Danske Bank A/S · OMXCOP:DANSKE
Danske Bank A/S — Debt Investor Presentation (March 2010)
47 slides from Danske Bank A/S's debt investor presentation, March 2010
Slide 1: U.S. Debt Roadshow
U.S. Debt Roadshow March, 2010
Slide 2: Disclaimer
Disclaimer This presentation has been prepared solely for use at this presentation. By attending the meeting where this presentation is made, or by reading the presentation slides, you agree to be bound by the following limitations. Thi presentation This i does d not constitute i or form f part off
Slide 3: Table of contents
Table of contents I. Overview of Danske Bank II. Macro Economy III. Financial a a Performance a IV. Funding & Liquidity V. Future Regulation 3
Slide 4: Danske Bank is a strong Nordic franchise
Danske Bank is a strong Nordic franchise Lending divided by Banking Activity Q4 2009 5.1 million customers NIR; 3 IR; 4 BAL; 1 Others; 4 NO; 9 2 2 million active Internet customers 2.2 Market M k position: ii Leader L d Branches: 121 SE; 10 DK; 59 Market share: 13% 734 branches in 14 countries* FIN;
Slide 5: Retail bank with well diversified credit exposure
Retail bank with well diversified credit exposure Credit exposure from lending activity, end-Q4 2009 (DKK 2,301bn, including DKK 1,816bn in lending and repos) Central and local governments Subsidised 6% housing companies 5% Banks 7% Personal customers 37% Commercial property 11% Construction, engine
Slide 6: Danske Banks ratings
Danske Banks ratings Moody's Moody s Standard & Poor's Poor s FITCH Stable outlook Negative outlook Stable outlook Short Long Short Long Short Long P-1 Aaa A-1+ AAA F1+ AAA P-2 Aa1 A-1 AA+ F1 AA+ P3 P-3 A 2 Aa2 A2 A-2 AA F2 AA Aa3 A-3 AA- F3 AA- A1 B A+ B A+ A2 C A C A A3 D A- D A- Baa1 BBB+ BBB+ B
Slide 7: Table of contents
Table of contents I. Overview of Danske Bank II. Macro Economy III. Financial a a Performance a IV. Funding & Liquidity V. Future Regulation 7
Slide 8: Indications of macroeconomic stabilisation, but turnaround is still fragile
Indications of macroeconomic stabilisation, but turnaround is still fragile % GDP development % Unemployment 5 - 2009 seems to be the trough Norway 20 - Rising trend going forward Euroland Baltics Denmark Finland Sweden 0 16 Ireland Baltics Ireland -5 12 Sweden Finland Euroland -10 8 Denmark -15 4 N
Slide 9: Signs of housing market stabilising
Signs of housing market stabilising Housing supply vs. number of transactions in Months Denmark 20 Region Prices peaked Price fall Change in since peak (%) Q409 (%) 15 Supply / sold houses Copenhagen Q3 2006 27.8 3.1 Zealand Q3 2007 22.1 0.2 10 South Denmark Q1 2008 6.8 -0.7 Central Jutland Q4 2007
Slide 10: Table of contents
Table of contents I. Overview of Danske Bank II. Macro Economy III. Financial a a Performance a IV. Funding & Liquidity V. Future Regulation 10
Slide 11: Improved result despite challenging conditions; continued decline in loan impairment charges
Improved result despite challenging conditions; continued i dddecline li iin lloan iimpairment i charges h Quarterly total income DKK m • Net profit 65% Y/Y to DKK 1.7bn in 2009 18,000 Other income Net trading income • Impairment charges still high, but declining 15,000 Net fee income steadily, wit
Slide 12: Record-high income, but net profit hurt by high impairment charges
Record-high income, but net profit hurt by high impairment charges DKK m 2008 2009 Index Q3 2009 Q4 2009 Index Net interest income 27 005 27,005 27 524 27,524 102 6 625 6,625 6 765 6,765 102 Net fee income 8,110 7,678 95 1,918 2,077 108 Net trading income 6,076 18,244 300 3,886 1,961 50 Other income
