Danske Bank A/s · OMXCOP:DANSKE
Danske Bank A/s — H1 2015 Earnings Presentation
35 slides from Danske Bank A/s's earnings presentation, Jul 22, 2015
Slide 1: Financial results for the first half of 2015
Financial results for the first half of 2015 Thomas F. Borgen Chief Executive Officer Henrik Ramlau-Hansen Chief Financial Officer 22 July 2015
Slide 2: Agenda
Financial results for H1 2015 Q1 2013 Agenda Executive summary and financial results 3 Business unit update 5 Selected topics 7 Outlook for full-year 2015 12 Q&A 13 Appendix 14 2
Slide 3: Executive summary for H1 2015
Financial results for H1 2015 Q1 2013 Executive summary for H1 2015 Net profit & ROE Net profit of DKK 9.4 bn and ROE of 12.5% Income Total income of DKK 23.2 bn – up 6% vs H1 2014 Expenses Expenses of DKK 10.8 bn – down 2% vs H1 2014 – and cost/income ratio of 46.4% Impairments Impairments of DKK 0
Slide 4: Net profit: DKK 9.4 bn, up 36% from first half of 2014
Financial results for H1 2015 Q1 2013 Net profit: DKK 9.4 bn, up 36% from first half of 2014 Income statement & key figures (DKK m) Key points, H1 2015 vs H1 2014 • Return on equity improved to 12.5% H1 2015 H1 2014 Index Q2 2015 Q1 2015 Index from 9.4% Net interest income 10,829 10,836 100 5,516 5,
Slide 5: Banking units: Strong performance vs H1 2014 at all units
Financial results for H1 2015 Q1 2013 Banking units: Strong performance vs H1 2014 at all units Pre-tax return on allocated capital ex goodwill charge (%) Financial highlights, H1 2015 vs H1 2014 H1 2014 H1 2015 Personal Banking • Lower NII due to substantial pressure on margins 20.6 21.1 • High fee
Slide 6: Danske Capital and Danica Pension: Strong performance continued in H1 2015
Financial results for H1 2015 Q1 2013 Danske Capital and Danica Pension: Strong performance continued in H1 2015 Danske Capital: Financial highlights, H1 2015 vs H1 2014 Danica Pension: Financial highlights, H1 2015 vs H1 2014 • Total income up 12% owing to increased assets under • Result from insur
Slide 7: Expenses: Down 2% vs H1 2014 despite higher activity, bonuses and one-off pension charge
Financial results for H1 2015 Q1 2013 Expenses: Down 2% vs H1 2014 despite higher activity, bonuses and one-off pension charge Total expenses ex goodwill charge (DKK m) Change in expenses ex goodwill (DKK m) Consultants etc. Bonuses Severance payments Other costs H1 2014 11,021 Deposit scheme guaran
Slide 8: Impairments: Loan loss ratio for Q2 of -5 bp for core activities
Financial results for H1 2015 Q1 2013 Impairments: Loan loss ratio for Q2 of -5 bp for core activities and -4 bp for the entire Group Group impairments, 2011 to Q2 15 (DKK bn/bp) Impairments (DKK m) Impairments Loan loss ratio* (rhs) H1 15 H1 14 Index Q2 15 Q1 15 Index Personal Banking 375 553 68 13
Slide 9: Impairments (continued): Improved credit quality and higher collateral values
Financial results for H1 2015 Q1 2013 Impairments (continued): Improved credit quality and higher collateral values result in net reversals in Q2 Individual loan impairment charges* (DKK bn) Impairment drivers, Q2 2015 vs Q1 2015 New Increased Reversal • Impairments decreased at all business units,
Slide 10: Capital: Solid capital base, CET1 ratio of 14.3%
Financial results for H1 2015 Q1 2013 Capital: Solid capital base, CET1 ratio of 14.3%, and Non-core deleveraging reduces REA CET1 ratio, Q1 15 to Q2 15 (%) Capital highlights • Tier 1 capital ratio and total capital ratio of 16.5 % and 18.7 %, respectively 0.3 14.3 • Effect of CRR/CRD IV on fully l
Slide 11: Business review: New operating model for Danske Bank Northern Ireland
Financial results for H1 2015 Q1 2013 Business review: New operating model for Danske Bank Northern Ireland Business review findings Our Northern Irish branch network Beginning in January 2016, Danske Bank Northern Ireland 46 branches will operate as a separate business unit Only limited operati
Slide 12: Outlook for full-year 2015: Net profit of above DKK 16 bn
