Jyske Bank A/s · OMXCOP:JYSK
Jyske Bank A/s — FY2014 Earnings Presentation
34 slides from Jyske Bank A/s's earnings presentation, 2015
Slide 1: Jyske Bank 2014
Jyske Bank 2014
Slide 2: Key points 2014
Key points 2014 CORE PROFIT AND NET PROFIT FOR THE YEAR • A year dominated by the merger with BRFkredit and D KKm 2014 2013 Index 14/13 influenced by the weak economic growth Core income 10,186 7,205 141 Core expens es 5,231 4,469 117 • Pre-tax profit DKK 3.1bn (including special items of DKK Core p
Slide 3: Merger with BRFkredit proceeds as planned
Merger with BRFkredit proceeds as planned 2014 benchmarks • DKK 32bn of new home loans granted (DKK 31bn booked) by end of 2014. Of which DKK 11bn was booked in Q4 • Alignment of sales organizations • Launch of cross-selling initiatives (corporate segment) 2H 2014 • Process integration and optimizat
Slide 4: Q4 2014 – a challenging quarter
Q4 2014 – a challenging quarter CORE PROFIT AND NET PROFIT FOR THE PERIOD DKKm Q4 2014 Q3 2014 Q2 2014 Q1 2014 Q4 2013 • Repatriation of loans from Totalkredit Net interest income 1,428 1,529 1,325 1,033 1,093 accelerated. From DKK 21bn end of Q3 to DKK Net fee and commission income 626 360 351 424
Slide 5: Net interest income under continued pressure
Net interest income under continued pressure Net interest income • Extremely low interest rate level puts pressure on NII but 1.800 DKKm 1.600 1.400 Jyske Bank new home loans (partially) compensate for NII 1.200 1.000 on lost volumes in traditional bank loans 800 600 • Margins under pressure due to
Slide 6: Solid fee and commission income
Solid fee and commission income Net fee and commision income • Overall solid net fee and commission income when considering 700 DKKm the lack of commission income from Totalkredit (estimated at a 600 500 gap of DKK 227m) 400 300 • Q4 seasonality magnified by/larger than usual: 200 100 – Loan managem
Slide 7: Value adjustments dominated by special items and turbulent market conditions
Value adjustments dominated by special items and turbulent market conditions • Positive value adjustments on special items of DKK 531m – Value adjustments 300 DKKm primarily Nets (DKK 189m) and sector shares (DKK 217m) 200 100 0 ‐100 • Negative interest rate risk back-fired as credit spreads on ‐200
Slide 8: Higher loan impairment charges than expected, losses remain stable
Higher loan impairment charges than expected, losses remain stable Impairment on loans etc. less losses • Loan impairment charges of DKK 2bn included in core earnings - 1.500 affected by management’s estimate, crisis in agriculture and 1.000 DKKm AQR 500 0 • Losses are stable at DKK 1.1bn (2013: DKK
Slide 9: Focus on agriculture
Focus on agriculture Commodityprices - milk and pigs Agricultural properties - price index 13 140 3 12.5 12 120 2.8 Index: 2006 = 100 11.5 100 11 2.6 DKK/kg DKK/kg 10.5 80 2.4 10 9.5 60 2.2 9 8.5 40 2 8 20 Jan-11 Apr-11 Jul-11 Jan-12 Apr-12 Jul-12 Jan-13 Apr-13 Jul-13 Jan-14 Apr-14 Jul-14 Jan-15 Oct
Slide 10: Creating growth in a declining market
Creating growth in a declining market • Structural shift from bank loans to mortgage loans continues SUMMARY OF BALANCE SHEET, END OF PERIOD • High degree of competition – in particular on corporate DKKm Q4 2014 Q3 2014 Q2 2014 Q1 2014 Q4 2013 Mortgage loans 218,864 215,998 208,853 0 0 segment Tradi
Slide 11: Strong capital base with high CET1 ratio
Strong capital base with high CET1 ratio Capital ratio • Capital ratio 16.4% and CET1 15.3% versus long-term 20 pct targets of 17.5% and 14% 15 10 • Individual solvency requirement 10.9% 5 • EBA stress test confirms strong capital base 0 2010 2011 2012 2013 2014 Core Tier 1 Hybrid Tier 1 Tier 2 • No
Slide 12: Long history of strong liquidity reserves
Long history of strong liquidity reserves Capital market scenario • Focus on quality and not only quantity: No “fixed number” but 60 enough to comply with critic survival horizons in all 3 internal 50 stress scenarios 40 DKKbn 30 • Structural change from a deposit deficit to a deposit surplus has 20
Slide 13: The upcoming supervisory diamond for mortgage credit institutions
The upcoming supervisory diamond for mortgage credit institutions • The supervisory diamond for mortgage credit THE SUPERVISORY DIAMOND FOR BRFKREDIT A/S institutions will be brought into effect gradually from 2014 2013 2018-2020 Concentration risk < 100% 76.4% 88.1% Increase in loans < 15% annually
Slide 14: Lower refinancing risk in BRFkredit
Lower refinancing risk in BRFkredit • In 2014 BRFkredit has continued to decrease the Refinancing 100% refinancing risk 90% • Refinancing bonds in three yearly auctions– still taking 80% the future LCR-law (Liquidity Coverage Ratio) into 70% 38% 36% 60% consideration 50% 31% • Financed and refinance
