Danske Bank A/s · OMXCOP:DANSKE
Danske Bank A/s — FY2023 Earnings Presentation
63 slides from Danske Bank A/s's earnings presentation, February 2024
Slide 1: Investor Presentation – Financial results 2023
Investor Presentation Financial results 2023
Slide 2: Content
Investor Presentation – FY 2023 Content Danske Bank – brief overview 03 – 11 Financial highlights – FY 2023 12 – 17 Business & Product Units 18 – 21 ESG, Sustainability, Financial Crime Prevention 22 – 33 Strategy execution 34 – 37 Credit Quality & Impairments 38 – 44 Capital 45 – 48 Funding & Liqui
Slide 3: Danske Bank - a brief overview
Danske Bank - a brief overview
Slide 4: We are a focused Nordic bank with strong regional roots
Investor Presentation – FY 2023 We are a focused Nordic bank with strong regional roots Finland (AA+) 3.2m 2,000+ 20,000 3rd largest personal and business large corporate and employees in Share of Group lending: 8% customers institutional customers 10 countries GDP growth 2023E: -0.5% DKK >770bn* >D
Slide 5: Nordic Outlook December 2023 - Modest economic cooling in the Nordics
Investor Presentation – FY 2023 Nordic Outlook December 2023 - Modest economic cooling in the Nordics Denmark Sweden Forecast 2023 2024 2025 Forecast 2023 2024 2025 GDP Growth 1.1% (1.7%) 1.0% (1.2%) 1.6% GDP Growth -0.2% (0.0%) 1.3% (1.7%) 1.8% Inflation 3.3% (4.0%) 2.0% (3.2%) 1.9% Inflation 8.6%
Slide 6: Outlook for Danish housing market
Investor Presentation – FY 2023 Outlook for Danish housing market Forecast for house prices, Denmark Household debt and interest payments, Denmark Index (2020:100) Debt burden Interest 120 Debt burden Interestburden burden,after tax after tax (% of disposable income) (% of disposable income) (% (%of
Slide 7: A year of significant improvement in financial performance and commercial momentum
Investor Presentation – FY 2023 A year of significant improvement in financial performance and commercial momentum underpinning sustainable profitability 2023 highlights 2024 outlook Net profit of Core banking income Improved efficiency DKK 21.3bn up +20% Cost/Income 49% Supported by strong NII tren
Slide 8: Better Bank strategy exceeding targets while enhancing resilience
Investor Presentation – FY 2023 Better Bank strategy exceeding targets while enhancing the resilience of Danske Bank and laying a strong foundation for Forward ’28 execution Our 2023 targets FY2023 Our 2026 targets to measure the success of Forward ’28 8.5-9% RoE 13% Personal Number of meetings per
Slide 9: Strong balance sheet underpins our resilient business model
Investor Presentation – FY 2023 Danske Bank’s strong balance sheet underpins our resilient business model which includes a well-balanced ALM strategy and a very strong liquidity position Danske Bank has a sound funding structure and remains very well capitalised with a prudent CET1 capital buffer to
Slide 10: Important progress across sustainability focus areas
Investor Presentation – FY 2023 Important progress achieved across sustainability focus areas as our 2023 strategy comes to a close Sustainable finance Sustainable operations Impact initiatives Responsible Sustainable Governance & Employee well- Environmental Entrepreneurship Financial investing fin
Slide 11: Financial outlook: Net profit for 2024
Investor Presentation – FY 2023 Financial outlook: Net profit for 2024 will reflect progress on financial ambitions for 2026 Total income is expected to grow in 2024, driven by higher core income, our continued efforts to Income drive commercial momentum and in line with our financial targets for 20
Slide 12: Financial highlights – full year 2023
Financial highlights – full year 2023
Slide 13: Strong income uplift supported by NII
