Danske Bank A/s · OMXCOP:DANSKE
Danske Bank A/s — Q1 2021 Earnings Presentation
39 slides from Danske Bank A/s's earnings presentation, Nov 19, 2021
Slide 1: Financial results – first quarter 2021
Financial results – first quarter 2021 Carsten Egeriis Chief Executive Officer Stephan Engels Chief Financial Officer
Slide 2: Agenda
Agenda 01. Summary 2 02. Group income statement 3 03. Business unit results 4 04. Key lines 9 05. Capital 14 06. Financial outlook for 2021 15 07. Q&A 16 08. Appendix 17
Slide 3: Summary – Good customer activity drives total income up
Financial results – first quarter 2021 Summary – Good customer activity drives total income up; significant decline in impairment charges and progress towards cost-income ratio ambition Positive impact from retail deposit Continued lending growth driven by Diversified business model; capital reprici
Slide 4: Solid trading and fee performance and more normalised impairment levels
Financial results – first quarter 2021 Solid trading and fee performance combined with more normalised impairment levels resulting in net profit of DKK 3,139 m Income statement and key figures (DKK m) Key points, Q1-21 vs Q1-20 Q1-21 Q1-20 Index Q4-20 Index • Total income up 17%, driven by the rebou
Slide 5: P&BC – Commercial momentum across Personal Customers Nordic
Financial results – first quarter 2021 P&BC – Commercial momentum across Personal Customers Nordic; deposit repricing partly mitigated NII effect Highlights Personal Customers DK saw Good traction in Personal Launched new green loans Continued high inflow of low- a positive NII development, Customer
Slide 6: P&BC – Profit before tax significantly up
Financial results – first quarter 2021 P&BC – Profit before tax significantly up from diversified income streams in DK, lending growth in other Nordic countries and lower impairments Key figures (DKK m) Q1-21/ Q1-21/ Q1-21 Q1-20 (%) Q4-20 (%) Q1-21 vs Q1-20 Total income 5,975 -2% +6% • PBT significa
Slide 7: LC&I – Strong activity in capital markets
Financial results – first quarter 2021 LC&I – Strong activity in capital markets, supportive market conditions and good traction in Asset Management Highlights Capital Markets sustaining Customer activity was high Good momentum in Asset the positive trend; supported High level of green bond across t
Slide 8: LC&I: Good start to the year
Financial results – first quarter 2021 LC&I: Good start to the year with commercial momentum and low impairment levels Key figures (DKK m) Q1-21/ Q1-21/ Q1-21 Q1-20 (%) Q4-20 (%) Q1-21 vs Q1-20 Total income 3,918 +68% -7% • PBT significantly up against Q1-20, as we saw a recovery in the financial ma
Slide 9: Positive result at Danica Pension; Northern Ireland held up well
Financial results – first quarter 2021 Positive result at Danica Pension driven by improved life insurance result; Northern Ireland held up well despite subdued economic activity and interest rate drop Danica Pension, key figures (DKK m) Northern Ireland, key figures (DKK m) Q1-21 Q1-21/Q1-20 (%) Q1
Slide 10: NII: NII slightly down
Financial results – first quarter 2021 NII: NII slightly down as increase in deposits and repricing partly mitigates negative effects from lending; Q1 stable due to deposit repricing effect, days and FX Net interest income, Q1-21/Q1-20 (DKKm) Net interest income, Q1-21/Q4-20 (DKKm) 5,560 5,553 -58 -
Slide 11: Fee: Increase in fee driven by capital markets and AuM
Financial results – first quarter 2021 Fee: Increase in fee driven by capital markets performance and AuM; Q1 impact from mortgage-related fees Net fee income, Q1-21/Q1-20 (DKKm) Net fee income, Q1-21/Q4-20 (DKKm) Q1 20 Q1 21 Q4 20 Q1 21 3,402 3,645 3,240 +5% -7% 3,402 -16% 1,590 +3% 1,333 1,293 1,3
Slide 12: Trading: Rebound in trading income
Financial results – first quarter 2021 Trading: Rebound in trading income from difficult Q1 last year; strong underlying trading income Q/Q driven by customer activity and favourable market conditions Net trading income, Q1-21/Q1-20 (DKKm) Highlights LC&I ex. xVA xVA P&BC NI Group Functions Trading
Slide 13: Expenses: Downwards trajectory according to plan
Financial results – first quarter 2021 Expenses: Downwards trajectory according to plan, including lower costs for AML/Estonia and transformation Expenses, Q1-21/Q1-20 (DKKm) Highlights 51 272 215 Expenses adjusted for one-offs down 6% vs Q1-20 and 18% vs Q4-20 6,385 77 49 90 6,273 One-off of DKK 15
