Danske Bank A/S · OMXCOP:DANSKE
Danske Bank A/S — Debt Investor Presentation (July 2021)
45 slides from Danske Bank A/S's debt investor presentation, July 2021
Slide 1: Debt investor update – first half 2021
Debt investor update – first half 2021
Slide 2: Agenda
Debt investor update – H1 2021 Agenda 01. Financial update 2 02. Capital and funding 12 03. Covered bond universe and ratings 18 04. Appendix 22
Slide 3: We are a Nordic universal bank with strong regional roots
Debt investor update – H1 2021 We are a Nordic universal bank with strong regional roots Norway (AAA) Finland (AA+) Challenger position 3rd largest Market share: 7% Market share: 10% Share of Group lending: 10% Share of Group lending: 7% GDP growth 2021E: 3.7% GDP growth 2021E: 2.2% Unemployment 202
Slide 4: Sustainability is an integrated element of our corporate strategy and targets
Debt investor update – H1 2021 Sustainability is an integrated element of our corporate strategy and our corporate targets What we want to accomplish by 2023 How we measure success The seven focus areas Sustainable "On average among the top 2 in customer 1 Sustainable ≤2.0 average CSAT rank investin
Slide 5: Rebound in economies led to high customer activity and lower impairments in H1
Debt investor update – H1 2021 Rebound in economies led to high customer activity and lower impairments in H1, while we continue to build a better bank Total income up for the first half of 2021 Record-high customer activity in capital Execution of cost management visible in driven by almost all inc
Slide 6: First impression from new CEO: A strong foundation and momentum
Debt investor update – H1 2021 First impression from new CEO: A strong foundation and momentum towards becoming a Better Bank; strong efforts to sharpen the commercial initiatives On the forefront of supporting Compliance function taken to Improving and digitising customers’ commercial and the next
Slide 7: Group: Higher customer activity, cost focus and credit quality drive performance
Debt investor update – H1 2021 Group: Higher customer activity, stringent cost focus and strong credit quality drive improved performance Income statement and key figures (DKK m) Key points, H1-21 vs H1-20 H1-21 H1-20 Index Q2-21 Q1-21 Index • Total income up 5% driven by higher customer activity an
Slide 8: NII: Stable development as NII underpinned by deposit repricing
Debt investor update – H1 2021 NII: Stable development as NII underpinned by deposit repricing Net interest income, H1-21/H1-20 (DKK m) Highlights 11,127 NII came in slightly lower than in the same period last year, as deposit margins -133 10,965 in H1 2020 benefited from elevated xIBOR levels 258 -
Slide 9: Fee: Increase in fee income driven by capital markets performance
Debt investor update – H1 2021 Fee: Increase in fee income driven by capital markets performance and higher activity; Q2 impacted by seasonality and value adjustments Net fee income, H1-21/H1-20 and Net fee income, Q1-21/Q1-20 (DKK m) Highlights 6,595 3,402 Fee income was up 11% from the same period
Slide 10: Trading: Solid underlying trading income driven by customer activity
Debt investor update – H1 2021 Trading: Solid underlying trading income driven by customer activity Net trading income, H2-21/H1-21 and Net trading income, Q2-21/Q1-20 (DKK m) Highlights Group Functions North. Ireland P&BC xVA LC&I ex. xVA 2,291 Net trading income increased 21% in H1-21 from 127 H1-
Slide 11: Expenses: Downwards trajectory according to plan
Debt investor update – H1 2021 Expenses: Downwards trajectory according to plan, including lower costs for AML/Estonia and transformation Expenses, H1-21/H1-20 (DKK m) Highlights 275 622 13,023 438 Expenses adjusted for one-offs down approx. 7% vs H1-20 and up 2% vs Q1-21 61 108 209 12,770 One-offs
