Danske Bank A/S · OMXCOP:DANSKE
Danske Bank A/S — 9M 2015 Earnings Presentation
36 slides from Danske Bank A/S's earnings presentation, Oct 29, 2015
Slide 1: Financial results – first nine months 2015
Financial results – first nine months 2015 Thomas F. Borgen Chief Executive Officer Henrik Ramlau-Hansen Chief Financial Officer 29 October 2015
Slide 2: Agenda
Financial results for – first Q1nine 2013months 2015 Agenda Executive summary and financial results 3 Business unit update 5 Selected topics 7 Outlook for full-year 2015 12 Q&A 14 Appendix 15 2
Slide 3: Executive summary – first nine months of 2015
Financial results for – first Q1nine 2013months 2015 Executive summary – first nine months of 2015 Net profit & ROE Net profit of DKK 13.1 bn and ROE of 11.5% Income Total income of DKK 33 bn – up 1% vs 9M 2014 Expenses Expenses of DKK 16 bn – down 4% vs 9M 2014 – and cost/income ratio of 48.3% Impa
Slide 4: Net profit: DKK 13.1 bn, up 28% from first 9 months of 2014
Financial results for – first Q1nine 2013months 2015 Net profit: DKK 13.1 bn, up 28% from first 9 months of 2014 Income statement & key figures (DKK m) Key points, 9M 2015 vs 9M 2014 9M 2015 9M 2014 Index Q3 2015 Q2 2015 Index • Return on equity improved to 11.5% Net interest income 16,169 16,571 98
Slide 5: Banking units: Strong performance vs 9M 2014 at all units
Financial results for – first Q1nine 2013months 2015 Banking units: Strong performance vs 9M 2014 at all units Pre-tax return on allocated capital ex goodwill charge (%) Financial highlights, 9M 2015 vs 9M 2014 Q1-Q3 2014 Q1-Q3 2015 Personal Banking • Lower NII due to pressure on deposit margins 21.
Slide 6: Danske Capital and Danica Pension: Satisfactory performance continued
Financial results for – first Q1nine 2013months 2015 Danske Capital and Danica Pension: Satisfactory performance continued Danske Capital: Financial highlights, 9M 2015 vs 9M 2014 Danica Pension: Financial highlights, 9M 2015 vs 9M 2014 • Total income up 7% owing to higher assets under • Premiums of
Slide 7: Expenses: Down 4% vs 9M 2014 due to continued cost focus
Financial results for – first Q1nine 2013months 2015 Expenses: Down 4% vs 9M 2014 due to continued cost focus; on track to meet full-year guidance of below DKK 22 bn Total expenses ex goodwill charge (DKK m) Change in expenses ex goodwill (DKK m) Consultants etc. Bonuses Severance payments Other cos
Slide 8: Impairments: Loan loss ratio for Q3 of -2 bp for core activities
Financial results for – first Q1nine 2013months 2015 Impairments: Loan loss ratio for Q3 of -2 bp for core activities and -1 bp for the entire Group Group impairments, 2011 to Q3 15 (DKK bn/bp) Impairments (DKK m) Impairments Loan loss ratio* (rhs) 9M 15 9M 14 Index Q3 15 Q2 15 Index Personal Bankin
Slide 9: Impairments (continued): Impairments remained low
Financial results for – first Q1nine 2013months 2015 Impairments (continued): Impairments remained low because of low interest rates and improving macroeconomic climate Individual loan impairment charges* (DKK bn) Impairment drivers, Q3 2015 vs Q2 2015 New Increased Reversal • The low level of impai
Slide 10: Capital: Strong capital base; CET1 ratio of 15.7%
Financial results for – first Q1nine 2013months 2015 Capital: Strong capital base; CET1 ratio of 15.7% from significantly lower REA. Successful Danica T2 capital issuance Capital ratios, under Basel III/CRR (%) Capital highlights Tier 2 Hybrid T1 / AT1 Common Equity Tier 1 • REA declined 7% due to f
Slide 11: PB Norway: Strong loan growth drives NII higher
Financial results for – first Q1nine 2013months 2015 PB Norway: Strong loan growth drives NII higher despite market pressure; new customers have sound credit quality Lending volume in NOK (Q2 2014 = Index 100) Comments 132 • At PB Norway in Q3, NII rose in NOK and expenses fell slightly 124 • Strong
Slide 12: Outlook for full-year 2015: Net profit of above DKK 16 bn
Financial results for – first Q1nine 2013months 2015 Outlook for full-year 2015: Net profit of above DKK 16 bn Total income Income is expected to be in line with the level in 2014 Expenses Expenses are expected to be below DKK 22 bn Impairment charges in our core activities are expected to decline t