Investor Presentation – FY 2023 Strong income uplift supported by NII; recovery in trading and insurance despite impact from one-offs; strong credit quality underpins low impairments Key points 2023 vs 2022 Income statement and key figures (DKK m) 2023 2022 Index Q423 Q323 Index Strong uplift in pro
Slide 14: NII: Healthy deposit margin expansion Y/Y
Investor Presentation – FY 2023 NII: Healthy deposit margin expansion Y/Y while recent pass-through impacts Q/Q development; deposit and lending volumes have stabilised Highlights Net interest income 2023 vs 2022 (DKKm) Deposit margin development (%) 35,000 3.0 PC -543 -480 2.68 Net interest income
Slide 15: Fees: Improving trend Q/Q
Investor Presentation – FY 2023 Fees: Improving trend Q/Q as activity remained solid with recovery in lending and investment fees; Y/Y affected by lower lending activity and reduced AuM Highlights Net fee income (DKK m) Activity-driven fees (transfers, accounts etc.) 12,590 20 Resilient income due t
Slide 16: Trading income: Continued recovery and less volatility
Investor Presentation – FY 2023 Trading income: Continued recovery and less volatility; calibrated risk in fixed income market-making strategy and seasonality in Q4 limit effect from lower rates Highlights Net trading income (DKK m) LC&I 3,704 -315 630 Y/Y: New fixed income strategy implemented in 2
Slide 17: Expenses: Dedicated cost management
Investor Presentation – FY 2023 Expenses: Dedicated cost management resulting in 4% decline in cost base Y/Y; well on track to deliver on 2026 C/I target Highlights Expenses (DKK m) Total costs down 4% Y/Y. Continued progress on efficiency as 26,478 underlying costs (adj. for one-offs in 22) were ke
Slide 18: Business & Product Units
Bank Business & Product Units
Slide 19: Business units: Growing momentum and enhanced profitability
Investor Presentation – FY 2023 Business units: Growing momentum and enhanced profitability; continued lending uplift for business customers Personal Customers Business Customers LC&I Good momentum throughout the year: pre-tax profit up Strong year with significant profit uplift, driven by Strong pr
Slide 20: Business units: Danica and Northern Ireland
Investor Presentation – FY 2023 Business units: Improved results in Danica; strong profitability in Northern Ireland driven by higher income Solid uplift in NII and trading income throughout the year. The strong 2023 financial Profit before imp. (DKK m) Lending (index) performance reflects business
Slide 21: Realkredit Danmark portfolio overview
Investor Presentation – FY 2023 Realkredit Danmark portfolio overview: Continued strong credit quality Highlights Retail loans, Realkredit Danmark, Q423 (%) Fixed rate (10 yrs-30 yrs) Interest-only ( ) = Q323 Portfolio facts, Realkredit Danmark, Q423 Variable rate (6m-10 yrs) Repayment Approx. 304,0
Slide 22: ESG, Sustainability, Financial Crime Prevention
ESG, Sustainability, Financial Crime Prevention
Slide 23: Sustainability is an integrated element of Forward '28 strategy
Investor Presentation – FY 2023 Sustainability is an integrated element of our Forward ’28 strategy Our starting point What we will do Large Corporates & Institutions Personal Customers Advisory services, transition finance Housing, investments, pensions, Advisory and project finance mobility and da
Slide 24: Climate Action Plan aligned with Paris Agreement
The disclaimer for the Climate Action Plan Progress Report 2023 applies to all information shown on this slide (see slide 62) Investor Presentation – FY 2023 Climate Action Plan aligned with Paris Agreement launched in January 2023 Carbon footprint of 13.3 million tCO2e across the Group, with >99% r
Slide 25: Climate Action Plan Progress Report shows positive traction
The disclaimer for the Climate Action Plan Progress Report 2023 applies to all information shown on this slide (see slide 62) Investor Presentation – FY 2023 Our Climate Action Plan Progress Report shows positive traction across our climate targets, though some sector targets do not follow the linea
