Danske Bank A/S · OMXCOP:DANSKE
Danske Bank A/S — FY2021 Earnings Presentation
36 slides from Danske Bank A/S's earnings presentation, February 2022
Slide 1: Financial results 2021
Financial results 2021 Presentation for Q4 conference call Carsten Egeriis Stephan Engels Chief Executive Officer Chief Financial Officer
Slide 2: Content
Financial results 2021 Content 1. Summary 2 2. Group & BU financials and key lines 4 3. Capital 13 4. Financial outlook for 2022 14 5. Appendix 16 6. Contact details 34 1
Slide 3: 2021 saw high customer activity; continued execution of plan to become a better bank
Financial results 2021 2021 saw high customer activity; we also continued to execute our plan to become a better bank and delivered structural progress towards our 2023 ambitions DKK 12.9 bn DKK 42.6 bn DKK 25.6 bn Outlook for net profit to be in the range of Higher total income in ’21 driven by str
Slide 4: Strengthening and leveraging our value proposition to support commercial momentum
Financial results 2021 We continue to strengthen and leverage our value proposition to support our commercial momentum; solid progress in 2021 underpinning our financial ambitions Digital convenience Expert advisory services Sustainable choices Leverage enhanced digital solutions to regain Lever
Slide 5: Total income up 4% y/y driven by highest fee income in 3 years
Financial results 2021 Total income up 4% y/y driven by highest level of fee income in 3 years and higher income from insurance business; robust credit quality drives significantly lower loan impairments Income statement and key figures (DKK m) Key points, 2021 vs 2020 2021 2020 Index Q4 21 Q3 21 In
Slide 6: P&BC: Improved commercial momentum evident in substantial fee income uplift
Financial results 2021 P&BC: Improved commercial momentum evident in substantial fee income uplift more than off-setting NII drag. PBT significantly improved by strong credit quality Profit development 2021 vs 2020 (DKK m) Highlights 7,906 • Progress on commercial priorities, incl. better investment
Slide 7: LC&I: Record-high fee income from capital markets activities
Financial results 2021 LC&I: Record-high fee income from capital markets activities driven by strong offering to customers and fuelled by strong rebound in economic activity Profit development 2021 vs 2020 (DKK m) Highlights 7,638 • Our strong franchise in Investment Banking & Securities helped to e
Slide 8: Danica and Northern Ireland key figures
Financial results 2021 Danica: Strong business momentum; Supported by favourable market conditions. Northern Ireland: Profit before tax significantly up as a result of loan loss reversals Danica Pension, key figures (DKK m) Northern Ireland, key figures (DKK m) 2021 2020 % Q4 21 Q3 21 % 2021 2020 %
Slide 9: NII: Continued support from repricing initiatives offset lower volumes and margins
Financial results 2021 NII: Continued support from repricing initiatives offset lower volumes and margins; Positive effect from improving lending volumes in Q4 Net interest income, 2021/2020 (DKK m) Highlights • NII ended in line with 2020 level despite headwinds from mix effects for home 22,151 -32
Slide 10: Fee: Strong activity across business units drives fee income in 2021
Financial results 2021 Fee: Strong activity across business units drives fee income in 2021; increased momentum in Q4 with all fee types up and particularly strong capital markets activity Net fee income, 2021/2020 and Net fee income, Q4 21/Q3 21 (DKK m) Highlights 13,525 3,824 2020 2021 Q3 21 Q4 21
Slide 11: Trading income from core activities in line with 2020
