Danske Bank A/S · OMXCOP:DANSKE
Danske Bank A/S — FY2015 Earnings Presentation
36 slides from Danske Bank A/S's earnings presentation, Feb 2, 2016
Slide 1: Financial results for 2015
Financial results for 2015 Thomas F. Borgen Chief Executive Officer Henrik Ramlau-Hansen Chief Financial Officer 2 February 2016
Slide 2: Agenda
Financial results for 2015 Q1 2013 Agenda Executive summary and financial results 3 Business unit update 5 Selected topics 7 Outlook for full-year 2015 12 Q&A 13 Appendix 14 2
Slide 3: Executive summary 2015
Financial results for 2015 Q1 2013 Executive summary 2015 Net profit of DKK 13.1 bn Net profit & ROE Net profit before goodwill impairment charges of DKK 17.7 bn, corresponding to ROE of 11.6% Income Total income of DKK 44.2 bn – unchanged vs 2014 Expenses Expenses of DKK 21.8 bn, excl. goodwill imp
Slide 4: Net profit: DKK 17.7 bn, up 36% from 2014
Financial results for 2015 Q1 2013 Net profit: DKK 17.7 bn,* up 36% from 2014 Income statement & key figures (DKK m) Key points, 2015 vs 2014 2015 2014 Index Q4 2015 Q3 2015 Index • Return on equity improved to 11.6% Net interest income 21,476 22,313 96 5,307 5,340 99 from 8.6%* Net fee income 12,12
Slide 5: Banking units: Improved results across the board
Financial results for 2015 Q1 2013 Banking units: Improved results across the board Pre-tax return on allocated capital excl. goodwill charges (%) Financial highlights, 2015 vs 2014 2014 2015 Personal Banking • NII down owing mainly to pressure on deposit margins 20.8 20.5 • Higher fee income reflec
Slide 6: Danske Capital and Danica Pension: Satisfactory performance continued in 2015
Financial results for 2015 Q1 2013 Danske Capital and Danica Pension: Satisfactory performance continued in 2015 Danske Capital: Financial highlights, 2015 vs 2014 Danica Pension: Financial highlights, 2015 vs 2014 • Profit before tax up 17% driven by an underlying positive • Total premiums of DKK 3
Slide 7: Expenses: Down 4% vs 2014 due to continued focus on costs
Financial results for 2015 Q1 2013 Expenses: Down 4% vs 2014 due to continued focus on costs Total expenses excl. goodwill charge (DKK m) Change in expenses excl. goodwill (DKK m) Consultants etc. Amortisation of customer relations* Severance payments Bonuses 2014 22,641 Deposit guarantee scheme Oth
Slide 8: Impairments: Loan loss ratio of zero in 2015
Financial results for 2015 Q1 2013 Impairments: Loan loss ratio of zero in 2015 Group impairments, 2011 to Q4 15 (DKK bn/bp) Impairments (DKK m) Impairments Loan loss ratio* (rhs) 2015 2014 Index Q4 15 Q3 15 Index Personal Banking 332 1,412 24 -56 13 - Business Banking -343 1,007 - -150 -90 - 5.0 10
Slide 9: Impairments: Positive development from better macroeconomy and credit quality
Financial results for 2015 Q1 2013 Impairments: Positive development from better macro- economy and our ongoing efforts to improve credit quality Individual loan impairment charges* (DKK bn) Impairment drivers, Q4 2015 vs Q3 2015 New Increased Reversal • Net reversal at Personal Banking supported by
Slide 10: Capital: Strong capital base; CET1 capital ratio of 16.1%
Financial results for 2015 Q1 2013 Capital: Strong capital base; CET1 capital ratio of 16.1% allowing for DKK 9 bn share buy-back programme Capital ratios, under Basel III/CRR (%) Capital highlights Q4 2015 Tier 2 Hybrid T1 / AT1 Common equity tier 1 • REA broadly unchanged at DKK 834 bn as lower ma
Slide 11: Bridge to above 12.5% ROE in 2018 with negative rates
Financial results for 2015 Q1 2013 Bridge to above 12.5% ROE in 2018 with negative rates ROE 2015-18E, after tax (%) ROE 2015* 11.6% Adjustments** 0.2% Costs 0.5-1% Funding & ratings 0.5% Volume effect 0.5-1% Income initiatives 0.5% Loan losses 0.5% & other Capital effect 0.5% ROE 2018E Above 12.5%
Slide 12: Outlook for full-year 2016: Net profit in line with 2015
Financial results for 2015 Q1 2013 Outlook for full-year 2016: Net profit in line with 2015* We expect continued pressure on margins in 2016, while we will benefit from volume NII growth and lower funding costs We expect the underlying trend in net fee income to continue, but we do not expect to Fee
