Jyske Bank A/S · OMXCOP:JYSK
Jyske Bank A/S — Q3 2015 Earnings Presentation
39 slides from Jyske Bank A/S's earnings presentation, 2015
Slide 1: Jyske Bank Q3 2015
il JYSKE BANK Jyske Bank Q3 2015 1/39
Slide 2: Highlights
Highlights • Capital return – Share buyback programme of up to DKK 500m to be launched (executed from November-June) – It is the intention that an ordinary dividend of about DKK 500m will be proposed at AGM in March 2016 • Continued success with integrating BRFkredit and Jyske Bank – Sales of new ho
Slide 3: Jyske Bank/BRFkredit merger - status
Jyske Bank/BRFkredit merger - status • Merger proceeds faster than expected: Annual revenue and New home loan products cost synergies of DKK 600m expected to have full annual 60 impact by mid-2018 as opposed to end of 2018 DKKbn 50 40 • Volume of new home loan products granted reaches DKK 55bn (DKK
Slide 4: Q3 2015 results
Q3 2015 results • Pre-tax profit of DKK 326m (equal to ROE 4.7% p.a.) CORE PROFIT AND PROFIT FOR THE PERIOD Q1-Q3 Q1-Q3 Index Q3 2015 Q2 2015 Index DKKm 2015 2014 15/14 Q3/Q2 Net interest income 4,453 3,887 115 1,500 1,513 99 • Core income driven by Net fee and commission income 1,339 1,135 118 372
Slide 5: NII supported by new home loans
NII supported by new home loans • NII is supported by: Net interest income 1.800 – Continued growth in new home loan products DKKm 1.600 – Increased contribution margins in mortgage activities 1.400 1.200 – Mortgages for corporate clients begin to pick up 1.000 800 600 400 200 • NII is pressured by:
Slide 6: Stable net fee and commission income
Stable net fee and commission income Net fee income • Stable net fee and commission income at level with Q3 2014 700 and Q2 2015 DKKm 600 500 400 300 200 100 0 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Net fee income ex BRFkredit BRFkredit net fee income • Securities trading etc.: Fee
Slide 7: Value adjustments hit by interest rate movements
Value adjustments hit by interest rate movements Value adjustments under core earnings • Interest rate development continues to drive development in 600 value adjustments: DKKm 500 — Continued volatility in especially DKK interest rates 400 — Rising short-term interest rates and falling long-term in
Slide 8: Core expenses in line with expectations
Core expenses in line with expectations • Core expenses increased by DKK 27m from Q2 to Development in core expenses 1.350 Q3 2015. The increase is primarily caused by: 1.300 • Salary increase prescribed by collective 1.250 agreement as per July 1st approx. DKK 15m 1.200 DKKm • New statutory Resolut
Slide 9: Impairment charges remain at low level
Impairment charges remain at low level Loan impairment charges and losses (under core profit) • Loan impairment charges under core profit of DKK 27m 800 DKKm 700 • Management’s estimates of DKK 360m of which DKK 224m is related 600 to agriculture – not individualized yet as negative events have not
Slide 10: Impairment charges by activity
Impairment charges by activity • Banking activities (Jyske Bank A/S): IMPAIRMENT CHARGES UNDER – Impairment ratio for Q3 2015 6bps CORE PROFIT BY ACTIVITY, PERIOD Index Index – On a net basis, stable impairment charges at low level DKKm Q1-Q3 2015 Q1-Q3 2014 15/14 Q3 2015 Q2 2015 Q3/Q2 Banking 361 1
Slide 11: Agriculture: limited exposure
Agriculture: limited exposure • Commodity prices are showing signs of improvement but agriculture – in particular dairy farmers and pig farmers – is MILK PRODUCERS AND PIG still in distress FARMING LOANS IMPAIRMENTS DKKm % BALANCE COVERAGE Individual impairments • Impairment ratios for dairy farmers
Slide 12: Geographical distribution of BRFkredit portfolio
Geographical distribution of BRFkredit portfolio Loss in % of lending for properties with residential purposes • Overweigth in areas with rising house prices, and low exposure in troubled areas • Growth in Eastern Jutland expected to continue due to Jyske Bank home loans New lending in 2015 Only 2%
Slide 13: Mortgage activities – credit quality