Financial results 2021 Trading income from core activities in line with 2020 Net trading income, 2021/2020 and Net trading income, Q4 21/Q3 21 (DKK m) Highlights Group Functions North. Ireland P&BC xVA LC&I ex. xVA 4,297 4,126 • y/y: Total trading income declined slightly as higher 139 98 income fro
Slide 12: Expenses: 6% lower excl. one-off
Financial results 2021 Expenses: 6% lower excl. one-off due to lower costs for transformation and lower AML/compliance costs Expenses, 2021/2020 (DKK m) Highlights 26,648 433 • y/y: Total underlying expenses decreased 6% adjusted for one- 1,367 offs, underpinning the improvement in C/I ratio, as we
Slide 13: Impairments: Strong credit quality resulting in net reversals for the quarter
Financial results 2021 Impairments: Strong credit quality further supported by economic recovery, resulting in net reversals for the quarter Impairment charges by category (DKK bn) Loan loss rat io by business unit (annualised, %) Credit quality deterioration: oil & gas Post-model adjustments 3.40 C
Slide 14: Capital: Strong capital base; CET1 ratio 17.7%
Financial results 2021 Capital: Strong capital base; CET1 ratio 17.7%, highlighting the significant buffer to requirements Key points Capital rat ios (%) Tier 2 AT1 Pillar II CET1 CET1 23.5 • The CET1 capital ratio decreased 0.4% points to 17.7% by the end of Q4 21, 2.6 22.4 2.4 due to higher REA fr
Slide 15: Net profit outlook for 2022: DKK 13-15 bn
Financial results 2021 Net profit outlook for 2022: As we are progressing towards our financial ambitions, we expect net profit to be in the range of DKK 13 – 15 bn We expect income from core banking activities to be higher in 2022 due to good economic activity and progress towards our 2023 financia
Slide 16: Q&A session
Financial results – first nine months 2021 Financial results – first nine months 2021 Danske Bank Q&A session Press 01 to ask a question Press 02 to cancel Press “Ask a question” We have the foundation in your webcast player We have invested in our operational setup We are ready to deliver sustainab
Slide 17: Appendix
Bank Appendix
Slide 18: Appendix
Financial results 2021 Appendix 01. Sustainability 18 02. Credit quality 21 03. Macro data 26 04. Realkredit Danmark overview 27 05. Funding, liquidity and ratings 28 06. Tax and one-off items 32
Slide 19: Development in 2021 positive across our sustainability targets
Financial results 2021 Development in 2021 has been positive across our sustainability targets Sustainable finance Sustainable operations Impact initiatives Responsible Sustainable Governance & Employee Environmental Entrepreneur- Financial investing financing integrity well-being & footprint ship c
Slide 20: Significant achievements within sustainable finance during 2021
Financial results 2021 Significant achievements within sustainable finance during 2021 – some highlights Leading sustainable financing • #1 Nordic arranger of green, social and sustainable bonds as well as sustainable bonds overall 1) • #1 arranger of Nordic sustainability-linked loans 1) Walking th
Slide 21: Ambition to reach net-zero by 2050 supported by strong commitments
Financial results 2021 Danske Bank’s ambition to reach net-zero by 2050 is supported by strong commitments, interim emissions targets and a carefully considered approach Lending Asset Management Asset Ownership Sustainable finance DKK 300 billion by 2023 in sustainable DKK 150 billion investments in
Slide 22: Credit quality: Low level of actual credit deterioration
Financial results 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) 23.6 22.6 22.5 22.5 22.3 24.6 23.5 23.3 23.3 21.9 23.1 22.7 6.