Financial results for H1 2015 Q1 2013 Outlook for full-year 2015: Net profit of above DKK 16 bn Total income Income is expected to increase from the level in 2014 Expenses Expenses are expected to be below DKK 22 bn Impairment charges in our core activities are expected to decline to a level signifi
Slide 13: Q&A session
Financial results for H1 2015 Q1 2013 Q&A session Press * then 1 to ask a question Press * then 2 to cancel Press “Ask a question” in your webcast player www.danskebank.com/ir 13
Slide 14: Appendix
Financial results for H1 2015 Q1 2013 Appendix Business units 15 Special topics: NII, trading income, expenses and allowance account 20 Macro, credit quality and portfolio reviews 25 Funding, liquidity and ratings 30 Tax 33 Contact details 34 14
Slide 15: Personal Banking: Positive momentum in fees, impairments and costs in Q2
Financial results for H1 2015 Q1 2013 Personal Banking: Positive momentum in fees, impairments and costs in Q2; good trend in Norway continues Income statement & key figures (DKK m) Lending volume by country,* Q1 2014 = Index 100 Q2 2015 Q1 2015 Index Denmark Sweden Northern Ireland Net interest inc
Slide 16: Business Banking: Positive trend in income, costs and impairments in Q2
Financial results for H1 2015 Q1 2013 Business Banking: Positive trend in income, costs and impairments in Q2; good momentum in Nordic lending Income statement & key figures (DKK m) Lending volume by country,* Q1 2014 = Index 100 Q2 2015 Q1 2015 Index Denmark Sweden Northern Ireland Net interest inc
Slide 17: Corporates & Institutions: NII up 6%; trading income down
Financial results for H1 2015 Q1 2013 Corporates & Institutions: NII up 6%; trading income down after exceptional Q1 Income statement & key figures (DKK m) Key points, Q2 15 vs Q1 15 Q2 2015 Q1 2015 Index Net interest income 703 660 106 • Profit before tax down 6% after exceptionally strong Q1 Net f
Slide 18: Danske Capital: AuM down 1% in Q2
Financial results for H1 2015 Q1 2013 Danske Capital: AuM down 1% in Q2 because of value adjustments despite good inflow Income statement (DKK m) Key points, Q2 15 vs Q1 15 Q2 2015 Q1 2015 Index • Non-performance-based income up 2% Net interest income -1 -2 - Net fee income 583 567 103 • Performance
Slide 19: Danica Pension: Full risk allowance booked for all four interest rate groups
Financial results for H1 2015 Q1 2013 Danica Pension: Full risk allowance booked for all four interest rate groups; investment return down owing to volatile market Income statement (DKK m) Investment allocation for Danica Traditionel, end-Q2 15 (%) Q2 2015 Q1 2015 Index Equities Credit bonds Alterna
Slide 20: Non-core: Commercial portfolio is almost run down
Financial results for H1 2015 Q1 2013 Non-core: Commercial portfolio is almost run down; REA decline owing mainly to the sale of the SME portfolio Key points Non-core loan portfolio, Q2 2015 (DKK bn) • Profit before tax rose to DKK 30 m in H1 2015 compared Allowance account Performing credit exposur
Slide 21: Net interest income: Flat vs. H1 2014
Financial results for H1 2015 Q1 2013 Net interest income: Flat vs. H1 2014 as lending effects and repayment of the state hybrid offset deposit margin pressure Quarterly net interest income (DKK m) Changes in net interest income (DKK m) -3% 5,735 5,742 H1 14 10,836 5,681 5,516 Lending volume 288 5,3
Slide 22: Trading income: Lower customer activity in financial markets
Financial results for H1 2015 Q1 2013 Trading income: Lower customer activity in financial markets and negative value adjustments in Q2 Trading income by business unit (DKK m) Key points Other incl. Treasury C&I Business Personal • Trading income down in Q2 owing to 2,715 lower customer activity in
Slide 23: Expenses: Down 2% because of continued cost focus and lower bonuses in Q2
Financial results for H1 2015 Q1 2013 Expenses: Down 2% because of continued cost focus and lower bonuses in Q2 Total expenses ex goodwill charge (DKK m) Change in expenses ex goodwill (DKK m) Consultants etc. Bonuses Severance payments Other costs Q1 2015 5,437 Deposit guarantee scheme/bank package
