Danske Bank A/s · OMXCOP:DANSKE
Danske Bank A/s — Q3 2024 Earnings Presentation
65 slides from Danske Bank A/s's earnings presentation, October 2024
Slide 1: Investor Presentation: Financial results Q3 2024
Investor Presentation Financial results Q3 2024
Slide 2: Content
Investor Presentation - First nine months 2024 Content Danske Bank – brief overview 03 – 11 Financial highlights – Q3 2024 12 – 17 Business & Product Units 18 – 23 ESG, Sustainability, Financial Crime Prevention 24 – 37 Credit Quality & Impairments 38 – 44 Capital 45 – 49 Funding & Liquidity 50 – 54
Slide 3: Danske Bank - a brief overview
Danske Bank - a brief overview Danske Bank 3
Slide 4: We are a focused Nordic bank with strong regional roots
Investor Presentation - First nine months 2024 We are a focused Nordic bank with strong regional roots Finland (AA+) 3.2m 2,000+ 20,000 3rd largest personal and business large corporate and employees in Share of Group lending: 8% customers institutional customers 10 countries GDP growth 2024E: -0.4%
Slide 5: Nordic Outlook September 2024: Normalising economies, with risks
Investor Presentation - First nine months 2024 Nordic Outlook September 2024: Normalising economies, with risks Denmark Sweden 2023 Forecast 2024 Forecast 2025 2023 Forecast 2024 Forecast 2025 GDP Growth 2.5% 1.8% (2.1%) 2.0% (2.0%) GDP Growth 0.1% 1.2% (1.5%) 2.4% (2.0%) Inflation 3.3% 1.5% (2.0%)
Slide 6: Historical macroeconomic development in the Nordics
Investor Presentation - First nine months 2024 Historical macroeconomic development in the Nordics GDP development (%) Unemployment (%) House prices (index 100=2005) 8 14 300 6 280 12 260 4 10 240 2 220 0 8 200 -2 180 6 -4 160 4 140 -6 120 2 -8 100 80 2005 2010 2015 2020 2025 2005 2010 2015 2020 202
Slide 7: Our commitments for 2026
Investor Presentation - First nine months 2024 Our commitments for 2026 Growth in focus segments How we measure progress1 Financial targets for ‘26 13% Leading wholesale and business bank in the Nordics Personal Number of meetings per Customers advisor (Index: 2023 = 100) 163 Leading retail bank in
Slide 8: Highlights: Sustained NII momentum; improved efficiency and strong credit quality
Investor Presentation - First nine months 2024 Highlights: Sustained NII momentum supported by balance sheet effects; improved efficiency and strong credit quality drive higher profitability Net profit of DKK 6.2bn Resilient NII NII peaked in Q3 as expected, supported by balance sheet effects and Bo
Slide 9: Strong balance sheet underpins our resilient business model
Investor Presentation - First nine months 2024 Danske Bank’s strong balance sheet underpins our resilient business model which includes a well-balanced ALM strategy and a very strong liquidity position Danske Bank has a sound funding structure and remains very well capitalised with a prudent CET1 ca
Slide 10: Strategic approach and priorities for sustainability
Investor Presentation - First nine months 2024 We have defined our strategic approach and priorities for sustainability To be a leading Nordic bank in supporting the sustainability transition of Our strategic ambition customers, companies we invest in and Nordic societies Create lasting value for ou
Slide 11: Financial outlook for 2024 revised upward
Investor Presentation - First nine months 2024 Financial outlook for 2024 revised upward due to expected lower expenses and loan impairment charges Total income is expected to grow in 2024, driven by higher core income, our continued efforts to drive Income commercial momentum and in line with our f
Slide 12: Financial highlights – third quarter 2024
Financial highlights – third quarter 2024 Danske Bank 12
Slide 13: Strong profitability driven by steady NII uplift and solid fee income
Strong profitability driven by steady NII uplift and solid fee income; cost trajectory in line with plan; strong credit quality & net reversal of impairments Highlights Income statement (DKK m) Total income up 8% y/y driven by sustained uplift 9M 24 9M 23 Index Q3 24 Q2 24 Index in core banking inco
