Danske Bank A/S · OMXCOP:DANSKE
Danske Bank A/S — H1 2021 Earnings Presentation
38 slides from Danske Bank A/S's earnings presentation, July 2021
Slide 1: Financial results – first half 2021
Financial results – first half 2021 Presentation for Conference Call Carsten Egeriis Stephan Engels Chief Executive Officer Chief Financial Officer
Slide 2: Agenda
Financial results – first half 2021 Agenda 01. Summary 2 02. Group income statement 4 03. Business unit results 5 04. Key lines 8 05. Capital 13 06. Financial outlook for 2021 14 07. Q&A 15 08. Appendix 16
Slide 3: Rebound in economies led to high customer activity and lower impairments in H1
Financial results – first half 2021 Rebound in economies led to high customer activity and lower impairments in H1, while we continue to build a better bank Total income up for the first half of 2021 Record-high customer activity in capital Execution of cost management visible in driven by almost al
Slide 4: First impression as incoming CEO: A strong foundation and momentum towards becoming a Better Bank
Financial results – first half 2021 First impression as incoming CEO: A strong foundation and momentum towards becoming a Better Bank; strong efforts to sharpen the commercial initiatives On the forefront of supporting Compliance function taken to Improving and digitising customers’ commercial and t
Slide 5: Group: Higher customer activity, stringent cost focus and strong credit quality drive improved performance
Financial results – first half 2021 Group: Higher customer activity, stringent cost focus and strong credit quality drive improved performance Income statement and key figures (DKK m) Key points, H1-21 vs H1-20 H1-21 H1-20 Index Q2-21 Q1-21 Index • Total income up 5% driven by higher customer activi
Slide 6: P&BC: Commercial momentum in Norway and Sweden; profitability remains challenged
Financial results – first half 2021 P&BC: Commercial momentum in Norway and Sweden; profitability remains challenged by sustained margin pressure and lack of growth in Personal Customers Denmark Profit development H1-21 vs H1-20 (DKK m) Highlights 3,919 Profit before tax up DKK 1bn as a In Q-21 NII
Slide 7: LC&I: Strong return on our investments in the capital markets offering
Financial results – first half 2021 LC&I: Strong return on our investments in the capital markets offering; record-high activity within capital raising activities for customers Profit development H1-21 vs H1-20 (DKK m) Highlights 3,463 Strong market position as a leading High customer activity and N
Slide 8: Danica: Delivered solid growth and 37% lift in net income excl. Q1 one-off
Financial results – first half 2021 Danica: Delivered solid growth and 37% lift in net income excl. Q1 one-off; Northern Ireland PBT significantly up due to lower impairments Danica Pension, key figures (DKK m) Northern Ireland, key figures (DKK m) H1-21 H1-20 % Q2-21 Q1-21 % H1-21 H1-20 % Q2-21 Q1-
Slide 9: NII: Stable development as NII underpinned by deposit repricing
Financial results – first half 2021 NII: Stable development as NII underpinned by deposit repricing Net interest income, H1-21/H1-20 (DKK m) Highlights 11,127 NII came in slightly lower than in the same period last year, as deposit margins -133 10,965 in H1 2020 benefited from elevated xIBOR levels
Slide 10: Fee: Increase in fee income driven by capital markets performance and higher activity
Financial results – first half 2021 Fee: Increase in fee income driven by capital markets performance and higher activity; Q2 impacted by seasonality and value adjustments Net fee income, H1-21/H1-20 and Net fee income, Q1-21/Q1-20 (DKK m) Highlights 6,595 3,402 Fee income was up 11% from the same p
Slide 11: Trading: Solid underlying trading income driven by customer activity
Financial results – first half 2021 Trading: Solid underlying trading income driven by customer activity Net trading income, H2-21/H1-21 and Net trading income, Q2-21/Q1-20 (DKK m) Highlights Group Functions North. Ireland P&BC xVA LC&I ex. xVA 2,291 Net trading income increased 21% in H1-21 from 12
Slide 12: Expenses: Downwards trajectory according to plan
Financial results – first half 2021 Expenses: Downwards trajectory according to plan, including lower costs for AML/Estonia and transformation Expenses, H1-21/H1-20 (DKK m) Highlights 275 622 438 Expenses adjusted for one-offs down approx. 7% vs H1-20 and up 2% vs Q1-21 13,023 61 108 209 12,770 One-
