Danske Bank A/S · OMXCOP:DANSKE
Danske Bank A/S — Investor Presentation (March 2009)
31 slides from Danske Bank A/S's investor presentation, Mar 27, 2009
Slide 1: Conservatism or weak asset quality?
Danske Bank Conservatism or weak asset quality? Henrik Hoffmann Executive Vice President, Group Credits March 27, 2009
Slide 2: Agenda
Agenda 1. Market situation: Very pessimistic outlook 2. The credit organization in Danske Bank is well prepared 3. Credit quality 1. Business areas 2. Sectors 3. Impairment 2
Slide 3: All our markets are under pressure
All our markets are under pressure Growth in Q4 2008 6 6 GDP growth, y/y 4 4 2 2 Denmark Finland Norway USA percent percent 0 0 -2 -2 Lithuania Germany -4 -4 Sweden Ireland -6 -6 Q4 08 . 3
Slide 4: Sharp downturn in the Nordic economies, but significant fiscal firepower
Sharp downturn in the Nordic economies, but significant fiscal firepower Macroeconomic key figures - 2009 estimates GDP growth Budget balance Gross publ. debt Unemp. rate % % of GDP % of GDP % -2.8 -0.5 25.2 2.9 -2.5 2.4 32.0 7.0 -4.5 1.1 35.7 8.8 -0.5 12.0 26.0 3.7 -2.7 -3.0 67.0 8.5 = worse than
Slide 5: There is more bad news to come
There is more bad news to come Correlation between credit tightening and defaults 12 100 10 75 8 50 6 25 Net % US banks credit tightening 4 0 2 -25 Global default rate 0 -50 dec 90 dec 92 dec 94 dec 96 dec 98 dec 00 dec 02 dec 04 dec 06 dec 08 Source: United States, Business Surveys. 5 5
Slide 6: Agenda
Agenda 1. Market situation: Very pessimistic outlook 2. The credit organization in Danske Bank is well prepared 3. Credit quality 1. Business areas 2. Sectors 3. Impairment 6
Slide 7: Strong Credit Organisation
Strong Credit Organisation Centralization reduction in DLA Strict lending criteria Group specialist functions (shipping, private equity) Extra staff to the credit area Increased focus to portfolio limits and classifications Restructuring of credit functions in Ireland 7
Slide 8: One platform, exceptional brands
One platform Exceptional brands Shared concepts including credit eases day-to-day management of multi-brand organization Shared terminology eases communication Shared data structure facilitates easier analysis and reporting Common IT systems facilitates easier implementation of changes
Slide 9: Credit modelling in pursuance of strengthened credit control
Credit modelling in pursuance of Consistency Objectivity PD models Validity (up-to-date customer information) Enhanced surveillance and control Collateral Value Models Faster response to changes Limit Models ⇒ Strengthened credit control 9
Slide 10: Credit Rating - Process
Credit Rating - Process Ra tin g re q ue st Monthly follow-up lists quest Cr Rating re ed it R t e q ues Rating office at gr atin ing R Relationship Manager FS Event Credit file Credit file Bank system 10
Slide 11: Rating responsibility
Rating responsibility Rating department #of customers, % Exposure, % Group Credits 29% 91% Local rating 71% 9% departments Statistic as of 31.12.2008 11
Slide 12: Agenda
Agenda 1. Market situation: Very pessimistic outlook 2. The credit organization in Danske Bank is well prepared 3. Credit quality 1. Business areas 2. Sectors 3. Impairment 12
Slide 13: Lending and credit exposure
Lending and credit exposure - Diversified low exposure to shipping and commercial property Lending by region, end-2008 Credit exposure by industry, end-2008 (ex repos ) (DKr 2,520bn, including DKr 2,019bn in loans) Central and Baltics Other Subsidised local 2% 2% housing Ireland governments 4% 3%
Slide 14: Danske Bank has been successful in improving lending margins
Danske Bank has been successful in improving lending margins - More to come and more is needed % 3.00 Marginal net interest margins Q4 2008* 2.65 2.58 2.50 2.16 2.02 2.00 1.69 1.58 1.50 1.00 0.50 0.00 Danske Bank Nordea DnB NOR SHB SEB Swedbank Source: FPK, Nordic banks, Feb. 23, 2009 * Marginal NIM
Slide 15: Known and potential problem exposures relatively modest vs. peers
Known and potential problem exposures relatively modest vs. peers % Percentage of total loans 70 65 60 60 53 50 Potential problem exposures 50 44 - Shipping 38 - Nordic real estate 40 - Nordic corporate (non-mortgage) - UK 30 Known problem exposures - Baltics 20 - Ireland & Northern Ireland
Slide 16: Credit quality: Increase in NPL in 2008 due to Q4
