Danske Bank A/S · OMXCOP:DANSKE
Danske Bank A/S — Debt Investor Presentation (May 2022)
49 slides from Danske Bank A/S's debt investor presentation, May 2022
Slide 1: Debt investor update – First quarter results 2022
Debt investor update – First quarter results 2022
Slide 2: Agenda
Debt investor update – Q1 2022 Agenda 01. Overview and Strategy 2 02. Q1 2022 Financial update 7 03. Capital and funding 15 04. Covered bond universe and ratings 21 05. Appendix 25
Slide 3: We are a Nordic universal bank with strong regional roots
Debt investor update – Q1 2022 We are a Nordic universal bank with strong regional roots Norway (AAA) Finland (AA+) Challenger position 3rd largest Market share: 6% Market share: 9% Share of Group lending: 10% Share of Group lending: 7% GDP growth 2022E: 3.8% GDP growth 2022E: 1.7% Unemployment 2022
Slide 4: Sustainability is an integrated element of our corporate strategy and targets
Debt investor update – Q1 2022 Sustainability is an integrated element of our corporate strategy and our corporate targets Sustainability critical in Better Danske Bank’s 2023 sustainability strategy aim to drive Selected highlights Bank plan to improve bank for all change by utilising the power of
Slide 5: Positive traction towards our ambitious targets across our sustainability indicators
Debt investor update – Q1 2022 Positive traction towards our ambitious targets across our sustainability indicators Sustainable finance Sustainable operations Impact initiatives Responsible Sustainable Governance & Employee Environmental Entrepreneur- Financial investing financing integrity well-bei
Slide 6: Implementation of new Sanctions at Danske Bank
Debt investor update – Q1 2022 Implementation of new Sanctions at Danske Bank • We have been investing heavily into our Sanctions Compliance Programme since we initiated our remediation programme • Ever since, our goal has been to deliver a Sanctions Compliance Programme that meets regulatory expect
Slide 7: Significant progress on our financial crime transformation
Debt investor update – Q1 2022 Significant progress on our financial crime transformation 2020 2021 2022 2023 A comprehensive Automating our Group-wide Financial We continue our Policies and We refresh due transaction monitoring Crime Plan is launched ongoing dialogue instructions are diligence data
Slide 8: Q1 highlights – commercial progress strengthens core banking activities
Debt investor update – Q1 2022 Q1 highlights – commercial progress strengthens core banking activities while financial markets-related income was impacted by volatility Q1 benefited from resilient fee income from Commercial progress, despite difficult Russia’s invasion of Ukraine accelerated diversi
Slide 9: Financial results – first quarter 2022
Financial results – first quarter 2022 Income from core banking activities up 2% Y/Y driven by improved NII trend; financial markets impacting trading and insurance income; credit quality remained strong Income statement and key figures (DKK m) Key points, Q122 vs Q121 Q122 Q121 Index Q4 21 Index •
Slide 10: Net profit outlook for 2022
Debt investor update – Q1 2022 Net profit outlook for 2022*: As we are progressing towards our financial ambitions, we expect net profit to be in the range of DKK 13 – 15 bn We expect income from core banking activities to be higher in 2022 due to good economic activity and progress towards our 2023
Slide 11: NII: Positive trend from improving credit demand and repricing initiatives
Debt investor update – Q1 2022 NII: Positive trend from improving credit demand coupled with full effect from repricing initiatives improve NII for fifth straight quarter Net interest income, Q122 / Q121 (DKK m) Highlights 8 5,630 • Net interest income continued the positive trend supported by lendi
Slide 12: Fee: Strong fee performance in core banking activities
Debt investor update – Q1 2022 Fee: Strong fee performance in core banking activities mitigated financial markets headwinds Net fee income, Q1-22/Q1-21 and Q1-22/Q4 21 (DKK m) Highlights 3,402 3,379 3,824 Y/Y Q1-21 Q1-22 Q4-21 Q1-22 -1% • Excluding landmark ECM deal in Q1-21, strong core banking fee
Slide 13: Trading income held up well despite challenging financial markets
