Danske Bank A/S · OMXCOP:DANSKE
Danske Bank A/S — Non-Deal Roadshow (November 2009)
54 slides from Danske Bank A/S's roadshow presentation, November 2009
Slide 1: Navigating through turbulent times
N i i through Navigating h h turbulent b l times i Non-deal road show in Japan & Asia November 2009
Slide 2: Disclaimer
Disclaimer This presentation has been prepared solely for use at this presentation. By attending the meeting where this presentation is made, or by reading the presentation slides, you agree to be bound by the following limitations. This presentation does not constitute or form part of and should no
Slide 3: Agenda
Agenda Slide I. The Kingdom of Denmark 4 II Danish II. D i hMMacro E Economy 13 III. Danske Bank Overview 18 IV. Financial Performance 25 V. Danske Bank Funding 30 VI. Appendix 37 3
Slide 4: I. The Kingdom of Denmark
I.I The Th Ki Kingdom d off Denmark D k
Slide 5: The Kingdom of Denmark in brief
The Kingdom of Denmark in brief Capital & largest city Copenhagen (55°46/N 12°34/E) Geography Denmark consists of the peninsula of Jutland and approximately 407 islands (of which 79 are inhabited) Highest peak 173m Official language Danish Religion Evangelical Lutheran Government Parliamentary democ
Slide 6: The public expenditures are high...
The public expenditures are high... - ... and so are the living standards Government spending GDP per capita 2008 in current PPPs, US $ 30,0 % of GDP 30,0 Germany 27,5 27,5 25,0 Denmark 25,0 USA 22,5 , 22,5 , UK 20,0 Japan 20,0 Japan 17,5 17,5 South 15,0 15,0 Korea China 12,5 12,5 Denmark 00 02 04 0
Slide 7: High tax and a high fraction active in the labour force
High tax and a high fraction active in the labour force Tax revenue as percentage of GDP Labour force as percentage of population aged 15-64 2008 2008 Germany Germany UK USA USA UK Japan Japan South Korea South Korea Denmark Denmark 0 10 20 30 40 50 60 60 65 70 75 80 85 Source: OECD, Tabel: TAXGDP S
Slide 8: The development of the Danish krone
The development of the Danish krone - The Danish central bank keeps a fixed exchange rate to the 200 200 2000=100 175 175 EUR/JPY 150 150 125 125 EUR/USD EUR/CNY 100 100 EUR/DKK 75 75 50 50 90 92 94 96 98 00 02 04 06 08 Source: Danske Research 8
Slide 9: Danish foreign trade in 2008 (1/2)
Danish foreign trade in 2008 (1/2) - Focused on neighbour countries, but Japan and China are also important South Korea Japan Germany Exports China Import USA Sweden 0 20 40 60 80 100 120 140 Source: Reuters Reuters Ecowin $ Billions 9
Slide 10: Danish foreign trade in 2008 (2/2)
Danish foreign trade in 2008 (2/2) Import Exports Goods Goods Transportequipment Transportequipment Machinery (excl. transport Machinery (excl. transport equipment) equipment) Manufactured goods classified Manufactured goods classified chiefly by materials chiefly by materials Chemicals and related
Slide 11: Denmark is highly competetive
Denmark is highly competetive Global Competitiveness p Index Stage g of development p Rank Score Transition Transition 1 2 3 (out of 133) (1-7) 1-2 2-3 GCI 2009-2010 5 5,5 GCI 2008-2009 ((out of 134)) 3 5,6 GCI 2007-2008 (out of 131) 3 5,6 Factor driven Efficiency Innovation Basic requirements 4 6,0
Slide 12: The Danish mortgage market
The Danish mortgage market - A long and proud tradition • Longest established mortgage market in the world: The first Danish mortgage institution was established in 1797 after a great fire in Copenhagen • Five lenders dominate the market (end 2008): Total mortgage debt (SDO & SDRO) EUR (bn) CB ratin
Slide 13: II. Danish Macro Economy
Danske . Danish Macro Economy —\
Slide 14: Macroeconomic trends
Macroeconomic trends - Under a significant pressure but the worst is behind us GDP growth Current account Gross public debt in % of GDP Public sector account Source: Danske Research 14
Slide 15: Rising unemployment rate
Rising unemployment rate - Wage growth and unemployment two main factors for the economy Unemployment rate Facts on unemployment nemplo ment 7 7 % % • Unemployment is currently 3.7 % - thus 103,700 Danes 6 6 are out of a job 5 5 4 4 3 3 • The economic slowdown 2001-2003 increased Unemployment rate
Slide 16: Rates are close to the bottom and so is inflation
Rates are close to the bottom and so is inflation The Danish mortgage market has been Inflation is close to the bottom relatively resilient 7 7 6 % y/y 6 % % % y/y 5% 30 year mortgage rate 5 5 6 6 5 5 4 4 Inflation (CPI) 1 year rate 3 3 4 4 2 2 3 3 1 1 2 2 0 0 Central Bank lending rate 1 1 -1 -1 05
Slide 17: Housing market under pressure but...