Slide 14: Impairments: Strong credit quality
Financial results – first quarter 2021 Impairments: Strong credit quality and low level of actual credit detoriation; individual exposures affected by pandemic accounted for most of the impairments in Q1 Impairment charges by category (DKK bn) Loan loss ratio by business unit Credit quality deterior
Slide 15: Capital: Strong capital base; CET1 ratio of 18.1%
Financial results – first quarter 2021 Capital: Strong capital base; CET1 capital ratio of 18.1% (buffer of 4.9%) Key points Capital ratios (%) • CET1 capital ratio has decreased from 18.3% to 18.1% since Q4-20, 23.0 23.4 due primarily to an increase in REA excl. FX of 0.3% points 3.1 2.4 2.2 2.2 17
Slide 16: 2021 outlook – We confirm our net profit guidance
Financial results – first quarter 2021 2021 outlook – We confirm our net profit guidance for the rest of the year We expect total income to be slightly higher than the level in 2020, subject mainly to Total income commercial momentum and broader economic developments Expenses are expected to be no m
Slide 17: Q&A session
Q&A session Press 01 to ask a question Press 02 to cancel Press “Ask a question” in your webcast player Want easy access to all relevant Danske Bank material? Download the Danske Bank MyInvestor app on your iPhone, iPad or Android device! www.danskebank.com/ir 16
Slide 18: Appendix
Financial results – first quarter 2021 Appendix 01. Business units 18 02. Credit quality 23 03. Macro and portfolio reivew 28 04. Funding, liquidity and ratings 31 05. Tax and one-off items 35 06. Contact details 37
Slide 19: Personal & Business Customers
Financial results – first quarter 2021 Personal & Business Customers Income statement (DKK m) NII bridge (DKK m) Q1-21 Q1-20 Index Q4-20 Index 24 44 Net interest income 3,879 3,951 98 3,910 99 3,910 11 74 45 3,879 33 4 Net fee income 1,750 1,815 96 1,414 124 Net trading income 150 162 93 153 98 Q4-2
Slide 20: Large Corporates and Institutions
Financial results – first quarter 2021 Large Corporates and Institutions Income statement (DKK m) NII bridge (DKK m) Q1-21 Q1-20 Index Q4-20 Index 1,267 5 2 11 Net interest income 1,216 1,143 106 1,267 96 42 0 16 1,216 1 Net fee income 1,599 1,347 119 2,176 73 Net trading income 1,102 -154 -716 750
Slide 21: Northern Bank
Financial results – first quarter 2021 Northern Bank Income statement (DKK m) NII bridge (DKK m) Q1-21 Q1-20 Index Q4-20 Index 7 Net interest income 331 375 88 324 102 3 12 331 7 1 324 10 3 Net fee income 60 83 72 66 91 Q4-20 Lending Lending Deposit Deposit FX Days Other Q1-21 Net trading income -20
Slide 22: Danica Pension
Financial results – first quarter 2021 Danica Pension Income statement and key figures (DKK m) Asset under management (DKKm) Q1-21 Q1-20 Index Q4-20 Index H&A Life insurance Result, life insurance 784 453 173 569 138 Q1-20 386,567 402,669 Result, health and accident insurance -290 -274 106 -84 345 R
Slide 23: Non-core
Financial results – first quarter 2021 Non-core Non-core loan portfolio, Q1-21 (DKK bn) Non-core, Q1-21 REA (DKK bn) Allowance account Non-performing credit exposure Performing credit exposure Non-core conduits etc. Non-core banking 8 7 2 4 2 5 5 4 2 1 3 5 1 2 4 4 3 1 1 2 0 1 0 Retail Commercial Pub
Slide 24: Credit quality: Low level of actual credit deterioration
Financial results – first quarter 2021 Credit quality: Low level of actual credit deterioration Breakdown of core allowance account under IFRS 9 (DKK bn) Allowance account by business unit (DKK bn) P&BC N.I. Stage 1 Stage 2 Stage 3 LC&I Other (Non-core) 24.1 24.9 23.6 25.1 25.9 24.6 22.6 22.5 23.5 2
Slide 25: Oil-related exposure: Q1 saw lower impairment charges
Financial results – first quarter 2021 Oil-related exposure: Q1 saw impairment charges at a lower level Key points, Q1-21 • The offshore segment, in which we see credit deterioration, makes up 36% of the exposure and accounts for 75% of expected credit losses. Uncertainty continues in the oil & gas
Slide 26: Credit exposure: Limited agriculture and oil-related exposure
