Danske Bank A/S · OMXCOP:DANSKE
Danske Bank A/S — FY2016 Earnings Presentation
34 slides from Danske Bank A/S's earnings presentation, Feb 2, 2017
Slide 1: Financial results for 2016
Financial results for 2016 Thomas F. Borgen Chief Executive Officer Jacob Aarup-Andersen Chief Financial Officer 2 February 2017
Slide 2: Agenda
Financial results for 2016 Agenda Executive summary 2 Business unit update 4 Selected topics 6 Outlook for full-year 2017 9 Q&A 10 Appendix 11 1
Slide 3: Executive summary: A satisfactory financial result for 2016
Financial results for 2016 Executive summary: A satisfactory financial result for 2016 Financial results, 2016 Low economic growth – full year of negative • Net profit of DKK 19.9 bn, up 12% from 2015* interest rates • ROE of 13.1% • Strong capital position, with a CET1 capital ratio of 16.3% Volume
Slide 4: Net profit: DKK 19.9 bn, up 12% from 2015
Financial results for 2016 Net profit: DKK 19.9 bn, up 12% from 2015* Income statement and key figures (DKK m) Key points, 2016 vs 2015 2016 2015 Index Q4 2016 Q3 2016 Index • Return on equity of 13.1% Net interest income 22,028 21,402 103 5,790 5,492 105 • Total income up 5%, reflecting Net fee inc
Slide 5: Banking units: Profit before tax up in the Nordic banking units
Financial results for 2016 Banking units: Profit before tax up in the Nordic banking units reflecting net reversal of impairments Pre-tax return on allocated capital (%) Financial highlights, 2016 vs 2015 2016 Personal Banking • Total income down, reflecting lower NII and net fee income 21.8 • Expen
Slide 6: C&I and Wealth Management: Strong client activity at C&I
Financial results for 2016 C&I and Wealth Management: Strong client activity at C&I; NII supported by increased lending at both business units C&I: Financial highlights, 2016 vs 2015 Wealth Management: Financial highlights, 2016 vs 2015 • NII up 15% as a result of volume growth and less margin • Ass
Slide 7: Expenses: Down 3% vs. 2015 level despite upward pressure from regulatory costs
Financial results for 2016 Expenses: Down 3% vs. 2015 level despite upward pressure from regulatory costs Change in expenses (DKK m) Total expenses ex goodwill charge (DKK m) Severance payments 320 298 Deposit guarantee & resolution funds 85 Amortisation of customer relations*** 502 203 Bonuses 347
Slide 8: Impairments: Loan loss ratio of zero bp in core activities in 2016
Financial results for 2016 Impairments: Loan loss ratio of zero bp in core activities in 2016 Group impairments,* 2012 to 2016 (DKK bn/bp) Impairment drivers, Q4 2016 vs Q3 2016 Impairments Loan loss ratio* (rhs) • Improved credit quality and reversals at all business units 18 70 except for C&I resu
Slide 9: Capital: Strong capital base; CET1 capital ratio of 16.3%
Financial results for 2016 Capital: Strong capital base; CET1 capital ratio of 16.3%; launch of DKK 10 bn share buyback programme Capital ratios, under Basel III/CRR (%) Capital highlights, Q4 2016 Tier 2 Hybrid T1/AT1 Pillar II CET1 CET1 • Reported CET1 of 16.3% after share-buy back in 2016. Fully
Slide 10: Outlook for full-year 2017: net profit in the range of DKK 17-19 bn
Financial results for 2016 Outlook for full-year 2017: We expect net profit in the range of DKK 17-19 bn Net interest We expect net interest income to be higher than in 2016, as we will benefit from income volume growth and lower funding costs Net fee Net fee income is expected to be somewhat higher
Slide 11: Q&A session
Financial results for 2016 Q&A session Press * then 1 to ask a question Press * then 2 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
Slide 12: Appendix
Financial results for 2016 Appendix Business units 12 Special topics 17 Macro and portfolio reviews 22 Funding, liquidity, ROE bridge and ratings 27 Tax 31 Contact details 32 11
