Jyske Bank A/S · OMXCOP:JYSK
Jyske Bank A/S — Q3 2013 Earnings Presentation
62 slides from Jyske Bank A/S's earnings presentation, 2013
Slide 1: Jyske Bank First to third quarter 2013
Jyske Bank First to third quarter 2013
Slide 2: Agenda
Agenda • Jyske Bank in brief • Macro Economy & Danish Banking 2013-2015 • Focus in Q1-Q3 2013 • Strategic Issues • Jyske Banks Performance 1968 1968-2013 2013 • Volumes • Capital Structure • Liquidity • Q1-Q3 in figures • Credit Quality • Danish FSA • Fact Book 2
Slide 3: Jyske Bank in brief
Jyske Bank in brief 3
Slide 4: Jyske Bank focuses on core business
Jyske Bank in brief Jyske Bank focuses on core business Description Branch Network • Established and listed in 1967 • 2nd largest Danish bank by lending • Total lending of approx. DKK 129bn • 104 domestic branches • Approx 675,000 Approx. 675 000 domestic customers • Business focus is on Danish priv
Slide 5: Jyske Bank has a differentiation strategy
Jyske Bank in brief Jyske Bank has a differentiation strategy “Jyske Differences” • Jyske Bank wants to be Denmark’s most customer-oriented bank byy p providing g high g standard p personal financial advice and taking ga genuine interest in customers • The strategy is to position Jyske Bank as a vis
Slide 6: Macro Economy & Danish Banking 2013
Macro Economy & Danish Banking 2013 6
Slide 7: The Danish economy at a glance
The Danish economy at a glance Equal disposable incomes The basics OECD-ranking lowest Gini coefficient Citizens: 5.6 million ((2011)) Area: 43 43.098 098 sq km (0 (0.4 4 % of USA) 2. Denmark Currency: Kroner (fixed exchange rate policy to the 15. Germany euro) 31. USA A welfare state Among the rich
Slide 8: The Danish economy: Slowly coming out of recession
The Danish economy: Slowly coming out of recession Denmark is a small open economy …but also in Denmark growth turned affected by the slow down in the EURO positive in Q2 area 4 4 3 3 2 2 1 1 0 0 Percentt Percentt -1 -1 -2 -2 -3 -3 -4 -4 -5 -5 -6 -6 03 04 05 06 07 08 09 10 11 12 13 14 Denmark Euro
Slide 9: Sentiment shows improvement, and some hard figures look better
Sentiment shows improvement, and some of the hard figures look somewhat better 9
Slide 10: …and house prices are rising
…and house prices are rising. House prices are up 3.5 % this year and prices on flats are up 18 % since the b i i off 2012 beginning 008=100 008=100 Index 20 Index 20 10
Slide 11: The SME sector has suffered, but improvement is visible now
The SME sector has suffered, but improvement is visible now 11
Slide 12: Unemployment is falling slightly, and interest rates are low
Unemployment is falling slightly, and interest rates are low, which keep household defaults at a low level 25,0 25,0 20 0 20,0 20 0 20,0 Percent Percent 15,0 15,0 10 0 10,0 10 0 10,0 5,0 5,0 0,0 0,0 00 02 04 06 08 10 12 Denmark Sweden UK Euro area Norway Spain Source: Reuters EcoWin 12
Slide 13: The private sector is in a consolidation mode
The private sector is in a consolidation mode, but bank lending to SME and corporates have stopped falling The private sector saving i record high …and is reluctant to borrow 10,0 10,0 7,5 7,5 5,0 5,0 2,5 2,5 00 0,0 00 0,0 -2,5 -2,5 -5,0 -5,0 90 92 94 96 98 00 02 04 06 08 10 12 Source: Danmarks Stat
