Al Sydbank A/s · OMXCOP:ALSYDB
Al Sydbank A/s — Sydbank — Debt Investor Presentation (September 2018)
37 slides from Al Sydbank A/s's debt investor presentation, September 2018
Slide 1: Presentation – Sydbank
1 Presentation – Sydbank Aabenraa September 2018
Slide 2: Agenda
2 Agenda 1. Executive Summary 2. Sydbank Credit Update 3. Macroeconomic Update 4. MREL and Proposed Transaction Summary 5. Concluding Remarks 6. Financial Statements
Slide 3: Agenda
3 Agenda 1. Executive Summary 2. Sydbank Credit Update 3. Macroeconomic Update 4. MREL and Proposed Transaction Summary 5. Concluding Remarks 6. Financial Statements
Slide 4: Executive summary: Sydbank in Brief
4 Executive summary: Sydbank in Brief Macro-economic Highly satisfactory result for 2017 – record dividend of DKK 11.31 per share operating environment Business model Banking in Denmark and Northern Germany – use of sub-suppliers Profit Profit of DKK 1,531m Impairment charges Impairment charges for
Slide 5: Agenda
5 Agenda 1. Executive Summary 2. Sydbank Credit Update 3. Macroeconomic Update 4. MREL and Proposed Transaction Summary 5. Concluding Remarks 6. Financial Statements
Slide 6: Business profile
6 Business profile Business model Clients • Nationwide Danish bank with operations in Germany • Relationship with clients based on long-term relations • All-round bank in terms of clients • Advisory bank with focus on creating value for money for • Full-service bank clients • Production of classic b
Slide 7: Market position
7 Market position Sydbank Market data Market share – Denmark 6-13% Market share – Danish corporate market (SMEs) 12-13% Market share – Danish retail market 5-6% Number of branches – Denmark 62 Number of branches – Germany 3 * Sydbank A/S has one shareholder > 5% of the shares.
Slide 8: Status – targets
8 Status – targets Target Objective Status 30 June 2018 Return on shareholders' Over 12%* 11.7% equity after tax Customer satisfaction Top 3 ** 4th - Aalund - Corporate Customer satisfaction Top 3 ** 5th - EPSI - Retail Common Equity Tier 1 Around 14.0% 15.5% capital ratio Capital ratio Around 18.0%
Slide 9: Strong capital base
9 Strong capital base Risk-weighted assets Capital 12,500 70,000 10,000 7,500 DKKm 60,000 DKKm 5,000 2,500 50,000 0 2014 2015 2016 2017 40,000 CET1 AT1 T2 2014 2015 2016 2017 Capital (DKKm) and Capital ratios SIFI and CRD IV • The Group’s capital targets are a CET1 ratio of 14% and a Total 2014 2015
Slide 10: Capital ratios have decreased in H1 2018 due to share buyback programme
10 Capital ratios have decreased in H1 2018 due to share buyback programme Q4 Q2 Key points H1 2018: DKKm 2017 2018 De facto • Implemented share buyback programme of DKK 500m in February 2018 extended by DKK 750m in June 2018 – total Credit risk 38,933 36,810 36,810 share buyback programme DKK 1,250
Slide 11: Capital requirement, planning and capital targets
11 Capital requirement, planning and capital targets Requirement incl all buffers Capital targets: Total • The capital targets are set at a level where Sydbank % expects to have capital that will cover all buffers at any CET1 capital time Minimum requirement 4.5 8.0 Pillar II buffer 1.7 3.0 • The Gr
Slide 12: Leverage ratio
12 Leverage ratio Leverage ratio end-Q2 2018 is 6.6% Regulatory requirements is 3% Buffer is about DKK 180bn in assets
Slide 13: Rating + SIFI
13 Rating + SIFI SIFI Sydbank has been designated as a SIFI in Denmark Moody’s most recent rating of Sydbank: Outlook: Long term debt rating and long term deposit rating on positive outlook Long-term deposit: A2 Baseline credit assessment: Baa1 Senior unsecured: A2 Short-term deposit: P-1.
