Danske Bank A/S · OMXCOP:DANSKE
Danske Bank A/S — Debt Investor Presentation (September 2012)
56 slides from Danske Bank A/S's debt investor presentation, Sep 10, 2012
Slide 1: Asia Investor Roadshow
Danske Bank Investor Presentation Asia Investor Roadshow Henrik Ramlau-Hansen CFO & Member of the Executive Board Peter Holm Senior Vice President, Head of Funding and Cover Pool Management Hong Kong & Singapore, 10-11 September 2012
Slide 2: Agenda
Danske Bank Investor Presentation Agenda Overview 3 Financial results 5 Rating , funding & liquidity 18 New issue 24 Appendix: Trends in focus areas & business units 28 Outlook for 2012 25 29 2
Slide 3: Danske Bank has created a strong Nordic franchise through mergers and acquisitions
Danske Bank Investor Presentation Danske Bank has created a strong Nordic franchise through mergers and acquisitions 5.0 million customers Finland 2.2 million active internet customers Market position: Leader Branches: 101 Market share: 12% 578 branches in 15 countries* Market rank: 3 20,997 full-ti
Slide 4: Overview of Danske Bank: Denmark is our main market
Danske Bank Investor Presentation Overview of Danske Bank: Denmark is our main market, but we are present throughout the Nordics Income distribution, H1 2012 (%) Lending by business unit, H1 2012 (%) Finland Finland Denmark Denmark 9 8 Sweden 8 Sweden 11 37 7 Norway 4 Northern Ireland 8 Norway 1 Ire
Slide 5: Overview
Danske Bank Investor Presentation Overview Financial results Rating , funding & liquidity New issue Appendix: Trends in focus areas & business units 5
Slide 6: Half-year results are a step in the right direction
Danske Bank Investor Presentation Half-year results are a step in the right direction, but there is still a way to go Net profit (DKK m) and ROE (%) Net profit ROE (r.a.) 3,000 4.0 2,500 2,286 3.0 2,000 1,907 1,706 1,500 2.0 1,000 725 1.0 500 0 0.0 H1 09 H1 10 H1 11 H1 12 6
Slide 7: Highlights
Danske Bank Investor Presentation Highlights Income statement & key figures (DKK m) Key points H1 H1 2012 H1 2011 Index Q2 2012 Q1 2012 Index • Best half year result since 2008 Net interest income 12,390 11,339 109 6,218 6,172 101 • Improvement driven both by a solid Net fee income 4,013 4,142 97 2,
Slide 8: Net interest income: Resilient, but strong underlying drivers
Danske Bank Investor Presentation Net interest income: Resilient, but strong underlying drivers – both positive and negative Quarterly net interest income (DKK m) Net interest income drivers Positive • Increased lending rates +7% 6.218 Negative 6.182 6.172 • Low and declining central bank rates • In
Slide 9: Trading: Strong H1 2012, but outlook is uncertain
Danske Bank Investor Presentation Trading: Strong H1 2012, but outlook is uncertain Quarterly trading income (DKK m) Trading income drivers • Solid trading income mainly from bond 3.222 and derivatives trading • Q2 gain on unlisted shares DKK 283 m and DKK 396 m on pension plans Prospera Ranking 2.4
Slide 10: Expenses: Elevated by restructuring costs, but cost programme on track
Danske Bank Investor Presentation Expenses: Elevated by restructuring costs, but cost programme on track Total expenses (DKK bn) No. of staff, end of period (‘000) Adjustments (bonus, severance, dep. guarantee, asset write down) 24 Adjusted expenses 6,850 22 6,678 6,632 21 6,459 20 5,499 18 2007 Q2
Slide 11: Impairment dynamics
Danske Bank Investor Presentation Impairment dynamics Individual loan impairment charges, ex Baltics (DKK bn) Change in allowance account (DKK m) New Increased Reversals Allowance, end-2007 4.900 5.4 3.8 2.3 3.1 3.5 Gross 104,082 impairments 1.8 Reversals 25,507 3.6 Write-offs 29,467 -1.8 Allowance
Slide 12: Impairments: Declining trend in recent quarters
Danske Bank Investor Presentation Impairments: Declining trend in recent quarters due to personal customers and SME’s Impairments by customer segment (DKK bn) Impairment drivers Financials • Decline in impairments of DKK 800 SMEs m in Q2 4.8 Large corp. • Drop in impairments in Denmark Personal and