Mortgage activities – credit quality 90-days arrears (per cent of instalment payments) Repossessed properties (DKKm) 0,14% 600 Commercial properties 200 Private Private properties 0,12% Commercial 500 # properties private (rhs) Subsidised # properties commercial (rhs) 150 0,10% Total 400 0,08% 300 1
Slide 14: Robust capital position allows room for capital return
Robust capital position allows room for capital return • Capital return: – Jyske Bank to launch buy-back programme of own shares equivalent to Capital ratio the value of up to DKK 500m (executed November 2015 – June 2016) 18 – It is the intention that an ordinary dividend for 2015 of about DKK 500m
Slide 15: Compliance with CET1 requirements in CRD IV & Danish SIFI
…. and makes Jyske already compliant with CET1 requirements in CRD IV & Danish SIFI Total capital requirement by 2019 expected to be around 17-17.5 % (incl. worst case fully loaded countercyclical buffer*) - With a CET1 ratio of 13.5 – 14 % (11 % if Pillar II is filled by a high trigger coco AT1 or
Slide 16: Strong liquidity reserves
Strong liquidity reserves Group Liquidity buffer • Liquidity buffer DKK 70bn end of Q3 2015 (DKK 55bn end of 2014) 80 DKK bn 70 • Stress scenarios an integrated part of daily liquidity risk 60 management and the limit structure since early 2007 50 40 • The Group’s liquidity reserves are conservative
Slide 17: LCR compliant
LCR compliant LCR Liquidity buffer end of Q3 2015 (DKKbn) • LCR compliance – key focus area during 2015 6 • As a Danish, full SIFI compliance (100%) is required from October 1st 2015 19 • During 2015 the Group has recalibrated the liquidity buffer by increasing the holdings of Level 1a assets and ad
Slide 18: A rare but regular issuer on the EMTN market
A rare but regular issuer on the EMTN market • Group issuance of senior debt will be from Jyske Bank A/S, Group redemption profile senior & senior secured debt thus no new issuance of senior secured bonds from BRFkredit A/S 10 DKKbn 8 6 • Senior unsecured activity will depend on developments in the
Slide 19: Re-financing in mortgage activities
Re-financing in mortgage activities Since 2014 the refinancing risk in BRFkredit has been reduced significantly to improve Group compliance with S&P’s SFR ratio and the upcoming NSFR. Split of BRFkredit loan portfolio according to refinancing profile 100% 80% 60% 40% 20% 0% 2013 2014 Q3 2015 Annual
Slide 20: Banking activities
Banking activities Income statement: • NII under pressure SUMMARY OF INCOME STATEMENT Index Index DKKm Q1-Q3 2015 Q1-Q3 2014 15/14 Q3 2015 Q2 2015 Q3/Q2 • Stable net fee & commission income Net interest income 2,757 2,894 95 952 946 101 • Negative value adjustments driven by interest rate Net fee an
Slide 21: Mortgage activities
Mortgage activities SUMMARY OF INCOME STATEMENT Income statement: Index Index DKKm Q1-Q3 2015 Q1-Q3 2014 15/14 Q3 2015 Q2 2015 Q3/Q2 • NII supported by increase in contribution rates as well Contribution income, etc. 1 1,255 601 209 431 418 103 Other net interest income 102 69 148 4 39 10 as jointly
Slide 22: Leasing activities
Leasing activities SUMMARY OF INCOME STATEMENT Index Index Income statement: DKKm Q1-Q3 2015 Q1-Q3 2014 15/14 Q3 2015 Q2 2015 Q3/Q2 • Stable NII Net interest income 339 323 105 113 110 103 Net fee and commission income -49 -22 223 -19 -15 127 • Net fee & commission income lower due to change Value a
Slide 23: Macro Economy & Danish Banking Q3 2015
Macro Economy & Danish Banking Q3 2015 23/39
Slide 24: Upturn in the Danish economy
Upturn in the Danish economy GDP 3 3 In Q2 GDP 2015 growth was 0.2% Q/Q 2,5 2,5 following 0.6 % in Q1. 2 2 Eight consecutive quarters with positive 1,5 1,5 growth. 1 1 Percent Growth slowed down a bit in Q2, but we Percent 0,5 0,5 still forecast a small upturn. 0 0 Private consumption is stimulated
Slide 25: The private sector is still in a consolidation mode
The private sector is still in a consolidation mode The private sector savings has been record high since 2009. Net savings 10 9 7,5 7 5 5 % of GDP % of GDP 3 2,5 Private to public sector: 1 Tax on pensions behind the latest fall for 0 private sector and gain for public sector. -1 -2,5 -3 -5 -5 05 0
Slide 26: Lower, but still above average consumer confidence