Slide 14: Liquidity Coverage Ratio – LCR
14 Liquidity Coverage Ratio – LCR The LCR is based on a regulatory cautiously determined liquidity buffer involving specific requirements as regards Danish mortgage bonds and the share thereof. The buffer must be sufficient to survive a 30-day stress scenario. The LCR’s 30-day horizon specifies a ru
Slide 15: Funding
15 Funding Funding strategy • Deposit-to-loan ratio of 129% • Loans and advances (excl reverse transactions) may not exceed the sum of deposits (excl repo transactions), senior loans with maturity exceeding one year and shareholders’ equity • DKK 5-15bn in long-term funding Loans and advances/deposi
Slide 16: Long-term funding
16 Long-term funding Senior loan Redemption of long-term funding 4 600 500 3 500 400 EURm DKKbn 2 300 200 1 100 0 0 2014 2015 2016 2017 2018 2019 2020 Covered Bond (SDO) funding agreement Nykredit – funding • Agreement with Nykredit about funding of bank originated mortgage loans Funding end-2017 DK
Slide 17: Agenda
17 Agenda 1. Executive Summary 2. Sydbank Credit Update 3. Macroeconomic Update 4. MREL and Proposed Transaction Summary 5. Concluding Remarks 6. Financial Statements
Slide 18: Sound economic structure
18 Sound economic structure Macroeconomic outlook 2015 2016 2017 2018F 2019F Private consumption (% ) 2.0 2.1 1.9 2.2 2.0 Government consumption (% ) 0.6 0.4 0.8 0.5 0.5 Gross investment (% ) 2.5 5.6 2.5 5.4 5.4 Exports (% ) 2.1 2.5 4.5 3.8 3.0 Imports (% ) 1.4 2.4 2.8 4.0 3.5 GDP (% ) 1.6 2.0 2.0 1
Slide 19: Denmark has a healthy economy
19 Denmark has a healthy economy Public deficit vs public debt – 2017 Current account, % of GDP 2017 6 9 USA Japan 4 Public deficit % of GDP Spain 4 UK France 2 Finland Portugal -1 Denmark Ireland 0 Greece 0 50 100 150 200 250 Sweden Germany -6 -2 Public debt % of GDP Germany Denmark Norway Sweden F
Slide 20: Property prices
20 Property prices House prices – Scandinavia (Q1 2006 = 100) House prices – capitals (Q1 2006 = 100) 200% 250% 175% 225% 200% 150% 175% 125% 150% 125% 100% 100% 75% 75% 50% 50% Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 2006 2007 2008 2009 2010 2011 2012 2013 2014
Slide 21: Property prices
21 Property prices House prices – whole country (DKK per square metre) House prices – region (DKK per square metre) DKKt DKKt 25 25 20 20 15 15 10 10 5 5 0 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 Homes Apa
Slide 22: Agenda
22 Agenda 1. Executive Summary 2. Sydbank Credit Update 3. Macroeconomic Update 4. MREL and Proposed Transaction Summary 5. Concluding Remarks 6. Financial Statements
Slide 23: Sydbank Inaugural Non-Preferred Senior Debt Issue
23 Sydbank Inaugural Non-Preferred Senior Debt Issue Key features of proposed [EUR] issue Issuer • Sydbank A/S Expected Issue Rating • [Baa1] (Moody’s) Maturity • [●] ([●] year bullet tenor) • Non-Preferred Senior Notes are intended to constitute MREL/TLAC Eligible Liabilities and Non-Preferred Seni
Slide 24: MREL
24 MREL MREL requirements apply from 1st July 2019. Requirement for O-SIFI is 2 times capital requirement including buffers. MREL requirement % 01/07/2019 Estimated Senior Non-Preferred needs Minimum requirement 8.0 around DKK 7.5bn 20 Pillar 2 add on 3.0 18 30.0% SIFI buffer 1.0 16 Capital conserva
Slide 25: Agenda
25 Agenda 1. Executive Summary 2. Sydbank Credit Update 3. Macroeconomic Update 4. MREL and Proposed Transaction Summary 5. Concluding Remarks 6. Financial Statements
Slide 26: Concluding remarks
26 Concluding remarks • Danish economy has a sound economic structure • Sydbank is the fourth largest bank in Denmark • Sydbank is an independent bank with a competitive return for its shareholders • Share buyback DKK 500m started in February 2018 – extended by DKK 750m in June 2018 – total share bu
Slide 27: Agenda
27 Agenda 1. Executive Summary 2. Sydbank Credit Update 3. Macroeconomic Update 4. MREL and Proposed Transaction Summary 5. Concluding Remarks 6. Financial Statements
Slide 28: Income statement
28 Income statement DKKm 2013 2014 2015 2016 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Core income 4,058 4,319 4,329 4,198 4,167 1,036 1,038 1,053 987 Trading income 229 196 215 237 233 58 36 55 45 Total income 4,287 4,515 4,544 4,435 4,400 1,094 1,074 1,108 1,032 Costs, core earnings 2,514 2,619 2,675 2
Slide 29: Balance sheet
29 Balance sheet DKKbn 2014 2015 2016 2017 Q2 2018 Loans and advances, bank loans 68.5 74.3 77.2 64.3 62.5 Loans and advances at fair value 6.9 10.2 6.1 5.2 6.1 Deposits and other debt 73.9 79.9 81.1 82.7 84.1 Bonds issued at amortised cost 3.7 3.7 3.7 3.7 0.0 Subordinated capital 1.4 2.1 2.1 1.9 2.