Slide 13: Q&A session
Financial results for 2015 Q1 2013 Q&A session Press * then 1 to ask a question Press * then 2 to cancel Press “Ask a question” in your webcast player www.danskebank.com/ir 13
Slide 14: Appendix
Financial results for 2015 Q1 2013 Appendix Business units 15 Special topics: NII, trading income, expenses, allowance, goodwill 21 Macro and portfolio reviews 26 Funding, liquidity and ratings 31 Tax 34 Contact details 35 14
Slide 15: Personal Banking: Stable NII and net reversals in Q4
Financial results for 2015 Q1 2013 Personal Banking: Stable NII and net reversals in Q4; good customer activity in Norway continues Income statement & key figures (DKK m) Lending volume by country,* Q3 2014 = Index 100 Q4 2015 Q3 2015 Index Denmark Sweden Northern Ireland Net interest income 2,359 2
Slide 16: Business Banking: NII up slightly in Q4
Financial results for 2015 Q1 2013 Business Banking: NII up slightly in Q4; good customer activity in Sweden and Norway Income statement & key figures (DKK m) Lending volume by country,* Q3 2014 = Index 100 Q4 2015 Q3 2015 Index Denmark Sweden Northern Ireland Net interest income 2,309 2,245 103 Net
Slide 17: Corporates & Institutions: Rebound in trading income in Q4
Financial results for 2015 Q1 2013 Corporates & Institutions: Rebound in trading income in Q4 and lower capital consumption Income statement & key figures (DKK m) Key points, Q4 15 vs Q3 15 Q4 2015 Q3 2015 Index Net interest income 630 667 94 • Trading income up in Q4 due to higher activity at FICC
Slide 18: Danske Capital: AuM down in Q4 due to asset transfer to Danica
Financial results for 2015 Q1 2013 Danske Capital: AuM down in Q4 due to asset transfer to Danica; continued net inflow and strong performance fees Income statement (DKK m) Key points, Q4 15 vs Q3 15 Q4 2015 Q3 2015 Index • Total income up 77% due to performance fees Net interest income -3 -1 - • Pe
Slide 19: Danica Pension: Full risk allowance for all four interest rate groups
Financial results for 2015 Q1 2013 Danica Pension: Full risk allowance for all four interest rate groups allows booking of DKK 248 m from shadow account Income statement (DKK m) New contribution rules on 1 January 2016 Q4 2015 Q3 2015 Index • New rules expected to lower earnings volatility at Danica
Slide 20: Non-core: Deleveraging progressed according to plan
Financial results for 2015 Q1 2013 Non-core: Deleveraging progressed according to plan; Personal Banking Lithuania and Latvia sold in 2015* Key points Non-core loan portfolio, Q4 2015 (DKK bn) • Profit before tax rose to DKK 46 m in 2015 compared Allowance account Performing credit exposure with a p
Slide 21: Net interest income: Effect of extremely low interest rates
Financial results for 2015 Q1 2013 Net interest income: Effect of extremely low interest rates Changes in net interest income (DKK m) 212 199 551 2,098 299 22,313 21,476 2014 Lending volume Lending margin Deposit volume Deposit margin Other 2015 21
Slide 22: Trading income: Higher customer activity in financial markets
Financial results for 2015 Q1 2013 Trading income: Higher customer activity in financial markets drives trading income up in all banking units and Treasury in Q4 Trading income by business unit (DKK m) Key points Other incl. Treasury C&I Business Personal • Trading income up in Q4 owing to 2,715 hig
Slide 23: Expenses: Increase of 13% in Q4 owing to restructuring charges
Financial results for 2015 Q1 2013 Expenses: Increase of 13% in Q4 owing to restructuring charges and seasonality Total expenses ex goodwill charge (DKK m) Change in expenses ex goodwill (DKK m) Consultants etc. Bonuses Severance payments Other costs Q3 2015 5,203 Deposit guarantee scheme/bank packa
Slide 24: Allowance account: Commercial property and personal customers
Financial results for 2015 Q1 2013 Allowance account: Commercial property and personal customers make up 51% of the individual allowance account Individual allowance account by industry* (DKK bn) Gross non-performing loans, ex Non-core (DKK bn) Individual allowance account Personal customers 8.1 Net