Slide 26: Recent highlights on sustainability agenda
Investor Presentation – FY 2023 Recent highlights on sustainability agenda contributing to strong performance Sustainable finance volume targets reached Climate Action Plan & Progress Report Since 2020, Danske Bank has increased its sustainable In January 2023, Danske Bank launched its Climate Actio
Slide 27: Deep dive – ESG integration in lending operations
Investor Presentation – FY 2023 Deep dive – Overview of ESG integration in Danske Bank’s lending operations 1. Position statements 2. Single-name ESG analysis 3. Portfolio-level ESG analysis Our position statements are a key tool for aligning ESG analysis is conducted for all large corporate Carbon
Slide 28: Committed to a range of sustainability initiatives
Investor Presentation – FY 2023 Danske Bank is committed to a range of sustainability initiatives – including these key examples Principles for Principles for Net-Zero Banking Alliance Net-Zero Asset Net Zero Asset Responsible Banking Responsible Investment Owner Alliance Managers Initiative A world
Slide 29: Our Path to Financial Crime Transformation
Investor Presentation – FY 2023 Our Path to Financial Crime Transformation 2022 2023 We continue to recruit new We incorporate all core employees with financial We take a number of specific We develop a set of clearly scenarios into our enhanced crime expertise, and by the and extraordinary decision
Slide 30: Completion of our Financial Crime Transformation Programme
Investor Presentation – FY 2023 Completion of our Financial Crime Transformation Programme Establishing a robust compliance function Completion of the Group Financial Crime Plan In the recent years, the Bank has made significant investments to The purpose of the Financial Crime Plan has been to desi
Slide 31: Regulatory Engagements
Investor Presentation – FY 2023 Regulatory Engagements We engage in ongoing dialogue with our regulators through regular meetings with the Financial Supervisory Authorities (“FSAs”) and Ongoing Supervisory College to ensure aligned expectations and transparency between our regulators and the Bank Di
Slide 32: Committee Governance for Compliance Risks
Investor Presentation – FY 2023 Committee Governance for Compliance Risks Financial Crime Remediation Compliance Risk Conduct and Post-Resolution Steering Committee Committee Compliance Committee Committee Provides governance structure and Second Line Committee responsible Board level committee that
Slide 33: Resolutions with the Danish and U.S. Authorities
Investor Presentation – FY 2023 The Resolutions with the Danish and U.S. Authorities In December 2022, Danske Bank reached the final resolutions with the U.S. Department of Justice (DOJ), the U.S. Securities and Exchange Commission (SEC) and the Danish Special Crime Unit (SCU) following the investig
Slide 34: Strategy execution
Bank Strategy execution
Slide 35: Better Bank strategy is now finalised
Investor Presentation – FY 2023 Better Bank strategy is now finalised – we have mostly achieved what we set out to do Financial targets FY2023 Achievements in focus areas Select performance indicators Society Compliance under control Robust control environment at all Customer PC BC LC&I 8.5-9% RoE 1
Slide 36: Our commitments for 2026
Investor Presentation – FY 2023 Our commitments for 2026 Growth in focus segments How we measure progress 1 Financial targets for ‘26 Leading wholesale and business bank in the Nordics Personal Number of meetings per Leading retail bank in Denmark and Finland Customers advisor (Index: 2023 = 100) 16
Slide 37: Ongoing cost discipline to reach our targets for 2026