Credit quality Business area 60% Rating 5,6,7 Rating 8,9 The exposure-weighted 50% 40% average PD was 0.64% 30% against 0.41% in 2007 20% 10% Source: Risk Management 2008 0% BA BA BA BA BA BA BA Da ns ke Othe r De nm a rk S we de n F inla nd No rwa y Ire la nd No rthe rn B a ltic 's M a rke ts Ire
Slide 17: Ireland (exposure at Dkr 81bn)
Ireland (exposure at Dkr 81bn) Customer segments Strengthening of the credit Corporate Other organization 58% 3% DLA centralized more than Group-average Commercial property Personal exposure 20.3bn 39% Hereof 6.8bn related to Type of exposure at 2008 developers Mortgage Majority of CP-expo
Slide 18: Modest Eastern European exposure for Danske Bank
Modest Eastern European exposure for Danske Bank SKr bn SKr bn and share (%) of total loans, Q4 2008 300 19.5% 250 Poland Russia 200 11.8% 5.7% Ukraine 150 Lithuania Latvia 100 Estonia 3.5% 1.7% 50 0 Swedbank SEB Nordea DnB NOR Danske Source: UBS, Swedbank: Too much uncertainty, Feb. 25, 2009. 18
Slide 19: Baltics (exposure at Dkr 32bn)
Baltics (exposure at Dkr 32bn) Product split 2/3 of corporates covered by prime 18 16 14 collateral A large part of the exposure is in 12 DKK bn 10 8 6 4 euro 2 0 Low level of individual losses, but will 2007 2008 2007 2008 Corporate Personal increase Investment loans Business leasing Short te
Slide 20: Mortgage lending
Mortgage lending Group level BA Denmark Mortgage % of BA Rating 5 - 11 Rating 8 - 11 y/y Banking activities Denmark Total Personal Corporate DKK bn lending total Personal Corporate Personal Corporate BA Denmark 806 71% 4% 42% 61% 9% 16% Danske Bank, DK 139 116 23 BA Sweden 96 44% 3% 44% 78% 4% 4% RD
Slide 21: Personal customers
Personal customers % Unemployment rate in our business areas 14 SE 12 10 FI IE 8 6 NIE NO 4 DK 2 0 04 05 06 07 08 09E 10E Of this property House prices are declining in all DKK bn Exposure related business areas Denmark 559 475 Sweden 57 41 A record high amount of houses are Finland 88 67 for sa
Slide 22: Shipping (exposure at Dkr 48bn)
Shipping (exposure at Dkr 48bn) Relative strong exposure to offshore, tankers Reefers Container FSO/FPSO and roro 0% 2% 3% Some and especially small customers are LPG struggling with cancelling orders 5% LNG Car 5% Reduced ship values can set collateral under Carriers/RORO pressure and breach
Slide 23: Agriculture (exposure at Dkr 89bn)
Agriculture (exposure at Dkr 89bn) Output prices have decreased Expectations of land price will decrease, especially in Denmark and Ireland Feeding stuffs segment is facing challenges in terms of increasing price volatility and a stagnating market Source: Eurostat and Statistics Denmark 23
Slide 24: Financial customers
Financial customers General reduction of exposure to financial customers 68% of exposure fully secured Dkr 25bn of exposure covered by state guarantees Exposure Collateral 24
Slide 25: Private Equity (exposure at Dkr 34bn)
Private Equity (exposure at Dkr 34bn) 60 transaction Deals done in the period 2003 to 2008 Primarily to Nordic countries Swedbank 17 # deals where total Exposure SHB 53 debt to EBITDA multiple > 5x 17bn to acquisition vehicles Danske 80 17bn to operating entities DnBNOR 85 Drawn amount D
Slide 26: Loan loss ratios outstripping peers
Loan loss ratios outstripping peers bp 75 Loan losses as bp of loans 2008 57 50 16 Collective impairments Write-off as bp of loans 2008 41 29 25 25 25 18 11 0 DB DnB NOR SEB Swedbank Nordea SHB 26
Slide 27: Loan impairment charges
Loan impairment charges - Significantly higher than forecast Impairment charges DKr 12bn DKr m Loan imp. charges by business unit bp (2008) Higher than forecast due to rapidly worsening 5,000 <= Loan imp. charges Loan imp. ratio => 400 economic crisis in Q4 4,000 300 Collective impairments of DK
Slide 28: Allowance and loan impairment charges broken down by industry
Allowance and loan impairment charges broken down by industry 28
Slide 29: Loan impairment charges and write-offs
Loan impairment charges and write-offs - Write-offs still at a low level DKr bn 15 Loan impairment charges 10 5 Write-offs 0 2005 2006 2007 2008 -5 29
Slide 30: Conservatism or weak asset quality?
Conservatism or weak asset quality? www.danskebank.com/ir 30 30
Slide 31: Disclaimer
Disclaimer 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 or an inducement to enter into investment activity. No part of this presentat