Slide 14: Denmark has a healthy public sector economy…
Denmark has a healthy public sector economy… Deficit is just below 3 2 % when excluding special pension 0 Sweden Germany repayment -2 2 Finland Belgium -4 France -6 6 P Portugal l UK -8 Ireland USA Greece Japan -10 Spain -12 -14 25 50 75 100 125 150 175 200 225 Gross financial liabilities, % of GDP
Slide 15: Competitiveness has improved
Competitiveness has improved Danish competitiveness deteriorated dramatically during g the booming gyyears. Danish p production sector has been under some pressure and still is, but conditions are slightly better due to a gradual and ongoing improvement since 2008: - Wage increases in now below exte
Slide 16: Overall the Danish economy is structurally strong
Overall the Danish economy is structurally strong Net assets against the rest of the world (2010) 125 125 100 100 Denmarks net assets against 75 75 the rest of the 50 50 world are 25 25 GDP GDP significantly 0 0 % of G % of G higher today : around 40 % of -25 -25 GDP -50 -50 -75 -75 -100 -100 -125 1
Slide 17: … And Denmark is a AAA economy
… And Denmark is a AAA economy 8 8 7 7 6 6 5 5 4 4 3 3 2 2 1 1 0 0 jan jul jan jul jan jul jan jul jan jul jan jul jan jul 07 08 09 10 11 12 13 Denmark Germany Spain Italy Source: Reuters EcoWin 17
Slide 18: The outlook
The outlook: Growth is likely to pick up, and overall the economy is strong • The economyy is likelyy to continue to show improvement p in the second half of 2013 and in 2014. The housing market is stronger, we see higher consumer sentiment, and we have the first small signs of stronger ”hard” figur
Slide 19: Jyske Bank forecasts
Jyske Bank forecasts The Danish economy 2010-2014 2012 Real growth (%) DKKbn 2010 2011 2012 2013* 2014* C Consumer spending p g 901 90 1.7 -0.5 0.5 0.5 0.4 1.1 Public spending 522 0.4 -1.5 0.7 0.4 0.5 Fixed gross investment 315 -2.4 2.9 -0.1 1.0 3.0 Inventory investment** -4 1.0 0.5 -0.4 0.3 0.0 Exp
Slide 20: Market conditions
Market conditions • Volumes continue to shrink in 2013 • Banks are pricing at the expense of risk of loosing volumes • Growing Net Interest Income only via M&A activities • Significant g improvement p in deposit/loans p ratio in most banks • Capital shortage in some banks due to maturing Tier II cap
Slide 21: Focus in Q1-Q3 2013
Focus in Q1-Q3 2013 21
Slide 22: Focus in Q1-Q3 2013
Focus in Q1-Q3 2013 • ROE pre tax t 14.6% 14 6% - satisfactory ti f t – 14.3%, 15.9% and 12.2% respectively in Q1, Q2 and Q3 • Growth in Net Interest Income of 3% due to acquisitions q • Growth in fees and commissions of 7% due to lack of performance related fees in Q3 • C t in Costs i alignment li
Slide 23: Strategic issues
Strategic issues 23
Slide 24: Strategic issues
Strategic issues Acquisition of Spar Lolland • Bank loans DKK 6.3bn, bank deposits DKK 9.5bn, total assets DKK 13bn • Long term earnings fully in line with earnings from other branches • Integration according to plan – All branch relocations in place – First phase of cost cuts implemented in Q1 2013
Slide 25: Strategic issues: capital and liquidity