Slide 14: NII: Sustained uplift in NII
NII: Sustained uplift in NII as support from volumes and balance sheet effects mitigate central bank rate cuts and despite timing of pricing adjustments Highlights NII 9M24 vs 9M23 (DKKm) Deposit margin development* (%) 3.0 27,452 157 2.68 Net interest income trended in line with 2.5 2.50 2.50 2.44
Slide 15: Fee income: Up 10% Y/Y
Fee income: Up 10% Y/Y, driven by high customer activity across products; Q/Q activity remained solid but lower due to one-offs and lower investment fees Highlights Net fee income (DKK m) Activity-driven fees (transfers, accounts, etc.) 10,403 Driven by solid demand for everyday banking 471 solution
Slide 16: Trading income: Healthy customer activity
Trading income: Healthy customer activity supported by favourable market conditions Highlights Net trading income (DKK m) LC&I 2,127 2,110 Y/Y: Healthy customer activity, reiterating that H1- 23 was exceptionally strong at LC&I -345 344 Q/Q: Favourable market conditions on the back of central bank r
Slide 17: Expenses: Cost trajectory in line with plan
Expenses: Cost trajectory in line with plan - inflation and investments mitigated by lower costs related to legacy cases Highlights Expenses (DKK m) 166 -131 19,046 Total operating expenses down 4% q/q due to consistent cost management and one-off benefit 18,853 358 -179 -658 635 Cost/income ratio a
Slide 18: Business & Product Units
Business & Product Units Danske Bank 18
Slide 19: Personal Customers: Strong financial performance
Personal Customers: Strong financial performance driven by resilient core banking income and healthy customer activity despite subdued housing lending Highlights Financial performance KPIs Strong financial performance Total income ROAC (%) Cost/income (%) underpinned by healthy customer (DKK m) 2026
Slide 20: Business Customers: Strong core banking income
Business Customers: Strong core banking income and commercial momentum supported by lending growth Highlights Financial performance KPIs Strong financial performance driven Total income ROAC (%) Cost/income (%) by core banking activities (DKK m) 2026 target (~21%) 2026 target (<40%) Total income sup
Slide 21: Large Corporates & Institutions
Large Corporates & Institutions: Good sentiment from corporate deal activity; strong development in Asset Management from continually positive net sales Highlights Financial performance KPIs Momentum in total income continue. Total income ROAC (%) Cost/income (%) Q/Q: Higher trading income offsets (
Slide 22: Business units: Danica and Northern Ireland
Business units: Solid net income development in Danica; loan growth in Northern Ireland Profit before imp. (DKK m) Lending (index) Lending continued to grow in line with our strategy, driven by residential mortgages supporting our market leading position in Northern Ireland 503 108 459 101 The third
Slide 23: Realkredit Danmark portfolio overview
Investor Presentation - First nine months 2024 Realkredit Danmark portfolio overview: Continued strong credit quality Highlights Retail loans, Realkredit Danmark, Q324 (%) ( ) = Q224 Portfolio facts, Realkredit Danmark, Q324 Fixed rate (10 yrs-30 yrs) Interest-only Approx. 295,000 loans (residential
Slide 24: ESG, Sustainability, Financial Crime Prevention
ESG, Sustainability, Financial Crime Prevention Danske Bank 24
Slide 25: Sustainability is an integrated element of our Forward '28 strategy
Investor Presentation - First nine months 2024 Sustainability is an integrated element of our Forward ’28 strategy Our starting point What we will do Large Corporates & Institutions Personal Customers Sustainable finance advisory services, Housing, investments, pensions, Advisory transition finance
Slide 26: Targets and ambitions across three sustainability agendas
Investor Presentation - First nine months 2024 We have set targets and ambitions covering each of our three sustainability agendas Climate change Nature & biodiversity Human rights & social impact We reduce emissions across our value chain We engage with high-impact sector companies We continuously