Housing market under pressure but... - Low unemployment rate & strong LTV position key drivers in assessing risk Property prices Updated: Q2 2009 500,00 Index (1996 = 100) 450,00 Ireland United Kingdom Sweden Houses Flats Finland (ex. Helsinki) Finland (Helsinki) Norway 400,00 Denmark 1.7% 4.2% 350,
Slide 18: III. Danske Bank Overview
III Danske Bank Overview III.
Slide 19: Danske Bank in Denmark
Danske Bank in Denmark - Largest commercial bank Development through mergers and acquisitions 1990 Merged with Kjøbenhavns Handelsbank and Provinsbanken (domestic merger) 1995 Acquired Danica Pension (domestic acquisition) 2000 Merger with RealDanmark A/S (domestic merger) 2004 Acquired National Iri
Slide 20: Nordic peer group
Nordic peer group - Five immediate peers in the Nordic region Lending bn Rating Largest shareholders Retail banking activities in Q2 2009 (Moody's/S&P) DK FI SE NO The Baltics UK GE UA RU PL Danske Bank 232,5 Aa3/A+ A.P. Møller Mærsk & A.P. Møller and Chastine Mc-Kinney Møller Foundation (22%) Fond
Slide 21: Rating
Rating - Maintained since Q1 2009 Moody's Standard & Poor's FITCH Stable outlook Negative outlook Stable outlook Short Long Short Long Short Long P-1 Aaa A-1+ AAA F1+ AAA P-2 P 2 Aa1 A1 A-1 AA+ F1 AA+ P-3 Aa2 A-2 AA F2 AA Aa3 A-3 AA- F3 AA- A1 B A+ B A+ A2 C A C A A3 D A- D A- Baa1 BBB+ BBB+ Baa2 BB
Slide 22: Danske Bank at a glance
Danske Bank at a glance 5 million customers 2.2 million active Internet customers 764 branches in 14 countries* 22,441 full-time employees Sweden Long term ratings Moody's S&P FITCH Aa3 A+ A+ Stable Negative Stable Short term ratings Moody's S&P FITCH P-1 A-1 F1+ Covered Bonds rating Moody's S&P FIT
Slide 23: Danske Banks market profile
Danske Banks market profile - Market leader and challenger positions Lending by geography Market Leader 4,6% 1,7% BA Denmark 1,2% Finland: 3,2% BA Finland 9,1% Branches: 121 BA Sweden Market share: 13% 10 4% 10,4% Market Challenger g BA Norway M k rank: Market k 3 60,2% Market Challenger Sweden: BA
Slide 24: Danish State Guarantee Schemes
Danish State Guarantee Schemes - Overview Bank Package I (October 2008) Bank Package II (February 2009) • Unconditionally, irrevocable guarantee by the Kingdom of Denmark • Ensures timely payment • AAA ratings, 0% risk weighting and ECB eligibility for -issues • Covers both existingg and new unsecu
Slide 25: IV. Financial Performance
IV Financial Performance IV.
