Jyske Bank A/s · OMXCOP:JYSK
Jyske Bank A/s — Q2 2015 Earnings Presentation
32 slides from Jyske Bank A/s's earnings presentation, 2015
Slide 1: Jyske Bank Q2 2015
il JYSKE BANK Jyske Bank Q2 2015 1/32
Slide 2: Highlights
Highlights • Continued success with integrating BRFkredit and Jyske Bank – Sales of new home loan products at DKK 50bn – Core expenses decline quarter by quarter – Expected integration costs lowered to DKK 100-150m (previous estimate DKK 150-200m) – Annual synergies of DKK 600m by mid-2018, 6 months
Slide 3: Status on Jyske Bank/BRFkredit merger
Status on Jyske Bank/BRFkredit merger • Annual revenue and cost synergies of DKK 600m expected to have full annual impact by mid-2018 as opposed to end of 2018 • Volume of new home loan products granted reaches DKK 50bn (DKK 46bn booked at end of Q2 2015) - future annual NII will close the gap from
Slide 4: Q2 2015 results
Q2 2015 results • Pre-tax profit of DKK 1,301m (equal to ROE 18.9%) of which: – Banking: DKK 1,080m – Mortgage: DKK 121m CORE PROFIT AND PROFIT FOR THE PERIOD Index Index – Leasing: DKK 100m H1 2015 H1 2014 Q2 2015 Q1 2015 DKKm 15/14 Q2/Q1 Net interest income 2,953 2,358 125 1,513 1,440 105 • Core i
Slide 5: NII increase driven by new home loans
NII increase driven by new home loans • NII is supported by: – Continued growth in new home loan products – Increased contribution margins in mortgage activities – Mortgages for corporate clients begin to pick up • NII is pressured by: – Low interest rate level that turns deposits unprofitable and B
Slide 6: Satisfactory fee and commission income
Satisfactory fee and commission income • Level with Q2 2014 but down by 43% compared to Q1 2015 • Major differences between Q1 and Q2 2015: – Few performance related fees from capital management as stock and bond markets have fallen since end of Q1 2015 – One-off commission income related to the set
Slide 7: Rising interest rates drive up value adjustments
Rising interest rates drive up value adjustments • Dominated by development in interest rates: — Increased volatility in especially DKK interest rates — Rising long-term interest rates • Positive value adjustment on non-performing clients’ transactions relating to interest-rate hedging (swaps) of DK
Slide 8: Significant drop in impairment charges
Significant drop in impairment charges • Loan impairment charges under core profit of DKK 24m equal to levels seen prior to the financial crisis • Loan impairment charges include management’s estimate of DKK 270m related to rising interest rates and the pro-longed Russian import ban that is tough on
Slide 9: Agriculture: renewed pressure, limited exposure
Agriculture: renewed pressure, limited exposure Commodity prices • Agriculture continues to be in focus 13 DKK/kg DKK/kg 3 12,5 • Several conditions deteriorated in Q2 2015: 12 2,8 – Russia pro-longed the import stop 11,5 11 – Milk and pork prices continued to fall 2,6 10,5 10 2,4 • At current price
Slide 10: New home loan products still on the rise
New home loan products still on the rise • Significant increase in new home loan products (DKK 46bn vs. BUSINESS VOLUME,END OF DKK 40bn end of Q1 2015 and DKK 31bn end of 2014) – PERIOD Index Index momentum is maintained, effect shows as increase in mortgage DKKm 1H 2015 1H 2014 15/14 Q2 2015 Q1 201
Slide 11: Increasingly robust capital position
Increasingly robust capital position • Capital ratio 17.1% and CET1 16.1% end of Q2 2015 versus long-term targets of 17.5% and 14% (based on fully implemented CRD IV requirements as per 2019) • Solid capital base allows room for: – Expansion (home loan products) – M&A activity if the opportunity sho
Slide 12: Strong liquidity reserves
Strong liquidity reserves Group Liquidity buffer • Liquidity buffer DKK 69bn end of Q2 2015 (DKK 55bn end of 2014) 80 DKK bn 70 • Stress scenarios an integrated part of daily liquidity risk 60 management and the limit structure since early 2007 50 40 • The Group’s liquidity reserves are conservative
Slide 13: LCR compliant
LCR compliant • LCR compliance – key focus area during 2015 LCR Liquidity buffer end of Q2 2015 (DKKbn) • As a Danish SIFI compliance (100%) is required from October 10 16 1st 2015 • During 2015 the Group has recalibrated the liquidity buffer by increasing the holdings of Level 1a assets and adjusti
Slide 14: A rare but regular issuer on the EMTN market
A rare but regular issuer on the EMTN market • Group issuance of senior debt will be from Jyske Bank A/S, Funding profile thus no new issuance of senior secured bonds from BRFkredit A/S 10 DKKbn 8 6 • Senior unsecured activity will depend on developments in the balance sheet (funding gap) 4 2 0 • In