Strategic issues Capital • Solvency ratio 15.7% • Capital buffer 5.7 percentage points • Core Tier 1 14.8% • Capital p target g - Core Tier I miniumum 12% is unchanged g • CRD IV insignificant effect due to higher risk weighted assets and higher capital base • Jyske Bank to become a systemic bank in
Slide 26: Jyske Bank performance 1968-2013
Jyske Bank performance 1968-2013 26
Slide 27: Profit before tax and Guarantee Fund
Profit before tax and Guarantee Fund 1,600 18% 800 20% 1,400 16% 600 15% 1,200 14% 400 10% DKKm DKKm 12% 5% 1,000 200 10% 0% 800 0 8% 5% -5% 600 -200 6% -10% 400 -400 -15% 4% 200 2% -600 -20% 0 0% -800 -25% Q12011 Q22011 Q32011 Q42011 Q12012 Q22012 Q32012 Q42012 Q12013 Q22013 Q32013 2008 2009 2010 2
Slide 28: ROE on opening equity – 1968-2012
ROE on opening equity – 1968-2012 Average: 61% 166% 145% 22% 40% 30% 20% 10% 0% -10% -20% -30% 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2 2 2 2 28
Slide 29: Volumes
Volumes 29
Slide 30: Bank loans and deposits
Bank loans and deposits 140 120 120 100 DKKbn DKKbn n 100 80 80 60 60 40 40 20 20 0 Q12011 Q22011 Q32011 Q42011 Q12012 Q22012 Q32012 Q42012 Q12013 Q22013 Q32013 0 2008 2009 2010 2011 2012 Q Q Q Q Q Q Q Q Q Q Q Bank loans Bank deposits Bank loans Bank deposits Bank B k loans: l 5.4% y/y 0.8% qq/q q 3
Slide 31: Capital Structure
Capital Structure 31
Slide 32: Capital structure
Capital structure • Core Tier 1 target: above 12% • Optimize risk and maximize earnings • Exploit the market to buy portfolios with an acceptable risk 20 18 20 16 18 pct 14 16 pct 14 12 12 10 10 8 8 6 6 4 4 2 2 0 0 Q12011 Q22011 Q32011 Q42011 Q12012 Q22012 Q32012 Q42012 Q12013 Q22013 Q32013 2008 200
Slide 33: Liquidity
Liquidity 33
Slide 34: Liquidity position and run-off
D DKKbn 0 10 20 30 40 50 60 Start of peeriod 1 month onths 2 mo 3 mo onths 4 mo onths 5 mo onths 6 mo onths 7 mo onths 8 mo onths 30.09.2013 9 mo onths Liquidity position and run-off 10 mo onths 11 mo onths 12 mo onths 15 mo onths 18 mo onths 21 mo onths 24 mo onths 34
Slide 35: Senior unsecured funding strategy
Senior unsecured funding strategy Jyske will be a rare but regular issuer on the EMTN market Funding plans will depend on developments in the balance sheet (funding gap) – and integrated part of policy is to maintain a deposit/loan ratio in the region of 90 -95 % -but: • Integrated part of funding s
Slide 36: Q1-Q3 2013 in figures
Q1-Q3 2013 in figures 36
Slide 37: Net Interest Income
Net Interest Income Spar Lolland: Q1 DKK 26 Q1: 26m Q2: DKK 118m Q3: DKK 22m 5,000 1,300 4,500 1,250 DKKm DKKm 4,000 1,200 3,500 3 000 3,000 1,150 2,500 1,100 2,000 1,050 1,500 1,000 , 1 000 1,000 500 950 Q12011 Q22011 Q32011 Q42011 Q12012 Q22012 Q32012 Q42012 Q12013 Q22013 Q32013 0 2008 2009 2010 2
Slide 38: Return/risk-trade off
Return/risk-trade off 110 5% 140 6% 108 120 5% 4% DKKbn DKKbn 100 106 4% 3% 80 104 3% 60 102 2% 2% 40 100 1% 20 1% 98 0 0% Q12011 Q22011 Q32011 Q42011 Q12012 Q22012 Q32012 Q42012 Q12013 Q22013 Q32013 96 0% 2008 2009 2010 2011 2012 Risk weighted assets NII/RWA (rhs) Risk weighted assets NII/RWA (rhs)
Slide 39: Fee and commision income