Slide 13: Capital: Earnings and capital efficiency increases tier 1 and core tier 1
Danske Bank Investor Presentation Capital: Earnings and capital efficiency increases tier 1 and core tier 1 Capital ratios, under CRD/Basel II (%) Capital drivers Total capital • RWA of DKK 893 bn Tier 1 (including state hybrid) • Government hybrid contributes Core tier 1 with 2.7 percentage point o
Slide 14: Peer comparison of core tier 1
Danske Bank Investor Presentation Peer comparison of core tier 1 demonstrating strength of Bank Capital ratios, Q2 2012 (%) Solvency ratio Total tier 1 ratio Core tier 1 ratio 17.7 16.6 16.5 16.1 16.2 15.0 14.7 14.3 13.0 13.3 13.4 12.8 13.5 13.6 12.7 10.9 11.8 10.2 12.1 11.3 11.8 10.9 11.1 10.9 10.3
Slide 15: Strategy process: On track, to be completed in Q3
Danske Bank Investor Presentation Strategy process: On track, to be completed in Q3 and reported in Q4 Corporate strategy Vision/Mission Corporate Story Corporates & Institutions Business Banking Personal Banking strategy strategy strategy Short-term measures 15
Slide 16: Macro trends in our core markets
Danske Bank Investor Presentation Macro trends in our core markets Affordability index for Danish housing prices, quarterly data GDP growth, Nordic countries (%) from1985 - 2011 Fixed rate Mixed rate Average GDP 2010 2011 2012E 2013E 140 Denmark 1.3 0.8 0.9 1.2 Above average = expensive 120 Sweden 6
Slide 17: Outlook for 2012: Low result, but high uncertainty
Danske Bank Investor Presentation Outlook for 2012: Low result, but high uncertainty due to economic and financial instability Macro Sluggish economic recovery and low interest rate environment NII Re-pricing continues, declining central bank rates create headwinds Expenses Cost cutting on track wit
Slide 18: Rating, funding & liquidity
Danske Bank Investor Presentation Overview Financial results Rating , funding & liquidity New issue Appendix: Trends in focus areas & business units 18
Slide 19: Danske Bank is rated by the three international rating agencies
Danske Bank Investor Presentation Danske Bank is rated by the three international rating agencies Negative outlook Stable outlook Stable outlook Short term Long term Short term Long term Short term Long term F1+ AAA* A-1+ AAA* P-1 Aaa F1 AA+ A-1 AA+ P-2 Aa1 F2 AA A-2 AA P-3 Aa2 F3 AA- A-3 AA- Aa3 B
Slide 20: Peer comparison – long term ratings
Danske Bank Investor Presentation Peer comparison – long term ratings Fitch Standard & Poor’s Moody’s A A- Baa1 A A+ A2 A+ AA- A2 A+ A+ A2 A+ A+ A1 A+ A+ A2 A A A2 AA- AA- Aa3 A- BBB+ Baa2 20
Slide 21: Funding, deposits and rating: Declining wholesale deposits after downgrade
Danske Bank Investor Presentation Funding, deposits and rating: Declining wholesale deposits after rating downgrade, but funding plan completed Deposits, end of period (DKK bn) Long term funding (DKK bn) Markets Covered CIB Senior BA, other 792 789 795 73 774 97 736 102 97 86 59 61 69 68 69 72 57 51
Slide 22: Liquidity: Strong liquidity buffer despite deposit outflow
Danske Bank Investor Presentation Liquidity: Strong liquidity buffer despite deposit outflow 12-month liquidity*, end of period (DKK bn) Key points Q2 2011 Q4 2011 Q2 2012 • 12- month liquidity of more than DKK 125 bn 300 • 12-month liquidity curve remains positive for more than 2½ years • Eligible
Slide 23: Solid funding structure and liquidity position
Danske Bank Investor Presentation Solid funding structure and liquidity position Loan portfolio and long-term funding, Q2 2012 (DKK bn) Maturing funding (DKK bn) Hybrid T1 1,754 69 1,704 Subordinated T2 115 Senior debt Senior Covered bonds Bank loans 598 51 736 Deposits 46 45 34 Bank mortgages 381 1
Slide 24: New issue