Slide 13: The new Danske Bank IR app for all iOS and Android devices is available
Financial results for – first Q1nine 2013months 2015 The new Danske Bank IR app for all iOS and Android devices is available in the App Store and Google Play With our new app you can: • Get push notifications whenever new content is uploaded to the app • Read the latest company announcements • Find
Slide 14: Q&A session
Financial results for – first Q1nine 2013months 2015 Q&A session www.danskebank.com/ir 14
Slide 15: Appendix
Financial results for – first Q1nine 2013months 2015 Appendix Business units 16 Special topics: NII, trading income, expenses and allowance account 22 Macro, credit quality and portfolio reviews 26 Funding, liquidity and ratings 31 Tax 34 Contact details 35 15
Slide 16: Personal Banking: Positive momentum in costs and impairments in Q3
Financial results for – first Q1nine 2013months 2015 Personal Banking: Positive momentum in costs and impairments in Q3; good trend in Norway continues Income statement & key figures (DKK m) Lending volume by country,* Q2 2014 = Index 100 Q3 2015 Q2 2015 Index Denmark Sweden Northern Ireland Net int
Slide 17: Business Banking: Income down from high Q2 activity
Financial results for – first Q1nine 2013months 2015 Business Banking: Income down from high Q2 activity; good customer activity in Sweden and Norway Income statement & key figures (DKK m) Lending volume by country,* Q2 2014 = Index 100 Q3 2015 Q2 2015 Index Denmark Sweden Northern Ireland Net inter
Slide 18: Corporates & Institutions: Income down due to lower activity in Q3
Financial results for – first Q1nine 2013months 2015 Corporates & Institutions: Income down due to lower activity in Q3, costs down 7% Income statement & key figures (DKK m) Key points, Q3 15 vs Q2 15 Q3 2015 Q2 2015 Index Net interest income 667 703 95 • Trading income down in Q3 due to lower activ
Slide 19: Danske Capital: AuM down in Q3 due to asset transfer to Danica
Financial results for – first Q1nine 2013months 2015 Danske Capital: AuM down in Q3 due to asset transfer to Danica and negative market impact; continued net inflow Income statement (DKK m) Key points, Q3 15 vs Q2 15 Q3 2015 Q2 2015 Index • Assets under Management down 5% driven by a DKK Net interes
Slide 20: Danica Pension: Full risk allowance for three of four interest rate groups
Financial results for – first Q1nine 2013months 2015 Danica Pension: Full risk allowance for three of four interest rate groups; investment return low in volatile markets Income statement (DKK m) Investment allocation for Danica Traditionel, end-Q3 15 (%) Q3 2015 Q2 2015 Index Equities Credit bonds
Slide 21: Non-core: Commercial portfolio is almost run down
Financial results for – first Q1nine 2013months 2015 Non-core: Commercial portfolio is almost run down; profit before tax expected around zero for full year 2015 Key points Non-core loan portfolio, Q3 2015 (DKK bn) • Profit before tax rose to DKK 33 m in Q1-Q3 2015 Allowance account Performing credi
Slide 22: Net interest income: Effect from extremely low interest rates
Financial results for – first Q1nine 2013months 2015 Net interest income: Effect from extremely low interest rates and margin pressure Changes in net interest income (DKK m) Changes in net interest income (DKK m) 9M 2014 16,571 Q2 15 5,516 Lending volume 4 Lending volume 411 Lending margin 117 Lendi
Slide 23: Trading income: Lower customer activity in financial markets
Financial results for – first Q1nine 2013months 2015 Trading income: Lower customer activity in financial markets Trading income by business unit (DKK m) Key points Other incl. Treasury C&I Business Personal • H1 2015 saw extraordinarily high 2,715 customer activity • Trading income down in Q3 owing
Slide 24: Expenses: Positive trend in expenses continues
Financial results for – first Q1nine 2013months 2015 Expenses: Positive trend in expenses continues Total expenses ex goodwill charge (DKK m) Change in expenses ex goodwill (DKK m) Consultants etc. Bonuses Severance payments Other costs Deposit guarantee scheme/bank packages Q2 2015 5,313 6,090 Staf
