Jyske Bank A/s · OMXCOP:JYSK
Jyske Bank A/s — Q1 2015 Earnings Presentation
32 slides from Jyske Bank A/s's earnings presentation, 2015
Slide 1: Jyske Bank Q1 2015
& JYSKE BANK Jyske Bank Q1 2015 1/32
Slide 2: Q1 highlights
Q1 highlights • Falling interest rates, resulting in negative interest rates, put pressure on NII • Rising stock markets have a positive effect on commission and fee income • Danish economy shows signs of improvement (e.g. increasing housing prices and expected GDP growth) – a better outlook for res
Slide 3: Status on Jyske Bank/BRFkredit merger
Status on Jyske Bank/BRFkredit merger • Sales of new home loan products reaches DKK 42bn (DKK 40bn New home loan products at end of Q1) and Q4 growth is repeated in Q1 – future annual 45 DKKbn NII close to closing the gap from lost commission income from 40 Totalkredit 35 30 25 20 15 10 5 0 Q4 2013
Slide 4: Q1 2015 results
Q1 2015 results • Pre-tax profit of DKK 502m - equal to ROE of 7.3% ann. CORE PROFIT AND NET PROFIT OR LOSS FOR THE PERIOD Q1 2015 Q1 2014 Index 15/14 • Core income driven by D KKm – stable net interest income – supported by income on new Core income 1,978 1,729 114 home loan products Core expenses
Slide 5: NII underlying development stable
NII underlying development stable Net interest income • NII is pressured by: 1,800 – Extremely low interest rate level DKKm 1,600 – Continued pressure on margins due to competition, limited 1,400 economic growth and high savings propensity 1,200 1,000 800 • NII on Jyske Bank new home loan products a
Slide 6: Strong fee and commission income
Strong fee and commission income • Overall, an increase of 46% compared to Q1 2014 and close Net fee income to Q4 2014 level 700 DKKm 600 • Significant increase in securities trading etc.: 500 – increasing activity across client segments 400 – performance related fees from capital management 300 200
Slide 7: Value adjustments hit by falling interest rates
Value adjustments hit by falling interest rates Value adjustments • Dominated by development in interest rates: 250 DKKm — Increased volatility in especially DKK interest rates 200 150 — Falling long-term interest rates 100 50 0 • Positive effects from bonds, equities and FX/currency -50 overshadowe
Slide 8: Impairment charges stabilized
Impairment charges stabilized Loan impairment charges and losses • Loan impairment charges under core profit revert to range seen in 1,200 2013 and early 2014 DKKm 1,000 800 • Losses are stable 600 400 • Management’s estimate related to agriculture in Q4 2014 has been 200 individualized in Q1 2015 0
Slide 9: Continued growth in new home loan products
Continued growth in new home loan products • Significant increase in new home loan products (DKK 40bn vs. SUMMARY OF BALANCE SHEET, END OF PERIOD DKK 31bn end of 2014) – momentum from Q4 is maintained Q1 2015 End-2014 Index 15/14 D KKbn Mortgage loans 229 219 105 • Signs of improvement in the Danish
Slide 10: Strong capital base with high CET1 ratio
Strong capital base with high CET1 ratio • Capital ratio 16.3% and CET1 15.3% versus long-term targets of Capital ratio 17.5% and 14% 18 pct 16 14 • Individual solvency requirement 10.7% (+0.3% SIFI requirement) 12 10 8 • Maintaining a solid capital base because: 6 – Expansion (home loan products) r
Slide 11: Long history of strong liquidity reserves
Long history of strong liquidity reserves • Focus on quality and not only quantity: No “fixed number” but Capital market scenario enough to comply with critic survival horizons in all 3 internal 70 DKKbn stress scenarios 60 50 • Structural change from a deposit deficit to a deposit surplus 40 has fu
Slide 12: The upcoming supervisory diamond for mortgage credit institutions
The upcoming supervisory diamond for mortgage credit institutions • The supervisory diamond for mortgage credit institutions will THE SUPERVISORY DIAMOND FOR be brought into effect gradually from 2018-2020 BRFkredit a/s Q1 2015 Q4 2014 Concentration risk < 100% 74.6% 76.4% • BRFkredit is compliant w
Slide 13: A rare but regular issuer on the EMTN market
A rare but regular issuer on the EMTN market • Group issuance of senior debt will be from Jyske Bank A/S, Redemption profile thus no new issuance of senior secured bonds from 12 DKKbn BRFkredit A/S 10 8 • Senior unsecured activity will depend on developments in 6 the balance sheet (funding gap) 4 2
Slide 14: Macro Economy & Danish Banking 2014
Macro Economy & Danish Banking 2014 14/32
