Danske Bank A/S · OMXCOP:DANSKE
Danske Bank A/S — 9M 2017 Earnings Presentation
34 slides from Danske Bank A/S's earnings presentation, Nov 2, 2017
Slide 1: Financial results – first nine months 2017
Financial results – first nine months 2017 Thomas F. Borgen Chief Executive Officer Jacob Aarup-Andersen Chief Financial Officer 2 November 2017
Slide 2: Agenda
Financial results – first nine months 2017 Agenda Executive summary 2 Business unit update 4 Selected topics 7 Outlook for full-year 2017 10 Q&A 11 Appendix 12 1
Slide 3: Executive summary: A satisfactory result for the first nine months of 2017
Financial results - first nine months 2017 Executive summary: A satisfactory result for the first nine months of 2017 Financial results, 9M 2017 The Nordic economies saw positive trends in • Net profit of DKK 15.3 bn, up 7% from 9M the first nine months of 2017 2016, which included domicile property
Slide 4: Net profit: DKK 15.3 bn, up 7% from 9M 2016
Financial results – first nine months 2017 Net profit: DKK 15.3 bn, up 7% from 9M 2016* Income statement and key figures (DKK millions) Key points, 9M 2017 vs 9M 2016 9M 2017 9M 2016 Index Q3 2017 Q2 2017 Index • Return on equity of 13.3% Net interest income 17,392 16,239 107 5,961 5,692 105 • Total
Slide 5: Banking units: Solid growth and strong credit quality continue in our Nordic markets
Financial results – first nine months 2017 Banking units: Solid growth and strong credit quality continue in our Nordic markets Pre-tax return on allocated capital (%) Financial highlights, 9M 2017 vs 9M 2016 9M 2017 9M 2016 Personal Banking • Total income up, driven by all income lines 21.5 21.8 •
Slide 6: PB Sweden: Partnership agreements drive profitable growth with sound credit quality
Financial results - first nine months 2017 PB Sweden: Partnership agreements drive profitable growth with sound credit quality Lending volume in SEK (Q2 2016 = Index 100) Comments 122 • Profitable organic growth in PB Sweden is an important part of realising our Nordic potential 118 • More than 90%
Slide 7: C&I and Wealth Management: Positive development in major income lines
Financial results - first nine months 2017 C&I and Wealth Management: Positive development in major income lines due to stronger customer activity C&I: Financial highlights, 9M 2017 vs 9M 2016 Wealth Management: Financial highlights, 9M 2017 vs 9M 2016 • Total income up 13%. The beginning of 2016 sa
Slide 8: Expenses: Up 2% from a low level, driven by IT-related costs
Financial results - first nine months 2017 Expenses: Up 2% from a low level, driven by IT-related costs for regulatory compliance and digitalisation Change in expenses (DKK millions) Total expenses ex goodwill charge (DKK millions) Severance payments 93 61 Deposit guarantee and resolution funds 93 A
Slide 9: Impairments: Loan loss ratio of -4 bp in core activities in 9M 2017
Financial results - first nine months 2017 Impairments: Loan loss ratio of -4 bp in core activities in 9M 2017 Group impairments,* 2012 to 9M 2017 (DKK billions/bp) Impairment drivers, Q3 2017 vs Q2 2017 Impairments Loan loss ratio* (rhs) • Net reversals continued at all business units except for C&
Slide 10: Capital: Strong capital base; CET1 capital ratio of 16.7%
Financial results - first nine months 2017 Capital: Strong capital base; CET1 capital ratio of 16.7% Capital ratios, under Basel III/CRR (%) Capital highlights, Q3 2017 Tier 2 Hybrid T1/AT1 Pillar II CET1 CET1 • REA down as counterparty risk decreased due to lower 21.6 derivatives exposure and marke
Slide 11: Upgraded outlook for full-year 2017: net profit DKK 19-21 bn
Financial results – first nine months 2017 Upgraded outlook for full-year 2017: We now expect net profit in the range of DKK 19-21 bn* Net interest We expect net interest income to be higher than in 2016, as we will benefit from volume income growth and lower funding costs Net fee income Net fee inc
Slide 12: Q&A session
Financial results - first nine months 2017 Q&A session Press * then 1 to ask a question Press * then 2 to cancel Press “Ask a question” in your webcast player Want easy access to all relevant Danske Bank material? Download the Danske Bank MyInvestor app on your iPhone, iPad or Android device! www.da
Slide 13: Appendix
Financial results – first nine months 2017 Appendix Business units 13 Special topics 18 Macro and portfolio reviews 23 Funding, liquidity, ROE bridge and ratings 27 Tax 31 Contact details 32 12