Investor Presentation – FY 2023 Ongoing cost discipline to reach out targets for 2026 Reminder from our investor day Our execution plan 2023-2026 DKK bn 2022 26.5 Focus FCRP cost and completion of remediation programmes 2023E 25-25.5 Inflation Improving advisory and engagement Remediation model acro
Slide 38: Credit quality & Impairments
Credit quality & Impairments
Slide 39: Impairments: Continually strong credit quality
Investor Presentation – FY 2023 Impairments: Continually strong credit quality resulted in reversals in Q4 and full- year impairments well below normalised level Highlights Impairment charges by category (DKK bn) Credit quality deterioration PMAs Macro models Debt collection one-off Credit quality r
Slide 40: Strong footprint within retail lending
Investor Presentation – FY 2023 Strong footprint within retail lending Lending by segment1 Q4 23 (%) Credit exposure by industry Q4 23 (%, rounded) 3% Personal customers 34 3% Public institutions 12 Northern Ireland LC&I Other Commercial property 11 24% Co-ops & Non-profit 8 15% Personal Customers D
Slide 41: Overall strong credit quality in portfolios exposed to macro cyclicality
Investor Presentation – FY 2023 Overall strong credit quality in portfolios exposed to macro cyclicality CRE: Well diversified and prudently managed growth Agriculture: Well-provisioned agriculture book Housing: Low leverage and strong household finances DKK 295 bn in gross exposure and ECL ~1% DKK
Slide 42: Commercial property; prudently managed
Investor Presentation – FY 2023 Commercial property; prudently managed and cash-flow based underwriting standards; sound credit quality and adequate buffers in place to mitigate tail risks Highlights Lending to CRE segment by major peer banks (index)* CRE share of total portfolio by major peer banks
Slide 43: Fossil fuels (coal, oil and gas) exposure
Investor Presentation – FY 2023 Fossil fuels (coal, oil and gas) exposure Key points Q423 Exposure towards oil majors (upstream oil and gas) has been stable during 2023 and exposure is down by 63% compared to end 2020. The exposure development is aligned with the Group’s 2030 climate target of reduc
Slide 44: Credit quality: Low level of actual credit deterioration
Investor Presentation – FY 2023 Credit quality: Low level of actual credit deterioration Stage 2 and 3 as % of net exposure Allowance account by business unit (DKK bn) 11 4 Stage 2 net exposure (% of Total, lhs) PC BC LC&I N.I. Other (Non-core) 10 Stage 3 net exposure (% of Total, rhs) 23.0 22.7 9 3
Slide 45: Capital
Bank Capital
Slide 46: Capital: Strong capital base with CET1 ratio of 18.8%
Investor Presentation – FY 2023 Capital: Strong capital base with CET1 ratio of 18.8% Capital ratios under Basel III/CRR (%) Current capital buffer structure (%) Tier 2 Hybrid T1/AT1 Pillar II component (total 2.7%) CET1 23.1 22.9 22.4 22.1 Norwegian systemic risk buffer 2.4 2.5 2.5 2.5 Countercycli
Slide 47: Strong CET1 capital build-up since 2008
Investor Presentation – FY 2023 Strong CET1 capital build-up since 2008; Available Distributable Items (ADI) well in excess of DKK 100 bn Common Equity Tier 1, 2008 – 2023 (DKK bn) +78 bn 152 149 155 144 126 130 134 133 133 127 133 119 107 77 79 85 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2
Slide 48: Fully compliant with MREL and subordination requirement
Investor Presentation – FY 2023 Fully compliant with MREL and subordination requirement; expect to cover MREL need with both preferred and non-preferred senior MREL and subordination requirement* and eligible funds Q423 DKK bn (% of Group REA) Comments PS > 1y NPS > 1y CET1, AT1, T2 The Group has to
Slide 49: Funding & Liquidity
Bank Funding & Liquidity
Slide 50: Funding structure and sources
