Jyske Bank A/s · OMXCOP:JYSK
Jyske Bank A/s — Q3 2020 Earnings Presentation
36 slides from Jyske Bank A/s's earnings presentation, Nov 3, 2020
Slide 1: Jyske Bank Q3 2020
Jyske Bank Q3 2020 3 November 2020
Slide 2: Q3 2020 highlights
Q3 2020 highlights Jyske Bank realised a return on equity of 8.1% p.a. in Q3 underpinned by an intensified cost focus, Net profit of DKK 696m, which helped reduce expenses 9% y/y. Additionally, core income rose 9% y/y as higher value return on equity of 8.1% adjustments and lower deposit rates more
Slide 3: Material initial COVID-19 impact followed by gradual recovery
Material initial COVID-19 impact followed by gradual recovery Initial unemployment increase of 50,000 reduced to c. 25,000 Danish consumer and business confidence remain subdued 200,000 3 180,000 2 160,000 1 140,000 0 120,000 -1 100,000 -2 80,000 -3 60,000 40,000 -4 20,000 -5 0 -6 Sep 9 Jul 1 Oct 7
Slide 4: Jyske Bank in brief
UF JYSKE BANK Jyske Bank in brief
Slide 5: Jyske Bank in brief
Jyske Bank in brief One of the largest financial Founded in 1967 by a merger of four local banks, some dating back to 1882, now a Danish SIFI institutions in Denmark with a total market share of approximately 11% following organic growth and successful M&A. Complementary segments The third largest b
Slide 6: 79% mortgage lending share improves resilience and growth
79% mortgage lending share improves resilience and growth Mortgage lending is low risk, high growth, more stable margins Credit quality of mortgage lending significantly stronger (bp) Mortgage lending has ~10x lower cost of risk than bank lending 225 200 • Cost of risk has averaged 5bp for mortgage
Slide 7: From above-market growth to repricing and cost initiatives
From above-market growth to repricing and cost initiatives Introducing profitability initiatives in next phase of strategy Lower deposit rates increase net interest income (DKKm) Repatriation of Totalkredit loans following merger in 2014 fully accomplished 100 • Following a prolonged period of above
Slide 8: Shareholder yield in focus
Shareholder yield in focus Shareholders’ view Total payout ratio Book value per share has increased 42% since 2015, as the number of 90% shares outstanding was reduced 24%. 80% 70% Earnings per share increased 11% from 2015 to 2019. 60% Total payout ratio has reached a level of approx. 70% in recent
Slide 9: Financial highlights
Financial highlights Q3 2020
Slide 10: Financial highlights
Financial highlights Net profit of DKK 696m and return on equity of 8.1% in Q3 2020 Income statement and key figures (DKKm) Q3 Q3 Index Q2 Index Q1-Q3 Q1-Q3 Index Net interest income down 2% y/y. Core net interest income rose 3%, as lower 2020 2019 y/y 2020 q/q 2020 2019 y/y deposit rates outweighed
Slide 11: Outlook
Outlook Core income Lower in 2020 than 2019 level Striving for declining expenses Core expenses Previously: Unchanged 2020 vs. 2019, incl. one-offs of DKK -57m in 2019 and DKK 75m in 2020. Loan impairment charges Significantly higher in 2020 than 2019 level DKK 1.0bn-1.5bn in 2020 Net profit Previou
Slide 12: Financial highlights: Business volumes
Financial highlights Business volumes
Slide 13: Business volumes
Business volumes Volume trends point to increasingly low risk business Business volumes (DKKbn) Q3 2020 vs. Q3 2019: • Bank lending down 13% due to low credit demand amid COVID-19 outbreak and Mortgage loans (nominal) +2% government support, tightening of credit policy and Jyske Bank (Gibraltar) sal
Slide 14: Total lending portfolio
Total lending portfolio Loans, advances and guarantees by sector (DKKbn) Balance of impairment charges by sector (DKKbn) Personal clients 44% 0.9% of loans, advances and guarantees Personal clients Real property 31% 0.8% Real property Finance and insurance 9% 1.3% Finance and insurance Other sectors
Slide 15: Mortgage portfolio
Mortgage portfolio Loans and advances at fair value by property category (DKKbn) 90-day mortgage arrears as % of lending by segment 0.7% Owner-occupied homes 49% Subsidised housing 16% 0.6% Private rental properties 16% 0.5% Office and business properties 10% Cooperative housing 4% 0.4% Vacation hom
Slide 16: Financial highlights: Income statement
Financial highlights Income statement
Slide 17: Core net interest income rose 2% q/q in Q3
Core net interest income rose 2% q/q in Q3 Comments Net interest income Q3 2019 vs. Q3 2020 (DKKm) Q3 2020 vs. Q3 2019: Net interest income down 2% y/y 1,340 -2% y/y • Core net interest income rose 3%, as the effect from lower deposit rates was greater 1,320 than the impact from pressure on lending
Slide 18: Net fee income impacted by the COVID-19 outbreak
Net fee income impacted by the COVID-19 outbreak Comments Net fee and commission income Q3 2019 vs. Q3 2020 (DKKm) Q3 2020 vs. Q3 2019: Net fee income down 26% y/y 700 • Normalising remortgaging activity in Q3 2020 following remortgaging wave starting in Q2 -26% y/y 2019 had significant impact on ne