Slide 24: Allowance account: Commercial property and personal customers make up 52%
Financial results for H1 2015 Q1 2013 Allowance account: Commercial property and personal customers make up 52% of the individual allowance account Individual allowance account by industry* (DKK bn) Gross non-performing loans, ex Non-core (DKK bn) Individual allowance account Personal customers 8.3
Slide 25: Nordic macro
Financial results for H1 2015 Q1 2013 Nordic macro Real GDP (constant prices, index 2005 = 100) Inflation (%) Denmark Sweden Norway Finland Denmark Sweden Norway Finland 130 6 5 120 4 110 3 2 100 1 90 0 2006 2008 2010 2012 2014 -1 2006 2008 2010 2012 2014 Interest rates (lending, %) Unemployment (%)
Slide 26: Nordic housing market
Financial results for H1 2015 Q1 2013 Nordic housing market Property prices (index 2005 = 100) House prices/nom. GDP (index 2005 = 100) Denmark Sweden Norway Finland Denmark Sweden Norway Finland 200 130 180 120 160 110 140 100 120 90 100 2006 2008 2010 2012 2014 2006 2008 2010 2012 2014 Apartment p
Slide 27: Realkredit Danmark and the Danish housing market: Portfolio overview
Financial results for H1 2015 Q1 2013 Realkredit Danmark and the Danish housing market: Portfolio overview Portfolio facts, Realkredit Danmark, end-Q2 15 Stock of retail loans, Realkredit Danmark, end-Q2 15 (%) • Approx. 377,000 loans (residential and commercial) Variable rate instalments Variable r
Slide 28: Realkredit Danmark: Increase in fixed-rate loans driven by very low interest rates
Financial results for H1 2015 Q1 2013 Realkredit Danmark: Increase in fixed-rate loans driven by very low interest rates Key points Expected trend in RD portfolio* (%) • Trend away from short-term Flexlån® continued in Q2 Interest-only Amortising 2015 • The share of total new mortgages represented b
Slide 29: Credit exposure: Limited agriculture and shipping/oil exposure
Financial results for H1 2015 Q1 2013 Credit exposure: Limited agriculture and shipping/oil exposure Agriculture exposure Shipping- and oil-related exposure • Market conditions remain weak; pig prices have increased • The shipping portfolio is booked mainly at C&I, and the since Q1, but milk prices
Slide 30: Funding and liquidity: 36 bn of long-term funding issued in H1
Financial results for H1 2015 Q1 2013 Funding and liquidity: 36 bn of long-term funding issued in H1; 45 bn of funding up for redemption in H2 Changes in funding , 2015 (DKK bn and bp*) Long-term funding ex RD (DKK bn) Cov. bonds Senior Tier 2 Tier 1 Funding plan 107bp Completed 51bp 95 37bp 73 64 5
Slide 31: Funding: Structure and sources; Danish mortgage system is fully pass-through
Financial results for H1 2015 Q1 2013 Funding: Structure and sources; Danish mortgage system is fully pass-through Loan portfolio and long-term funding, Q2 15 (DKK bn) Funding sources (%) Q1 2015 Q2 2015 1,886 114 Senior debt 47 1,601 Bank loans 542 840 Deposits 18 Bank mortgages 319 192 Covered bon
Slide 32: Three distinct methods of rating banks
Financial results for H1 2015 Q1 2013 Three distinct methods of rating banks Rating methodology Danske Bank’s rating Anchor Extraord. Add. Issuer + 1 + 2 + 3 + 4 = SACP + + ALAC + = SACP* Support factors Rating bbb+ +1 0 0 0 a- 0 +1 0 A (Stable) 1=Business Position 2=Capital & Earnings 3=Risk Positi
Slide 33: Tax
Financial results for H1 2015 Q1 2013 Tax Actual and adjusted tax rates (DKK m) Tax drivers Q22015 Q12015 Q42014 Q32014 Q22014 • The difference between profit Profit before tax 5,814 6,362 -5,298 4,503 5,000 before tax and adjusted pre-tax Ireland core and non-core -206 -433 434 79 87 profit relates
Slide 34: Contacts
Financial results for H1 2015 Q1 2013 Contacts Henrik Ramlau-Hansen Direct: +45 45 14 06 66 Chief Financial Officer Mobile: +45 22 20 73 10 hram@danskebank.com Claus Ingar Jensen Direct: +45 45 12 84 83 Head of IR Mobile: +45 25 42 43 70 clauj@danskebank.dk John Bäckman Direct: +45 45 14 07 92 Chief
Slide 35: Disclaimer
Financial results for H1 2015 Q1 2013 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