Slide 13: Slightly increasing and robust net interest income from banking activities
Slightly increasing and robust net interest income from banking activities Annual net interest income Quarterly net interest income DKK m DKK m Y/Y 2%* 30,000 Y/Y 6%* 7,500 Q/Q 2% * * * * 20,000 6,500 10,000 5,500 0 4,500 2007 2008 2009 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 * Adjuste
Slide 14: Net trading income at more than double the normal level, but declining as expected
Net trading income at more than double the normal level, level but declining as expected Breakdown of net trading income VIX Volatility Index 90 DKK m Q1 2009 Q2 2009 Q3 2009 Q4 2009 2009 Trading Activities 7,534 4,410 3,194 1,791 16,929 75 Group Treasury -589 297 567 -152 123 60 Institutional Banki
Slide 15: Loan impairment charges declining, but from a very high level
Loan impairment charges declining, but from a very high level Annual loan impairment charges Quarterly loan impairment charges DKK bn DKK bn bp 30,000 10,000 200 135 bp Total loan imp. 7,500 charges in bp 150 20,000 57 bp 5,000 100 10,000 2,500 50 3 bp 0 0 0 2007 2008 2009 Q3 08 Q4 08 Q1 09 Q2 09
Slide 16: Loan impairment charges still dominated by corporates; stable coverage ratio
Loan impairment charges still dominated by corporates; stable coverage ratio Impairments by customer segment Gross exp. subject to individual imp. test & cov. ratio - SMEs account for most of the Groups impairments - Coverage ratio incl. collateral nearly 90% Exposure Coverage 100% DKK bn ratio, %
Slide 17: Capital position strengthened further in 2009
Capital position strengthened further in 2009 Capital ratios CRD/Basel II Trend in RWA (DKKm) % 20 16 99 32 26 12 33 960 8 834 4 0 meters quality ange in counte rparty Q4 08 Q4 09 4 2008 4 2009 et and nding ew Solvencyy ratio sk param Ne len Credit q Marke ris Cha Q4 Q4 Total tier 1 ratio Tier 1 r
Slide 18: Outlook for 2010
Outlook for 2010 • Some economic improvement, but 2010 will be another challenging year • Robust income from banking activities • Lower trading and insurance income; level dependent on market developments • Total expenses to decline in 2010; continued focus on cost management management, but also in
Slide 19: Table of contents
Table of contents I. Overview of Danske Bank II. Macro Economy III. Financial a a Performance a IV. Funding & Liquidity V. Future Regulation 19
Slide 20: Significant funding completed in 2009; very low funding need in 2010
Significant funding completed in 2009; very low l ffunding di need d iin 2010 Issued funding and funding need 12-month liquidity* Moodys Financial Strength DKK bn DKK bn 190 182 450 168 127 300 End-Q4 2009 95 150 75 End-Q4 2008 End-Q3 2009 30 30 0 0 -150 2006 2007 2008 2009 2010E 2011E months 1 wee
Slide 21: Well-diversified funding structure
Well-diversified funding structure Loan-to-deposit p g gap p ((DKK bn)) and ratio ((%)) Total funding g Q4 2009 DKK 2,419bn DKK bn % 500 130 Equity; 4% Central banks; 6% 400 125 Repos; 6% 300 Banks, net; 4% Deposits; 32% 120 200 Certificates; 7% 115 100 L-T bonds; 12% 0 110 Q3 08 Q4 08 Q1 09 Q2 09 Q
Slide 22: Move towards long term funding sources
Move towards long term funding sources Q4 2009 25% Q4 2008 13% 0% Central Banks Due to credit Repo Certificates Deposits Deposits Mortgage Covered Issued bonds Subordinated Shareholders' institutions (other) (personal) Finance Bonds debt equity (ex. CB) Match funded 22
Slide 23: Diversification through funding programs
covered bonds Short term funding Long term funding & - - 150 300 450 120 160 40 80 DKK bn DKK bn EMTN US CP SEK MTN - 100 150 50 ECP FIN MTN SEK MTN UK CD SAMPO EMTN S FIN MTN SEK CP S MPO FIN MTN SAM SAMPO EMTN S 144A US SAMPO FIN CD SAM MPO FIN MTN Strruc. note. prog. NOK CP N 144A US CB programme