Lower, but still above average consumer confidence Consumer Confidence Business cycle indicators 20 20 30 30 15 15 20 20 10 10 10 10 0 0 Net value Net value 5 5 Net value Net value -10 -10 0 0 -20 -20 -5 -5 -30 -30 -10 -10 -40 -40 -15 -15 -50 -50 -20 -20 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
Slide 27: House prices on the rise
House prices on the rise Prices on dwellings House Prices 110 110 140 140 105 105 130 130 Index 2008 = 100 100 100 120 120 Index 2008 = 100 110 110 95 95 100 100 Index Index 90 90 90 90 85 85 80 80 80 80 70 70 60 60 75 75 50 50 70 70 40 40 06 07 08 09 10 11 12 13 14 15 Danmark Norway USA UK Spanien
Slide 28: The turnaround for housing is spreading
The turnaround for housing is spreading House Prices 120 120 Index 2006 = 100 110 110 House prices increases have spread out beyond Index 2006 = 100 100 100 the largest cities 90 90 Price increases in 87 out of 98 municipalities in 80 80 2015H1 70 70 Continued large excess supply in some areas, 60 6
Slide 29: Affordability is strong – even with fixed rate
Affordability is strong – even with fixed rate Housing affordability Net intallment (fixed rate) for new buyers relative to disp. income 80 80 70 70 Index 2004 = 100 Index 2004 = 100 60 60 50 50 40 40 30 30 20 20 Source: Datastream 29/39
Slide 30: Unemployment is slightly declining, debt servicing capacity strong
Unemployment is slightly declining, and with interest rates all time low – debt servicing capacity is strong Unemployment rate Arrears 3,0 3,0 25 25 2,5 2,5 20 20 2,0 2,0 In % of all payments In % of all payments 15 15 Percent Percent 1,5 1,5 10 10 1,0 1,0 5 5 0,5 0,5 0 0 0,0 0,0 Denmark Euro zone S
Slide 31: Overall bankruptcies in the SME sector are trending downwards
Bank loans and underlying credit quality: Overall bankruptcies in the SME sector are trending downwards Danish bankruptcies Danish bankruptcies 700 700 120 120 Bankrupties 12 month avg. Bankrupties 12 month avg. 600 600 100 100 500 500 80 80 Number 400 400 Number 60 60 300 300 40 40 200 200 20 20 10
Slide 32: The Danish economy at a glance
The Danish economy at a glance The basics Citizens: 5.6 million (2013) Flexible labour market Area: 43,098 sq km (0.4 % of USA) Unemployment (latest) Currency: Kroner (fixed exchange rate policy to the euro) Denmark 6.3 % Euro Area 11.0 % USA 5.1 % Among the rich Denmark 10th richest country in the
Slide 33: Competitiveness has improved
Competitiveness has improved Unit labor costs (euro) 150 150 140 140 130 130 Index 2000 = 100 Index 2000 = 100 120 120 110 110 100 100 90 90 80 80 70 70 60 60 Denmark Germany Sweden UK Norway Frankrig Source: Datastream 33/39
Slide 34: Denmark has a healthy public sector economy…
Denmark has a healthy public sector economy… The surplus in 2014 was due to a one-off contribution from pension tax brought forward. Excluding temporary elements net saving was -2 % of GDP. For 2015 we expect -2.5 % of GDP. 34/39
Slide 35: … and Denmark is a AAA economy
… and Denmark is a AAA economy Government bond yield 8 8 10 year government bond yield, % 7 7 10 year government bond yield, % 6 6 5 5 4 4 3 3 2 2 1 1 0 0 Denmark Germany Italy Spain Source: Datastream 35/39
Slide 36: Denmark has huge wealth abroad
Denmark has huge wealth abroad Net foreign assets 2010 (Denmark is 2015Q2) 100 100 50 50 % of GDP 0 0 % of GDP -50 -50 -100 -100 -150 -150 PT GR IT GB AT SE NL DE BE Source: Danmarks Nationalbank 36/39
Slide 37: Jyske Bank forecasts
Jyske Bank forecasts T he Da nish e conomy 2 0 1 2 -2 0 1 6 2014 Real growth (%) DKKbn 2012 2013 2014 2015 2016 H ouse hold sp e nd ing 904 0.4 0.0 0.9 1.7 1.8 P ub lic sp e nd ing 511 -0.2 -0.5 0.1 1.4 0.1 Fixe d gr oss inve stme nt 359 0.7 0.9 4.0 0.8 4.3 Inve ntor y inve stme nt* 15 -0.6 -0.2 0.4
Slide 38: General legal disclaimer
General legal disclaimer • This presentation and the information contained therein is furnished and has been prepared solely for information purposes by Jyske Bank A/S. It is furnished for your private information with the express understanding, which recipient acknowledges, that it is not an offer,
Slide 39: Questions
Questions 39/39