Slide 23: Fossil fuels (coal and oil) exposure: climate targets set for lending book
Financial results 2021 Fossil fuels (coal and oil) exposure: climate targets have been set for the lending book to support the transition away from fossil fuels Key points, Q4 21 • This page shows the current exposure to fossil fuels and includes customers involved in production, refining, and distr
Slide 24: Credit exposure: Limited agriculture and directly oil-related exposure
Financial results 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 1.9bn from the preceding quarter mainly
Slide 25: Credit exposure: Limited exposure to transportation, hotels, restaurants and leisure
Financial results 2021 Credit exposure: Limited exposure to transportation, hotels, restaurants and leisure Transportation exposure Hotels, restaurants and leisure exposure • Total gross exposure* remained stable compared to the Q3 2021 level and increased by 1.1bn from the Q4 2020 level • Demand fo
Slide 26: Credit exposure: Limited retailing exposure and stable commercial real estate
Financial results 2021 Credit exposure: Limited exposure to retailing and stable credit quality in commercial real estate Retailing Commercial real estate • Gross exposure decreased DKK 2.1bn from the preceding quarter and decreased DKK 15 bn from Q4 2020, driven mainly by a decrease in non-resident
Slide 27: Nordic macroeconomic data
Financial results 2021 Nordic macroeconomic data Denmark Sweden Norway Finland Real GDP, constant prices (index 2005 = 100) Inflation (%) Property prices (index 2005 = 100) Consumer spending, Denmark (same weekday 2019 = 100) Unemployment (%) Apartment prices (index 2005 = 100) 150 140 130 120 110 1
Slide 28: Realkredit Danmark portfolio overview
Financial results 2021 Realkredit Danmark portfolio overview: 48% of new retail lending in Q4 was variable rate vs 50% of stock Highlights Retail loans, Realkredit Danmark, Q4 21 (%) Fixed rate (10 yrs-30 yrs) Interest-only Portfolio facts, Realkredit Danmark, Q4 21 Variable rate (6m-10 yrs) Repayme
Slide 29: Funding and liquidity: LCR compliant at 164%
Financial results 2021 Funding and liquidity: LCR compliant at 164% Changes in funding,* 2021-2022 (DKK bn and bp) Long-term funding excl. RD (DKK bn)** Cov. bonds Senior Non-Preferred Senior Funding plan Completed 30bp 100 35bp 5bp 156bp 70-90 79 75 60bp 38bp 69 37 26bp 30 34 33 26 27 16 104 90bp 6
Slide 30: Funding structure and sources: Danish mortgage system fully pass-through
Financial results 2021 Funding structure and sources: Danish mortgage system is fully pass-through Loan port folio and long-term funding, Q4 21 (DKK bn) Funding sources* (%) 58% 2,406 56% Q3 2021 173 Senior & Q4 2021 NPS bonds 1,834 1,168 Deposits Bank loans 615 Bank mortgages 406 12% 13% 252 Covere
Slide 31: Danske Bank's credit ratings
Financial results 2021 Danske Bank’s credit ratings Long-term instrument ratings S&P upgrades Danske Bank in Q4 2021 Fitch Moody’s Scope S&P On 16 December 2021, S&P upgraded Danske Bank’s counterparty rating to AAA Aaa AAA AAA ‘AA-/A-1+’ from ‘A+/A-1’, as well as Danske Bank’s issuer and senior deb
Slide 32: Danske Bank's ESG ratings
Financial results 2021 Danske Bank’s ESG ratings We have chosen to focus on five providers based on their importance to our investors End 2021 End 2020 End 2019 End 2018 Range 1 B 200 companies, out of the 13,126 B C C A to F (A highest rating) analysed, made the climate change A List in 2021 C+ Pri
Slide 33: Tax
Financial results 2021 Tax Actual and adjusted tax rates (DKK m) Tax drivers, Q4 21 • The actual tax rate of 27% (excluding prior-year 2021 Q4 2021 Q3 2021 Q2 2021 Q1 2021 adjustments) is higher than the Danish rate of 22%, due primarily to the tax effect from tax exempt Profit before tax 16,571 4,5
Slide 34: Material extraordinary items in 2021
Financial results 2021 Material extraordinary items in 2021 One-off items Effect (DKK m) P&L line affected 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 ECJ -150 Expenses Net income
Slide 35: Contacts
Financial results 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 Mobile — +45
Slide 36: Disclaimer
Financial results 2021 Disclaimer Important Not ice This presentation does not constitute or form part of and should not be construed as, an offer to sell or issue or the solici tation of an offer to buy or acquire securities of Danske Bank A/S in any jurisdiction, including the United States, or an