Slide 30: Bank loans – sector breakdown
30 Bank loans – sector breakdown DKKbn 2017 2016 2015 Agriculture, hunting, forestry and fisheries 3,944 4,472 4,885 Manufacturing and extraction of raw materials 8,171 7,352 6,991 Energy supply etc 2,064 1,990 2,586 Building and construction 3,386 2,903 2,430 Trade 11,460 11,309 11,432 Transportati
Slide 31: Total credit intermediation
31 Total credit intermediation Total credit intermediation Q4 Q4 Q1 Q2 Change DKKbn 2016 2017 2018 2018 Q2 Bank loans - retail 29.9 18.0 16.9 16.5 -0.5 Bank loans - corporate 46.7 46.0 46.5 45.9 -0.6 Bank loans - public authorities 0.6 0.3 0.1 0.2 0.1 Bank loans - total 77.2 64.3 63.5 62.5 -1.0 Fund
Slide 32: Impairment charges constitute minus DKK 44m in Q2 2018
32 Impairment charges constitute minus DKK 44m in Q2 2018, equal to minus 6bp Impairment charges for bank loans DKKm Bp 50 5 4 3 30 43 2 1 33 10 11 0 -20 -13 -13 -10 -27 -29 -2 -2 -2 -2 -44 -30 -3 -4 -3 -50 -6 -6 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 16 16 16 17 17 17 17 18 18 Impairment charges Impairment rat
Slide 33: Thank you
33 Thank you Additional information: Bjarne Larsen, Deputy Group Chief Executive tel +45 74 37 20 40, [email protected] Jørn Adam Møller, CFO tel +45 74 37 24 00, [email protected]
Slide 34: Disclaimer – part 1/4
34 Disclaimer – part 1/4 MANUFACTURER TARGET MARKET (MIFID II PRODUCT GOVERNANCE) IS ELIGIBLE COUNTERPARTIES AND PROFESSIONAL CLIENTS ONLY (ALL DISTRIBUTION CHANNELS). NO PRIIPS KEY INFORMATION DOCUMENT (KID) HAS BEEN PREPARED AS NOT AVAILABLE TO RETAIL IN EEA THIS DOCUMENT AND ITS CONTENTS ARE CONF
Slide 35: Disclaimer – part 2/4
35 Disclaimer – part 2/4 This presentation is being made only to and is directed only at: (a) persons who are outside the United Kingdom; (b) persons who have professional experience in matters relating to investments who fall within Article 19(5) of the U.K. Financial Services and Markets Act 2000
Slide 36: Disclaimer – part 3/4
36 Disclaimer – part 3/4 Where acting as agent on behalf of a disclosed or undisclosed client when purchasing, or making or accepting an offer to purchase, any Notes (or any beneficial interests therein) from the Issuer and/or the Joint Lead Managers the foregoing representations, warranties, agreem
Slide 37: Disclaimer – part 4/4
37 Disclaimer – part 4/4 By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend upon future circumstances that may or may not occur, many of which are beyond the control of the Issuer or the Group and all of which are based on current belief
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