Slide 27: Climate Action Plan aligned with Paris Agreement
The disclaimer for the Climate Action Plan Progress Report 2023 applies to all information shown on this slide (see slide 63) Investor Presentation - First nine months 2024 Climate Action Plan aligned with Paris Agreement launched in January 2023 Carbon footprint of 13.3 million tCO2e across the Gro
Slide 28: Climate Action Plan Progress Report shows positive traction
The disclaimer for the Climate Action Plan Progress Report 2023 applies to all information shown on this slide Investor Presentation - First nine months 2024 Our Climate Action Plan Progress Report shows positive traction across our climate targets, though some sector targets do not follow the linea
Slide 29: Recent highlights on the sustainability agenda
Investor Presentation - First nine months 2024 Recent highlights on the sustainability agenda contributing to strong performance Partnerships to strengthen the green transition Expansion of energy improvement loans in the real estate sector Favourable loans for energy improvements expanded to cover
Slide 30: Overview of recent sustainability-related publications
Investor Presentation - First nine months 2024 Overview of recent sustainability-related publications 2 FEB 7 FEB 23 FEB 31 MAY Climate Action Plan Human Rights Report Progress Report Annual Report incl. Position Statement Sustainability statement Sustainability approach on Fossil Fuels + Fact Book
Slide 31: Deep dive – ESG integration in lending operations
Investor Presentation - First nine months 2024 Deep dive – Overview of ESG integration in Danske Bank’s lending operations 1. Position statements 2. Single-name ESG analysis 3. Portfolio-level ESG analysis Our position statements are a key tool for aligning ESG analysis is conducted for all large co
Slide 32: Committed to a range of sustainability initiatives
Investor Presentation - First nine months 2024 Danske Bank is committed to a range of sustainability initiatives – including these key examples Principles for Principles for Net-Zero Banking Alliance Net-Zero Asset Net Zero Asset Responsible Banking Responsible Investment Owner Alliance Managers Ini
Slide 33: Testing and further strengthening the Financial Crime framework
Investor Presentation - First nine months 2024 Testing and further strengthening the Financial Crime framework Testing of the FC Plan deliveries Roadmap ahead Four years ago, the Bank launched the Financial Crime The Financial Crime landscape continues to evolve and the Bank, along with others in th
Slide 34: The Financial Crime Framework beyond completion of the FC Plan
Investor Presentation - First nine months 2024 The Financial Crime Framework beyond completion of the FC Plan By concluding the FC Plan Danske Bank has now in place a Financial Crime Framework which meets regulatory requirements applicable to the Bank and is reasonably designed to manage the Bank’s
Slide 35: Regulatory Engagements
Investor Presentation - First nine months 2024 Regulatory Engagements We engage in ongoing dialogue with our regulators through regular meetings with the Financial Supervisory Authorities (“FSAs”) and the Supervisory College to ensure aligned expectations and transparency between our regulators and
Slide 36: Committee Governance for Financial Crime Compliance Risks
Investor Presentation - First nine months 2024 Committee Governance for Financial Crime Compliance Risks Joint Financial Crime Risk & Compliance Committee Conduct and Compliance Committee Post-Resolution Committee Functions as a discussion and decision forum on Board level committee that oversees th
Slide 37: Resolutions with the Danish and U.S. Authorities
Investor Presentation - First nine months 2024 The Resolutions with the Danish and U.S. Authorities In December 2022, Danske Bank reached the final resolutions with the U.S. Department of Justice (DOJ), the U.S. Securities and Exchange Commission (SEC) and the Danish Special Crime Unit (SCU) followi
Slide 38: Credit quality & Impairments
Credit quality & Impairments Danske Bank 38