Fee and commision income 1,800 600 1,600 500 DKKm DKKm 1,400 400 1,200 1 000 1,000 300 800 200 600 100 400 200 0 Q12011 Q22011 Q32011 Q42011 Q12012 Q22012 Q32012 Q42012 Q12013 Q22013 Q32013 0 2008 2009 2010 2011 2012 800 700 DKKm 600 500 400 Performance 300 related fees 200 100 0 Securities trading
Slide 40: Net interest and fee income
Net interest and fee income 7,000 1,800 1,600 25% 6,000 25% 26% 1,400 28% 24% 32% 26% 24% DKKm DKKm 22% 27% 23% 22% 5,000 23% 23% 1,200 31% 37% 1,000 4,000 800 75% 75% 74% 76% 76% 3,000 74% 72% 78% 600 77% 68% 78% 69% 77% 77% 73% 400 2,000 63% 200 1,000 0 Q12011 Q22011 Q32011 Q42011 Q12012 Q22012 Q3
Slide 41: Value adjustments
Value adjustments 900 200 800 100 DKKm DKKm 700 600 0 500 -100 100 400 300 -200 200 -300 100 0 -400 Q12011 Q22011 Q32011 Q42011 Q12012 Q22012 Q32012 Q42012 Q12013 Q22013 Q32013 -100 2008 2009 2010 2011 2012 300 200 Interest rate DKKm 100 0 hedging/customers -100 Q2 2012: - DKK 357m -200 Q1- Q3 2013:
Slide 42: Gross earnings
Gross earnings 6,700 2,500 6,600 2,000 DKKm DKKm 6,500 6,400 1,500 6,300 1,000 6,200 500 6,100 6,000 0 Q12011 Q22011 Q32011 Q42011 Q12012 Q22012 Q32012 Q42012 Q12013 Q22013 Q32013 5,900 2008 2009 2010 2011 2012 42
Slide 43: Operating expenses and employees
Operating expenses and employees 5,000 4,100 1,600 3,900 4,500 1,400 3,850 4,000 4,000 3,800 1,200 3,900 DKKm DKKm 3,750 3,500 1,000 3,800 3,700 3,000 800 3,650 2,500 , 3,700 , 3,600 600 2,000 3,600 3,550 400 1,500 3,500 3,500 200 3,450 1,000 3,400 0 3,400 500 Q12011 Q22011 Q32011 Q42011 Q12012 Q220
Slide 44: Core earnings before loan impairment charges
Core earnings before loan impairment charges 3,500 1,000 900 3,000 800 DKKm DKKm 2,500 700 600 2,000 500 400 1,500 300 1,000 200 100 500 0 Q12011 Q22011 Q32011 Q42011 Q12012 Q22012 Q32012 Q42012 Q12013 Q22013 Q32013 0 2008 2009 2010 2011 2012 44
Slide 45: Loan impairment charges
Loan impairment charges Spar Lolland: Q1 DKK 26 Q1: 26m Q2: DKK 118m Q3: DKK 22m 3,000 1,000 900 2,500 800 DKKm DKKm 700 2,000 600 500 1,500 400 300 1,000 200 100 500 0 Q12011 Q22011 Q32011 Q42011 Q12012 Q22012 Q32012 Q42012 Q12013 Q22013 Q32013 0 2008 2009 2010 2011 2012 45
Slide 46: Core earnings
Core earnings 1,800 800 1,600 600 DKKm DKKm 1,400 400 1,200 200 1,000 0 800 -200 600 -400 400 -600 600 200 -800 Q12011 Q22011 Q32011 Q42011 Q12012 Q22012 Q32012 Q42012 Q12013 Q22013 Q32013 0 2008 2009 2010 2011 2012 46
Slide 47: Earnings from investment portfolios
Earnings from investment portfolios 700 250 600 200 DKKm DKKm 500 400 150 300 100 200 50 100 0 0 Q12011 Q22011 Q32011 Q42011 Q12012 Q22012 Q32012 Q42012 Q12013 Q22013 Q32013 -100 2008 2009 2010 2011 2012 47
Slide 48: Credit quality
Credit quality 48
Slide 49: Loan impairment charges and losses
Loan impairment charges and losses 3,000 1,000 900 2,500 800 DKKm DKKm 700 2,000 600 500 1,500 400 300 1,000 200 100 500 0 Q12011 Q22011 Q32011 Q42011 Q12012 Q22012 Q32012 Q42012 Q12013 Q22013 Q32013 0 2008 2009 2010 2011 2012 Loan impairment charges and provisions for guarantees Losses Loan impairm
Slide 50: Loans and advances split by sector