Slide 26: Key messages
Key messages - Acceptable result in light of macroeconomic challenges DKK m Q Quarterly l totall iincome 18,000 Other income Still challenging macroeconomic environment, but Net trading income indications of more stable conditions ahead 15,000 Net fee income Net interest income Net profit 81% Y/Y to
Slide 27: Performance highlights
Performance highlights - High total income, but net profit low due to impairment charges Income statement and key figures DKK m 9M 2008 9M 2009 Index Q2 2009 Q3 2009 Index Net interest income 19,640 20,759 106 6,907 6,625 96 Net fee income 6,166 5,601 91 1,920 1,918 100 Net trading income 3 886 3,88
Slide 28: Loan impairment charges
Loan impairment charges - Impairment charges still high, but gradually declining from Q4 08 level DKK m Quarterly loan impairment charges Impairment charges DKK 6.2bn in Q3 2009 10 000 10,000 173 bp Impairment charges still declining, although level remains extraordinarily high owing to the 156 bp m
Slide 29: Capital management
Capital management - Improving capital ratios Capital ratios CRD/Basel II Trend in RWA (DKKm) - Strong improvement due to new hybrid capital and reduced assets - Decline in lending drives the reduction % Q4 08 Q1 09 Q2 09 Q3 09 14 Core (tier 1) ratio ex hybrid 8.1 7.9 8.2 8.5 27 14 Core (tier 1) r
Slide 30: V. Danske Bank Funding
\/7. Danske Bank Funding 7, \ \ \ _— : a ee, if 7 “4 -_» Gi ? \
Slide 31: Well-diversified funding structure
Well-diversified funding structure End-Q3 2009 State guarantee has eased access to funding. Total funding DKK 2,547bn Danske Bank has issued DKK 34.5bn with individual state guarantee Equity; Central 4% Long term funding of DKK 151bn issued until b k 5% banks; end Q3 2009 Repos; 5% Loan/Depo
Slide 32: Funding programmes
covered bonds Programmes for short term funding Programmes for long term funding & - - 150 300 450 120 160 40 80 DKK bn DKK bn Funding programmes EMTN US CP U SEK MTN - 100 150 50 ECP FIN MTN SEK MTN UK CD U SA AMPO EMTN FIN MTN SE EK CP SAM MPO FIN MTN SA AMPO EMTN 144A US SAMPO FIN CD SAM MPO FIN
Slide 33: Shift towards more long term funding sources
Shift towards more long term funding sources Back to more normal conditions after a turbulent Q4 2008 Q3 2009 Q4 2008 25% 13% 0% Central Banks Due to credit Repo Certificates Deposits Deposits Covered Bonds Issued bonds Subordinated Shareholders' i tit ti institutions ( th ) (other) ((personal) l)
Slide 34: Liquidity and new funding
Liquidity and new funding - Strong improvement as access to intl capital markets has eased New funding in Q2 & Q3 / 2009 12-month liquidity* By maturity Moodys Financial Strength DKK bn DKK bn 30 Q3 2009 450 Q2 2009 20 300 End-Q3 2009 End-Q2 2009 150 End-Q4 2008 10 0 -150 1 week 2 months 3 months
Slide 35: Danske Bank Group Funding - Contacts
Danske Bank Group Funding - Contacts Cato Baldvinsson Tel.: + 45 45 12 84 10 Peter Holm Tel.: + 45 45 12 84 85 Senior Vice President E-mail: [email protected] Senior Vice President E-mail: [email protected] Knud Erik Kristensen Tel.: +45 45 12 84 86 Claus Jensen Tel.: +45 45 12 84 83 Chief Funding
Slide 36: www.danskebank.com/ir
Danske Bank www.danskebank.com/ir De
Slide 37: VI. Appendix
Danske VI. Appendix —
Slide 38: Investor Relations website for debt investors
www.danskebank.com/ir / Danske Banks Investor Relations website has a sub-section dedicated to debt investors The section contains detailed information about Danske Bank Banks: s: Funding strategy Ratings Debt issues Covered Bonds Securitisation 38
Slide 39: Rating
Rating - Maintained since Q1 2009 Moodys 13 February 2009 Moody's Investors Service today downgraded the long-term deposit ratings and bank financial strength rating (BFSR) of Danske Bank to Aa3 from Aa1 and to C from B [ ] The downgrade of Danske Bank's BFSR to C from B reflects its weakened f
Slide 40: Loan impairment charges and coverage ratio
Loan impairment charges and coverage ratio - SMEs still predominate in impairment charges Impairments by customer segment Gross NPL and coverage ratios - SMEs account for most of the Groups impairments Gross NPL - Coverage ratio incl. collateral above 90% Coverage (DKK bn) ratio (%) 100% 90 Coverag
Slide 41: Loan imp. charges - geographical breakdown (1)
Loan imp. charges geographical breakdown (1) - Q3 impairments in Denmark related to shipping, property and farming DKK m DKK m 12 500 12,500 A Accumulated l t d iimpairments i t 117 bp* b * 3 500 3,500 Accumulated impairments186 bp* Denmark Collective 1,479 3,000 Finland Collective 250 10,000 59%
Slide 42: Loan imp. charges - geographical breakdown (2)
Loan imp. charges - geographical breakdown (2) - Ireland and the Baltics account for a large portion of total impairments DKK m DKK m 2 000 2,000 7 000 7,000 Accumulated impairments 346 bp* Accumulated impairments 749 bp* Northern Ireland 323 6,000 Ireland 1,600 Collective Collective 623 3% of Group
Slide 43: Re-capitalisation instrument - Overview
Re-capitalisation instrument Overview Act on State-Funded Capital Injections (Feb 3. 2009) Danske Banks solution (May 24. 2009) • Package size DKK 100bn • Danske Bank Group DKK 26bn Mortgage institutions 25bn Realkredit Danmark 2bn Banks 75bn Danske Bank A/S 24bn • Repayment condition • Hybrid,
Slide 44: Issues related to the two packages
Issues related to the two packages - DKK 26bn in hybrid and DKK 34bn in senior unsecured Hybrid capital ISIN code Currency Amount (m) Date issued Maturity Coupon DK0030170444 DKK 23 992 23,992 11 05 2009 Perpetual 11.05.2009 12 04 2014 ← Danske Bank 12.04.2014 DK0030171848 DKK 2,034 11.05.2009 Perpe
Slide 45: Danske Bank issues in 2009
Danske Bank issues in 2009 The table above shows exchange-listed issues of the following amounts or more: USD 200m EUR 200m GBP 150m SEK 500m NOK 400m CHF 100m JPY 3,000m Senior unsecured ISIN code Currency Amount (m) Date issued Maturity Coupon XS0409220836 EUR 3,000 21.01.2009 21.09.2010 2.5% p.a.
