Jyske Bank A/S · OMXCOP:JYSK
Jyske Bank A/S — Q3 2012 Earnings Presentation
45 slides from Jyske Bank A/S's earnings presentation, 2012
Slide 1: Interim Financial Report First to third quarter 2012
Interim Financial Report First to third quarter 2012
Slide 2: Agenda
Agenda Jyske Bank in brief Jyske Bank performance 2008-2012 Jyske Bank actions in 2010, 2011 and 2012 • Strengthening the revenue base • Cost reductions • Select acquisitions including portfolios • Optimizing capital structure • Improving funding structure Danish FSA • Reports in 2011 and 2012 • New
Slide 3: Jyske Bank in brief
——== So J yske Bank in brief
Slide 4: Jyske Bank focuses on core business
Jyske Bank in brief Jyske Bank focuses on core business Description Branch Network • Established and listed in 1967 • 2nd largest Danish bank by lending • Total lending of approx. DKK 119bn • 109 domestic branches • Approx. 550,000 domestic customers • Business focus is on Danish private individuals
Slide 5: Jyske Bank has a differentiation strategy
Jyske Bank in brief Jyske Bank has a differentiation strategy “Jyske Differences” • Vision is to be Denmark’s most customer-oriented bank by providing high standard personal financial advice and taking a genuine interest in customers • The strategy is to position Jyske Bank as a visible and distinct
Slide 6: Jyske Bank performance 2008-2012
Jyske Bank performance 2008-2012 6
Slide 7: Jyske Bank performance
Jyske Bank performance DKKm 2008 2009 2010 2011 Q1-Q3 Q1-Q3 2012 2012 ** Profit before Bank 1522 1208 1509 1269* 494 1394 Packages, the Guarantee fund and tax ROE 15.7% 11.3% 12.1% 9.5% 4.8% 13.4% * Exclusive of one off items and special items ** Exclusive of more stringent guidelines regarding loan
Slide 8: Pre-tax profit (ROE on average equity)
Pre-tax prof it (ROE on avg. equity) Average: 50% 110% 87% 19% 40% 30% 20% 10% 0% -10% -20% -30% 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 8
Slide 9: Profit before tax and DPCA
Profit before tax and DPCA 2,500 25% 1,000 30% 20% 500 2,000 20% 10% DKKm DKKm 0 0% 1,500 15% -10% -500 -20% 1,000 10% -1,000 -30% Q12009 Q22009 Q32009 Q42009 Q12010 Q22010 Q32010 Q42010 Q12011 Q22011 Q32011 Q42011 Q12012 Q22012 500 5% 0 0% Profit before tax 2007 2008 2009 2010 2011 DPCA and guideli
Slide 10: Jyske Bank actions in 2010, 2011 and 2012
Jyske Bank actions in 2010, 2011 and 2012 • Strengthening the revenue base • Cost reductions • Selective acquisitions including portfolios • Optimizing capital structure • Improving funding structure 10
Slide 11: Strengthening the revenue base
Strengthening the revenue base • Interest rate hikes since Q2 2011 of 150 bp (gross) in 2011 and 100 bp (gross) in 2012 due to higher funding costs and payments to the Guarantee Fund • High floor risk due to very low short term interest rates • Decreasing efficiency of interest rate hikes over time
Slide 12: Return/risk trade-off
Return/risk-trade off 140 5% 120 6% 120 100 5% 4% DKKbn DKKbn 100 80 4% 80 3% 60 3% 60 2% 40 2% 40 20 1% 1% 20 0 0% Q12009 Q22009 Q32009 Q42009 Q12010 Q22010 Q32010 Q42010 Q12011 Q22011 Q32011 Q42011 Q12012 Q22012 Q32012 0 0% 2007 2008 2009 2010 2011 Risk weighted assets NII/RWA (rhs) Risk weighted
Slide 13: Cost reductions
Cost reductions • Staff reductions – Expected 3550 employees (exclusive of approx. 60 temporary employees) end of 2012 against 4158 in Q3 2006 • 9 branch mergers in NW Jutland and Copenhagen • Successful conversion of IT systems to Bankdata in October 2012 Special items DKK 460m Operating expenses a
Slide 14: Selective acquisitions including portfolios
Selective acquisitions including portfolios Parts of Finans Nord (lease portfolio) Fjordbank Mors (branch) • Future new sales and administration of existing • Retail and SME portfolio; 40.000+ customers corporate leasing portfolio; approx. DKK 6bn (gross) • DKK 1.0bn on Jyske Bank balance sheet (bra
