Jyske Bank A/S · OMXCOP:JYSK
Jyske Bank A/S — Q2 2018 Earnings Presentation
39 slides from Jyske Bank A/S's earnings presentation, Aug 21, 2018
Slide 1: Jyske Bank Q2 2018
Jyske Bank Q2 2018 21 August 2018
Slide 2: Group strategy shows a direction matching our desired positioning
The Jyske Bank Group strategy shows a direction matching our desired positioning The strategy rests on The Jyske Bank the intention that through our activities we will meet our clients and make Group’s updated a positive difference for them, wherever they are - geographically, in the strategy does n
Slide 3: Group strategy secures balance between stakeholders
Group strategy secures balance between stakeholders CLIENTS EMPLOYEES Clients receive advice, solutions and The employees have an attractive service ranking among the best on the workplace with opportunities for market development GROUP STRATEGY SHAREHOLDERS Shareholders receive an attractive, risk-
Slide 4: Jyske Bank Group Strategy: highlights and select initiatives
Jyske Bank Group Strategy Strategy highlights Select strategic initiatives • Client relations and advice based on the Digital relation bank as client's needs preferred by clients • Solutions beyond the expected - and at profitable terms Simple establishment of or changes to property financing Easy t
Slide 5: Our targets
Our targets Q2 2018 Return on Equity • Delivering an attractive long-term return on equity of 8-12% ROE 9.8% Volume growth 2018-2020 • Total loan portfolio of DKK 350bn in Jyske Realkredit +DKK 20-25bn in housing related loans DKK 314bn +DKK 15-20bn in property loans for corporate clients Full Time
Slide 6: Q2 2018 highlights
Q2 2018 highlights • Net profit of DKK 811m, equal to ROE 9.8% p.a. CORE PROFIT AND PROFIT FOR THE PERIOD DKKm Index Index • Business volumes: Q2 2018 Q2 2017 18/17 Q2 2018 Q1 2018 Q2/Q1 ― Loan growth in all segments compared to both Q1 2018 1,439 1,386 104 1,439 1,407 102 Net interest income and Q2
Slide 7: ROE back to mid-target range
ROE back to mid-target range Net profit 1,400 18% • Net profit of DKK 811m and ROE of 9.8% p.a. in Q2 2018 DKKm 16% 1,200 14% 1,000 12% 800 10% 600 8% 6% 400 4% 200 2% 0 0% Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2015 2015 2016 2016 2016 2016 2017 2017 2017 2017 2018 2018 Net Profit ROE (after tax) • An
Slide 8: NII in line with volume growth
NII in line with volume growth Q2 2018 vs. Q1 2018: Development in NII • Overall, development in NII reflects volume growth and a more stable 1,450 contribution from strategic balance and risk management DKKm 1,400 • In Q2 2018 NII is: 1,350 • Supported by volume growth in all 3 segments as well as
Slide 9: Lower activity and financial markets drive down net fee income
Lower activity and financial markets drive down net fee income Net fee income 700 DKKm 600 • Net fee income in Q2 2018 of DKK 399m – down by 5% relative to Q2 2017 and 21% 500 relative to Q1 2018 400 300 • Decrease in net fee income can be attributed to: 200 • Banking activities: No performance rela
Slide 10: Value adjustments at lower levels
Value adjustments at lower levels • In Q2 2018 minor increase in long-term interest rates was seen and Value adjustments 400 credit spreads were fairly stable compared to Q1 2018 350 DKKm 300 • Value adjustments under core profit amounted to DKK -38m vs. DKK 250 -68m in Q1 2018 200 150 • Of which va
Slide 11: Decrease in core expenses enlarged by reversal
Decrease in core expenses enlarged by reversal • Core expenses in Q2 2018 down by DKK 129m compared to Q1 2018 Q2 2018 vs. Q1 2018: Development in core expenses 1,300 primarily driven by reversal of provision re. law suit in Gibraltar (DKK DKKm 1,250 96m) but also lower number of FTE and a general c
Slide 12: Net reversals set aside increase in management estimate
Net reversals set aside increase in management estimate Loan impairment charges (under core profit) • Impairment charges of DKK 27m under core profit: 500 ― Includes DKK 100m increase in management estimate DKKm 400 primarily due to Danish agriculture being troubled by 300 draught 200 ― Thus, still