Financial results – first quarter 2021 Credit exposure: Limited agriculture and directly oil-related exposure Agriculture exposure Oil-related exposure • African Swine Fewer (ASF), which spread to Germany in Q3 2020, continues to • Total oil-related exposure was more or less unchanged from the prece
Slide 27: Credit exposure: Transportation, hotels, restaurants and leisure
Financial results – first quarter 2021 Credit exposure: Limited exposure to transportation, hotels, restaurants and leisure Transportation exposure Hotels, restaurant and leisure exposure • Total gross exposure* increased DKK 1 bn to DKK 16.6 bn from the Q4-20 level due mainly to increased exposure
Slide 28: Credit exposure: Retailing and commercial real estate
Financial results – first quarter 2021 Credit exposure: Limited exposure to retailing and stable credit quality in commercial real estate Retailing Commercial real estate • Gross exposure decreased to DKK 319 bn in Q1-21 from DKK 331 bn in Q4-20 - driven • Total gross exposure stayed at DKK 27.1 bn
Slide 29: Nordic macroeconomics
Financial results – first quarter 2021 Nordic macroeconomics Denmark Sweden Norway Finland EU Real GDP, constant prices (index 2005 = 100) Inflation (%) Interest rates, leading (%) Unemployment (%) Source: Danske Bank Macro Research 28
Slide 30: Nordic housing markets
Financial results – first quarter 2021 Nordic housing markets Denmark Sweden Norway Finland EU Property prices (index 2005 = 100) House prices/nom. GDP (index 2005 = 100) Apartment prices (index 2005 = 100) Apartment prices/nom. GDP (index 2005 = 100) Source: Danske Bank Macro Research 29
Slide 31: Consumer behavioural metrics
Financial results – first quarter 2021 Consumer behavioural metrics Denmark Sweden Norway Finland EU C&I lending volume (DKK bn) Consumer spending, Denmark (same weekday 2019 = 100) 290 120 285 110 280 100 275 270 90 265 80 260 70 0 0 Feb Apr Jun Aug Oct Jan Apr Q2 ’19 Q3 ’19 Q4 ’19 Q1 ’20 Q2 ’20 Q3
Slide 32: Realkredit Danmark portfolio overview
Financial results – first quarter 2021 Realkredit Danmark portfolio overview: 71% of new retail lending in Q1 was fixed-rate vs 48% of stock C&I lending volume (DKK bn) Retail loans, Realkredit Danmark, Q1 2021 (%) Portfolio facts, Realkredit Danmark, Q1 2021 Fixed rate (10 yrs-30 yrs) Interest only
Slide 33: Funding and liquidity: LCR compliant at 151%
Financial results – first quarter 2021 Funding and liquidity: LCR compliant at 151% Changes in funding,* 2021 (DKK bn and bp) Long-term funding excl. RD (DKK bn)** Cov. bonds Senior Non-Preferred Senior Funding plan Completed 31bp 100 79 70-90 59bp 69 67 36 25 33 bp 81bp 5bp 104bp 8 8 8 35 bp 6 1 DK
Slide 34: Funding structure and sources
Financial results – first quarter 2021 Funding structure and sources: Danish mortgage system is fully pass-through Loan portfolio and long-term funding, Q1 2021 (DKK bn) Funding sources (%) 63 63 2,214 Q4 2020 109 Senior & NPS bonds Q1 2021 1,828 Bank loans 621 1,129 Deposits Bank mortgages 399 168
Slide 35: Three distinct methods for rating banks
Financial results – first quarter 2021 Danske Bank’s rating Three distinct methods for rating banks Rating methodology Extra- Anchor Additional + 1 + 2 + 3 + 4 = SACP = ordinary + ALAC + = Issuer rating SACP1 factors support bbb+ +1 +1 -1 0 a- 0 +2 -1 A (Stable) 1=Business Position, 2=Capital & Earn
Slide 36: Tax
Financial results – first quarter 2021 Tax Actual and adjusted tax rates (DKK m) Tax drivers, Q1 2021 • The actual tax rate of 22.8% (excluding prior-year regulations) is higher than the Danish rate of 22% due primarily to the tax effect from non-deductible expenses Q12021 Q42020 Q32020 Q22020 Q1202
Slide 37: Material extraordinary items in Q1 2021
Financial results – first quarter 2021 Material extraordinary items in Q1 2021 One-off items in Q1 2021 Impact P&L line affected (DKK m) Gain on sale of Visa C shares 227 Trading Provision for home office allowance -122 Expenses Provision for upcoming changes in the VAT setup following ruling from E
Slide 38: Contacts
Financial results – first quarter 2021 Contacts Claus Ingar Jensen Mobile — +45 25 42 43 70 Head of IR clauj@danskebank.dk Olav Jørgensen Mobile — +45 52 15 02 94 Chief IR Officer ojr@danskebank.dk Sofie Heerup Friis Mobile — +45 20 60 51 15 Senior IR Officer sofri@danskebank.dk Patrick Laii Skydsga
Slide 39: Disclaimer
Financial results – first quarter 2021 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