Slide 46: Danske Bank issues in 2009 - Covered Bonds
Danske Bank issues in 2009 Covered Bonds ISIN code Currency Amount (m) Register Date issued Maturity Coupon DK0030075106 DKK 10 D 18-12-2007 02-01-2012 3-mo CIBOR flat f DK0030091301 DKK 9 D 07-02-2008 02-01-2018 6-mo CIBOR flat XS0357775559 EUR 1 I 14-04-2008 14-04-2010 4.375% p.a. DK0030101209 DKK
Slide 47: Danish mortgage bond act among the strictest in Europe
Danish mortgage bond act among he strictest in Europe Swedish Danish Norwegian Finnish German Covered C dBBond dAActt Covered C dBBonddA Actt Covered C dBBond dAActt Covered C dBBonddA Actt Covered C dBBond dAActt Cover Residential mortgages Residential mortgages Residential mortgages Residential mo
Slide 48: The pass through principle
The pass through principle Mirroring Loan and Bond Terms Proceeds At disbursement the borrower will receive the proceeds from the sale of the bonds Issuing discount or premium is thus transferred to the borrower I.e. loan costs are directly linked to the listed bond price Interest Loan interest rate
Slide 49: Danske Bank covered bond universe
Danske Bank covered bond universe - Legislation and history behind two business lines Covered Bond issuer since 2007 Specialized regulated mortgage bank Based on a new legislation Provides traditional mortgage loans Loans from f the Groups banking Dates back to 1851 activities in Northern Europe Pa
Slide 50: Covered bonds in Danske Bank
Covered bonds in Danske Bank • Danske Bank Covered Bond Programme was established in December 2007 • The legal framework is the Danish Financial Business Act adapted to CRD in 2007 • Only residential mortgages and public sector loan (and substitution assets) • Issues are done directly on the balance
Slide 51: Characteristics for the Cover Pool D
Danske Bank covered bonds - Characteristics for the Cover Pool D Pool notional DKK 31.8bn ( 4.3bn equivalent) Number of Loans 51,576 Substitution collateral 0 Residential/commercial 100 % owner occupied residential properties WA LTV 62% WA Seasoning 2,8 WA Remaining Term 27.0 years Rate type Floa
Slide 52: Cover Pool D loans by size and LTV
Danske Bank covered bonds - Characteristics for the Cover Pool D 01.11.2009 % 30 25 Loans by size 20 Exposure 15 10 5 - 10,000 10,000 750-1,000 50-100 0-50 00-150 50-250 50-500 00-750 1,000--1,500 1,500--2,000 2,000--2,500 2,500--3,000 3,000--5,000 Above 1 5,000-1 5 10 15 25 50 Loan size, DKK 1.
Slide 53: Characteristics for the Cover Pool I
Danske Bank covered bonds - Characteristics for the Cover Pool I Pool notional DKK 69.2bn ( 9.3bn equivalent) Number of Loans 96,227 Substitution collateral DKK 1.41bn Residential/commercial 73 7% owner 73.7% owner-occupied occupied, 26.3% 26 3% housing cooperatives WA LTV 61% WA seasoning 2.4 ye
Slide 54: Cover Pool I loans by size and LTV
Danske Bank covered bonds - Characteristics for the Cover Pool I 01.11.2009 % 20 15 Loans by size Exposure 10 5 - 10,000 10,000 750-1,000 50-100 0-50 00-150 50-250 50-500 00-750 1,000--1,500 1,500--2,000 2,000--2,500 2,500--3,000 3,000--5,000 Above 1 5,000-1 5 10 15 25 50 Loan size, DKK 1.000 %