Jyske Bank A/S · OMXCOP:JYSK
Jyske Bank A/S — Q1 2013 Earnings Presentation
58 slides from Jyske Bank A/S's earnings presentation, 2013
Slide 1: Jyske Bank Q1 2013
Jyske Bank Q1 2013
Slide 2: Agenda
Agenda • Jyske Bank in brief • Macro Economy & Danish Banking 2013-2014 • Focus in Q1 2013 • Strategic issues • Jyske Banks performance 1968-2012 • Volumes • Capital Structure • Liquidity • Q1 2013 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 • 111 domestic branches • Approx. 675,000 domestic customers • Business focus is on Danish private individuals
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 by providing high standard personal financial advice and taking a genuine interest in customers • The strategy is to position Jyske Bank as a visible and d
Slide 6: Macro Economy & Danish Banking 2013-2014
Macro Economy & Danish Banking 2013 6
Slide 7: Jyske Bank forecasts: the Danish economy 2010-2014
Jyske Bank forecasts The Danish economy 2010- 2010-2014 2012 Real growth (%) DKKbn 2010 2011 2012 2013* 2014* Private spending 900 1.7 -0.5 0.6 0.7 1.5 Public spending 522 0.4 -1.5 0.2 1.0 0.8 Fixed gross investment 320 -2.4 2.8 2.2 0.8 3.5 Inventory investment** investment -6 1.0 0.5 -0.4 0.1 0.0 E
Slide 8: The Danish economy: currently in a low growth mode
The Danish economy: - currently in a low growth mode Denmark is a small open economy … and private saving is still record high affected by the slow down in the EURO both in households and the SME/corporate area sectors 10,0 10,0 7,5 7,5 5,0 5,0 Growth in % Growth in % % of GDP % of GDP 2,5 2,5 0,0 0
Slide 9: … with subdued sentiment indicators
… with subdued sentiment indicators 9
Slide 10: …and a private sector that is reluctant to lend
…and a private sector that is reluctant to lend 10
Slide 11: Why are Danish households so reluctant to spend?
Why are Danish households so reluctant to spend ? Burst of the housing bubble : Combined with the financial crisis: Average LTVs in Danish housing market -Net wealth 25 % below peak levels in 2007 2007 : approx. 45 % and slightly higher than in 2004 2012 : shy of 70 % and Increased household leverag
Slide 12: Household debt is high, but assets are high too
Household debt is high, but assets are high too ….…also in international comparison Households balance sheet 1,200 (2010) 1,200 1,000 1,000 800 800 % of disp. income % of disp. iincome 600 600 400 400 200 200 0 0 -200 -200 -400 -400 DK GB AU CA IE DE SE NL BE US ES NO PT AT GR FR FI JP IT Housing Pe
Slide 13: ….and Denmark has a healthy public sector economy…
….and Denmark has a healthy public sector economy… 13
Slide 14: … and overall strong structural features…
… and overall strong structural features… Net assets against the rest of the world (2010) 125 125 100 100 Denmark 75 75 net assets against the rest 50 50 of the world 25 25 % of GDP % of GDP are 0 0 significantly -25 -25 higher today : -50 -50 around 35 % of GDP -75 -75 -100 -100 -125 -125 PT IR GR
Slide 15: …ensure low interest rates, and stable unemployment
…ensure low interest rates, and unemployment has been stable for more than two years 8 8 7 7 25,0 25,0 6 6 20,0 20,0 5 5 15,0 15,0 4 4 3 3 10,0 10,0 2 2 5,0 5,0 1 1 0,0 0,0 0 0 00 02 04 06 08 10 12 jan jul jan jul jan jul jan jul jan jul jan jul jan 07 08 09 10 11 12 13 Denmark Sweden UK Denmark Ger
Slide 16: …causing only few household defaults
…causing only few household defaults. But the business sector still suffers from weak demand 16
Slide 17: The outlook for 2013: subdued growth in an overall strong economy
The outlook for 2013: subdued growth in an overall strong economy • The slowdown is set to continue through 2013 due to a weak Euro area, weak real wage development, and continued private sector saving • However, some improvement is likely driven by a stronger housing market and rising economic sent