Slide 13: Renewed focus on agriculture as Denmark is hit by drought
Renewed focus on agriculture as Denmark is hit by draught Dairy farmers, plant farming and pig farming (DKKm/% ) • Limited exposure as agriculture excl. fishing accounts for approx. 1% of the Group’s loans and guarantees. Loans, advances and Balance of impairment Impairment ratio • In Q2 2018, manag
Slide 14: Mortgages: The portfolio
Mortgages: The portfolio Distribution of lending portfolio • 87% of lending to properties with housing purposes 1% 1% 0% ― No loans with swaps to co-operative housing Owner-occupied (51%) ― No lending to agriculture and other primary 11% production Vacation homes (3%) Cooperative (5%) Private rental
Slide 15: Mortgages: Improved credit quality
Mortgages: Improved credit quality Lending in 90-days arrears (per cent of lending) Repossessed properties (DKKm/number) 1.8% Private 600 60 1.6% Commercial 500 1.4% 50 Subsidised 1.2% 400 40 1.0% 300 30 0.8% 0.6% 200 20 0.4% 100 10 0.2% 0.0% 0 0 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q2 2014 Q2 201
Slide 16: Bank loans: the portfolio
Bank loans: the portfolio • Portfolio composition end of Q2 2018: Loans and guarantees by sector % ― Corporates take up larger proportion, 60% vs. 58% Loans, advances and Balance of loan Losses Impairment end-2017 and 53% end-2016 as volume grows guarantees impairment charges charges Q2 2018 Q4 2017
Slide 17: Sale of Nordjyske Bank shares dominates investment portfolio earnings
Sale of Nordjyske Bank shares dominates investment portfolio earnings Investment portfolio earnings , quarterly 500 • Positive effect from Nordjyske Bank shares DKK 188m in Q2 2018 vs. DKKm DKK 356m in Q1 2018 400 300 • In June 2018, Jyske Bank’s share holding in Nordjyske Bank was disinvested in co
Slide 18: Capital and Liquidity
CS JYSKE BANK Capital and Liquidity
Slide 19: Capital position allows new buy-back programme
Capital position allows new buy-back programme • Capital ratio 20.4% and CET1 ratio 16.7% end of Q2 2018 vs. long-term Capital ratios targets of 17.5% and 14% post-Basel IV implementation 25 pct – Capital structure aligned with long-term targets 20 – Jyske Bank will aim to distribute excess capital
Slide 20: Future regulation
Future regulation • Long-term capital targets based on fully implemented Basel IV capital Capital ratios and Basel IV requirements: Percent – Capital ratio 17.5% and CET1 ratio 14% 20 2.0 – Capital ratios to remain above long-term targets given upcoming 1.7 capital requirements 15 0.5 1.5 2.5 10 Pil
Slide 21: Liquidity is still ample
Liquidity is still ample Group liquidity buffer • Liquidity buffer DKK 58bn end of Q2 2018 (DKK 73bn end of 2017) 80 ― 86% of the buffer - DKK 50bn - is eligible for repo DKKbn transactions at central banks (Nationalbanken or ECB) 70 11% 11% ― Cash placements are categorized as intra-day eligible 60
Slide 22: A frequent EUR issuer
A frequent EUR issuer Redemption profile 9 Ongoing access to a diversified European investor base helps Jyske Bank DKKbn maintain a prudent risk and funding profile 8 7 6 Since 2012 more than 500 different investors have bought into the Group’s senior unsecured debt, capital (Tier 2 and AT1) or EUR
Slide 23: Appendices
Appendices: 1) Jyske Bank in brief and business segments 2) Danish Economy Q2 2018
Slide 24: Jyske Bank in brief
Jyske Bank in brief • One of the four large financial institutions in Denmark and a Danish SIFI • 3 segments (Banking, Mortgage and Leasing) • Estimated market share of 12% • Danish play • Approx. 865,000 customers • Nationwide branch network comprised of 92 personal client branches, 32 corporate br
Slide 25: Jyske Bank in brief: Group key figures
Jyske Bank in brief Jyske Bank Group key figures Shareholders' Loans and Total Profit before Net profit, equity at year- ROE after tax, advances, Deposits, assets, Number of tax, DKKm DKKm end, DKKm average equity DKKbn DKKbn DKKbn FTEs 1997 584 443 4,772 9.6% 36.6 41.5 63.1 2,671 1998 710 511 5,173
