Danske Bank A/S · OMXCOP:DANSKE
Danske Bank A/S — Debt Investor Presentation (2016)
31 slides from Danske Bank A/S's debt investor presentation, 2016
Slide 1: Debt investor update First nine months 2016
Debt investor update First nine months 2016
Slide 2: Agenda
Debt investor update – first nine months 2016 Agenda Overview of Danske Bank 2 Summary of 9M 2016 3 Business unit update 5 Selected topics 7 Capital, Funding & Rating 9 Appendix 13 1
Slide 3: Overview: Danske Bank has a strong Nordic franchise
Debt investor update – first nine months 2016 Overview: Danske Bank has a strong Nordic franchise Facts Danske Bank market share2 3.4 million customers 280 branches1 15 countries Finland 19,433 full-time employees 10% Norway Sweden Business units Estonia 6% 5% Personal Banking 5% Latvia Business Ban
Slide 4: Executive summary: A satisfactory result for the first nine months of 2016
Debt investor update – first nine months 2016 Executive summary: A satisfactory result for the first nine months of 2016 Financial results, 9M 2016 Low economic growth – continuation of • Net profit of DKK 14.3 bn, up 9% from first negative interest rates nine months of 2015 • ROE of 12.6% - on trac
Slide 5: Net profit: DKK 14.3 bn, up 9% from first nine months of 2015
Debt investor update – first nine months 2016 Net profit: DKK 14.3 bn, up 9% from first nine months of 2015 Income statement and key figures (DKK m) Key points, 9M 2016 vs 9M 2015 9M 2016 9M 2015 Index Q3 2016 Q2 2016 Index • Return on equity of 12.6% Net interest income 16,239 16,123 101 5,492 5,48
Slide 6: Banking units: Income down vs exceptionally strong 9M 2015
Debt investor update – first nine months 2016 Banking units: Income down vs exceptionally strong 9M 2015; all units benefit from net reversals of impairments Pre-tax return on allocated capital (%) Financial highlights, 9M 2016 vs 9M 2015 9M 2016 Personal Banking • NII down due to migration from ban
Slide 7: C&I and Wealth Management: Strong client activity at C&I
Debt investor update – first nine months 2016 C&I and Wealth Management: Strong client activity at C&I; increased lending supports NII at both business units C&I: Financial highlights, 9M 2016 vs 9M 2015 Wealth Management: Financial highlights, 9M 2016 vs 9M 2015 • Total income up 4%, reflecting str
Slide 8: Expenses: Down 2% despite upward pressure from regulatory cost
Debt investor update – first nine months 2016 Expenses: Down 2% despite upward pressure from regulatory cost Change in expenses (DKK m) Total expenses ex goodwill charge (DKK m) Severance payments 176 165 Deposit guarantee & resolution funds 189 Amortisation of customer relations*** 290 288 98 Bonus
Slide 9: Impairments: Loan loss ratio of 1 bp ex Non-core in first nine months of 2016
Debt investor update – first nine months 2016 Impairments: Loan loss ratio of 1 bp ex Non-core in first nine months of 2016 Group impairments,* 2011 to 9M 2016 (DKK bn/bp) Impairment drivers, Q3 2016 vs Q2 2016 Impairments Loan loss ratio* (rhs) • Impairments remain low despite increased impairments
Slide 10: Capital: Strong capital base; CET1 capital ratio unchanged at 15.8%
Debt investor update – first nine months 2016 Capital: Strong capital base; CET1 capital ratio unchanged at 15.8% as REA increase offsets earnings Capital ratios, under Basel III/CRR (%) Capital highlights, Q3 2016 Tier 2 Hybrid T1/AT1 Pillar II CET1 CET1 • Market risk up from a low level in Q2, lea
Slide 11: Funding structure and sources: Danish mortgage system is fully pass-through
Debt investor update – first nine months 2016 Funding structure and sources: Danish mortgage system is fully pass-through Loan portfolio and long-term funding, Q3 2016 (DKK bn) Funding sources (%) Q2 2016 Q3 2016 1,949 55 137 Senior debt 1,675 Bank loans 572 872 Deposits Bank mortgages 335 168 Cover
Slide 12: Funding and liquidity: DKK 74 bn of long-term funding issued
Debt investor update – first nine months 2016 Funding and liquidity: DKK 74 bn of long-term funding issued in the first nine months of 2016; LCR-compliant at 137% Changes in funding,* 9M 2016 (DKK bn and bp) Long-term funding ex RD*** (DKK bn) Cov. bonds Senior Tier 2 Tier 1 Funding plan Completed 5
Slide 13: Danske Bank's credit ratings
Debt investor update – first nine months 2016 Danske Bank’s credit ratings Danske Bank’s long-term issuer rating and outlook Rating agency issues Moody’s S&P Fitch S&P Global upgrades SACP rating Positive Stable Stable • On July 8 2016, S&P raised Danske Bank’s SACP (Stand- Alone Credit Profile) rat
Slide 14: Appendix
Debt investor update – first nine months 2016 Appendix Business units 14 Special topics 19 Portfolio review: Realkredit Danmark 23 Macro 25 Outlook and ROE bridge 27 Contact details 29 13
Slide 15: Personal Banking: PBT up 13% driven by fees and net reversals
Debt investor update – first nine months 2016 Personal Banking: PBT up 13% driven by fees and net reversals; strong customer activity in Sweden and Norway continues Income statement & key figures (DKK m) Lending volume by country* (Q1 2015 = Index 100) Q3 2016 Q2 2016 Index Denmark Finland Sweden No
Slide 16: Business Banking: Lending growth driven by Denmark and Sweden
Debt investor update – first nine months 2016 Business Banking: Lending growth driven by Denmark and Sweden; competition remains tough Income statement & key figures (DKK m) Lending volume by country* (Q1 2015 = Index 100) Q3 2016 Q2 2016 Index Denmark Finland Sweden Norway Net interest income 2,078