Slide 19: Continued positive development in financial markets in Q3
Continued positive development in financial markets in Q3 Comments Value adjustments (DKKm) Value adjustments down DKK 142m q/q to DKK 189m 400 +284m y/y 350 • Banking activities: Continued broad-based positive development in financial markets supported value adjustments in Q3. Lower contribution fr
Slide 20: Intensified cost focus helped reduce expenses 9% y/y in Q3
Intensified cost focus helped reduce expenses 9% y/y in Q3 Comments Expenses Q3 2019 vs. Q3 2020 (DKKm) Q3 2020 vs. Q3 2019: Expenses down 9% y/y 1,300 -9% y/y • Number of full-time employees declined 8%, which outweighed the yearly 1,280 increase in salaries prescribed by collective agreement (+2%)
Slide 21: Credit quality remains solid with NPL ratio at all-time low
Credit quality remains solid with NPL ratio at all-time low Comments Cost of risk (bp) Impairment charges down DKK 56m q/q to DKK -48m 100 -1bp y/y • Cost of risk down 5bp q/q to -4bp in Q3 2020 due to a continued positive 80 development in clients’ credit quality and despite a higher management’s e
Slide 22: Business segments
Business segments Comments Profit before tax by segment (DKKm) Banking activities: Profit before tax of DKK 369m, up DKK 313m y/y 1,500 +102% y/y • Net interest income down 2% y/y. Lower deposit rates for private and corporate clients more than offset lower bank lending and the sale of Jyske Bank (G
Slide 23: Financial highlights: Capital and liquidity
Financial highlights Capital and liquidity
Slide 24: Solid capital position
Solid capital position Comments Capital ratios and capital requirements Capital ratio of 22.3% and CET1 ratio of 17.5%, up 0.1pp and 1.2pp q/q, respectively 24% +209bp y/y 22% • Positive earnings impact, partly counteracted by increased REA. 20% • Targeting 20%-22% capital ratio and 15%-17% CET1 rat
Slide 25: Liquidity and funding
Liquidity and funding Comments Maturity/call-date profile (DKKbn) Liquidity coverage ratio was 273% Q3 2020 vs. 253% end of 2019 (internal target: 12 >150%). 10 Leverage ratio of 5.3% at the end of Q3 2020, unchanged vs. the end of 2019. Funding plans 8 • Jyske Bank monitors the need for new capital
Slide 26: Sustainability
UF JYSKE BANK Sustainability
Slide 27: Sustainability is ingrained in Jyske Bank's vision
Sustainability Sustainability is ingrained in Jyske Bank’s vision “We have an ambition of running our business responsibly and in a way that promotes sustainability.” – Jyske Bank’s vision: To make a difference. Reorganisation furthers Investor Relations, CSR activities, and the Sustainability progr
Slide 28: History of Jyske Bank
UF JYSKE BANK History of Jyske Bank
Slide 29: One of the largest financial institutions in Denmark
One of the largest financial institutions in Denmark Banking activities cover advisory services relating to traditional financial solutions targeting personal Nationwide presence and private banking clients as well as corporate clients and also trading and investment activities Jyske Bank targeting
Slide 30: Jyske Bank financial results and key figures
Jyske Bank Financial results and key figures Loans and Profit before tax Shareholders' Total assets Year Net profit (DKKm) Return on equity advances Deposits (DKKbn) Number of FTEs (DKKm) equity (DKKm) (DKKbn) (DKKbn) 1997 584 443 4,772 9.6% 36.6 41.5 63.1 2,671 1998 710 511 5,173 10.3% 39.7 43.8 76
Slide 31: Macroeconomics
UF JYSKE BANK Macroeconomics
Slide 32: Macroeconomics
Macroeconomics Real gross domestic product (index 2010, y/y) Inflation rate (HICP, y/y) 10% 6% 5% 5% 4% 0% 3% -5% 2% -10% 1% -15% 0% -20% -1% 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 201
Slide 33: Macroeconomics
Macroeconomics Real estate prices, Denmark (y/y) House prices to disposable income 30% 140 25% 20% 130 15% 120 10% 5% 110 0% -5% 100 -10% -15% 90 -20% 80 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2
Slide 34: Forecast
Forecast Financial results and key figures DKKbn Real growth (%) Danish economy 2017-2021 2019 2017 2018 2019 2020 2021 Consumer spending 1,079 1.6 2.7 2.2 -4.2 4.0 Public spending 558 1.0 0.4 1.2 -0.8 1.3 Fixed gross investment 512 3.0 5.4 2.4 -3.3 3.4 Inventory investment* 12 -0.1 0.3 -0.3 -0.3 0.
Slide 35: Contacts and financial calendar
Contacts and financial calendar Trine Lysholt Nørgaard Financial calendar 2021 Head of Investor Relations & Sustainability 23 Feb. 2021 Announcement of the 2020 results Phone: +45 89 89 64 29 23 Feb. 2021 Annual report Mobile: +45 21 58 25 15 E-mail: trine.norgaard@jyskebank.dk 23 Feb. 2021 Risk Man
Slide 36: Disclaimer
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, recommendation