Slide 26: Banking activities
Banking activities • Increasing volume in bank loans Financials 1,600 • Decline in bank deposits – still above average 2017 levels DKKm 1,400 • Increasse in AUM driven by inflow of funds and improved returns 1,200 1,000 • Lower net fee income 800 • Core expenses driven down by reversal of provision
Slide 27: Mortgage activities
Mortgage activities Financials 600 • Continued growth in volume DKKm 500 • Core income for Q2 2018 increased significantly by sale of property - 400 pushing it above 2017 levels and outweighing lower net fee income 300 driven by lower refinancing activity 200 • Negative value adjustments due to drif
Slide 28: Leasing activities
Leasing activities Financials 160 DKKm 140 • Loan volumes continue to increase and support NII 120 • Stable core expenses 100 80 • Increase in core profit driven by reversal of impairments 60 • Impairment charges positively affected by reversal of impairment 40 charges related to a single large expo
Slide 29: Danish Economy August 2018
CS JYSKE BANK Danish Economy August 2018
Slide 30: Headlines on the Danish Economy
Headlines on the Danish Economy • We expect the upturn in the Danish economy to continue in 2018 and 2019 • Low interest rates, increasing house prices and export market growth stimulates demand. Export competitiveness looks healthy • Gradually the pace of the upturn is likely to decline do to labou
Slide 31: Danish economy – an upturn story
Danish economy – an upturn story • Overall the Danish financial sector’s operating environment is still improving The upturn will continue New all-time high employment level after 7% increase Source: Source: 31
Slide 32: 3 kinds of stimulus support demand
3 kinds of stimulus support demand House prices recovering after burst in 08/09 Spill-over from European recovery Source: Source: Interest rates are at a historic low Demand is increasing Source: Source: 32
Slide 33: The labour market performance is strong
The labour market performance is strong • The labour force is increasing from foreign labour supply and a higher retirement age. Gradually lack of labour supply will become more pronounced. Foreign labour accounts for +50% of rise in employment Lack of labour supply is accelerating Source: Source: 3
Slide 34: Improved asset quality – as defaults have normalized
Improved asset quality – as defaults have normalized Unemployment is declining Forced house sales well below 500 properties per month Business bankruptcies at neutral level (less than 0.2% per year) Source: Source: Source: 34
Slide 35: Turnaround and consolidation at the same time
Turnaround and consolidation at the same time • Low interest rates and solid real wage growth make it possible for households to consume more and save up at the same time The private sector is saving up …so household debt has declined …and household net assets are large Household net assets (incl. h
Slide 36: House prices have continued up in all regions
House prices have continued up in all regions • Widespread recovery on housing market, especially on flats in big cities • There is a risk that very low interest rates may overheat local parts of the market. Especially the Copenhagen market. • However, new regulation and a new housing tax model will
Slide 37: Moderate Danish price increase in European context
Moderate Danish price increase in European context European house prices the past year The development in Scandinavian house prices Source: Source: 37
Slide 38: Denmark is a AAA economy with strong structural financial features
Denmark is a AAA economy with strong structural financial features Current account surpluses since late 90s ..imply that foreign assets are increasing Source: Source: And public sector debt is low This is why Denmark is AAA Source: Source: 38
Slide 39: 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,