Slide 24: Covered Bonds is a valuable funding tool
Covered Bonds is a valuable funding tool DKK bn Eligible loans in the D & I pool 80.000 D pool I pool 60.000 40 000 40.000 20.000 0 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 24
Slide 25: Table of contents
Table of contents I. Overview of Danske Bank II. Macro Economy III. Financial a a Performance a IV. Funding & Liquidity V. Future Regulation 25
Slide 26: Shock waves hitting the financial industry
Shock waves hitting the financial industry 1st Financial crisis 2 d Recession 2nd R i 3rdRegulation Capital Liquidity L Leverage ratio ti 26
Slide 27: Capital: Existing framework will be adjusted
Capital: Existing framework will be adjusted Capital ratios CRD/Basel II % 20 16 12 8 4 0 Q4 08 Q4 09 Solvencyy ratio Total tier 1 ratio Tier 1 ratio incl. convertible hybrid Core tier 1 ratio ICAAP ratio (individual solvency requirement) 27
Slide 28: Liquidity
Liquidity q Net stable funding ratio ≥ 100% - Available amount of Stable Funding/Required amount of stable funding Liquidity coverage ratio ≥ 100% -S Stock off Liquid L qu d ass assetss /Net /N cash ash outflows u fl ws over v a 30 30-day day time m pperiod d 28
Slide 29: Leverage ratio: Too simplistic?
Leverage ratio: Too simplistic? Leverage g ratios % 8 6.4 9 5.9 6 4.5 4.2 4.2 4 3.0 3.2 3.1 28 2.8 2 0 Unadjusted According to US GAAP* Adjusted** Q408 Q309 Q409 * Netting g of derivatives and ex securities sold in repos p and intangibles. g ** US GAAP and ex insurance assets and Realkredit Danmark
Slide 30: www.danskebank.com/ir
www danskebank com/ir www.danskebank.com/ir 30
Slide 31: Danske Banks funding team
Danske Banks funding team Cato Baldvinsson Tel.: + 45 45 12 84 10 Peter Holm Tel.: + 45 45 12 84 85 Senior Vice President E-mail: [email protected] Senior Vice President E-mail: [email protected] Knud Erik Kristensen Tel.: +45 45 12 84 86 Claus Jensen Tel.: +45 45 12 84 83 Chief Funding g Manager
Slide 32: Appendix
Appendix
Slide 33: Improving lending margins in all markets, but pressure beginning to emerge
Improving lending margins in all markets, but pressure beginning to emerge Quarterly lending margins Q3 2008 Q4 2009 % 2.5 (loan stock) 2.0 1.5 1.0 0.5 0.0 Denmark Sweden Norway Northern Ireland Rep. of Ireland Note: Danske Bank DK includes Realkredit Denmark lending. 33
Slide 34: Narrowing deposit margins because of lower short term rates
Narrowing deposit margins because of lower short term rates short-term Quarterly deposit margins Q3 2008 Q4 2009 % 2.0 (deposit stock) 1.5 1.0 0.5 0.0 -0.5 Denmark Sweden Norway Northern Ireland Rep. of Ireland 34
Slide 35: 13% reduction of balance sheet, driven particularly by Danske Markets
13 % reduction of balance sheet, driven particularly by Danske Markets Trend in total assets DKK bn end of period 4 000 4,000 Change in 2009 3,000 Other assets +11% Trading & inv. - 26% 2,000 portfolio Banks & repos - 23% 1,000 Lending - 6% 0 Total - 13% Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4
Slide 36: Good trend in loan impairment charges on the Nordic markets
Good trend in loan impairment charges on the Nordic markets DKK m DKK m 15,000 2,800 Accumulated impairments161 bp* p Accumulated impairments 134 bp* p Denmark Collective 1,612 Finland Collective 244 12,500 59% of Groups lending 2,000 9% of Groups lending Individual Individual 10,000 Quarterly P
Slide 37: High loan impairment charges in Ireland, the Baltics and Danske Markets
