Jyske Bank A/S · OMXCOP:JYSK
Jyske Bank A/S — Danske Bank – Danish Banking Seminar 2017
24 slides from Jyske Bank A/S's conference presentation, Mar 14, 2017
Slide 1: Jyske Bank – Danske Bank Danish Banking Seminar
Jyske Bank Danske Bank – Danish Banking Seminar 14 March 2017
Slide 2: 2016 highlights
2016 highlights • A strong finish in Q4 contributes to delivering a net profit of DKK 3,116m, equal to ROE 10.3% in 2016 • Continued growth in new home loans – Total volume of DKK 80bn end of 2016 versus DKK 57.5bn end of 2015 – Expected growth of DKK 10-15bn in 2017 • Improved credit quality – Net
Slide 3: Our targets
Our targets 2016 • Delivering an attractive long-term return on equity of 8-12% 10.3% • Volume growth of DKK 100bn in housing-related loans and DKK 20bn in property loans for DKK 80.0 corporate clients and DKK 12.4bn • Harvesting annual synergies of DKK 600m related to the Jyske Bank/BRFkredit merge
Slide 4: Jyske Bank Group
Jyske Bank Group • Growth in mortgages and home loans continues at high pace Financials 2,500 • Stabilization of bank loans and bank deposits on the rise DKKm 2,000 • Positive development in AUM due to inflow of new funds and positive returns 1,500 • Core income under pressure, strong finish due to
Slide 5: Strong finish lifts ROE into mid-target range
Strong finish lifts ROE into mid-target range Net profit • Delivering a net profit of DKK 1,202m in Q4 and DKK 3,116m in 3,500 21% 2016 DKKm 3,000 18% 2,500 15% • ROE of 16.0% p.a. in Q4 and 10.3% in 2016 2,000 12% 1,500 9% • ROE for 2016 of 10.3% compared to 9.0% in 2015, net increase of 1.3 percen
Slide 6: Banking activities
Banking activities Financials • Stabilization of bank loans and bank deposits on the rise 1,800 • Positive development in AUM due to inflow of new funds and DKKm 1,600 1,400 positive returns 1,200 1,000 800 • Core income under pressure, strong finish due to Q4 seasonality 600 in net fee income 400 2
Slide 7: Mortgage activities
Mortgage activities Financials • Growth in all lending segments - most significant in Private 600 segment but also significant growth in Commercial segment DKKm 500 400 • Core income steadily growing as volume grows 300 • Core expenses as expected 200 100 • Overall, low level of impairment charges –
Slide 8: Leasing activities
Leasing activities Financials • Gradually increasing loan volumes 150 DKKm • Stable development in core income based on increased 100 business volume • Core expenses develop as expected 50 • Impairment charges at a low level - Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Core expenses Core income Core pr
Slide 9: Investment portfolio earnings improved in H2 2016
Investment portfolio earnings improved in H2 2016 • Improved investment portfolio earnings driven by: Investment portfolio earnings, quarterly 400 DKKm – In H2 2016 positive value adjustments of DKK 120m related 300 to fair value assessment of Jyske Bank’s holdings in 200 Nordjyske Bank (2016: DKK -
Slide 10: Adjusting to long-term capital targets
Adjusting to long-term capital targets Capital ratio • Capital ratio 18.3% and CET1 ratio 16.5% end of Q4 2016 vs. long-term 20 targets of 17.5% and 14% pct 15 10 • Gradual adjustment of the capital structure towards targets (3.5 pp.) – Process initiated in Q3 2015 5 – Majority of adjustment expecte
Slide 11: 2017 focus areas
2017 focus areas • Growth strategy: – An expected growth of DKK 10-15bn in new home loans • Pricing: – Full effect of negative deposits rates on demand deposits from corporates – As per February 1st 2017 the Group no longer waives or offers to discount fees on transfers of mortgages – Restructuring
Slide 12: Growth strategy: mortgage lending and home loans
Growth strategy: mortgage lending and home loans 12
Slide 13: Strategic focus on mortgage lending is a success
Strategic focus on mortgage lending is a success Development in mortgage lending • The Group’s mortgage loan volumes have grown 180 by more than DKK 80bn since early 2014 DKKbn 160 140 – Primarily in Private segment due to the new home 120 loan products 100 80 – Commercial and Subsidised have grown
Slide 14: Increasing profitability
Increasing profitability 18 Fixed costs • Growth in the lending portfolio drives marginal operating 16 Average lending costs per loan costs down towards capital costs 14 12 10 • Growth in the portfolio creates larger issuances and lower 8 funding costs 6 – LCR compliant proportion of issuances has i
Slide 15: Why are we successful in attracting customers?
Why are we succesful in attracting customers? Margins on home loans incl. quotation cut1) (LTV 0-80%) • A broad product range comprised of two different product types: With Fixed F5 F1 Floater2) instalments – Transparent traditional mortgage products in BRFkredit Jyske Bank 0.61 0.79 1.00 0.703) – C
Slide 16: Political agreement on mortgages – not a game changer
Political agreement on mortgages – not a game changer • Political agreement on home loans reached in January Focus on margins in the mortgage 2017: market is more intense than ever – Notice period for changes in fees and margins is prolonged to 6 months – No fees and 50% reduction in quotation cut i
Slide 17: Reducing risk and earnings volatility
Reducing risk and earnings volatility • At end of 2016 low risk mortgage loans make up 66% of the Losses and impairment charges 1985-2015 Group’s loan portfolio 3.0 – Historically, losses and impairment charges on mortgages are 2.5 Mortgage (PIT) Banks (PIT) significantly lower than on bank loans: 1
Slide 18: Digitalisation of the mortgage market
Digitalisation of the mortgage market • The mortgage market will become more digitalised over the coming years • The Group must develop a platform for the digital customers 1,778,532 properties • Within the last year the Group has launched new products, new funding sources, new web design, and a new
Slide 19: Capital
G JYSKE BANK Capital 19
Slide 20: Strong capital position
Strong capital position • Capital ratio 18.3% and CET1 ratio 16.5% end of 2016 compared to Capital ratio and CET1 17.0% and 16.1% end of 2015. Change in capital ratios due to: 20 – Strengthening of retained earnings 18 0.6 1.2 16 2.5 16.5 – Higher REA (primarily volume growth in property related loa
Slide 21: Credit Quality
G JYSKE BANK Credit Quality 21
Slide 22: Net reversals
Net reversals • Net reversals of DKK 149m under core profit – Impairment charges on agriculture of DKK 292m Loan impairment charges (under core profit) – Net reversals of DKK 293m in Q4 2016 alone 200 DKKm 100 • End of 2016 total balance of management’s estimate of DKK 471m, of 0 which DKK 235m rela
Slide 23: Limited exposure to dairy and pig farmers
Limited exposure to dairy and pig farmers • Exposure to dairy and pig farmers accounts for less than 1% of Loans, advances and Balance of loan Impairment ratio the Group’s loans and guarantees guarantees impairment charges DKKm/% 2016 2015 2016 2015 2016 2015 Dairy farmers 889 1,154 722 710 45% 38%
Slide 24: 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,
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