Slide 17: Corporates & Institutions: Strong client activity in FICC
Debt investor update – first nine months 2016 Corporates & Institutions: Strong client activity in FICC; impairment charges against oil sector Income statement & key figures (DKK m) Key points, Q3 2016 vs. Q2 2016 Q3 2016 Q2 2016 Index • Total income up 8% because of higher customer activity Net int
Slide 18: Wealth Management: AUM up 4%; improved ROAC due to capital efficiency
Debt investor update – first nine months 2016 Wealth Management: AUM up 4%; improved ROAC due to capital efficiency Income statement (DKK m) Key points, Q3 2016 vs Q2 2016 Q3 2016 Q2 2016 Index • Assets under management up 4% driven by performance, net Net interest income 167 164 102 sales (DKK 1 bn
Slide 19: Non-core: Deleveraging continues; full-year pre-tax result close to zero
Debt investor update – first nine months 2016 Non-core: Deleveraging continues; full-year pre-tax result is expected to be close to zero Non-core loan portfolio, Q3 2016 (DKK bn) Total REA (DKK bn) Allowance account Non-core conduits, etc. Non-performing credit exposure 27 Non-core Banking Performin
Slide 20: Credit quality: Positive underlying trend continues; NPLs affected by oil sector
Debt investor update – first nine months 2016 Credit quality: Positive underlying trend in credit quality continues; NPLs affected by exposure to the oil sector Individual loan impairment charges* (DKK bn) Gross non-performing loans (DKK bn) New Individual allowance account Net exposure in default I
Slide 21: Credit exposure: Limited agriculture and directly oil-related exposure
Debt investor update – first nine months 2016 Credit exposure: Limited agriculture and directly oil-related exposure Agriculture exposure (2.5% of Group net exposure) Oil-related exposure (0.9% of Group net exposure) • The Danish agriculture industry remains under pressure, and • Net exposure of DKK
Slide 22: Overview: Danske Bank Group Covered Bond Universe
Debt investor update – first nine months 2016 Overview: Danske Bank Group Covered Bond Universe • Realkredit Danmark, which has been a Covered • Danske Bank A/S, • Danske Bank PLC, • New Swedish CB programme, Bond issuer since 1851 which has been a Covered which has been a Covered which is to be a C
Slide 23: Danske Bank: The four cover pools - Overview
Debt investor update – first nine months 2016 Danske Bank: The four cover pools - Overview Residential Residential Combined Residential 1 Characteristics Cover Pool D Cover Pool I Cover Pool C Danske Bank plc Pool notional DKK 37.4bn DKK 119.4bn DKK 54.9bn DKK 45.5bn (EUR 5.0bn equivalent) (EUR16.0b
Slide 24: Realkredit Danmark and the Danish housing market: Portfolio overview
Debt investor update – first nine months 2016 Realkredit Danmark and the Danish housing market: Portfolio overview Portfolio facts, Realkredit Danmark, end-Q3 2016 Stock of retail loans, Realkredit Danmark, end-Q3 2016 (%) • Approx. 372,000 loans (residential and commercial) Variable rate instalment
Slide 25: Realkredit Danmark: Two-thirds of new retail loans are fixed rate loans
Debt investor update – first nine months 2016 Realkredit Danmark: Two-thirds of new retail loans are fixed rate loans; compliant with all regulatory requirements Key points Supervisory diamond for Danish mortgage institutions • In new retail lending, the share of fixed-rate loans increased to 67% fr
Slide 26: Nordic macro economy
Debt investor update – first nine months 2016 Nordic macro economy Denmark Sweden Norway Finland Real GDP, constant prices (index 2005 = 100) Inflation (%) 135 6 4 120 2 105 0 2006 2008 2010 2012 2014 2016 90 2006 2008 2010 2012 2014 2016 -2 Interest rates, leading (%) Unemployment (%) 6 10 5 8 4 6
Slide 27: Nordic housing markets
Debt investor update – first nine months 2016 Nordic housing markets Denmark Sweden Norway Finland Property prices (index 2005 = 100) House prices/nom. GDP (index 2005 = 100) 200 130 125 180 120 160 115 110 140 105 100 120 95 100 90 85 2006 2008 2010 2012 2014 2016 2006 2008 2010 2012 2014 2016 Apar
Slide 28: Outlook for full-year 2016: We now expect net profit higher than in 2015
Debt investor update – first nine months 2016 Outlook for full-year 2016: We now expect net profit higher than in 2015* We expect somewhat less pressure on margins for the remainder of 2016, and we will benefit from NII** volume growth and somewhat lower funding costs In light of weak activity level
Slide 29: Bridge to above 12.5% ROE in 2018 with negative rates
Debt investor update – first nine months 2016 Bridge to above 12.5% ROE in 2018 with negative rates ROE 2015-18E, after tax (%) ROE 2015* 11.6% Adjustments** 0.2% Costs 0.5-1% Funding & ratings 0.5% Volume effect 0.5-1% Income initiatives 0.5% Loan losses 0.5% & other Capital effect 0.5% ROE 2018E A
Slide 30: Contacts
Debt investor Financial update results – first nine months 2016 fo1 2013 Contacts Christoffer Møllenbach Claus Ingar Jensen Head of Group Treasury Head of IR Direct: +45 45 14 63 60 Direct: +45 45 12 84 83 Mobile: +45 21 55 10 52 Mobile: +45 25 42 43 70 E-mail: chm@danskebank.dk E-mail: clauj@danske
Slide 31: Disclaimer
Debt investor update – first nine months 2016 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