Slide 12: Impairments: Strong credit quality and low level of actual credit deterioration
Debt investor update – H1 2021 Impairments: Strong credit quality and low level of actual credit detoriation Impairment charges by category (DKK bn) Loan loss rat io by business unit (annualised, %) 3.40 Credit quality deterioration: oil & gas Post-model adjustments P&BC LC&I Credit quality deterior
Slide 13: Capital: Strong capital base; CET1 capital ratio of 18.0%
Debt investor update – H1 2021 Capital: Strong capital base; CET1 capital ratio of 18.0% (buffer of 4.9%) Capital ratios, under Basel III/CRR (%) Est imated capital buffer structure (%) Tier 2 Countercyclical capital buffer 23.3 Hybrid T1/AT1 22.7 23.0 23.0 Capital conservation buffer Pillar II comp
Slide 14: Strong CET1 capital build-up since 2008; ADI well in excess of DKK 100 bn
Debt investor update – H1 2021 Strong CET1 capital build-up since 2008; Available Distributable Items (ADI) well in excess of DKK 100 bn Common Equity Tier 1, 2008 – H1-21 (DKK bn) +DKK 70 bn 144 147 126 130 134 133 133 127 133 119 107 77 79 85 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 20181
Slide 15: Fully compliant with MREL requirement
Debt investor update – H1 2021 Fully compliant with MREL requirement; expect to cover MREL need with both preferred and non-preferred senior MREL resources and requirements; Q1 2021; % of Group REA Overview of MREL MREL resources and requirements; Q2 2021; % of Group REA Senior <1Y Own funds The Gro
Slide 16: Funding structure and sources: Danish mortgage system is fully pass-through
Debt investor update – H1 2021 Funding structure and sources: Danish mortgage system is fully pass-through Loan portfolio and long-term funding, Q2-21 (DKK bn) Funding sources (%) 56 2,323 55 Q1 2021 160 Senior & NPS bonds Q2 2021 1,810 1,198 Deposits Bank loans 606 16 Bank mortgages 398 12 159 Cove
Slide 17: Funding programmes and currencies
Debt investor update – H1 2021 Funding programmes and currencies Covered bonds by currency, end-Q2 2021 Largest funding programmes, end-Q2 2021 Utilisation 0% EMTN Programme 43% EUR 24% Limit – EUR 35bn 30% SEK NOK Global Covered Bond 75% CHF Limit – EUR 30bn 46% ECP Programme 5% Total DKK 162 bn Li
Slide 18: Funding and liquidity: LCR compliant at 155%
Debt investor update – H1 2021 Funding and liquidity: LCR compliant at 155% 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 59bp 79 44 bp 67 69 60-75 74 bp 9 bp 36 ≈25-40 25 24 104bp 16 17 28 bp 94
Slide 19: Danske Bank covered bond universe, a transparent pool structure
Debt investor update – H1 2021 Danske Bank covered bond universe, a transparent pool structure1 Danske Bank A/S C-pool S&P AAA Fitch AAA + Residential mortgages from • Denmark, D-pool • Norway, I-pool • Sweden, Danske Hypotek AB Danske Bank A/S I-pool Finland • Finland, Danske Mortgage Bank Plc S&P
Slide 20: Danske Bank's credit ratings
Debt investor update – H1 2021 Danske Bank’s credit ratings Long-term instrument ratings Fitch and Moody’s take rat ing act ion on Danske Bank in Q2 2021 Fitch Moody’s Scope S&P Fitch revises its outlook on Danske Bank to Stable and affirms ‘A’ issuer rating AAA Aaa AAA AAA On the 11 June 2021, Fitc
Slide 21: Danske Bank's ESG ratings
Debt investor update – H1 2021 Danske Bank’s ESG ratings We have chosen to focus on five providers based on their importance to our investors Q2 2021 Q1 2021 31 Dec 2020 31 Dec 2019 31 Dec 2018 Range 1 B 277 companies, out of the 9,600+ analysed, B B C C D- to A+ (A+ highest rating) made the climate
Slide 22: Three distinct methods for rating banks