Danske Bank Investor Presentation Overview Financial results Rating , funding & liquidity New issue Appendix: Trends in focus areas & business units 24
Slide 25: New Issue - Summary Terms & Conditions
Danske Bank Investor Presentation New Issue - Summary Terms & Conditions Issuer Danske Bank A/S Issuer’s Senior Baa1 (Stable) / A- (Stable) / A (Neg) Ratings (M / S / F) Instrument Rating Fitch: BBB (exp) Description USD [Benchmark] Dated Subordinated Tier 2 Fixed Rate Resettable Notes (the “Notes")
Slide 26: Loss Absorption, Substitution & Variation terms
Danske Bank Investor Presentation Substitution & The Issuer may at any time substitute or vary the Notes provided that substituted or varied notes are Variation Qualifying Tier 2 Notes: Qualifying Tier 2 Notes must have terms that are not materially less favourable to an investor and (i) comply with
Slide 27: Q&A
Danske Bank Investor Presentation Q&A www.danskebank.com/ir 27
Slide 28: Appendix
Danske Bank Investor Presentation Appendix NII and margin developments 29 Expenses 32 Credit 33 Covered bonds 40 Business units 42 28
Slide 29: Net interest income: Margin improvement visible in most markets
Danske Bank Investor Presentation Net interest income: Margin improvement visible in most markets Quarterly change in net interest income (DKK m) Net interest margins, NII/loan stock (%) Q2 11 1,3 Q2 12 Q1 12 6,172 Denmark 1.3 1,4 Lending volume 46 Finland 1.4 1,3 Funding 60 Sweden 1.4 1,2 Equity 28
Slide 30: Higher lending margins are beginning to feed through
Danske Bank Investor Presentation Higher lending margins are beginning to feed through Quarterly lending margins (%) Quarterly deposit margins (%) 1,10 0,79 Q3 11 1,17 0,60 Q4 11 Denmark* 1,31 0,29 1,34 0,33 Q1 12 0,47 0,66 Q2 12 0,68 0,36 Finland 0,77 0,16 0,66 0,38 1,06 0,83 1,17 0,75 Sweden 1,32
Slide 31: Net fee income: Stable despite low activity
Danske Bank Investor Presentation Net fee income: Stable despite low activity Quarterly net fee income (DKK m) Fee income drivers Portfolio fees • Activity levels remain subdued Activity fees • Small decline in activity-based fees 2,218 • Increase in portfolio-based fees 2,049 2,026 1,987 1,938 1.49
Slide 32: Expenses: On track with cost programme
Danske Bank Investor Presentation Expenses: On track with cost programme Expenses (DKK m) Quarterly change in expenses (DKK m) H1 12 H1 11 Index Q2 12 Q1 12 Index Expenses 13,482 14,029 96 6,632 6,850 97 Q1 12 6,850 Perf. based compensation 457 372 123 172 285 60 Severance payments etc. 363 173 210
Slide 33: Loan quality
Danske Bank Investor Presentation Loan quality Impairment-tested loans (%) Coverage, individual allowance /impairment-tested loans (%) Q1 12 Q1 12 Q2 12 Q2 12 Denmark 5.7 Denmark 31 5.8 31 3.8 31 Finland Finland 3.8 31 2.2 32 Sweden Sweden 2.0 34 3.2 33 Norway Norway 3.2 33 17.8 62 N. Ireland N. Ire
Slide 34: Impairments: Lower impairments in Denmark and Northern Ireland
Danske Bank Investor Presentation Impairments: Lower impairments in Denmark and Northern Ireland Impairments (DKK m) Loan loss ratio (bp, annualised) Q112 Q212 Q112 1.330 Q212 Denmark Denmark 40 54 960 110 Finland 151 Finland 39 29 210 Sweden 61 Sweden 13 44 114 Norway 7 Norway 2 33 646 Northern Ire
Slide 35: Denmark and Northern Ireland: Loan exposure
Danske Bank Investor Presentation Dividend Denmark and Northern Ireland: Loan exposure Individual impairments Value of collateral Residential mortgage exposure Commercial property exposure Denmark (DKK bn) Northern Ireland (DKK bn) Denmark (DKK bn) Northern Ireland (DKK bn) 517.4 16.1 121.1 10.3 9.9
Slide 36: Ireland: Breakdown of loan portfolio
Danske Bank Investor Presentation Dividend Ireland: Breakdown of loan portfolio Individual impairments Value of collateral Personal mortgages (DKK bn) Other (DKK bn) Total (DKK bn) Arrears*, private customers (%) 91-180 days Market 26.8 180+ days 16.1 10.2 10.7 3.6 1.8 0.5 0.1 1.8 0.7 0.4 1.9 1.1 3.
