Danske Bank A/S · OMXCOP:DANSKE
Danske Bank A/S — Investor Day (November 2012)
19 slides from Danske Bank A/S's investor day presentation, Nov 8, 2012
Slide 1: The road to profitability
Danske Bank Capital Markets Day The road to profitability Henrik Ramlau-Hansen, Chief Financial Officer 8 November 2012
Slide 2: Agenda
Agenda Results for 9M 2012 Roadmap to ROE above 12% in 2015 Rationale behind the share issue ROE sensitivity to key assumptions 2
Slide 3: Setting the scene
Setting the scene Income statement (DKK m) Key points 9M 2012 9M 2011 Index Total income up 14% Net interest income 18,588 17,355 107 Stable expenses despite Net fee income 6,129 6,080 101 restructuring costs Net trading income 7,469 5,687 131 ÷ Impairment charges Other income 2,323 2,799 83 hig
Slide 4: Outlook for 2012
Outlook for 2012 Macro Economic growth to remain low in most markets Income Improvement of income is an ongoing process Expenses Expected to increase 4% above 2011 level Loan losses In line with 2011 level, around DKK 13 bn Net profit Results remain low 4
Slide 5: Financial targets
Financial targets Q3 2012 Ambitions ROE 3.8% Above 12% in 2015 S&P/Moody’s/Fitch Improve ratings at least one notch Ratings A-/Baa1/A Core tier 1 12.7% Minimum 13% by the end of 2013 Total capital 19.4% Minimum 17% by the end of 2013 Liquidity Meet EU 2015 LCR requirement by the end of 2012 Nominal
Slide 6: ROE above 12% in 2015
ROE above 12% in 2015 Change in ROE from 2012 to 2015 9M 2012 annualised (after tax) 3.8% Management actions (pre-tax) 1 4–6% points Declining loan losses (pre-tax) 2 5–6% points Short term rates (pre-tax) 3 4–5% points Capital, regulation, inflation, tax 4 6–7% points 2015E (after tax) ROE above 12
Slide 7: Management actions increase profit by DKK 6–8 bn in 2015
Management actions increase profit by DKK 6–8 bn in 2015 Effect from 9M 2012 annualised to 2015 (DKK bn pre-tax) Initiatives 1 Pricing Additional effects of Pricing 2 implemented pricing measures Continue pricing measures Fees Sales Sales 3–4 Reduce fee discounts Increase cross sales in Pe
Slide 8: Management actions by business unit
Management actions by business unit Effect from 9M 2012 annualised to 2015 (DKK bn pre-tax) 1 Personal Banking 3–4 Business Banking 2–2.5 C&I 1–1.5 Danske Capital 0.4 Total actions Total management actions of DKK 6–8 bn Corresponds to a positive ROE effect of 4–6 % points 8
Slide 9: Growth at Danske Capital through 2015
Growth at Danske Capital through 2015 Effect from 9M 2012 annualised to 2015 (DKK bn pre-tax) Initiatives 1 Sales Through Danske Bank to – Institutional clients Sales 0.5 (solution products) – Retail clients (managed accounts) Through external channels to international institutional clients (alp
Slide 10: Cost efficiency leads to costs below DKK 26 bn in 2015
Cost efficiency leads to costs below DKK 26 bn in 2015 Effect on total expenses from 2012 guidance to 2015 (DKK bn pre-tax) Staff reduction (1,000s) 1 24 2012E 27 20 16 One-offs 1 12 2008 Q312 2015E Cost efficiency 1.5 Branch network reduction 900 Inflation 1.5 600 2015E Cost below DKK 26 bn 300 200
Slide 11: Towards more normal market conditions
Towards more normal market conditions Effect of lower impairments (DKK bn pre-tax) 2 Effect of higher S-T rate (DKK bn pre-tax) 3 Floor risk Denmark 1–2 3-4 on deposits Effect on Ireland 5–6 2 equity Rest of group 0.5 Increased equity 0.5 2015E Impairments drop by DKK 7–8 bn 2015E DKK 6 bn Correspon
Slide 12: Negative ROE effects between 2012 and 2015
Negative ROE effects between 2012 and 2015 Effect of headwinds (DKK bn pre-tax) Assumptions 4 Inflation assumed to be around 2% p.a. Inflation 1.5 More expensive capital and funding Capital & funding 2-3 Effects of regulation are almost offset by capital efficiency Negative ROE effect of low
Slide 13: Growth at Danica through 2015
Growth at Danica through 2015 Effect from 9M 2012 annualised to 2015 (DKK bn) Management actions at Danica 4 Technical result pre-tax Premiums to increase by DKK Result after tax 5–6 bn from 2012 to 2015 1.7 AuM to grow moderately; 1.5 changes in taxation are a 1.4 negative driver in 2013 Inve
Slide 14: Capital efficiency is a critical ROE improvement driver
Capital efficiency is a critical ROE improvement driver Change in risk-weighted assets for Group (DKK bn) Assumptions 4 Flattish RWA towards 2015 Q3 12 851 New regulation Specific risk CRD III (IRC) Counterparty risk (CVA) New regulation 90–110 Capital efficiency Sampo Bank Foundation IRB Pa
Slide 15: Illustration of impact of DKK 7 bn in new share capital and rating upgrade
Illustration of impact of DKK 7 bn in new share capital and rating upgrade Full-year 2014 effect (DKK bn pre-tax) Pro forma EPS 2014 based on consensus (DKK) Lower volume -0.1 0.6 AT1 capital 1.1 1 Lower price 0.1 AT1/T2 instruments Lower price 0.6 14.2 14.1 ST and LT funding Increased activity 0.2
Slide 16: Significant spread tightening after 30 October share issue
Significant spread tightening after 30 October share issue 5Y senior bond spread,* 6M ASW, Jun-Nov 2012 (bp) 5Y senior bond spread,* 6M ASW, Oct-Nov 2012 (bp) Swedbank Handelsbanken Swedbank Handelsbanken Nordea Danske Bank Nordea Danske Bank 200 1 Sep-5 Nov 160 -96bp 140 150 29 Oct -5 Nov 120 -21bp
Slide 17: 2015 ROE sensitivity
2015 ROE sensitivity ROE 14% ROE 13% ROE 12% ROE 11% Condition1: 10.7 11.7 13.0 14.5 40 30 20 10 Condition 2: Core tier 1(%) Loan loss ratio (bps) 1.3 2.0 ROE ambition 2.7 Given all three conditions, ROE reaches 12% 3.4 Sensitivity If one condition changes, Condition 3: level of ROE changes S-T rate
Slide 18: Top CFO priorities through 2015
Top CFO priorities through 2015 Rating upgrade Improved net profit Follow-up on business unit targets 18
Slide 19: Disclaimer
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 the United States, or an inducement to enter in