Slide 15: Re-financing in mortgage activities
Re-financing in mortgage activities Since 2014 the refinancing risk in BRFkredit has been reduced significantly to improve Group compliance with S&P’s SFR ratio and the upcoming NSFR. Split of BRFkredit loan portfolio according to refinancing profile 100% 80% 60% 40% 20% 0% 2013 2014 1H 2015 Annual
Slide 16: Macro Economy & Danish Banking H1 2015
Macro Economy & Danish Banking H1 2015 16/32
Slide 17: Upturn in the Danish economy
Upturn in the Danish economy GDP growth has picked up In Q1 GDP 2015 growth was 0.4% Q/Q 3 3 following 0.3 % and 0.6 % growth in Q4 2,5 2,5 and Q3, respectively. 2 2 Seven quarters in a row with positive 1,5 1,5 growth. 1 1 We now have small upturn. Percent Percent 0,5 0,5 Private consumption has st
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. Net savings 10 9 7,5 7 5 5 Private to public sector: % of GDP % of GDP 3 2,5 Tax on pensions behind the latest fall for private sector and gain for public sector. 1 0 -1 -2,5 -3 -5 -5 05 06
Slide 19: Optimistic consumers, but more sceptic manufacturers
Optimistic consumers, but more sceptic manufacturers Consumer Confidence Business cycle indicators 20 20 30 30 15 15 20 20 10 10 10 10 5 5 0 0 Net value Net value Net value Net value 0 0 -10 -10 -5 -5 -20 -20 -10 -10 -30 -30 -15 -15 -40 -40 -20 -20 -50 -50 00 01 02 03 04 05 06 07 08 09 10 11 12 13 1
Slide 20: House prices are on the rise
House prices are on the rise Prices on dwellings House Prices 105 105 140 140 100 100 120 Index 2008 = 100 120 Index 2008 = 100 95 95 100 100 80 90 90 Index Index 80 60 85 85 40 80 80 60 20 75 75 40 0 70 70 2007 2008 2009 2010 2011 2012 2013 2014 2015 Denmark Norway USA UK Houses Flats Source: Datas
Slide 21: The turnaround for housing is spreading
The turnaround for housing is spreading House Prices 120 120 House prices increases have spread out beyond the largest cities. 110 110 Index 2006 = 100 Index 2006 = 100 100 100 Continued large excess supply in rural areas but 90 90 number of house sales is picking up. 80 80 70 70 60 60 Capital Zeala
Slide 22: Affordability is strong – even with fixed rate
Affordability is strong – even with fixed rate Housing affordability Net intallment (fixed rate) for new buyers relative to disp. income 210 120 190 110 Index 2004 = 100 Index 2004 = 100 170 100 150 90 130 80 110 70 90 60 Source: Datastream 22/32
Slide 23: Unemployment is slightly declining, debt servicing capacity strong
Unemployment is slightly declining, and with interest rates all time low – debt servicing capacity is strong Unemployment rate Arrears 3,0 3,0 25 25 2,5 2,5 20 20 2,0 2,0 In % of all payments In % of all payments 15 15 Percent Percent 1,5 1,5 10 10 1,0 1,0 5 5 0,5 0,5 0 0 0,0 0,0 Denmark Euro zone S
Slide 24: Overall bankruptcies in the SME sector are trending downwards
Bank loans and underlying credit quality: Overall bankruptcies in the SME sector are trending downwards Danish bankruptcies Danish bankruptcies 700 700 120 120 Bankrupties 12 month avg. 600 600 Bankrupties 12 month avg. 100 100 500 500 80 80 Number 400 400 Number 60 60 300 300 40 40 200 200 20 20 10
Slide 25: The Danish economy at a glance
The Danish economy at a glance The basics Citizens: 5.6 million Area: 43.098 sq km (0.4 % of USA) Flexible labour market Currency: Kroner (fixed exchange rate policy to the Unemployment (latest) euro) Denmark 6.0 % Among the rich Euro Area 11.1 % Denmark 9th richest country in the OECD USA 5.3 % OEC
Slide 26: Competitiveness has improved
Competitiveness has improved 26/32
Slide 27: Denmark has a healthy public sector economy…
Denmark has a healthy public sector economy… The surplus in 2014 was due to a one-off contribution from pension tax brought forward. Excluding temporary elements net saving was -2 % of GDP. For 2015 we expect -1,8 % of GDP 27/32
Slide 28: … and Denmark is a AAA economy
… and Denmark is a AAA economy Government bond yield 8 8 10 year government bond yield, % 7 7 10 year government bond yield, % 6 6 5 5 4 4 3 3 2 2 1 1 0 0 Denmark Germany Italy Spain Source: Datastream 28/32
Slide 29: Denmark has huge wealth abroad
Denmark has huge wealth abroad Net foreign assets 2010 (Denmark is 2015Q1) 100 100 50 50 % of GDP 0 0 % 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 29/32
Slide 30: Jyske Bank forecasts
Jyske Bank forecasts The Danish economy 2012-2016 2014 Real growth (%) DKKbn 2012 2013 2014 2015* 2016* Consumer spending 904 0.4 0.0 0.9 2.1 1.8 Public spending 511 -0.2 -0.5 0.1 0.9 0.3 Fixed gross investment 359 0.6 1.0 4.0 1.5 4.5 Inventory investment** 15 -0.6 -0.2 0.4½ 0.0 0.0 Exports 1031 0.1
Slide 31: 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 32: Questions
Questions 32/32