Slide 13: Personal Banking: Pre-tax profit up 4% on net reversals
Financial results for 2016 Personal Banking: Pre-tax profit up 4% on net reversals; strong customer activity in Sweden and Norway continues Income statement and key figures (DKK m) Lending volume by country* (Q1 2015 = Index 100) Q4 2016 Q3 2016 Index Denmark Finland Sweden Norway Net interest incom
Slide 14: Business Banking: Pre-tax profit up 17% on NII, trading income and net reversals
Financial results for 2016 Business Banking: Pre-tax profit up 17% on NII, trading income and further net reversals Income statement and key figures (DKK m) Lending volume by country* (Q1 2015 = Index 100) Q4 2016 Q3 2016 Index Denmark Finland Sweden Norway Net interest income 2,148 2,078 103 130 Ne
Slide 15: Corporates & Institutions: Higher Capital Markets income
Financial results for 2016 Corporates & Institutions: Higher Capital Markets income; impairments to oil related exposure continued Income statement and key figures (DKK m) Income breakdown (DKK m) Q4 2016 Q3 2016 Index FICC Capital Markets General Banking Net interest income 795 778 102 Net fee inco
Slide 16: Wealth Management: AUM up 3%; pre-tax profit up 38%
Financial results for 2016 Wealth Management: AUM up 3%; pre-tax profit up 38% owing to booking of performance fees and shadow account Income statement and key figures (DKK m) Key points, Q4 2016 vs Q3 2016 Q4 2016 Q3 2016 Index • Assets under management up 3% on performance, net sales Net interest
Slide 17: Non-core: Deleveraging progressed according to plan
Financial results for 2016 Non-core: Deleveraging progressed according to plan; REA of DKK 13 bn at the end of 2016 Non-core loan portfolio, Q4 2016 (DKK bn) Non-core REA (DKK bn) Allowance account Non-core conduits, etc. Non-performing credit exposure 26 Non-core Banking Performing credit exposure
Slide 18: Net interest income: Up 4% adjusted for FX effects
Financial results for 2016 Net interest income: Up 4% adjusted for FX effects despite significant lending margin pressure Change in net interest income (DKK m) 22,028 0 253 317 696 801 580 21,402 87 2015 Lending Lending Deposit Deposit Days effect FX effect Other 2016 volume margin volume margin 17
Slide 19: Trading income: Strong full-year result
Financial results for 2016 Trading income: Strong full-year result; activity in Q4 slightly lower than in strong Q3 Trading income by business unit (DKK m) Key points, Q4 2016 vs Q3 2016 Other incl. Treasury Wealth Management Business • Trading income down 9% owing to Northern Ireland C&I Personal s
Slide 20: FICC: Changed risk profile has reduced risk, volatility and capital consumption
Financial results for 2016 FICC: Changed risk profile has reduced risk, volatility and capital consumption FICC income , 2014 to 2016 (DKK m) Comments • The adjusted risk profile of FICC has resulted in lower income 4,525 volatility and lower capital use due to less warehousing 4,049 • Daily income
Slide 21: Expenses: Up 11% owing to seasonally higher expenses in Q4
Financial results for 2016 Expenses: Up 11% owing to seasonally higher expenses in Q4 Total expenses ex goodwill charge (DKK m) Change in expenses ex goodwill (DKK m) Severance payments Bonuses Deposit guarantee scheme/resolution fund Other costs Q3 2016 5,471 6,273 +11% 6,056 Staff costs 43 Severan
Slide 22: Credit quality: Further improvement; NPLs decreased 16% in 2016
Financial results for 2016 Credit quality: Further improvement in credit quality; NPLs decreased 16% in 2016 Individual loan impairment charges* (DKK bn) Gross non-performing loans (DKK bn) New Individual allowance account Net exposure in default Increased Net exposure not in default Reversal 47.8 4
Slide 23: Nordic macro economy