Slide 15: The Danish economy at a glance
The Danish economy at a glance Equal disposable incomes The basics Eurostat-ranking lowest Gini coefficient (2013): Citizens: 5.6 million 1. Norway Area: 43.098 sq km (0.4% of USA) 11. Denmark Currency: Kroner (fixed exchange rate policy to the euro). 15. Germany. A welfare state Among the rich Tota
Slide 16: The private sector is still in a consolidation mode
The private sector is still in a consolidation mode The private sector saving has been record high since 2009. Private to public sector: • Tax on pensions behind the latest fall for private sector and gain for public sector. % of GDP % of GDP 16/32
Slide 17: The private sector is reluctant to borrow
The private sector is reluctant to borrow Structural shift to mortgage institutions away from banks DKK, bn DKK, bn 17/32
Slide 18: Overall the Danish economy is improving
Overall the Danish economy is improving • In Q4 GDP growth was 0.5 % Q/Q following 0.1 % and 0,6 % growth in Q2 and Q3, respectively – quarterly figures are erratic • Overall growth has improved, and there is reason to be a bit more optimistic about the Danish Economy • Private consumption are expec
Slide 19: Optimistic consumers, but sceptic manufacturers
Optimistic consumers, but sceptic manufacturers 19/32
Slide 20: House prices increased during the past year
House prices increased during the past year Index 2008=100 Index 2008=100 20/32
Slide 21: Capital region has the lead. Affordability is strong
Capital region has the lead. Affordability is strong Net intallment (fixed rate) for new buyers relative to disp. income 150 150 140 140 130 130 Index 2006 = 100 Index 2006 = 100 120 120 110 110 100 100 90 90 80 80 70 70 94 96 98 00 02 04 06 08 10 12 14 Source: Jyske Bank 21/32
Slide 22: After years of suffering, bankruptcies in the SME sector are trending downwards
After years of suffering, bankruptcies in the SME sector are trending downwards 22/32
Slide 23: Household defaults are also declining
With unemployment slightly declining, and interest rates being low, household defaults are also declining 25,0 25,0 20,0 20,0 15,0 15,0 10,0 10,0 5,0 5,0 0,0 0,0 00 02 04 06 08 10 12 14 Denmark Sweden UK Euro area Norway Spain Source: Reuters EcoWin 23/32
Slide 24: Competitiveness has improved
Competitiveness has improved • Danish competitiveness deteriorated dramatically during the booming years • Danish production sector has been under some pressure and still is, but conditions are slightly better due to a gradual and on-going improvement. Source: Ministry for economic affairs and the i
Slide 25: Denmark has a healthy public sector economy…
Denmark has a healthy public sector economy… • Public debt is low and public net saving was 1.2 % of GDP in 2014, but is expected to be in deficit (2.3 % of GDP) in 2015 2 German • The reason for the surplus in 2014 was because of 0 a one-off contribution from pension tax brought Greece forward -2 F
Slide 26: … and Denmark is a AAA economy
… and Denmark is a AAA economy 26/32
Slide 27: Denmark has huge wealth abroad
Denmark has huge wealth abroad Net foreign assets 2010 (Denmark is 2014) 100 100 50 50 0 0 % of GDP % of GDP -50 -50 -100 -100 -150 -150 PT IR GR ES IT US GB CA AT FR SE FI NL DK DE JP BE NO Source: Danmarks Nationalbank 27/32
Slide 28: Pressure for stronger DKK on back of SNB
Pressure for stronger DKK on back of SNB EUR/DKK • Resolute response from Danish Central 7,64 7,64 Bank: Upper limit 7,62 — Buy foreign currency (DKK 274,9bn in 7,60 7,60 January-March) — 4 interest rate reductions since mid- 7,56 7,56 January (current level: -0.75%) — Government bond issuance suspe
Slide 29: The outlook: A movement from low to moderate growth; overall strong economy
The outlook: A movement from low to moderate growth; overall strong economy • In the coming quarters the economy is likely to consolidate the moderate growth we have seen lately and with some more improvement over time. However, Denmark remains very dependent on the conditions in the European econom
Slide 30: Jyske Bank forecasts
Jyske Bank forecasts & JYSKE BANK 2014 Real growth (3%) DKKbn 2012 2013 2014 2015* 2016* Consumer spending 900 0.4 0.0 0.4 Us: 1.6 Public spending 513 -0.2 -0.5 1.4 0.9 0.1 Fixed gross investment 356 0.6 1.0 2.9 1.9 4.0 Inventory investment** 1s -0.6 -0.2 0.3 0.0 0.0 Exports 1031 0.1 0.8 2.9 1.6 3.0
Slide 31: 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,
Slide 32: Questions
Questions 32/32