Slide 13: Impairments: Strong credit quality and low level of actual credit detoriation
Financial results – first half 2021 Impairments: Strong credit quality and low level of actual credit detoriation Impairment charges by category (DKK bn) Loan loss ratio by business unit (annualised, %) 3.40 Credit quality deterioration: oil & gas Post-model adjustments P&BC LC&I Credit quality dete
Slide 14: Capital: Strong capital base; CET1 capital ratio of 18.0%
Financial results – first half 2021 Capital: Strong capital base; CET1 capital ratio of 18.0% (buffer of 4.9%) Key points Capital ratios (%) Tier 2 AT1 Pillar II CET1 CET1 CET1 capital ratio decreased 0.1% points to 18.0% in Q2-21 from 18.1% in 23.4 23.3 3.1 2.6 Q1-21 2.2 2.7 17.8 Total REA increase
Slide 15: Net profit outlook upgraded: We expect a net profit of more than DKK 12 billion in 2021
Financial results – first half 2021 Net profit outlook upgraded: We expect a net profit of more than DKK 12 billion in 2021 Revised 8 July 2021 We expect total income in 2021 to be higher (than the level in 2020*), including the gain from Total income the sale of the business activities in Luxembour
Slide 16: Q&A session
Financial results – first half 2021 Q&A session Press 01 to ask a question Press 02 to cancel Press “Ask a question” in your webcast player www.danskebank.com/ir 15
Slide 17: Appendix
Financial results – first half 2021 Appendix 01. Sustainability 17 02. Business units 18 03. Credit quality 23 04. Macro data 28 05. Realkredit Danmark overview 30 06. Funding, liquidity and ratings 31 07. Tax and one-off items 34 08. Contact details 36
Slide 18: We have tripled our ambitions to 300 bn in sustainable finance
Financial results – first half 2021 We have tripled our ambitions from ‘well above DKK 100 bn’ to 300 bn in sustainable finance Sustainable finance Sustainable operations Impact initiatives Sustainable Sustainable Governance & Employee Environmental Entrepreneur- Financial investing financing integr
Slide 19: Personal & Business Customers
Financial results – first half 2021 Personal & Business Customers Income statement (DKK m) NII bridge (DKK m) H1-21 H1-20 Index Q2-21 Q1-21 Index 11 3,879 58 14 3,881 Net interest income 7,766 8,029 97 3,887 3,879 100 46 26 20 11 Net fee income 3,267 3,273 100 1,516 1,750 87 Q1-21 Lending Lending De
Slide 20: Large Corporates and Institutions
Financial results – first half 2021 Large Corporates and Institutions Income statement (DKK m) NII bridge (DKK m) H1-21 H1-20 Index Q2-21 Q1-21 Index 1,216 Net interest income 2,392 2,448 98 1,177 1,216 97 37 10 27 20 1,177 0 8 7 Net fee income 3,220 2,570 125 1,621 1,599 101 Net trading income 1,85
Slide 21: Danica Pension
Financial results – first half 2021 Danica Pension Income statement and key figures (DKK m) Assets under management (DKK m) H1-21 H1-20 Index Q2-20 Q1-21 Index H&A Life insurance Result, life insurance 1312 1277 103 528 784 67 Q2-20 411,861 428,287 Result, health and accident -362 -300 121 -72 -290
Slide 22: Northern Bank
Financial results – first half 2021 Northern Bank Income statement (DKK m) NII bridge (DKK m) H1-21 H1-20 Index Q2-21 Q1-21 Index 4 3 2 11 Net interest income 662 703 94 331 331 100 11 331 3 331 6 Net fee income 129 133 97 69 60 115 Q1-21 Lending Lending Deposit Deposit FX Days Other Q2-21 Net tradi
Slide 23: Non-core
Financial results – first half 2021 Non-core Non-core loan portfolio, Q2-21 (DKK bn) Non-core, Q2-21 REA (DKK bn) Allowance account Non-performing credit exposure Performing credit exposure Non-core conduits etc. Non-core banking 8 7 2 2 5 4 5 2 3 1 3 5 1 2 2 4 4 3 1 1 2 0.4 1 1 0.0 0.2 Retail Comme
Slide 24: Credit quality: Low level of actual credit deterioration
Financial results – first half 2021 Credit quality: Low level of actual credit deterioration Breakdown of core allowance account under IFRS 9 (DKK bn) Allowance account by business unit (DKK bn) P&BC N.I. Stage 1 Stage 2 Stage 3 LC&I Other (Non-core) 24.1 24.9 23.6 25.1 25.9 24.6 22.6 22.5 22.5 23.5
Slide 25: Oil-related exposure: Limited downside risks
Financial results – first half 2021 Oil-related exposure: Limited downside risks underpinned by reduced exposure to off- shore segment coupled with solid collateral coverage Key points, Q2-21 • The offshore segment, in which we have seen credit deterioration, makes up 39% of the exposure and account