Slide 15: Optimizing capital structure
Optimizing capital structure • Redemption of EUR 25m supplementary capital in Q2 2011 • Buy back of EUR 50m hybrid capital in Q4 2011 • Capital increase Q1 2012 • Al time high ratios Q3 2012 – due to lower market risk, consolidated P/L and improved capital structure (base capital) 18 18 16 16 14 pct
Slide 16: Improving funding structure
Improving funding structure Agreement with BRFKredit to issue covered bonds from Q1 2012 • Home loans tranferred from JB balance sheet to BRF Kredit • Issue AAA covered bonds from existing capital centre • All new loans from February 2012, part of the existing stock of home loans • DKK 1.6bn in Q3 2
Slide 17: Liquidity position and run-off
Liquidity position and run-off 45 40 35 30 DKKbn 25 20 15 10 5 0 30.09.2012 17
Slide 18: Long-term funding strategy
Long-term funding strategy – A rare but regular issuer in the EMTN market Funding plans from 2012 and beyond will depend on developments in the balance sheet (funding gap) - policy is to maintain a deposit/loan ratio in the region of 90% (end Q3 2012: 91%): • Maturity profile shows an ongoing but de
Slide 19: Danish FSA
Danish FSA • Reports in 2011 and 2012 • New stringent guidelines for impairments 19
Slide 20: Danish FSA reports 2011 and 2012
Danish FSA reports 2011 and 2012 SME customers and IRB setup • Decision making material satisfactory • No ground for changing impairment charges • IRB models satisfactory IT inspection • Principles and policies meet required demands Market Risk and Compliance • Management of market risk satisfactory
Slide 21: New stringent guidelines for impairments
New stringent guidelines for impairments • Focus real estate portfolios and agriculture • More stringent impairment principles (net exposures, asset values) • Customers interest rated hedges at fair value • One off effect Q2 2012: – Impairments DKK 543m – Value adjustments DKK 357m • Higher volatili
Slide 22: Q3 2012 in figures
Q3 2012 in figures • Core earnings • Credit quality • Investment portfolio earnings • Fee and commission income • Value adjustments 22
Slide 23: Core earnings
——== So Core earnings A/\.—
Slide 24: Profit/loss
Profit/loss Q1-Q3 2012 Q1-Q3 2011 Earnings The Earnings The on invest- Guaran- Re- on invest- Guaran- Re- Core ment tee Fund, classifi Core ment tee Fund, classifi DKKm earnings portfolios etc. -cation Total earnings portfolios etc. -cation Total Net interest income 3,404 295 0 0 3,699 3,224 222 0 0
Slide 25: Core earnings
Core earnings Profit for the period Q1-Q3 Q1-Q3 Index Q3 Q2 Q1 Q4 Q3 DKKm 2012 2011 12/11 2012 2012 2012 2011 2011 2011 Net interest income 3,404 3,224 106 1,121 1,135 1,148 1,186 1,091 4,410 Dividends, etc. 20 17 118 0 17 3 0 1 17 Net fee and commission income 1,148 923 124 392 351 405 387 306 1,31
Slide 26: Core earnings
Core earnings 3,000 600 400 2,500 DKKm DKKm 200 2,000 0 1,500 -200 -400 1,000 -600 500 -800 0 2007 2008 2009 2010 2011 26
Slide 27: Gross earnings
Gross earnings 6,600 2,000 6,500 1,800 6,400 1,600 DKKm DKKm 6,300 1,400 6,200 1,200 1,000 6,100 800 6,000 600 5,900 400 5,800 200 5,700 0 5,600 2007 2008 2009 2010 2011 • NII +6% • Fees and commissions +24% • Other operating income +12% • Operational lease +163% •Value adjustments DKK -31m due to s
Slide 28: Core earnings before loan impairment charges
Core earnings before loan impairment charges 3,500 1,000 900 3,000 800 DKKm DKKm 2,500 700 600 2,000 500 1,500 400 300 1,000 200 500 100 0 0 2007 2008 2009 2010 2011 •NII under pressure due to lower loan balances and decreases of margins • Positive rebound from Q2 driven by positive development in a
Slide 29: Segment reporting
Segment reporting Profit before tax Banking activities Trading and Investment 2000 1600 DKKm DKKm 1400 1500 1200 1000 1000 500 800 600 0 400 -500 200 -1000 0 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011 400 600 DKKm DKKm 200 500 0 400 -200 300 -400 200 -600 100 -800 0 Q12009 Q22009 Q32009 Q4200