Investor Presentation – FY 2023 Funding structure and sources: Danish mortgage system is fully pass-through Loan portfolio and long-term funding Q423 (DKK bn) Funding sources* (%) 2,306 Q323 60% 59% 156 Senior & Q423 NPS bonds 1,779 1,137 Deposits Bank loans 626 14% 12% Bank mortgages 397 9% 9% 9% 9
Slide 51: Funding programmes and currencies
Investor Presentation – FY 2023 Funding programmes and currencies Covered bonds by currency Q423 Largest funding programmes Q423 47% 21% Utilisation SEK NOK EMTN Programme 44% Limit – EUR 35bn Total Total Global Covered Bond 69% DKK DKK166 bn 155 bn Limit – EUR 30bn 31% EUR 1% ECP Programme 18% CHF
Slide 52: Funding plan
Investor Presentation – FY 2023 Funding plan Changes in funding* 2023-2024 (DKK bn and bp) Long-term funding excl. RD (DKK bn)*** Completed Funding plan Cov. bonds Senior Non-Preferred Senior 16bp 100 97bp 95 162bp 32bp 80-100 56bp 18bp 68bp 162bp 47 35 40 79 38bp 28 33 23 23 22 75 12 Redemptions 20
Slide 53: EUR1 issuance: D-pool and C-pool
Investor Presentation – FY 2023 EUR1 issuance: Danske Mortgage Bank & Danske Bank A/S “D-pool” and “C-pool” Danske Bank A/S C-pool1 S&P AAA Fitch AAA Residential mortgages Denmark, D-pool Norway, I-pool (to be sold to Nordea) Sweden, Danske Hypotek AB Finland, Danske Mortgage Bank Plc Danske Bank A/
Slide 54: Credit & ESG Ratings
Bank Credit & ESG Ratings
Slide 55: Danske Bank's credit ratings
Investor Presentation – FY 2023 Danske Bank’s credit ratings Long-term instrument ratings No credit rating changes in Q4 2023 Fitch Moody’s Scope S&P There were no credit rating changes on Danske Bank AAA Aaa AAA AAA in Q4 2023. AA+ Aa1 AA+ AA+ In Q3 2023, Fitch Ratings (Fitch) upgraded Danske AA Aa
Slide 56: Danske Bank's ESG ratings – No change in Q4 2023
Investor Presentation – FY 2023 Danske Bank’s ESG ratings – No change in Q4 2023 We have chosen to focus on five providers based on their importance to our investors Q4 2023 Q3 2023 Q2 2023 Q1 2023 End End 2021 End 2020 Range 2022 CDP 1 B 283 companies, out of the 18,700 B B B B B B A to F (A highes
Slide 57: Danske Bank's credit ratings
Investor Presentation – FY 2023 Danske Bank’s credit ratings Rating methodology Danske Bank’s rating Extraordinary Anchor Potential CRA* + 1 + 2 + 3 + 4 = = SACP** + external + ALAC = Issuer rating SACP1 adjustment support A+ bbb+ +1 +1 -1 0 0 a- 0 +2 (Stable) 1=Business Position, 2=Capital & Earnin
Slide 58: Tax & Material one-offs
Bank Tax & Material one-offs
Slide 59: Tax
Investor Presentation – FY 2023 Tax Actual and adjusted tax rates (DKK m) Tax drivers, Q4 2023 2023 Q4 2023 Q3 2023 Q2 2023 Q1 2023 The actual tax rate of 23.8% (excluding prior- year's adjustments) is lower than the Danish rate of 25.2% - due to the tax effect from tax exempt Profit before tax acco
Slide 60: Material extraordinary items in 2023
Investor Presentation – FY 2023 Material extraordinary items in 2023 One-off items Effect P&L line affected (DKK m) Q123 None Transaction costs and prudent valution related to Personal Customers Norway -693 Other income Gain from sale of shares taken over in connection with a loan 327 Trading Q223 R
Slide 61: Contacts
Investor Presentation – FY 2023 Contacts Investor Relations Group Treasury and Funding Claus Ingar Jensen Mobile +45 25 42 43 70 Kasper Refslund Kirkegaard Mobile: +45 23 82 94 88 Head of IR clauj@danskebank.dk Head of Group Treasury kaki@danskebank.dk Nicolai Brun Tvernø Mobile +45 31 33 35 47 Bent
Slide 62: Disclaimer for Climate Action Plan Progress Report 2023
Investor Presentation – FY 2023 Disclaimer for Danske Bank’s Climate Action Plan Progress Report 2023 Danske Bank’s Climate Action Plan Progress Report 2023 has been prepared by Danske Bank A/S (“Danske Bank”). Danske Bank is under supervision by the Danish Financial Supervisory Authority (Finanstil
Slide 63: Disclaimer Important Notice
Investor Presentation – FY 2023 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