Slide 18: Market conditions
Market conditions • Shrinking volumes also in 2013 • Earnings capacity close to maximum; further growth via higher volumes • Capital shortage in some banks due to maturing Tier II capital instruments • More stringent assessment of solvency requirement (Pillar I+) can lead to lower capital buffers in
Slide 19: Focus in Q1 2013
Focus in Q1 2013 19
Slide 20: Focus in Q1 2013
Focus in Q1 2013 • ROE pre tax 14.3% (opening equity) – satisfactory • Spar Lolland DKKm Fair value adjustments of acquired net assets 97 Layoffs in 2013 and anticipated staff reductions in 2014 -54 Rental obligations -21 Other integration costs -4 Effect on operations in Q1 2013 18 Expected integra
Slide 21: Strategic issues
Strategic issues 21
Slide 22: Strategic issues
Strategic issues Spar Lolland • Bank loans DKK 6.3bn, bank deposits DKK 9.5bn, total assets DKK 13bn • Branch mergers finalized by Q2 2013 • It migration and further staff reduction in Q2 2014 • Long term earnings fully in line with earnings from other branches Capital • Core Tier 1:13.7% • Redempti
Slide 23: Jyske Bank performance 1968-2012
Jyske Bank performance 1968-2012 23
Slide 24: Profit before tax and DPCA
Profit before tax and DPCA 1,600 18% 800 20% 1,400 16% 600 15% 14% 400 10% 1,200 DKKm DKKm 5% 12% 200 1,000 0% 10% 0 800 -5% 8% -200 -10% 600 -400 6% -15% 400 4% -600 -20% 200 2% -800 -25% Q12011 Q22011 Q32011 Q42011 Q12012 Q22012 Q32012 Q42012 Q12013 0 0% 2008 2009 2010 2011 2012 Profit before tax
Slide 25: Pre-tax profit (ROE on average equity)
Pre-tax prof it (ROE on avg. equity) Average: 50% 110% 87% 19% 40% 30% 20% 10% 0% -10% -20% -30% 1968 1972 1976 1980 1984 1988 1992 1996 2000 2004 2008 2012 25
Slide 26: Volumes
Volumes 26
Slide 27: Bank loans and deposits
Bank loans and deposits 140 120 120 100 DKKbn DKKbn 100 80 80 60 60 40 40 20 20 0 Q12011 Q22011 Q32011 Q42011 Q12012 Q22012 Q32012 Q42012 Q12013 0 2008 2009 2010 2011 2012 Bank loans Bank deposits Bank loans Bank deposits Bank loans: Bank loans: Spar Lolland 4.1% y/y +5.8% 5.4% q/q 27
Slide 28: Capital Structure
Capital Structure 28
Slide 29: Capital structure
Capital structure • Core Tier 1 above 12% • Optimize risk and maximize earnings • Exploit the market to buy portfolios with an acceptable risk 20 20 18 18 16 16 pct pct 14 14 12 12 10 10 8 8 6 6 4 4 2 2 0 Q12011 Q22011 Q32011 Q42011 Q12012 Q22012 Q32012 Q42012 Q12013 0 2008 2009 2010 2011 2012 Core
Slide 30: Liquidity
Liquidity 30
Slide 31: Liquidity position and run-off
Liquidity position and run-off 60 50 40 DKKbn 30 20 10 0 31.03.2013 31
Slide 32: 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 -100 % -but: • Integrated part of funding
Slide 33: Q1 2013 in figures
Q1 2013 in figures 33
Slide 34: Net Interest Income
Net Interest Income 5,000 1,200 4,500 1,180 1,160 DKKm DKKm 4,000 1,140 3,500 1,120 3,000 1,100 2,500 1,080 2,000 1,060 1,500 1,040 1,000 1,020 500 1,000 Q12011 Q22011 Q32011 Q42011 Q12012 Q22012 Q32012 Q42012 Q12013 0 2008 2009 2010 2011 2012 34
Slide 35: 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 96 0% 2008 2009 2010 2011 2012 Risk weighted assets NII/RWA (rhs) Risk weighted assets NII/RWA (rhs) 35
Slide 36: Fee and commission income
Fee and commision income 1,800 600 1,600 500 DKKm DKKm 1,400 400 1,200 1,000 300 800 200 600 100 400 200 0 Q12011 Q22011 Q32011 Q42011 Q12012 Q22012 Q32012 Q42012 Q12013 0 2008 2009 2010 2011 2012 300 250 DKKm 200 150 100 50 0 Securities trading Money transfers and Loan management Guarantee Other fe
Slide 37: Net interest and fee income
Net interest and fee income 7,000 1,800 1,600 6,000 25% 26% 1,400 28% 32% 26% 24% DKKm DKKm 22% 27% 23% 22% 5,000 23% 23% 1,200 31% 37% 1,000 4,000 800 75% 74% 76% 74% 3,000 72% 78% 600 77% 68% 78% 69% 77% 77% 73% 400 2,000 63% 200 1,000 0 Q12011 Q22011 Q32011 Q42011 Q12012 Q22012 Q32012 Q42012 Q120