Slide 37: Non-core Ireland
Danske Bank Investor Presentation Dividend Non-core Ireland Individual impairments Value of collateral CRE (DKK bn) Personal mortgages (DKK bn) Other* (DKK bn) Total (DKK bn) 19.4 38.1 16.1 1.7 9.0 9.7 24.4 3.1 9.7 6.4 1.9 0.1 1.3 13.8 1.0 3.1 4.7 7.5 0.8 2.0 Gross Impaired Gross Impaired Gross Impa
Slide 38: Limited exposure to agriculture and shipping
Danske Bank Investor Presentation Limited exposure to agriculture and shipping Agriculture: breakdown of loan portfolio, Q2 2012 (%) Shipping: breakdown of loan portfolio, Q2 2012 (%) Other Other Car carriers 14 Agriculture Ro-Ro 9 10 Chemical tanker Mixed 25 Product tanker 2 7 operations 6 6 Contai
Slide 39: Credit exposure
Danske Bank Investor Presentation Credit exposure Credit exposure by industry, Q2 2012 (%) Energy and utilities Construction etc. Transport. & shipping Other financials 2% 3% Other industrials 3% 2% 3% Other 4% Central and local gov. Personal customers 5% 37% Subsidised housing 5% Banks 6% 9% Consum
Slide 40: Group Covered Bond Universe
Danske Bank Investor Presentation Danske Bank Group Covered Bond Universe Legislation and history behind three business lines • Covered Bond issuer since 1851 • Covered Bond issuer since 2007 • Covered Bond issuer since 2005 • Based on Danish legislation • Based on Danish legislation • The former Sa
Slide 41: The three cover pools and Sampo
Danske Bank Investor Presentation The three cover pools and Sampo RESIDENTIAL RESIDENTIAL COMBINED RESIDENTIAL Characteristics Cover Pool D Cover Pool I Cover Pool C Sampo Bank Pool notional DKK 42.3bn (€ 5.7bn equivalent) DKK 117.6 bn (€15.8bn equivalent) DKK 26.0 bn (€ 3.5bn equivalent) DKK 37.0 b
Slide 42: Retail Banking Denmark: Visible increase in net interest income
Danske Bank Investor Presentation Retail Banking Denmark: Visible increase in net interest income but higher impairments lower the result Income statement (DKK m) Trend in lending volume, average (DKK bn) H1 2012 H1 2011 Index Retail Corporate Net interest income 6,270 5,918 106 Net fee income 1,590
Slide 43: Retail Banking Denmark, including Realkredit Danmark
Danske Bank Investor Presentation Retail Banking Denmark, including Realkredit Danmark Impairments at Retail Banking Denmark, Q2 2012 (DKK m) Loans by LTV and rating, Realkredit Danmark, end-Q2 2012 (%) Individual Collective Total Rating 1-3 4-7 8-11 Total Public LTV ratio guarantee Bank Personal cu
Slide 44: Retail Banking Finland: Strong net interest income
Danske Bank Investor Presentation Retail Banking Finland: Strong net interest income, but low result due to loan losses Income statement (DKK m) Trend in lending volume, average (DKK bn) H1 2012 H1 2011 Index Retail Corporate Net interest income 1,122 1,002 112 Net fee income 532 501 106 Other incom
Slide 45: Retail Banking Sweden: High return held up
Danske Bank Investor Presentation Retail Banking Sweden: High return held up by 20 % increase in net interest income Income statement (DKK m) Trend in lending volume, average (DKK bn) H1 2012 H1 2011 Index Retail Corporate Net interest income 1,384 1,158 120 Net fee income 265 304 87 Other income 96
Slide 46: Retail Banking Norway: Solid increase in total income
Danske Bank Investor Presentation Retail Banking Norway: Solid increase in total income more than double pre-tax profit Income statement (DKK m) Trend in lending volume, average (DKK bn) H1 2012 H1 2011 Index Retail Corporate Net interest income 973 760 128 Net fee income 146 130 112 Other income 36