Debt investor update – Q1 2022 Trading income held up well because of good customer activity despite challenging financial markets and value adjustments Net trading income (DKK m) Highlights Group Functions North. Ireland P&BC xVA LC&I ex. xVA 1,266 34 • Solid customer-driven trading income despite
Slide 14: Expenses: Underlying progress on efficiency despite high remediation costs
Debt investor update – Q1 2022 Expenses: Underlying progress on efficiency despite continually high remediation costs. Ramp up of AML/Compliance y/y according to plan. Expenses, Q122/Q121 (DKK m) Highlights 6,371 6,273 • Y/Y affected by the ramp-up of AML/compliance during ‘21 and the 163 expected r
Slide 15: Impairments: Strong credit quality supported very modest impairment charges
Debt investor update – Q1 2022 Impairments: Strong credit quality supported very modest impairment charges despite additional PMAs to account for current uncertainty and potential lagging effects Highlights Impairment charges by category* (DKK bn) 4.3 Credit quality deterioration: oil & gas Post-mod
Slide 16: Capital: CET1 capital ratio of 17.6% (buffer of 5.0%)
Debt investor update – Q1 2022 Capital: CET1 capital ratio of 17.6% (buffer of 5.0%) Capital ratios, under Basel III/CRR (%) Current capital buffer structure (%) Tier 2 Countercyclical capital buffer Hybrid T1/AT1 23.0 Capital conservation buffer 22.4 Pillar II component (total 3.4%) 21.7 21.5 SIFI
Slide 17: Strong CET1 capital build-up since 2008; ADI well in excess of DKK 100 bn
Debt investor update – Q1 2022 Strong CET1 capital build-up since 2008; Available Distributable Items (ADI) well in excess of DKK 100 bn Common Equity Tier 1, 2008 – 2022 Q1 (DKK bn) +DKK 75 bn 144 152 151 126 130 134 133 133 127 133 119 107 77 79 85 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Slide 18: Fully compliant with MREL and subordination requirement
Debt investor update – Q1 2022 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; Q1 2022; Comments DKK bn (% of Group REA) +39 PS > 1y CET1, AT1, T2 (+4.5%) NPS > 1y*
Slide 19: Funding structure and sources: Danish mortgage system is fully pass-through
Debt investor update – Q1 2022 Funding structure and sources: Danish mortgage system is fully pass-through Loan port folio and long-term funding, Q1 22 (DKK bn) Funding sources* (%) 58% 58% 2,371 Q4-21 161 Senior & Q1-22 NPS bonds 1,843 1,177 Deposits Bank loans 654 Bank mortgages 407 13% 13% 251 Co
Slide 20: Funding programmes and currencies
Debt investor update – Q1 2022 Funding programmes and currencies Covered bonds by currency, end-Q1 2022 Largest funding programmes, end-Q1 2022 Utilisation EMTN Programme 49% EUR 27% 28% Limit – EUR 35bn SEK NOK Global Covered Bond 73% Limit – EUR 30bn 45% ECP Programme Total DKK 160 bn 0% Limit – E
Slide 21: Funding and liquidity: LCR compliant at 164%
Debt investor update – Q1 2022 Funding and liquidity: LCR compliant at 164% Changes in funding,* 2022 (DKK bn and bp) Long-term funding excl. RD (DKK bn)*** Cov. bonds Senior Non-Preferred Senior Funding plan Completed 30bp 100 156bp 79 70-90 75 69 112bp** 37 26bp 30 214bp 17bp 29bp 9bp 20** 16 8 11
Slide 22: Danske Bank covered bond universe, a transparent pool structure
Debt investor update – Q1 2022 Danske Bank covered bond universe, a transparent pool structure1 Danske Bank A/S C-pool S&P AAA Fitch AAA Residential mortgages • Denmark, D-pool • Norway, I-pool • Sweden, Danske Hypotek AB Danske Bank A/S I-pool Finland • Finland, Danske Mortgage Bank Plc S&P AAA Fit
Slide 23: Danske Bank's credit ratings
Debt investor update – Q1 2022 Danske Bank’s credit ratings Long-term instrument ratings Credit rat ings remain unchanged in Q1 2022 Fitch Moody’s Scope S&P Credit ratings remain unchanged in Q1 2022, and include the first round of AAA Aaa AAA AAA fallout from the Russia/Ukraine war. AA+ Aa1 AA+ AA+
Slide 24: Danske Bank's ESG ratings
Debt investor update – Q1 2022 Danske Bank’s ESG ratings We have chosen to focus on five providers based on their importance to our investors Q1 2022 End 2021 End 2020 End 2019 End 2018 Range B 200 companies, out of the 13,126 analysed, B B C C A to F (A highest rating) CDP1 made the climate change
Slide 25: Three distinct methods for rating banks