Debt investor update – H1 2021 Three distinct methods for rating banks Danske Bank’s rating Rating methodology Extra- Anchor Additional + 1 + 2 + 3 + 4 = SACP = ordinary + ALAC + = Issuer rating SACP1 factors support A bbb+ +1 +1 -1 0 a- 0 +2 -1 (Stable) 1=Business Position, 2=Capital & Earnings, 3=
Slide 23: Appendix
Debt investor update – H1 2021 Appendix 01. Sustainability 23 02. Business units 28 03. Credit quality 35 04. Macro and portfolio reivew 40 05. Outlook 42 06. Contact details 43
Slide 24: Our 2023 Sustainability Strategy defines the key dimensions for our efforts
Debt investor update – H1 2021 Our 2023 Sustainability Strategy defines the key dimensions for our efforts to create lasting value for our customers, employees, society and investors Danske Bank’s 2023 Sustainability Strategy 23
Slide 25: Danske Bank aims to be a leading bank in the Nordics on Sustainable Finance
Debt investor update – H1 2021 Danske Bank aims to be a leading bank in the Nordics on Sustainable Finance Fully committed to the Paris Climate Agreement Execution delivering results • Net Zero Asset Owners’ Alliance • #1 Nordic bookrunner for green, social and sust. bonds1) • Net Zero Asset Manager
Slide 26: We have tripled our ambitions to 300 bn in sustainable finance
Debt investor update – H1 2021 We have tripled our ambitions from ‘well above DKK 100 bn’ to 300 bn in sustainable finance Sustainable finance Sustainable operations Impact initiatives Sustainable Sustainable Governance & Employee Environmental Entrepreneur- Financial investing financing integrity w
Slide 27: Our position statements are a key tool for aligning with societal goals
Debt investor update – H1 2021 Our position statements are a key tool for aligning with societal goals and communicating our approach to selected themes and sectors with elevated ESG risks Thematic statements Sector specific statements Climate change Agriculture Arms & defence Forestry Human rights
Slide 28: Danske Bank supports a range of international agreements and standards
Debt investor update – H1 2021 Danske Bank supports a range of international agreements, goals, partnerships and standards relating to sustainability – some of these are listed below Principles for Responsible Net-Zero Asset Owner Net-Zero Asset Managers UN Guiding Principles on Principles for Respo
Slide 29: Strong footprint within retail lending
Debt investor update – H1 2021 Strong footprint within retail lending Lending by segment 1 Q2-21 (%) Credit exposure by industry Q2-21 (%) Personal Customers DK Personal Customers 38 Personal Customer Nordic Public Institutions 13 Business Customers Commercial Property 12 Asset Finance Co-ops & Non-
Slide 30: Personal & Business Customers
Debt investor update – H1 2021 Personal & Business Customers Income statement (DKK m) NII bridge (DKK m) H1-21 H1-20 Index Q2-21 Q1-21 Index 11 3,879 58 14 3,881 Net interest income 7,766 8,029 97 3,887 3,879 100 46 26 20 11 Net fee income 3,267 3,273 100 1,516 1,750 87 Q1-21 Lending Lending Deposit
Slide 31: Realkredit Danmark portfolio overview
Debt investor update – H1 2021 Realkredit Danmark portfolio overview: 66% of new retail lending in Q2 was fixed-rate vs 49% of stock Highlights Retail loans, Realkredit Danmark, Q2-21 (%) Fixed rate (10 yrs-30 yrs) Interest-only Portfolio facts, Realkredit Danmark, Q2-21 Variable rate (6m-10 yrs) Re
Slide 32: Large Corporates and Institutions
Debt investor update – H1 2021 Large Corporates and Institutions Income statement (DKK m) NII bridge (DKK m) H1-21 H1-20 Index Q2-21 Q1-21 Index 1,216 Net interest income 2,392 2,448 98 1,177 1,216 97 37 10 27 20 1,177 0 8 7 Net fee income 3,220 2,570 125 1,621 1,599 101 Net trading income 1,852 1,6
Slide 33: Danica Pension