Slide 47: Banking Activities Northern Ireland
Danske Bank Investor Presentation Banking Activities Northern Ireland: Moving in the right direction with higher income and lower costs and impairments Income statement (DKK m) Trend in lending volume*, average (DKK bn) H1 2012 H1 2011 Index Retail Corporate Net interest income 604 548 110 -2% Net f
Slide 48: Banking Activities Ireland
Danske Bank Investor Presentation Banking Activities Ireland: Higher expenses due to restructuring of the continuing business Income statement (DKK m) Trend in lending volume, end of period (DKK bn) H1 2012 H1 2011 Index Retail Corporate Net interest income 207 456 45 Net fee income 39 31 126 Other
Slide 49: Non-core Ireland: Marked by high impairments
Danske Bank Investor Presentation Non-core Ireland: Marked by high impairments Income statement (DKK m) Trend in lending volume, end-of-period (DKK bn) H1 2012 H1 2011 Index Retail Corporate Net interest income 210 - - Net fee income -1 - - Other income 2 - - Total income 211 - - 27 27 Expenses 106
Slide 50: Banking Activities Baltics
Danske Bank Investor Presentation Banking Activities Baltics: Higher income and increased write back of impairments increases pre-tax profit by 50 % Income statement (DKK m) Trend in lending volume, average (DKK bn) H1 2012 H1 2011 Index Retail Corporate Net interest income 244 240 102 Net fee incom
Slide 51: CIB: Solid NII development and continued margin improvement
Danske Bank Investor Presentation CIB: Solid NII development and continued margin improvement, but higher loan losses from shipping and construction Income statement (DKK m) Trend in lending volume, average (DKK bn) H1 2012 H1 2011 Index Net interest income 1,059 952 111 Net fee income 384 437 88 10
Slide 52: Danske Markets & Treasury
Danske Bank Investor Presentation Danske Markets & Treasury: Solid Q2 from derivates and bond trading, one off gains increase income in Treasury Income statement (DKK m) Trading income split, Q2 2012 H1 2012 H1 2011 Index FX & money market Danske Markets 4,916 3,659 134 Repos & derivatives 4 Group T
Slide 53: Danske Capital: Lower fee income due to changed asset mix
Danske Bank Investor Presentation Danske Capital: Lower fee income due to changed asset mix, margins remain flattish Income statement (DKK m) AuM – customer breakdown (DKK bn) H1 2012 H1 2011 Index Private equity Institutional Retail* Life insurance Net interest income 60 55 109 Net fee income 783 8
Slide 54: Insurance: Result boosted by booking of risk allowance
Danske Bank Investor Presentation Insurance: Result boosted by booking of risk allowance, helped by strong investment result and new discount curve Quarterly insurance income (DKK m) Key points • Risk allowance for 3 out of 4 groups 976 • New discount curve reduces liabilities with DKK 1.3 bn and im
Slide 55: Danica Pension: Strong investment result
Danske Bank Investor Presentation Danica Pension: Strong investment result and partially booked risk allowance Income statement (DKK m) Investment allocation for Danica Traditionel, end-Q2 2012 (%) H1 12 H1 11 Index Equities Bonds Credit bonds Property Premiums (bn) 12.6 14.2 89 Danica Traditionel (
Slide 56: Disclaimer
Danske Bank Investor Presentation 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 Stat
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