Loans and advances split by sector Balance of loan impairment charges and Loans, advances and provisions for Loanimpairment charges Jyske Bank A/S guarantees guarantees for the period Loss for the period Loans, advances and guarantees as well as loan impairment charges and provisions for guarantees
Slide 51: Loans and advances split by sector
Loans and advances split by sector Balance of loan Balance of loan impairment impairment Loan impairment Jyske Bank A/S charges and charges and Loss for the charges for the Loans, advances provisions for Loans, advances provisions for period/loans, period/loans, and d guarantees guarantees and d gua
Slide 52: Large exposures
Large exposures per centt off capital it l base b 70% 60% 50% 40% 30% 20% 10% 0% 2008 2009 2010 2011 2012 Q1-Q3 2013 Jyske Bank large exposures: > 10% : 0 7.5-10%: 3 52 5-7.5%: 6
Slide 53: Balance of loan impairment charges
Balance of loan impairment charges 5,000 5,000 4,500 4,500 4,000 4,000 DKKm DKKm 3,500 3,500 3,000 3,000 2,500 2,500 2,000 2,000 1,500 1,500 1,000 1,000 500 500 0 Q12011 Q22011 Q32011 Q42011 Q12012 Q22012 Q32012 Q42012 Q12013 Q22013 Q32013 0 2008 2009 2010 2011 2012 Balance of loan impairment charge
Slide 54: Balance of loan impairment charges
Balance of loan impairment charges Per cent of loans and advances Per cent of loans and advances 4.0% 4.0% 3.5% 3.5% 3.0% 3.0% 2.5% 2.5% 2.0% 2.0% 1.5% 1.5% 1.0% 1.0% 0 5% 0.5% 0.5% 0.0% Q12011 Q22011 Q32011 Q42011 Q12012 Q22012 Q32012 Q42012 Q12013 Q22013 Q32013 0.0% 2008 2009 2010 2011 2012 54
Slide 55: Exposures by credit rating
Exposures by credit rating Corporates Retail 30% 25% 25% 20% 20% 15% 15% 10% 10% 5% 5% 0% 0% 1 2 3 4 5 6 7 8 9 10 11 12 13 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 31.12.2012 30.09.2013 31.12.2012 30.09.2013 55
Slide 56: Danish FSA
Danish FSA • Reports in 2011, 2012 and 2013 • New stringent guidelines for impairments 56
Slide 57: Danish FSA reports 2011, 2012 and 2013
Danish FSA reports 2011, 2012 and 2013 SME customers and IRB setup • Decision making material satisfactory • No ground for changing impairment charges • IRB models satisfactory IT inspection • Principles and policies meet required demands Market Risk and Compliance • g Management of market risk sati
Slide 58: New stringent guidelines for impairments
New stringent guidelines for impairments • Implemented in Q2 2012 • One off effect: – Impairments DKK 543m – Value adjustments DKK 357m • Higher volatility in value adjustments and impairments when interest rates changes • FSA is currently reassessing the guidelines 58
Slide 59: Fact Book
Fact Book 59
Slide 60: Core earnings
Core earnings Profit for the period Q1-Q3 Q1-Q3 Index DKKm 2013 2012 13/12 Q3 2013 Q2 2013 Q1 2013 Q4 2012 Q3 2012 2012 Net interest income 3,508 3,404 103 1,141 1,258 1,109 1,067 1,121 4,471 Dividends, etc. 35 20 175 1 21 13 0 0 20 Net fee and commission income 1,226 1,148 107 367 424 435 504 392 1
Slide 61: Profit/loss
Profit/loss First nine months of 2013 First nine months of 2012 Earnings Reclassi- on The Reclassi- fication invest- Guaran- fication Earnings on The ment tee Core investment Guarantee Core port- Fund Fund, DKKm earnings portfolios Fund, etc. Total earnings folios etc. Total Net interest income 3,50
Slide 62: Questions
Questions 62