Slide 14: Personal Banking: Profit before tax up 2%; growth in Sweden and Norway continues
Financial results – first nine months 2017 Personal Banking: Profit before tax up 2%; growth in Sweden and Norway continues Income statement and key figures (DKK millions) Lending volume by country* (Q2 2016 = Index 100) Q3 2017 Q2 2017 Index Denmark Finland Sweden Norway Net interest income 2,007 1
Slide 15: Business Banking: Profit before tax up 4%; growth across all markets continued
Financial results – first nine months 2017 Business Banking: Profit before tax up 4%; growth across all markets continued Income statement and key figures (DKK millions) Lending volume by country* (Q2 2016 = Index 100) Q3 2017 Q2 2017 Index Denmark Finland Sweden Norway Net interest income 2,227 2,1
Slide 16: Corporates & Institutions: Income and expenses down due to seasonality in Q3
Financial results – first nine months 2017 Corporates & Institutions: Income and expenses down due to seasonality in Q3 Income statement and key figures (DKK millions) Income breakdown (DKK millions) Q3 2017 Q2 2017 Index FICC Capital Markets General Banking Net interest income 781 785 99 Net fee in
Slide 17: Wealth Management: AuM up 1%; expenses down 8% in Q3
Financial results - first nine months 2017 Wealth Management: AuM up 1%; expenses down 8% in Q3 Income statement and key figures (DKK millions) Key points, Q3 2017 vs Q2 2017 Q3 2017 Q2 2017 Index • Assets under management up 1% driven by performance Net interest income 176 174 101 • Net outflow for
Slide 18: Non-core: Deleveraging progressed according to plan
Financial results - first nine months 2017 Non-core: Deleveraging progressed according to plan; REA of DKK 10 bn at Q3 2017 Non-core loan portfolio, Q3 2017 (DKK billions) Non-core REA (DKK billions) Allowance account Non-core conduits, etc. Non-performing credit exposure Non-core Banking Performing
Slide 19: Net interest income: Up 8% adjusted for FX
Financial results - first nine months 2017 Net interest income: Up 8% adjusted for FX Change in net interest income (DKK millions) Comments • NII Other includes: • Differences at the Internal 17,392 Bank between actual and allocated funding costs (FTP) 104 514 689 • Income related to the Group’s 398
Slide 20: Trading income: Down 3% owing to seasonality
Financial results - first nine months 2017 Trading income: Down 3% owing to seasonality Trading income by business unit (DKK millions) Key points, Q3 2017 vs Q2 2017 Other incl. Treasury Wealth Management Business • Trading income was down 3% due to Northern Ireland C&I Personal lower activity in FI
Slide 21: Expenses: Down 5% in Q3 due mainly to reduced IT expenses and severance payments
Financial results - first nine months 2017 Expenses: Down 5% in Q3 due mainly to reduced IT expenses and severance payments Total expenses (DKK millions) Change in expenses (DKK millions) Severance payments Bonuses Deposit guarantee scheme/resolution fund Other costs Q2 2017 5,760 6,056 IT 80 -5% Se
Slide 22: Credit quality: Positive trend continues; NPLs decreased 17% y/y
Financial results – first nine months 2017 Credit quality: Positive trend in credit quality continues; NPLs decreased 17% y/y Individual loan impairment charges* (DKK billions) Gross non-performing loans (DKK billions) New Increased Reversal Individual allowance account Net exposure in default Net e
Slide 23: Credit exposure: Limited exposure to agricultural and oil-related segments
Financial results – first nine months 2017 Credit exposure: Limited exposure to agricultural and oil-related segments Agriculture exposure (2.4% of Group exposure) Oil-related exposure (0.8% of Group exposure) • Higher milk prices during the quarter, while pig prices • Net exposure decreased to DKK
Slide 24: Nordic macroeconomics
Financial results - first nine months 2017 Nordic macroeconomics Denmark Sweden Norway Finland Real GDP, constant prices (index 2005 = 100) Inflation (%) 2005 2007 2009 2011 2013 2015 2017 2005 2007 2009 2011 2013 2015 2017 Interest rates, leading (%) Unemployment (%) 2005 2007 2009 2011 2013 2015 2
Slide 25: Nordic housing markets
Financial results - first nine months 2017 Nordic housing markets Denmark Sweden Norway Finland Property prices (index 2005 = 100) House prices/nom. GDP (index 2005 = 100) 2005 2007 2009 2011 2013 2015 2017 2005 2007 2009 2011 2013 2015 2017 Apartment prices (index 2005 = 100) Apartment prices/nom.
