower level
Debt investor update – Q1 2021 Oil-related exposure: Q1 saw impairment charges at a lower level Key points, Q1-21 • The offshore segment, in which we see credit deterioration, makes up 36% of the exposure and accounts for 75% of expected credit losses. Uncertainty continues in the oil & gas industry
Slide 38: Credit exposure: Limited agriculture and directly oil-related exposure
Debt investor update – Q1 2021 Credit exposure: Limited agriculture and directly oil-related exposure Agriculture exposure Oil-related exposure • African Swine Fewer (ASF), which spread to Germany in Q3 2020, continues to • Total oil-related exposure was more or less unchanged from the preceding qua
Slide 39: Credit exposure: Limited exposure to transportation, hotels, restaurants and leisure
Debt investor update – Q1 2021 Credit exposure: Limited exposure to transportation, hotels, restaurants and leisure Transportation exposure Hotels, restaurant and leisure exposure • Total gross exposure* increased DKK 1 bn to DKK 16.6 bn from the Q4-20 level due mainly to increased exposure to a few
Slide 40: Credit exposure: Limited exposure to retailing and stable credit quality in commercial real estate
Debt investor update – Q1 2021 Credit exposure: Limited exposure to retailing and stable credit quality in commercial real estate Retailing Commercial real estate • Gross exposure decreased to DKK 319 bn in Q1-21 from DKK 331 bn in Q4-20 - driven • Total gross exposure stayed at DKK 27.1 bn while th
Slide 41: Nordic macroeconomics
Debt investor update – Q1 2021 Nordic macroeconomics Denmark Sweden Norway Finland EU Real GDP, constant prices (index 2005 = 100) Inflation (%) Interest rates, leading (%) Unemployment (%) Source: Danske Bank Macro Research 40
Slide 42: Nordic housing markets
Debt investor update – Q1 2021 Nordic housing markets Denmark Sweden Norway Finland EU Property prices (index 2005 = 100) House prices/nom. GDP (index 2005 = 100) Apartment prices (index 2005 = 100) Apartment prices/nom. GDP (index 2005 = 100) Source: Danske Bank Macro Research 41
Slide 43: Consumer behavioural metrics
Debt investor update – Q1 2021 Consumer behavioural metrics Denmark Sweden Norway Finland EU C&I lending volume (DKK bn) Consumer spending, Denmark (same weekday 2019 = 100) 290 120 285 110 280 100 275 270 90 265 80 260 70 0 0 Feb Apr Jun Aug Oct Jan Apr Q2 ’19 Q3 ’19 Q4 ’19 Q1 ’20 Q2 ’20 Q3 ’20 Q4
Slide 44: 2021 outlook – We confirm our net profit guidance for the rest of the year
Debt investor update – Q1 2021 2021 outlook – We confirm our net profit guidance for the rest of the year We expect total income to be slightly higher than the level in 2020, subject mainly to Total income commercial momentum and broader economic developments Expenses are expected to be no more than
Slide 45: Contacts
Debt investor update – Q1 2021 Contacts Kimberly Bauner Mobile +46 73 700 19 39 Claus Ingar Jensen Mobile +45 25 42 43 70 Head of Group Treasury tagg@danskebank.dk Head of IR clauj@danskebank.dk Bent Callisen Direct +45 45 12 84 08 Nicolai Brun Tvernø Mobile +45 31 33 35 47 Head of Group Funding, Mo
Slide 46: Disclaimer
Debt investor update – Q1 2021 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,