Slide 15: A rare but regular issuer on the EMTN market
A rare but regular issuer on the EMTN market Redemption profile BRF senior unsecured bonds • Group issuance of senior debt will be from Jyske Bank A/S, 6 BRF senior secured bonds thus no new issuance of senior secured bonds from BRFkredit 5 Jyske Bank senior unsecured EMTN A/S bonds 4 DKKbn 3 • Seni
Slide 16: Macro Economy & Danish Banking 2014
Macro Economy & Danish Banking 2014 16
Slide 17: The Danish economy at a glance
The Danish economy at a glance Equal disposable incomes The basics Eurostat-ranking lowest Gini coefficient Citizens: 5.6 million (2013) Area: 43.098 sq km (0.4 % of USA) 1. Norway Currency: Kroner (fixed exchange rate policy to the 11. Denmark euro) 15. Germany A welfare state Among the rich Total
Slide 18: The private sector is still in a consolidation mode
The private sector is still in a consolidation mode The private sector saving has been record high since 2009. Private to public sector: -Tax on pensions behind the latest fall for private sector and gain for public sector. % of GDP % of GDP 18
Slide 19: The private sector is reluctant to borrow
The private sector is reluctant to borrow - Structural shift to mortgage institutions away from banks DKK, bn DKK, bn 19
Slide 20: Overall the Danish economy is improving
Overall the Danish economy is improving In Q3 GDP growth was 0.4 % following 0.1 % and 0,2 % growth in Q1 and Q2, respectively – quarterly figures are eratic. Percent Percent Overall growth has improved, but is only weak to moderate. There are still concerns due to Euro area softening and geopolitic
Slide 21: Optimistic consumers, but sceptic manufacturers
Optimistic consumers, but sceptic manufacturers 21
Slide 22: House prices increased during the past year
House prices increased during the past year Index 2008=100 Index 2008=100 22
Slide 23: Capital region has the lead. Affordability is strong
Capital region has the lead. Affordability is strong Net intallment (fixed rate) for new buyers relative to disp. income 150 150 140 140 Index 2006 = 100 Index 2006 = 100 130 130 120 120 110 110 100 100 90 90 80 80 70 70 94 96 98 00 02 04 06 08 10 12 14 Source: Jyske Bank 23
Slide 24: After years of suffering, bankruptcies in the SME sector are trending downwards
After years of suffering, bankruptcies in the SME sector are trending downwards 24
Slide 25: With unemployment slightly declining, household defaults are also declining
With unemployment slightly declining, and interest rates being low, household defaults are also declining Percent Percent 25
Slide 26: Competitiveness has improved
Competitiveness has improved Danish competitiveness deteriorated dramatically during the booming years. Danish production sector has been under some pressure and still is, but conditions are slightly better due to a gradual and ongoing improvement. Source: Ministry for economic affairs and the inter
Slide 27: Denmark has a healthy public sector economy
Denmark has a healthy public sector economy Public debt is low and public net saving was -0.7 % of GDP in 2013 and is expected to have been in surplus (2 % of GDP) in 2014. There is a one- off contribution from pension tax brought forward. Without this deficits would otherwise be close to 3 % of GDP
Slide 28: … and Denmark is a AAA economy
… and Denmark is a AAA economy 28
Slide 29: Denmark has huge wealth abroad
Denmark has huge wealth abroad Net foreign assets 2010 (Denmark is 2014) 100 100 50 50 0 0 % of GDP % of GDP -50 -50 -100 -100 -150 -150 PT IR GR ES IT US GB CA AT FR SE FI NL DK DE JP BE NO Source: Danmarks Nationalbank 29
Slide 30: Pressure for stronger DKK on back of SNB
Pressure for stronger DKK on back of SNB • Resolute response from Danish Central Bank: • Buy foreign currency (DKK 107bn in January) • 4 interest rate reductions since mid-January (current EUR/DKK EUR/DKK level: -0.75%) • Government bond issuance suspended • Danish fixed exchange rate policy dates b
Slide 31: The outlook: Low to moderate growth to continue, overall strong economy
The outlook:Low to moderate growth to continue, overall strong economy • In the coming quarters the economy is likely to continue in a low to moderate growth mode with some improvement over time. However, Denmark remains very dependend on the conditions in the European economy. • An actual upturn ca
Slide 32: Jyske Bank forecasts
The Danish economy 2011-2016 Consumer spending Public spending Fixed gross investment Inventory investment** Exports Imports Gross domestic product (GDP) Current account - DKKbn — percentage of GDP Public budget balance - DKKbn — percentage of GDP Unemployment -Unemployed (thousands), gross - Percen
Slide 33: General legal disclaimer
General legal 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,
Slide 34: Questions
Questions 34