Debt investor update – H1 2021 Danica Pension Income statement and key figures (DKK m) Assets under management (DKK m) H1-21 H1-20 Index Q2-20 Q1-21 Index H&A Life insurance Result, life insurance 1312 1277 103 528 784 67 Q2-20 411,861 428,287 Result, health and accident -362 -300 121 -72 -290 insur
Slide 34: Northern Bank
Debt investor update – H1 2021 Northern Bank Income statement (DKK m) NII bridge (DKK m) H1-21 H1-20 Index Q2-21 Q1-21 Index 4 3 2 11 Net interest income 662 703 94 331 331 100 11 331 3 331 6 Net fee income 129 133 97 69 60 115 Q1-21 Lending Lending Deposit Deposit FX Days Other Q2-21 Net trading in
Slide 35: Non-core
Debt investor update – H1 2021 Non-core Non-core loan portfolio, Q2-21 (DKK bn) Non-core, Q2-21 REA (DKK bn) Allowance account Non-performing credit exposure Performing credit exposure Non-core conduits etc. Non-core banking 8 7 2 2 5 4 5 2 3 1 3 5 1 2 2 4 4 3 1 1 0.4 2 0.2 1 1 0.0 Retail Commercial
Slide 36: Credit quality: Low level of actual credit deterioration
Debt investor update – H1 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 22.5 23.5 23.3
Slide 37: Oil-related exposure: Limited downside risks
Debt investor update – H1 2021 Oil-related exposure: Limited downside risks underpinned by reduced exposure to off- shore segment coupled with solid collateral coverage Key points, Q2-21 • The offshore segment, in which we have seen credit deterioration, makes up 39% of the exposure and accounts for
Slide 38: Credit exposure: Limited agriculture and directly oil-related exposure
Debt investor update – H1 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* decreased by DKK 3.3 bn from the preceding quart
Slide 39: Credit exposure: Limited exposure to transportation, hotels, restaurants and leisure
Debt investor update – H1 2021 Credit exposure: Limited exposure to transportation, hotels, restaurants and leisure Transportation exposure Hotels, restaurant and leisure exposure • Total gross exposure* increased DKK 0.6 bn to DKK 17.2 bn from the Q1-21 level due mainly to increased exposure to a A
Slide 40: Credit exposure: Limited exposure to retailing and commercial real estate
Debt investor update – H1 2021 Credit exposure: Limited exposure to retailing and stable credit quality in commercial real estate Retailing Commercial real estate • Gross exposure remains in line with preceding quarter • Total gross exposure increased DKK 1.2 bn to DKK 28.3 bn while the share of Gro
Slide 41: Nordic macroeconomics
Debt investor update – H1 2021 Nordic macroeconomics Denmark Sweden Norway Finland EU Real GDP, constant prices (index 2005 = 100) Inflation (%) Consumer spending, Denmark (same weekday 2019 = 100) Unemployment (%) 130 120 110 100 90 80 70 0 Feb Apr Jun Aug Oct Jan Apr Jun 2020 2020 2020 2020 2020 2
Slide 42: Nordic housing markets
Debt investor update – H1 2021 Nordic housing markets Denmark Sweden Norway Finland 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 41
Slide 43: Net profit outlook upgraded: more than DKK 12 billion in 2021
Debt investor update – H1 2021 Net profit outlook upgraded: We expect a net profit of more than DKK 12 billion in 2021 Revised 8 July 2021 We expect total income in 2021 to be higher (than the level in 2020*), including the gain from Total income the sale of the business activities in Luxembourg and
Slide 44: Contacts
Debt investor update – H1 2021 Contacts Kimberly Bauner Mobile +46 73 700 19 39 Claus Ingar Jensen Mobile +45 25 42 43 70 Head of Group Treasury [email protected] Head of IR [email protected] Bent Callisen Direct +45 45 12 84 08 Nicolai Brun Tvernø Mobile +45 31 33 35 47 Head of Group Funding, Mo
Slide 45: Disclaimer
Debt investor update – H1 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 solici tation of an offer to buy or acquire securities of Danske Bank A/S in any jurisdiction, including the United States