High loan impairment charges in Ireland, the Baltics and Danske Markets DKK m DKK m 2,400 8,000 Accumulated impairments p 914 bp* p Northern Ireland Accumulated impairments 389 bp* Ireland 2,000 Collective 633 3% of Groups lending Collective 322 6,000 4% of Groups lending 1,600 Individual Individu
Slide 38: Credit exposure to commercial property and construction
Credit exposure to commercial property and construction Portion Construction Commercial from and building Sector in DKK bn property developers materials total Denmark 108.9 1.2 12.2 121.1 Finland 17.2 0.7 5.3 22.5 Sweden 48.7 0.2 4.6 53.4 Norway 34.4 2.8 1.9 36.3 Northern Ireland 10.1 3.5 4.4 14.5 I
Slide 39: Danish agriculture sector pressured by lower property and output prices
Danish agriculture sector pressured by lower property and d output prices i Exposure to agriculture DKK bn Realkredit Danmark 45 Banking Activities Denmark 11 Other Other business areas 15 6% Mixed Agriculture 71 operations 8% Agriculture LTV, Realkredit Danmark % Agriculture 25% 2008 46 2009 64 Che
Slide 40: Well-diversified shipping exposure
Well-diversified shipping exposure Multipurpose Seismic 1% 1% Other Shipping exposure DKK bn FPSO/FSO 3% Shipping 44 4% Container Land trans., aviation & insfrastructure 24 f d feeder Offshore Off h supply l 2% 20% Transportation and shipping 68 Offshore rig 8% DKK bn Shipping Ro-ro Gross exposure s
Slide 41: Consensus 2010
Consensus 2010 2010 (DKK m) Low Average High Consensus is prepared by Danske Bank's IR team and Net interest income 25,657 26,799 28,289 the estimates are based on input sent to Danske Bank Net fee income 7,605 8,021 8,362 after the release of the Annual Report for 2009 from analysts who follow the
Slide 42: The two retail pools
The two retail pools Pool D Pool notional DKK 31.8bn ( 4.3bn equivalent) Macroeconomic outlook 2010: Number of Loans 51,576 Danish economic growth is likely to benefit from an Substitution collateral 0 improving global economy. RETAIL Residential/commercial 100 % owner occupied residential proper
Slide 43: New pool (Pool C). No issues yet
New pool (Pool C). No issues yet Pool notional DKK 41bn ( 5.5 bn equivalent) Number of Loans 8.339 COMMERCIAL Geographical location Sweden (83%), (83%) Norway (17%) 2% 4% 16% 58% 20% Cooperative housing g societies Office Industrial Retail Other 43
Slide 44: Danish State Guarantee Schemes
Danish State Guarantee Schemes - Overview Bank Package I (October 2008) Bank Package II (February 2009) • Unconditionally, irrevocable guarantee by the Kingdom of Denmark • Ensures timely payment • AAA ratings, 0% risk weighting and ECB eligibility for -issues • Covers both existing and new unsecur
Slide 45: Re-capitalisation instrument Overview
Re-capitalisation instrument Overview Act on State-Funded Capital Injections (Feb 3. 2009) Danske Banks solution (May 24. 2009) • Package size DKK 100bn • Danske Bank Group DKK 26bn Mortgage g g institutions 25bn Realkredit Danmark 2bn Banks 75bn Danske Bank A/S 24bn • Repayment condition • Hyb
Slide 46: Issues related to the two packages
Issues related to the two packages - DKK 26bn in hybrid and DKK 35bn in senior unsecured Hybrid capital ISIN code Currency Amount (m) Date issued Maturity Call DK0030170444 DKK 23 992 23.992 11 05 2009 Perpetual 11.05.2009 12 04 2014 ← Danske Bank 12.04.2014 DK0030171848 DKK 2.034 11.05.2009 Perpetu
Slide 47: www.danskebank.com/ir
www.danskebank.com/ir / Danske Banks Investor Relations website has a sub-section dedicated to debt investors The section contains detailed information about Danske Bank Banks: s: Funding strategy Ratings Debt issues Covered Bonds Securitisation 47
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