Slide 26: Credit exposure: Limited agriculture and directly oil-related exposure
Financial results – first half 2021 Credit exposure: Limited agriculture and directly oil-related exposure Agriculture exposure Oil-related exposure • African Swine Fewer (ASF), which spread to Germany in Q3 2020, continues to • Total oil-related exposure* decreased by DKK 3.3 bn from the preceding
Slide 27: Credit exposure: Limited exposure to transportation, hotels, restaurants and leisure
Financial results – first half 2021 Credit exposure: Limited exposure to transportation, hotels, restaurants and leisure Transportation exposure Hotels, restaurant and leisure exposure • Total gross exposure* increased DKK 0.6 bn to DKK 17.2 bn from the Q1-21 level due mainly to increased exposure t
Slide 28: Credit exposure: Limited exposure to retailing and commercial real estate
Financial results – first half 2021 Credit exposure: Limited exposure to retailing and stable credit quality in commercial real estate Retailing Commercial real estate • Gross exposure remains in line with preceding quarter • Total gross exposure increased DKK 1.2 bn to DKK 28.3 bn while the share o
Slide 29: Nordic macroeconomics
Financial results – first half 2021 Nordic macroeconomics Denmark Sweden Norway Finland EU Real GDP, constant prices (index 2005 = 100) Inflation (%) 140 6 135 5 130 4 125 3 120 2 115 1 110 0 105 -1 100 95 -2 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 05 06 07 08 09 10 11 12 13 14 15 16 17 1
Slide 30: Nordic housing markets
Financial results – first half 2021 Nordic housing markets Denmark Sweden Norway Finland Property prices (index 2005 = 100) House prices/nom. GDP (index 2005 = 100) Real Estate Prices, Index, Residential, Price Index 150 140 275 250 130 225 120 200 110 175 100 150 90 125 80 100 75 70 05 06 07 08 09
Slide 31: Realkredit Danmark portfolio overview
Financial results – first half 2021 Realkredit Danmark portfolio overview: 66% of new retail lending in Q2 was fixed-rate vs 49% of stock Highlights Retail loans, Realkredit Danmark, Q2-21 (%) Fixed rate (10 yrs-30 yrs) Interest-only Portfolio facts, Realkredit Danmark, Q2-21 Variable rate (6m-10 yr
Slide 32: Funding and liquidity: LCR compliant at 155%
Financial results – first half 2021 Funding and liquidity: LCR compliant at 155% Changes in funding,* 2021 (DKK bn and bp) Long-term funding excl. RD (DKK bn)** Cov. bonds Senior Non-Preferred Senior Funding plan Completed 31bp 100 79 59bp 44bp 67 69 60-75 36 74bp 9bp 25 24 104bp 16 17 28bp 94bp 34
Slide 33: Funding structure and sources
Financial results – first half 2021 Funding structure and sources: Danish mortgage system is fully pass-through Loan portfolio and long-term funding, Q2-21 (DKK bn) Funding sources (%) 56 2,323 55 Q1 2021 160 Senior & NPS bonds Q2 2021 1,810 1,198 Deposits Bank loans 606 16 Bank mortgages 398 12 159
Slide 34: Danske Bank's credit ratings
Financial results – first half 2021 Danske Bank’s credit ratings Long-term instrument ratings Fitch and Moody’s take rating action on Danske Bank in Q2-21 Fitch Moody’s Scope S&P Fitch revises its outlook on Danske Bank to Stable and affirms ‘A’ issuer rating AAA Aaa AAA AAA On 11 June 2021, Fitch r
Slide 35: Tax
Financial results – first half 2021 Tax Actual and adjusted tax rates (DKK m) Tax drivers, Q2-21 • The actual tax rate of 22.9% (exclusive prior year Q2-21 Q1 2021 Q42020 Q32020 Q22020 regulations and one-offs) is higher than the Danish rate of 22% - due primarily to the tax effect from non- Profit
Slide 36: Material extraordinary items in H1 2021
Financial results – first half 2021 Material extraordinary items in H1 2021 Effect One-off items in H1 2021 P&L line affected (DKK m) Gain on sale of Visa C shares 227 Trading Provision for home office allowance -122 Expenses Q1 Provision for upcoming changes in the VAT setup following ruling from E
Slide 37: Contacts
Financial results – first half 2021 Contacts Claus Ingar Jensen Mobile — +45 25 42 43 70 Head of IR [email protected] Nicolai Brun Tvernø Mobile — +45 31 33 35 47 Chief IR Officer [email protected] Olav Jørgensen Mobile — +45 52 15 02 94 Chief IR Officer [email protected] Patrick Laii Skydsgaard
Slide 38: Disclaimer
Financial results – first half 2021 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 St