Slide 39: Impairments: Strong credit quality with net reversal
Investor Presentation - First nine months 2024 Impairments: Strong credit quality with net reversal of impairments; prudent PMA buffer remains in place Highlights Impairment charges by category (DKK bn) Credit quality deterioration PMAs Macro models Debt collection one-off Strong credit quality and
Slide 40: Strong footprint within retail lending
Investor Presentation - First nine months 2024 Strong footprint within retail lending Lending by segment1 Q3 24 (%) Credit exposure by industry Q3 24 (%, rounded) 4% Personal customers 33 1% Commercial property 12 of which residential (6%) Northern Ireland LC&I Other Public institutions 9 24% Privat
Slide 41: Strong credit quality in portfolios exposed to macro cyclicality
Investor Presentation - First nine months 2024 Overall strong credit quality in portfolios exposed to macro cyclicality CRE: Well diversified & prudently managed growth Agriculture: Well-provisioned agriculture book Housing: Low leverage, strong household finances DKK 298 bn in credit exposure and E
Slide 42: Commercial property: Prudently managed
Investor Presentation - First nine months 2024 Commercial property: Prudently managed and cash-flow based underwriting standards; sound credit quality & adequate buffers in place to mitigate tail risks Highlights Lending to CRE segment by major peer banks (index)* CRE share of total portfolio by maj
Slide 43: Fossil fuels (coal, oil and gas) exposure
Investor Presentation - First nine months 2024 Fossil fuels (coal, oil and gas) exposure Key points Q3 24 Exposure towards exploration and production (E&P) of oil and gas is down by 76% compared to end 2020. The exposure development is aligned with the Group’s 2030 climate target of reducing finance
Slide 44: Credit quality: Low level of actual credit deterioration
Investor Presentation - First nine months 2024 Credit quality: Low level of actual credit deterioration Stage 2 and 3 as % of net exposure Allowance account by business unit (DKK bn) 3.0 12 Stage 3 net exposure (% of Total, rhs) PC LC&I Other (Non-core) 11 2.5 Stage 2 net exposure (% of Total, lhs)
Slide 45: Capital
Capital Danske Bank 45
Slide 46: Capital: Strong capital base with CET1 ratio of 19.1%
Investor Presentation - First nine months 2024 Capital: Strong capital base with CET1 ratio of 19.1% Capital ratios (%) Current capital buffer structure (%) Tier 2 AT1 Pillar II component (total 3%) CET1 Systemic risk buffer 23.1 23.0 22.9 Countercyclical capital buffer 22.1 2.5 2.7 2.7 Capital cons
Slide 47: Capital update: CET1 development toward 2026
Investor Presentation - First nine months 2024 Capital update: CET1 development toward 2026 CET1 capital generation & usage (% of REA) – Capital markets day June 2023 CET1 requirement Buffer to requirement -6% 10% ▪ CET1 capital ratio expected to approach 17.8% -3% -1.5% -1% >16% target through capi
Slide 48: Strong CET1 capital build-up since 2008
Investor Presentation - First nine months 2024 Strong CET1 capital build-up since 2008; Available Distributable Items (ADI) well in excess of DKK 100 bn Common Equity Tier 1, 2008 – 2024 (DKK bn) +82 bn 152 155 159 144 149 126 130 134 133 133 127 133 119 107 77 79 85 2008 2009 2010 2011 2012 2013 20
Slide 49: Fully compliant with MREL and subordination requirement
Investor Presentation - First nine months 2024 Fully compliant with MREL and subordination requirement; expect to cover MREL need with both preferred and non-preferred senior MREL & subordination requirement* and eligible funds Q324 DKK bn (% of Group REA) Comments The Group has to meet a MREL +36 r
Slide 50: Funding & Liquidity
Funding & Liquidity Danske Bank 50
Slide 51: Funding structure and sources
Investor Presentation - First nine months 2024 Funding structure and sources: Danish mortgage system is fully pass-through Loan portfolio and long-term funding Q324 (DKK bn) Funding sources* (%) 2,229 Q224 59% 59% 149 Senior & Q324 NPS bonds 1,749 1,090 Deposits Bank loans 613 14% 13% 10% 9% 9% 10%
Slide 52: Funding programmes and currencies