Debt investor update – Q1 2022 Three distinct methods for rating banks Danske Bank’s rating Rating methodology Potential Extraordinary Anchor + 1 + 2 + 3 + 4 = CRA = SACP1 + external + ALAC = Issuer rating SACP1 adjustment 2 support A+ bbb+ +1 +1 -1 0 0 a- 0 +2 (Negative) 1=Business Position, 2=Capi
Slide 26: Appendix
Debt investor update – Q1 2022 Appendix 01. Sustainability 26 02. Exposure to Russia/Ukraine 32 03. Financial Crime transformation 33 04. Business units 36 05. Credit quality 39 06. Macro overview 46 07. Contact details 47
Slide 27: Our 2023 Sustainability Strategy defines the key dimensions for our efforts
Debt investor update – Q1 2022 Our 2023 Sustainability Strategy defines the key dimensions for our efforts to create lasting value for our customers, employees, society and investors Danske Bank’s 2023 Sustainability Strategy 26
Slide 28: On sustainable finance, Danske Bank aspires to Nordic leadership
Debt investor update – Q1 2022 On sustainable finance, Danske Bank aspires to Nordic leadership – our sustainable finance framework has been developed to drive and integrate that ambition Group ambition for Be a leading bank in the Nordics on sustainable finance and the leading bank in Denmark Susta
Slide 29: Ambition to reach net-zero by 2050 supported by strong commitments
Debt investor update – Q1 2022 Danske Bank’s ambition to reach net-zero by 2050 is supported by strong commitments, interim emissions targets and a carefully considered approach Lending Asset Management Asset Ownership Sustainable finance DKK 300 billion by 2023 in sustainable DKK 150 billion by 203
Slide 30: Significant achievements within sustainable finance during 2021
Debt investor update – Q1 2022 Significant achievements within sustainable finance during 2021 – some highlights Leading sustainable financing • #1 Nordic arranger of green, social and sustainability bonds as well as sustainable bonds overall 1) • #1 arranger of Nordic sustainability-linked loans 1)
Slide 31: International agreements, goals, partnerships and standards supported
Debt investor update – Q1 2022 Danske Bank supports a range of international agreements, goals, partnerships and standards relating to sustainability – some of these are listed below Principles for Responsible Net-Zero Banking Alliance Net-Zero Asset Managers Net-Zero Asset Owner Principles for Resp
Slide 32: Deep dive: ESG integration in lending operations
Debt investor update – Q1 2022 Deep dive: Overview of ESG integration in Danske Bank’s lending operations Multiple types of approaches are implemented to consider ESG factors both at company and portfolio levels 1. Position statements 2. Single-name ESG analysis 3. Portfolio-level ESG analysis Our
Slide 33: Exposure related to Russian invasion of Ukraine
Debt investor update – Q1 2022 Exposure related to Russian invasion of Ukraine (as published 8 March 2022) Fund exposure and Treasury – very limited Direct credit exposure – less than 0.1% in Danske Invest and none in Treasury Our direct (credit and counterparty) exposure to Danske Bank and Dani
Slide 34: Financial Crime prevention - increase in number of full-time employees
Debt investor update – Q1 2022 Financial Crime prevention - increase in number of full-time employees Group headcount 3,497 Full-time employees dedicated to the financial crime prevention agenda* 2015 2016 2017 2018 2019 2020 2021 2022 7 240 Second Line headcount Employees working in Employees worki
Slide 35: Committee governance for Compliance Risks
Debt investor update – Q1 2022 Committee governance for Compliance Risks Financial Crime Steering Compliance Risk Committee Conduct and Compliance Committee Committee • Provides governance structure and • Second Line Committee responsible for • Board level committee that oversees the delivery oversi
Slide 36: Regulatory Engagements
Debt investor update – Q1 2022 Regulatory Engagements • We engage in ongoing dialogue with our regulators through regular Financial Supervisory Authority (FSA) and Supervisory College meetings to ensure aligned expectations and transparency between our regulators and the Bank. Ongoing Dialogue • We
Slide 37: P&BC: Total income up 10% driven by steady commercial momentum