Slide 38: Value adjustments
Value adjustments 900 200 800 100 DKKm DKKm 700 600 0 500 -100 400 300 -200 200 -300 100 0 -400 Q12011 Q22011 Q32011 Q42011 Q12012 Q22012 Q32012 Q42012 Q12013 -100 2008 2009 2010 2011 2012 200 150 DKKm 100 50 0 -50 -100 Bonds Shares, etc. Currency Derivatives Other assets Issued bonds Other liabilit
Slide 39: Gross earnings
Gross earnings 6,700 2,000 1,800 6,600 1,600 DKKm DKKm 6,500 1,400 6,400 1,200 1,000 6,300 800 6,200 600 400 6,100 200 6,000 0 Q12011 Q22011 Q32011 Q42011 Q12012 Q22012 Q32012 Q42012 Q12013 5,900 2008 2009 2010 2011 2012 39
Slide 40: 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 Q22012 Q
Slide 41: Core earnings before loan impairment charges
Core earnings before loan impairment charges 3,500 800 700 3,000 DKKm DKKm 600 2,500 500 2,000 400 1,500 300 200 1,000 100 500 0 Q12011 Q22011 Q32011 Q42011 Q12012 Q22012 Q32012 Q42012 Q12013 0 2008 2009 2010 2011 2012 41
Slide 42: Loan impairment charges
Loan impairment charges 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 0 2008 2009 2010 2011 2012 42
Slide 43: Core earnings
Core earnings 1,800 600 1,600 400 DKKm DKKm 1,400 200 1,200 0 1,000 -200 800 -400 600 400 -600 200 -800 Q12011 Q22011 Q32011 Q42011 Q12012 Q22012 Q32012 Q42012 Q12013 0 2008 2009 2010 2011 2012 43
Slide 44: 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 -100 2008 2009 2010 2011 2012 44
Slide 45: Credit quality
Credit quality 45
Slide 46: Loans and advances split by sector
Loans and advances split by sector Balance of loan impairment charges and Impairment charges and Jyske Bank A/S Loans, advances and provisions for provisions for guarantees guarantees guarantees for the period Loss for the period Loans, advances and guarantees as well as loan impairment charges and
Slide 47: 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 guarantees guarantees and guarant
Slide 48: Large exposures
Large exposures per cent of capital base 70% 60% 50% 40% 30% 20% 10% 0% 2008 2009 2010 2011 2012 Q1 2013 48
Slide 49: 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 0 2008 2009 2010 2011 2012 Balance of loan impairment charges Losses Balan
Slide 50: Balance of loan impairment charges
Balance of loan impairment charges 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% 0.0% Q12011 Q22011 Q32011 Q42011 Q12012 Q22012 Q32012 Q42012 Q12013 0.0% 2008 2009 2010 2011 2012 50
Slide 51: 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 31.03.2013 31.12.2012 31.03.2013 Changes in corporates rating classes 1 and 8 are attributable to repo-transactions 51
Slide 52: Danish FSA
Danish FSA • Reports in 2011, 2012 and 2013 • New stringent guidelines for impairments 52
Slide 53: 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 • Management of market risk satisf
Slide 54: New stringent guidelines for impairments
New stringent guidelines for impairments • Focus real estate portfolios and agriculture • More stringent impairment principles (net exposures, asset values) • Customers interest rate swaps at fair value • One off effect Q2 2012: – Impairments DKK 543m – Value adjustments DKK 357m • Higher volatility
Slide 55: Fact Book
Fact Book 55
Slide 56: Core earnings
Core earnings Profit for the period Q1 Q1 Index Q1 Q4 Q3 Q2 Q1 DKKm 2013 2012 13/12 2013 2012 2012 2012 2012 2012 Net interest income 1,109 1,148 97 1,109 1,067 1,121 1,135 1,148 4,471 Dividends, etc. 13 3 433 13 0 0 17 3 20 Net fee and commission income 435 405 107 435 504 392 351 405 1,652 Net int
Slide 57: Profit/loss
Profit/loss First quarter of 2013 First quarter of 2012 Earning Earning s on The Reclassi s on The Reclassi invest Guaran fication invest Guaran fication Core ment tee Core ment tee earning portfoli Fund, earning portfoli Fund, DKKm s os etc. Total s os etc. Total Net interest income 1,109 88 0 0 1,
Slide 58: Questions
Questions 58