Slide 26: Realkredit Danmark and the Danish housing market: Portfolio overview
Financial results - first nine months 2017 Realkredit Danmark and the Danish housing market: Portfolio overview Portfolio facts, Realkredit Danmark, Q3 2017 Stock of retail loans (DKK 441 bn), Realkredit Danmark, Q3 17 (%) • Approx. 370,000 loans (residential and commercial) Fixed rate (10yrs-30yrs)
Slide 27: Realkredit Danmark: 58% of new retail loans are fixed rate loans
Financial results - first nine months 2017 Realkredit Danmark: 58% of new retail loans are fixed rate loans; compliant with all regulatory requirements Key points Supervisory diamond for Danish mortgage institutions • 58% of new retail loans in Q3 were fixed-rate loans and 28% were 5- to 10-year var
Slide 28: Funding and liquidity: DKK 42 bn of long-term funding issued in 9M 2017
Financial results - first nine months 2017 Funding and liquidity: DKK 42 bn of long-term funding issued in 9M 2017; LCR compliant at 150% Changes in funding,* 9M 2017 (DKK billions and bp) Long-term funding excl. RD (DKK billions)** Cov. bonds Senior Funding plan Completed 81bp 85 70 96bp 64 55-70 1
Slide 29: Funding structure and sources: Danish mortgage system is fully pass-through
Financial results - first nine months 2017 Funding structure and sources: Danish mortgage system is fully pass-through Loan portfolio and long-term funding, Q3 2017 (DKK billions) Funding sources (%) Q2 2017 2,049 Q3 2017 55 56 133 Senior debt 1,726 Bank loans 590 923 Deposits Bank mortgages 347 204
Slide 30: ROE of 13.1% in 2016; longer-term ambition maintained
Financial results - first nine months 2017 ROE of 13.1% in 2016; longer-term ambition maintained with unchanged assumptions ROE 2015-18E, after tax (%) Status at year-end 2016 Overall status of ROE bridge to 2018 • On track ROE 2015* 11.6% • Underlying assumptions are unchanged Adjustments** 0.2% Co
Slide 31: Three distinct methods for rating banks
Financial results - first nine months 2017 Danske Bank’s rating Three distinct methods for rating banks Rating methodology Anchor Extraord. Add. Issuer + 1 + 2 + 3 + 4 = SACP = + ALAC + = SACP1 support factors rating bbb+ +1 +1 0 0 a 0 0 0 A (Stable) 1=Business Position, 2=Capital & Earnings, 3=Risk
Slide 32: Tax
Financial results - first nine months 2017 Tax Actual and adjusted tax rates (DKK millions) Tax drivers, Q3 2017 Q3 2017 Q2 2017 Q1 2017 Q4 2016 Q3 2016 • The adjusted tax rate of 22.5% is higher Profit before tax 6,236 6,183 7,140 7,039 6,267 than the Danish rate of 22% due to higher Ireland core a
Slide 33: Contacts
Financial results - first nine months 2017 Contacts Direct: +45 45 12 84 83 Claus Ingar Jensen Mobile: +45 25 42 43 70 Head of IR clauj@danskebank.dk Direct: +45 45 14 07 92 John Bäckman Mobile: +45 30 51 46 85 Chief IR Officer jbc@danskebank.dk Direct: +45 45 14 06 04 Robin Hjelgaard Løfgren Mobile
Slide 34: Disclaimer
Financial results - first nine months 2017 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 Un