Financial results for 2016 Nordic macro economy Denmark Sweden Norway Finland Real GDP, constant prices (index 2005 = 100) Inflation (%) 135 6 4 120 2 105 0 2006 2008 2010 2012 2014 2016 90 2006 2008 2010 2012 2014 2016 -2 Interest rates, leading (%) Unemployment (%) 6 10 5 8 4 6 3 4 2 1 2 0 0 2006
Slide 24: Nordic housing markets
Financial results for 2016 Nordic housing markets Denmark Sweden Norway Finland Property prices (index 2005 = 100) House prices/nom. GDP (index 2005 = 100) 200 130 125 180 120 160 115 110 140 105 120 100 95 100 90 85 2006 2008 2010 2012 2014 2016 2006 2008 2010 2012 2014 2016 Apartment prices (index
Slide 25: Realkredit Danmark and the Danish housing market: Portfolio overview
Financial results for 2016 Realkredit Danmark and the Danish housing market: Portfolio overview Portfolio facts, Realkredit Danmark, end-Q4 2016 Stock of retail loans, Realkredit Danmark, end-Q4 2016 (%) • Approx. 370,000 loans (residential and commercial) Fixed rate: Repayment Variable rate (6m-10y
Slide 26: Realkredit Danmark: Almost 60% of new retail loans are fixed rate
Financial results for 2016 Realkredit Danmark: Almost 60% of new retail loans are fixed rate loans; compliant with all regulatory requirements Key points Supervisory diamond for Danish mortgage institutions • Almost 60% of new retail loans in Q4 were fixed-rate loans and 28% were 5- to 10-year varia
Slide 27: Credit exposure: Agriculture and oil-related exposure
Financial results for 2016 Credit exposure: Preliminary signs of improvement in agriculture; further collective charges against oil-related exposure Agriculture exposure (2.5 % of Group net exposure) Oil-related exposure (0.9 % of Group net exposure) • Market conditions showed positive signs in the
Slide 28: Funding and liquidity: DKK 85 bn of long-term funding issued in 2016
Financial results for 2016 Funding and liquidity: DKK 85 bn of long-term funding issued in 2016; LCR-compliant at 158% at attractive spreads Changes in funding,* 2016 (DKK bn and bp) Long-term funding ex RD (DKK bn) Cov. bonds Senior Tier 2 Tier 1 Funding plan Completed 48bp 85 82bp 70-90 96bp 70 93
Slide 29: Funding structure and sources: Danish mortgage system is fully pass-through
Financial results for 2016 Funding structure and sources: Danish mortgage system is fully pass-through Loan portfolio and long-term funding, Q4 2016 (DKK bn) Funding sources (%) Q3 2016 Q4 2016 1,929 55 144 Senior debt 1,689 Bank loans 580 859 Deposits Bank mortgages 338 154 Covered bonds 13 9 9 10
Slide 30: ROE of 13.1% in 2016; longer-term ambition maintained
Financial results for 2016 ROE of 13.1% in 2016; longer-term ambition maintained with unchanged assumptions ROE 2015-18E, after tax (%) Status at year-end 2016 Overall status of ROE bridge to 2018 • On track ROE 2015* 11.6% • Underlying assumptions are unchanged Adjustments** 0.2% Costs • In line Co
Slide 31: Three distinct methods of rating banks
Financial results for 2016 Danske Bank’s rating Three distinct methods of rating banks Rating methodology Anchor Extraord. Add. Issuer + 1 + 2 + 3 + 4 = SACP = + ALAC + = SACP1 Support factors Rating bbb+ +1 +1 0 0 a 0 0 0 A (Stable) 1=Business Position, 2=Capital & Earnings, 3=Risk Position, 4=Fund
Slide 32: Tax
Financial results for 2016 Tax Actual and adjusted tax rates (DKK m) Tax drivers, Q4 2016 2016 Q42016 Q32016 Q22016 Q12016 • The difference between profit before tax Profit before tax 25,357 7,039 6,267 5,780 6,271 and adjusted pre-tax profit mainly relates Ireland core and Non-core -254 -96 -68 -23
Slide 33: Contacts
Financial results for 2016 Contacts Direct: +45 45 12 84 83 Claus Ingar Jensen Mobile: +45 25 42 43 70 Head of IR [email protected] Direct: +45 45 14 07 92 John Bäckman Mobile: +45 30 51 46 85 Chief IR Officer [email protected] Direct: +45 45 14 06 04 Robin Hjelgaard Løfgren Mobile: +45 24 75 15 4
Slide 34: Disclaimer
Financial results for 2016 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 States, or