AL Sydbank A/S · OMXCOP:ALSYDB
AL Sydbank A/S — Sydbank — H1 2019 Earnings Presentation
21 slides from AL Sydbank A/S's earnings presentation, Aug 28, 2019
Slide 1: Interim Report H1 2019
27-08-2019 1 Interim Report H1 2019 Solid credit quality – lower interest rates – high remortgaging activity 28 August 2019
Slide 2: Highlights for H1 2019
27-08-2019 2 Highlights for H1 2019 Key points Solid credit quality – lower interest rates – high remortgaging activity A stronger bank Impressive increase in customer satisfaction – retail and corporate Profit Profit of DKK 389m – ROE of 7.0% p.a. after tax Core income Core income of DKK 905m in Q2
Slide 3: Core income – Q2 2019 up 1% vs Q1 2019
27-08-2019 3 Core income – Q2 2019 up 1% vs Q1 2019 Key points H1 19 vs H1 18: DKKm H1 2019 H1 2018 Index Q2 2019 Q1 2019 Index • Net interest income etc down by Net interest income etc 754 919 82 373 381 98 18% – 5% due to MREL issues – Mortgage credit * 300 289 104 159 141 113 September 2018 and F
Slide 4: Net interest income etc – development from Q1 2019 to Q2 2019
27-08-2019 4 Net interest income etc – development from Q1 2019 to Q2 2019 DKKm 4 1 2 380 5 4 360 381 373 340 320 Q1 2019 1 more Decline in Increase MREL Margin Q2 2019 day loan volume net deposits costs pressure and average product mix
Slide 5: Net interest income represents 41% of core income in Q2 19
27-08-2019 5 Net interest income represents 41% of core income in Q2 19 DKKm 1,000 800 529 546 565 593 528 524 531 519 532 600 400 511 490 473 460 459 200 439 417 381 373 0 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 17 17 17 18 18 18 18 19 19 Net interest income Other core income
Slide 6: Trading income – satisfactory level in H1 2019
27-08-2019 6 Trading income – satisfactory level in H1 2019 DKKm 100 96 80 60 58 55 40 45 36 40 40 20 0 -2 -20 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19
Slide 7: Costs (core earnings) – reduction of DKK 10m in H1 2019
27-08-2019 7 Costs (core earnings) – reduction of DKK 10m in H1 2019 DKKm 10 42 1400 1350 1,429 1300 1,397 1,365 1,374 1,369 1,346 1250 1200 H1 H1 H1 H1 H1 Rise in Reduction H1 2014 2015 2016 2017 2018 costs H1 2019 2019 3%
Slide 8: Impairment charges constitute minus DKK 20m in Q2 2019, equal to minus 3bps
27-08-2019 8 Impairment charges constitute minus DKK 20m in Q2 2019, equal to minus 3bps Impairment charges for bank loans DKKm Bp Reversal for ninth consecutive quarter. 4 20 Impairment charges represent: 2 • Minus 4bps in H1 2019, up from minus 7bps H1 2018 0 0 -13 • Minus 3bps in Q2 2019, down fr
Slide 9: Net reversal in Q2 2019
27-08-2019 9 Net reversal in Q2 2019 DKKm Impairment charges - quarterly Key points Q2 2019: • Impairment charges as regards corporate 75 exposures represent DKK 6m • Provision as regards agriculture is unchanged 50 DKK 100m • Impairment charges as regards retail exposures 25 represent minus DKK 26m
Slide 10: Investment portfolio earnings – negative result for Q2 2019
27-08-2019 10 Investment portfolio earnings – negative result for Q2 2019 Investment portfolio earnings – DKKm Investment portfolio earnings for H1 2019 8 10 represent minus DKK 28m compared with -13 -12 earnings of minus DKK 78m in H1 2018. -14 -14 Investment portfolio earnings for Q2 2019 represen
Slide 11: Income statement – ROE of 7.0% in H1 2019