Slide 25: Allowance account: Commercial property and personal customers make up 52%
Financial results for – first Q1nine 2013months 2015 Allowance account: Commercial property and personal customers make up 52% of the individual allowance account Individual allowance account by industry* (DKK bn) Gross non-performing loans, ex Non-core (DKK bn) Individual allowance account Personal
Slide 26: Nordic macro
Financial results for – first Q1nine 2013months 2015 Nordic macro Real GDP (constant prices, index 2005 = 100) Inflation (%) Denmark Sweden Norway Finland Denmark Sweden Norway Finland 130 6 5 120 4 3 110 2 1 100 0 90 -1 2006 2008 2010 2012 2014 2006 2008 2010 2012 2014 -2 Interest rates (lending, %
Slide 27: Nordic housing market
Financial results for – first Q1nine 2013months 2015 Nordic housing market Property prices (index 2005 = 100) House prices/nom. GDP (index 2005 = 100) Denmark Sweden Norway Finland Denmark Sweden Norway Finland 200 130 180 120 160 110 140 100 120 90 100 2006 2008 2010 2012 2014 2006 2008 2010 2012 2
Slide 28: Realkredit Danmark and the Danish housing market: Portfolio overview
Financial results for – first Q1nine 2013months 2015 Realkredit Danmark and the Danish housing market: Portfolio overview Portfolio facts, Realkredit Danmark, end-Q3 15 Stock of retail loans, Realkredit Danmark, end-Q3 15 (%) • Approx. 377,000 loans (residential and commercial) Variable rate instalm
Slide 29: Realkredit Danmark: Increase in fixed-rate loans driven by very low interest rates
Financial results for – first Q1nine 2013months 2015 Realkredit Danmark: Increase in fixed-rate loans driven by very low interest rates Key points Expected trend in RD portfolio* (%) • Growing interest in long-term variable rate loans in Q3 Interest-only Amortising owing to steeper yield curve • Aro
Slide 30: Credit exposure: Limited agriculture and shipping/oil exposure
Financial results for – first Q1nine 2013months 2015 Credit exposure: Limited agriculture and shipping/oil exposure Agriculture exposure (2.8 % of Group exposure) Shipping and oil related exposure (2.0 % of Group exposure) • Market conditions stayed weak. Both milk and pig prices declined • The ship
Slide 31: Funding and liquidity: Funding plan almost completed
Financial results for – first Q1nine 2013months 2015 Funding and liquidity: Funding plan almost completed; LCR compliant with new rules Changes in funding , 2015 (DKK bn and bp1) Long-term funding ex RD (DKK bn) Cov. bonds Senior Tier 2 Tier 1 Funding plan 107bp Completed 45bp 51bp 116bp 95 73 33 13
Slide 32: Funding: Structure and sources; Danish mortgage system is fully pass-through
Financial results for – first Q1nine 2013months 2015 Funding: Structure and sources; Danish mortgage system is fully pass-through Loan portfolio and long-term funding, Q3 15 (DKK bn) Funding sources (%) Q2 2015 Q3 2015 1,871 110 Senior debt 48 1,590 Bank loans 529 824 Deposits Bank mortgages 317 16
Slide 33: Three distinct methods of rating banks
Financial results for – first Q1nine 2013months 2015 Three distinct methods of rating banks Rating methodology Danske Bank’s rating Anchor Extraord. Add. Issuer + 1 + 2 + 3 + 4 = SACP + + ALAC + = SACP* Support factors Rating bbb+ +1 0 0 0 a- 0 +1 0 A (Stable) 1=Business Position 2=Capital & Earning
Slide 34: Tax
Financial results for – first Q1nine 2013months 2015 Tax Actual and adjusted tax rates (DKK m) Tax drivers Q32015 Q22015 Q12015 Q42014 Q32014 • The difference between profit Profit before tax 4,720 5,814 6,362 -5,298 4,503 before tax and adjusted pre-tax Ireland core and non-core -193 -206 -433 434
Slide 35: Contacts
Financial results for – first Q1nine 2013months 2015 Contacts Henrik Ramlau-Hansen Direct: +45 45 14 06 66 Chief Financial Officer Mobile: +45 22 20 73 10 hram@danskebank.com Claus Ingar Jensen Direct: +45 45 12 84 83 Head of IR Mobile: +45 25 42 43 70 clauj@danskebank.dk John Bäckman Direct: +45 45
Slide 36: Disclaimer
Financial results for – first Q1nine 2013months 2015 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, includ