Slide 25: Goodwill impairments: Write-down of DKK 4.6 bn
Financial results for 2015 Q1 2013 Goodwill impairments: Write-down of DKK 4.6 bn related to Finland and Northern Ireland Goodwill impairment charge by business area (DKK m) Goodwill drivers • The goodwill impairments were made mainly because the assumptions used for impairment testing include Perso
Slide 26: Nordic macroeconomy
Financial results for 2015 Q1 2013 Nordic macroeconomy Real GDP (constant prices, index 2005 = 100) Inflation (%) Denmark Sweden Norway Finland Denmark Sweden Norway Finland 140 6 5 130 4 120 3 110 2 1 100 0 90 -1 2007 2009 2011 2013 2015 2007 2009 2011 2013 2015 -2 Interest rates (leading, %) Unemp
Slide 27: Nordic housing markets
Financial results for 2015 Q1 2013 Nordic housing markets Property prices (index 2005 = 100) House prices/nom. GDP (index 2005 = 100) Denmark Sweden Norway Finland Denmark Sweden Norway Finland 200 130 180 120 160 110 140 100 120 90 100 2007 2009 2011 2013 2015 2007 2009 2011 2013 2015 Apartment pri
Slide 28: Realkredit Danmark and the Danish housing market: Portfolio overview
Financial results for 2015 Q1 2013 Realkredit Danmark and the Danish housing market: Portfolio overview Portfolio facts, Realkredit Danmark, end-Q4 15 Stock of retail loans, Realkredit Danmark, end-Q4 15 (%) • Approx. 374,000 loans (residential and commercial) Variable rate instalments Variable rate
Slide 29: Realkredit Danmark: Continued reduction of short-term variable rate loans
Financial results for 2015 Q1 2013 Realkredit Danmark: Continued reduction of short-term variable rate loans Key points Expected trend in RD portfolio* (%) • Growing interest in long-term variable rate loans in Q4 Interest-only Amortising owing to steeper yield curve • Around one-third of new lendin
Slide 30: Credit exposure: Limited agriculture and directly oil-related exposure
Financial results for 2015 Q1 2013 Credit exposure: Limited agriculture and directly oil-related exposure Agriculture exposure (2.9 % of Group exposure) Oil-related exposure (1.0 % of Group exposure) • Market conditions stayed weak in Q4. Movements in milk and pig • Directly oil-related exposure amo
Slide 31: Funding and liquidity: Funding for 2015 successfully completed
Financial results for 2015 Q1 2013 Funding and liquidity: Funding for 2015 successfully completed; LCR compliant at 125% Changes in funding , 2015 (DKK bn and bp*) Long-term funding excl. RD (DKK bn) Cov. bonds Senior Tier 2 Tier 1 Funding plan 42bp Completed 94bp 95 113bp 93bp 64 70 60-80 50bp 14bp
Slide 32: Funding: Structure and sources
Financial results for 2015 Q1 2013 Funding: Structure and sources; Danish mortgage system is fully pass-through Loan portfolio and long-term funding, Q4 15 (DKK bn) Funding sources (%) Q3 2015 Q4 2015 1,863 112 Senior debt 56 1,609 Bank loans 541 817 Deposits Bank mortgages 324 14 190 Covered bonds
Slide 33: Three distinct methods of rating banks
Financial results for 2015 Q1 2013 Three distinct methods of rating banks. Rating methodology Danske Bank’s rating Anchor Extraord. Add. Issuer + 1 + 2 + 3 + 4 = SACP = + ALAC + = SACP* Support factors Rating bbb+ +1 0 0 0 a- 0 +1 0 A (Stable) 1=Business Position 2=Capital & Earnings 3=Risk Position
Slide 34: Tax
Financial results for 2015 Q1 2013 Tax Actual and adjusted tax rates (DKK m) Tax drivers 2015 Q42015 Q32015 Q22015 Q12015 • The difference between profit Profit before tax 17,762 866 4,720 5,814 6,362 before tax and adjusted pre-tax Ireland core and non-core -936 -104 -193 -206 -433 profit relates t
Slide 35: Contacts
Financial results for 2015 Q1 2013 Contacts Henrik Ramlau-Hansen Direct: +45 45 14 06 66 Chief Financial Officer Mobile: +45 22 20 73 10 [email protected] Jacob Aarup-Andersen Direct: +45 45 14 06 02 Deputy CFO Mobile: +45 51 70 01 83 [email protected] Claus Ingar Jensen Direct: +45 45 12 84 83 H
Slide 36: Disclaimer
Financial results for 2015 Q1 2013 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 Sta