Debt investor update – Q1 2022 P&BC: Total income up 10% driven by steady commercial momentum in retail segments and continued enhancement of SME offerings as we progress towards our 2023 ambitions P&BC - highlights Income statement (DKK m) Q1-22 Q1-21 Index Q4-21 Index PCDK: Improved customer flow
Slide 38: LC&I: Strong franchise and advisory capabilities underpinning solid results
Debt investor update – Q1 2022 LC&I: Strong franchise and advisory capabilities underpinning solid results as we continue to assist clients in navigating their currently difficult operating environment LC&I - highlights Income statement (DKK m) Significant credit demand, e.g. in DK and Strong custom
Slide 39: Danica and Northern Ireland results
Debt investor update – Q1 2022 Danica: Good business momentum, however, negative impact from investment results Northern Ireland: Lower profitability due primarily to trading income volatility Danica Pension, key figures (DKK m) Northern Ireland, key figures (DKK m) Q1-22 Q1-21 Index Q4-21 Index Q1-
Slide 40: Strong footprint within retail lending
Debt investor update – Q1 2022 Strong footprint within retail lending Lending by segment 1 Q1 22 (%) Credit exposure by industry Q1 22 (%) Personal Customers DK Personal Customers 37.5 Personal Customer Nordic Commercial Property 11.6 Business Customers Public Institutions 11.2 Asset Finance Co-ops
Slide 41: Realkredit Danmark portfolio overview
Debt investor update – Q1 2022 Realkredit Danmark portfolio overview: Improving trend for higher margin products, however, still with prudent LTV ratios Highlights Retail loans, Realkredit Danmark, Q1 22 (%) Fixed rate (10 yrs-30 yrs) Interest-only ( ) = Q4-21 Portfolio facts, Realkredit Danmark, Q1
Slide 42: Credit quality: Low level of actual credit deterioration
Debt investor update – Q1 2022 Credit quality: Low level of actual credit deterioration Breakdown of Post-Model Adjustments (DKK bn) Allowance account by business unit (DKK bn) P&BC N.I. 6.3 LC&I Other (Non-core) Agriculture 0.9 5.6 23.5 23.3 23.3 23.1 22.7 CRE 1.2 20.6 1.5 Capital Goods 5.8 5.5 5.5
Slide 43: Fossil fuels exposure: Climate targets set for the loan book
Debt investor update – Q1 2022 Fossil fuels (oil & gas and coal) exposure: : Climate targets have been set for the loan book to support the transition Key points, Q1 22 • This page shows exposure to fossil fuels and includes customers involved in the production, refining, and distribution (including
Slide 44: Credit exposure: Limited exposure to agriculture and oil
Debt investor update – Q1 2022 Credit exposure: Limited and well-impaired exposure to agriculture and oil Agriculture exposure Oil-related exposure • African Swine Fewer (ASF), which spread to Germany in Q3 2020, Covid-19, Chinese imports, and the RU/UA war is causing uncertainty for the industry. T
Slide 45: Credit exposure: transportation, hotels, restaurants and leisure
Debt investor update – Q1 2022 Credit exposure: Limited exposure to transportation, hotels, restaurants and leisure Transportation exposure Hotels, restaurants and leisure exposure • Total gross exposure* increased by DKK 0.2bn from the Q4-21 level. • Total gross exposure decreased slightly, and was
Slide 46: Credit exposure: retailing and commercial real estate
Debt investor update – Q1 2022 Credit exposure: Limited exposure to retailing and stable credit quality in commercial real estate Retailing Commercial real estate • Gross exposure decreased DKK 4.8bn from the preceding quarter, driven mainly by a decrease in the residential segment. • Overall, credi
Slide 47: Nordic macroeconomic data
Debt investor update – Q1 2022 Nordic macroeconomic data EU-27 Denmark Sweden Norway Finland Real GDP, constant prices (index 2005 = 100) Inflation (%) Property prices (index 2005 = 100) Consumer spending (% change from same period 2019) Unemployment (%) Apartment prices (index 2005 = 100) Source: D
Slide 48: Contacts
Debt investor update – Q1 2022 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 49: Disclaimer
Debt investor update – Q1 2022 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 solici tation of an offer to buy or acquire securities of Danske Bank A/S in any jurisdiction, including the United States