Investor Presentation - First nine months 2024 Funding programmes and currencies Covered bonds by currency Q324 Largest funding programmes Q324 49% 15% Utilisation SEK NOK EMTN Programme 44% Limit – EUR 35bn Total Global Covered Bond 52% DKK 166 bn Limit – EUR 30bn 34% EUR ECP Programme 1% 32% CHF L
Slide 53: Funding plan
Investor Presentation - First nine months 2024 Funding plan Changes in funding* 2024 (DKK bn and bp) Long-term funding excl. RD (DKK bn)** Cov. bonds Senior Non-Preferred Senior Completed*** Funding plan 16bp 100 95 162bp 169bp 31bp 112bp 47 35 79 70-85 38bp 29 17 37bp 24 81bp 22 75 12 8 7 7 Redempt
Slide 54: Danske Bank covered bond universe
Investor Presentation - First nine months 2024 Danske Bank covered bond universe – A transparent pool structure, with EUR issuance by Danske Mortgage Bank & Danske Bank A/S “D-pool” and “C-pool” Danske Bank A/S C-pool1 S&P AAA Fitch AAA Residential mortgages Scope AAA Denmark, D-pool • Norway, I-poo
Slide 55: Credit & ESG Ratings
Credit & ESG Ratings Danske Bank 55
Slide 56: Credit ratings – S&P upgrades non-preferred senior, Tier 2 and AT1
Investor Presentation - First nine months 2024 Danske Bank’s credit ratings – S&P upgrades non-preferred senior debt, subordinated Tier 2 debt and additional Tier 1 capital instruments Long-term instrument ratings Rating summary Q3 2024 Fitch Moody’s Scope S&P On 20 September 2024, S&P upgraded Dans
Slide 57: Credit ratings – No changes by Fitch or Moody's
Investor Presentation - First nine months 2024 Danske Bank’s credit ratings – No changes by Fitch or Moody’s in Q3 2024 Rating methodology Danske Bank’s rating Operating Business Risk Asset Earnings & Capitalisation & Funding & Viability Government + + + + + + = + = Issuer rating environment Profile
Slide 58: Credit ratings – S&P upgrades Stand-Alone Credit Profile
Investor Presentation - First nine months 2024 Danske Bank’s credit ratings – S&P upgrades Stand-Alone Credit Profil to ‘a’ Rating methodology Danske Bank’s rating Extraordinary Anchor Potential CRA** + 1 + 2 + 3 + 4 = = SACP* + external + ALAC*** = Issuer rating SACP* adjustment support A+ bbb+ +1
Slide 59: ESG ratings – No changes in Q3 2024
Investor Presentation - First nine months 2024 Danske Bank’s ESG ratings – No changes in Q3 2024 We have chosen to focus on four providers based on their importance to our investors ESG rating agency Q3 2024 Q2 2024 Q1 2024 End-2023 End-2022 End-2021 Range CDP1 B 362 companies, out of the 21,000 B B
Slide 60: Tax & Material one-offs
Tax & Material one-offs Danske Bank 60
Slide 61: Tax
Investor Presentation - First nine months 2024 Tax Actual and adjusted tax rates (DKK m) Tax drivers, Q3 2024 Q3 2024 Q2 2024 Q1 2024 Q4 2023 Q3 2023 The actual tax rate of 24.9% (excluding prior- year's adjustments) is lower than the Danish rate Profit before tax according to P&L 7,935 7,774 7,517
Slide 62: Material extraordinary items, 2023 – 2024
Investor Presentation - First nine months 2024 Material extraordinary items, 2023 – 2024 Quarter One-off items Effect (DKK m) P&L line affected Q123 None Transaction costs and prudent valution related to Personal Customers Norway -693 Other income Q223 Gain from sale of shares taken over in connecti
Slide 63: Contacts
Investor Presentation - First nine months 2024 Contacts Investor Relations Group Treasury and Funding Claus Ingar Jensen Mobile +45 25 42 43 70 Kasper Refslund Kirkegaard Mobile: +45 23 82 94 88 Head of IR clauj@danskebank.dk Head of Group Treasury kaki@danskebank.dk Nicolai Brun Tvernø Mobile +45 3
Slide 64: Disclaimer for Climate Action Plan Progress Report 2023
Investor Presentation - First nine months 2024 Disclaimer for Danske Bank’s Climate Action Plan Progress Report 2023 Danske Bank’s Climate Action Plan Progress Report 2023 has been prepared by Danske Bank A/S (“Danske Bank”). Danske Bank is under supervision by the Danish Financial Supervisory Autho
Slide 65: Disclaimer
Investor Presentation - First nine months 2024 Disclaimer Important Notice 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, including th