Slide 30: Net interest and fee income
Net interest and fee income 7,000 1,800 1,600 6,000 25% 1,400 26% 26% 24% 26% 28% DKKm DKKm 21% 22% 23% 23% 21% 22% 22% 23% 5,000 23% 23% 1,200 23% 23% 31% 1,000 4,000 37% 800 75% 3,000 74% 600 76% 74% 79% 74% 78% 72% 79% 77% 78% 77% 78% 77% 77% 77% 77% 77% 400 2,000 63% 69% 200 1,000 0 Q12009 Q2200
Slide 31: Credit quality
——== So Credit quality A/\.—
Slide 32: Loans and advances split by sector
Loans and advances split by sector Loan impairment Balance of loan charges and Jyske Bank A/S impairment charges provisions for Loans, advances and and provisions for guarantees for the guarantees guarantees period Loss for the period Loans, advances and guarantees as First First First First First F
Slide 33: Loans and advances split by sector
Loans and advances split by sector Balance of loan Balance of loan impairment impairment Loan impairment Jyske Bank A/S charges and charges and Loss for the charges for the Loans, advances provisions for Loans, advances provisions for period/loans, period/loans, and guarantees guarantees and guarant
Slide 34: Large exposures
Large exposures per cent of capital base 70% 60% 50% 40% 30% 20% 10% 0% 2007 2008 2009 2010 2011 Q3 2012 • Long-term strategy is intact to reduce dependence of large corporates 34
Slide 35: Loan impairment charges
Loan impairment charges 3,000 1,000 900 2,500 800 DKKm DKKm 700 2,000 600 500 1,500 400 1,000 300 200 500 100 0 0 2007 2008 2009 2010 2011 • Strong performance throughout 2010 • Positive trend reversed in Q2 2011 driven by economic standstill • New level of impairment charges, particularly driven by
Slide 36: Balance of loan impairment charges
Balance of loan impairment charges 5000 5000 4500 4500 4000 4000 DKKm DKKm 3500 3500 3000 3000 2500 2500 2000 2000 1500 1500 1000 1000 500 500 0 0 Q12009 Q22009 Q32009 Q42009 Q12010 Q22010 Q32010 Q42010 Q12011 Q22011 Q32011 Q42011 Q12012 Q22012 Q32012 2007 2008 2009 2010 2011 Balance of loan impairm
Slide 37: Balance of loan impairment charges
Balance of loan impairment charges per cent of loans and advances 3.5% 4.0% 3.5% 3.0% 3.0% 2.5% 2.5% 2.0% 2.0% 1.5% 1.5% 1.0% 1.0% 0.5% 0.5% 0.0% Q12009 Q22009 Q32009 Q42009 Q12010 Q22010 Q32010 Q42010 Q12011 Q22011 Q32011 Q42011 Q12012 Q22012 Q32012 0.0% 2007 2008 2009 2010 2011 • Growth of 0.4 pp
Slide 38: Exposures by credit rating
Exposures by credit rating Corporates Retail 30% 25% 25% 20% 20% 15% 15% 10% 10% 5% 5% 0% 0% 1 2 3 4 5 6 7 8 9 10 11 12 13 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 31.12.2011 30.09.2012 31.12.2011 30.09.2012 38
Slide 39: Earnings from investment portfolios
Earnings from investment portfolios 39
Slide 40: Earnings from investment portfolios
Earnings from investment portfolios 250 600 500 200 DKKm 400 DKKm 300 150 200 100 100 0 -100 50 -200 -300 0 Q12009 Q22009 Q32009 Q42009 Q12010 Q22010 Q32010 Q42010 Q12011 Q22011 Q32011 Q42011 Q12012 Q22012 Q32012 -400 2007 2008 2009 2010 2011 • Satisfactory return in Q1-Q3 2012 of DKK 260m above 5-
Slide 41: Fee and commission income
Fee and commission income A/\.—
Slide 42: Fee and commission income
2,000 Fee and commision income 450 1,800 400 1,600 350 DKKm DKKm 1,400 300 1,200 250 1,000 200 800 150 600 100 400 50 200 0 Q12009 Q22009 Q32009 Q42009 Q12010 Q22010 Q32010 Q42010 Q12011 Q22011 Q32011 Q42011 Q12012 Q22012 Q32012 0 2007 2008 2009 2010 2011 700 600 • 2012 change of level compared to 2
Slide 43: Value adjustments
——== So Value adjustments A/\.—
Slide 44: Value adjustments
Value adjustments 400 900 300 800 DKKm 700 200 DKKm 600 100 500 0 400 -100 300 -200 200 -300 100 0 -400 Q12009 Q22009 Q32009 Q42009 Q12010 Q22010 Q32010 Q42010 Q12011 Q22011 Q32011 Q42011 Q12012 Q22012 Q32012 -100 2007 2008 2009 2010 2011 300 200 • Rebound in Q3 2012 from low level in Q2 due to impa
Slide 45: Questions
——== So Questions