27-08-2019 11 Income statement – ROE of 7.0% in H1 2019 DKKm H1 2019 H1 2018 Index Q2 2019 Q1 2019 Index Key points H1 19 vs H1 18: Core income 1,805 2,040 88 905 900 101 • Core income down by 12% • Trading income up by 36% Trading income 136 100 136 40 96 42 • Costs (core earnings) up by Total inco
Slide 12: Loans and advances unchanged in Q2 2019 – deposits continue to grow
27-08-2019 12 Loans and advances unchanged in Q2 2019 – deposits continue to grow DKKbn 89.1 86.3 86.3 85 84.1 82.7 82.7 81.5 80 75 70 65 64.3 63.5 62.5 62.1 61.0 60.9 60.9 60 55 50 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Deposits Loans
Slide 13: Corporate loans – increase in Q2 2019 predominantly in non-core corporate
27-08-2019 13 Corporate loans – increase in Q2 2019 predominantly in non-core corporate DKKbn Q2 2019 Q1 2019 Q4 2018 Q4 2017 Manufacturing and extraction of raw materials 8,903 8,604 8,469 8,171 Energy supply etc 1,677 2,175 2,168 2,064 Trade 12,279 12,649 11,855 11,460 Transportation, hotels and r
Slide 14: Total credit intermediation – increase of DKK 0.4bn in Q2 2019
27-08-2019 14 Total credit intermediation – increase of DKK 0.4bn in Q2 2019 Total credit intermediation Q4 Q4 Q1 Q2 Change • Total credit intermediation DKKbn 2017 2018 2019 2019 Q2 increased by DKK 0.4bn in Q2 Bank loans - retail 18.0 15.7 15.4 14.9 -0.5 2019 – equal to an increase of 0.3% Bank lo
Slide 15: Capital ratios affected by an increase in market risk
27-08-2019 15 Capital ratios affected by an increase in market risk Q4 Q4 Q1 Q2 Key points Q2 2019: DKKm 2017 2018 2019 2019 De facto • The DKK 0.7bn increase in REA is attributable to an increase in market risk of DKK 0.6bn Credit risk 38,933 36,032 36,132 36,385 36,385 • The capital ratio dropped
Slide 16: Capital ratio development in H1 2019 – ratios down by 0.8 pp
27-08-2019 16 Capital ratio development in H1 2019 – ratios down by 0.8 pp Key points: Capital ratio at 1 Jan 2019 22.4 • The announced share buyback programme of DKK 250m has Share buyback DKK 250m 0.5 reduced the capital ratio by 0.5pp • The increase in risk exposure is attributable to market risk
Slide 17: Outlook for 2019
27-08-2019 17 Outlook for 2019 • Total income is expected to be lower than the income generated in 2018. • Costs (core earnings) are projected to rise slightly in 2019. • Impairment charges for 2019 are forecast to be at a low level. • Non-recurring costs are expected to represent around DKK 75m. •
Slide 18: Deposit surplus marching upwards – negative interest rates on retail deposits
27-08-2019 18 Deposit surplus marching upwards – negative interest rates on retail deposits Negative interest rates – DKKbn Deposit surplus retail customers: 30 • Limit of DKK 7.5m on demand deposits carrying 20 interest rate of 0% • Interest rate on deposits in excess of DKK 7.5m is 10 subject to i
Slide 19: Questions
27-08-2019 19 Questions
Slide 20: Thank you
27-08-2019 20 Thank you Additional information: Karen Frøsig, CEO tel +45 74 37 20 00, direktionen@sydbank.dk Jørn Adam Møller, CFO tel +45 74 37 24 00, jam@sydbank.dk
Slide 21: Forward-looking statements
27-08-2019 21 Forward-looking statements • This presentation contains statements concerning expectations of future developments, including future income as well as expected business events. Such statements are by their nature uncertain and associated with risks as many factors – of which some may be