Jyske Bank A/S · OMXCOP:JYSK
Jyske Bank A/S — FY2011 Earnings Presentation
45 slides from Jyske Bank A/S's earnings presentation, February 2012
Slide 1: Jyske Bank 2011
Jyske Bank 2011 February 2012 1
Slide 2: Agenda
Agenda Jyske Bank in brief Off to a good start in 2012 Jyske Bank performance 2008-2011 Jyske Bank actions in 2010, 2011 and 2012 • Strengthening the revenue base • Cost reductions • Select acquisitions including portfolios • Optimizing capital structure • Improving funding structure Danish FSA repo
Slide 3: Jyske Bank in brief
Jyske Bank in brief 3
Slide 4: Jyske Bank focuses on core business
Jyske Bank in brief Jyske Bank focuses on core business Description Branch Network • Established and listed in 1967 • 2nd largest Danish bank by lending • Total lending of approx. DKK 113bn • 109 domestic branches • Approx. 550,000 customers • Business focus is on Danish private individuals, SMEs an
Slide 5: Jyske Bank has a differentiation strategy
Jyske Bank in brief Jyske Bank has a differentiation strategy “Jyske Differences” • Vision is to be Denmark’s most customer-oriented bank by providing high standard personal financial advice and taking a genuine interest in customers • The strategy is to position Jyske Bank as a visible and distinct
Slide 6: Off to a good start in 2012
Off to a good start in 2012 6
Slide 7: Off to a good start in 2012
Off to a good start in 2012 • Change of strategy: Organic growth and select acquisitions including portfolios – Two acquisitions of portfolios in 2011 • Underlying earnings capacity improved during 2011 • 2012 and 2013 – Reap the fruits of actions taken in 2010, 2011 and beginning of 2012 – ROE movi
Slide 8: Off to a good start in 2012 - cont.
Off to a good start in 2012 - cont. Financial figures 2011 • The financial highlights for the accounting year 2011 are as announced on 26 January 2012 Funding agreement using covered bonds • The agreement with BRFkredit about Covered Bond funding of Jyske Bank’s home loans is expected to increase th
Slide 9: Jyske Bank performance 2008-2011
Jyske Bank performance 2008-2011 9
Slide 10: Profit before Bank Packages, the Guarantee fund and tax
DKKm 2008 2009 2010 2011 Profit before Bank Packages, 1522 1208 1509 1269* the Guarantee fund and tax ROE 15.7% 11.3% 12.1% 9.5% * Exclusive of one off items and special items 10
Slide 11: Pre-tax profit and ROE history
Pre-tax prof it (ROE on avg. equity) Average: 50% 110% 87% 19% 40% 30% 20% 10% 0% -10% -20% -30% 1968 1974 1980 1986 1992 1998 2004 2010 1971 1977 1983 1989 1995 2001 2007 11
Slide 12: Jyske Bank actions in 2010, 2011 and 2012
Jyske Bank actions in 2010, 2011 and 2012 • Strengthening the revenue base • Cost reductions • Select acquisitions including portfolios • Optimizing capital structure • Improving funding structure 12
Slide 13: Strengthening the revenue base
Strengthening the revenue base • Interest rate hikes in April, July, October, December • Action taken after Central Bank-rate changes • 150 bp (gross) in 2011 due to higher funding costs and payments to the Guarantee Fund • Full effect from Q2 2012 Net Interest Income Net Interest Income 5,000 1,400
Slide 14: Cost reductions
Cost reductions • Underlying growth in costs 2% in 2011 • Staff reductions – Expected 3550 employees end of 2012 against 4158 in Q3 2006 • 8 branch mergers in NW Jutland and Copenhagen • Converting IT systems to Bankdata systems; cost reduction DKK 200m relative to 2010-budget • Total reduction in c
Slide 15: Cost reductions
Cost reductions Continued reduction in no. of employees • 150 employees in Sept 2011 - one off costs of DKK 80m in Q3 2011 • 100 employees by natural wastage in 2012 • Full effect DKK 150m • +141 employees from acquisitions • Expected 3550 employees end of 2012 against 4158 in Q3 2006 Migration of I
Slide 16: Select acquisitions including portfolios
Select acquisitions including portfolios Parts of Finans Nord Fjordbank Mors (branch) • Future new sales and administration of existing • Retail and SME portfolio; 43.000 customers, corporate leasing portfolio; approx. DKK 6bn (gross), loans DKK 2.3bn, deposits DKK 3.5bn, AUM DKK 300m on Jyske Bank
Slide 17: Management summary
Management summary 2011 2012E DKKm Fjordbank Mors Finans Nord Easyfleet Total Fjordbank Mors Finans Nord Easyfleet Total Net interest income 19,2 1,3 0,6 21,1 110,1 26,8 2,1 139,1 Other income 2,8 10,3 9,0 22,1 19,7 37,4 33,6 90,7 Gross earnings 22 11,6 9,6 43,3 129,8 64,3 35,8 229,8 Staff costs 5,5
Slide 18: Optimizing capital structure
Optimizing capital structure Redemption of EUR 25m supplementary capital in Q2 2011 • Profit before tax: DKK - 52m • 7% bond loan • Contractual maturity in 2024 Buy back of EUR 50m hybrid capital in Q4 2011 • Profit after tax: DKK +155m • Price of 55 • Offers for EUR 68m • Core Tier 1 Capital ratio
Slide 19: Solvency ratio
Solvency ratio 18 18 16 16 14 14 pct pct 12 12 10 10 8 8 6 6 4 4 2 2 0 0 2007 2008 2009 2010 2011 Core Tier 1 Hybrid Tier 1 Tier 2 Core Tier 1 Hybrid Tier 1 Tier 2 •Focus on equity •Aligned capital targets with requirements for swedish SIFI’s (Core Tier 1 of 12%) •No government capital •No dividend
Slide 20: Improving funding structure
Improving funding structure Agreement with BRF Kredit to issue covered bonds - Feb. 2012 • Home loans tranferred from JB balance sheet to BRF Kredit • Issue AAA covered bonds from existing capital centre • All new loans from February 2012 • Part of the existing stock of home loans, dependent on appr
Slide 21: Liquidity position and run-off
Liquidity position and run-off 45 40 35 30 DKKbn 25 20 15 10 5 0 31.12.2011 21
Slide 22: Long-term funding strategy
Long-term funding strategy – A rare but regular issuer in the EMTN market Funding plans from 2012 and beyond will depend on developments in the balance sheet (funding gap) - policy is to maintain a deposit/loan ratio in the region of 90% (end 2011: 93%): • Looking at our maturity profile we will hav
Slide 23: Danish FSA reports
7 Danish FSA reports A/\.—
Slide 24: Danish FSA reports received in 2011
Danish FSA reports received in 2011 SME customers and IRB setup • Decision making material satisfactory • No ground for changing impairment charges • IRB models satisfactory IT inspection • Principles and policies meet required demands Market Risk and Compliance • Management of market risk satisfact
Slide 25: Potentials
7 Potentials A/\.—
Slide 26: Potentials
Potentials Legal development in Hedge-case • Provision of DKK 229m in 2011 • Dependent on development of case Cancellation of hybrid capital • Nominal DKK 1292m (potential) 26
Slide 27: 2011 in figures
2011 in figures • Core earnings • Credit quality • Investment portfolio earnings • Fee and commission income • Value adjustments 27
Slide 28: Core earnings
7 Core earnings A/\.—
Slide 29: Core earnings
Core earnings Pre-tax profit for the period Index Q4 Q3 Q2 Q1 Q4 DKKm 2011 2010 11/10 2011 2011 2011 2010 2010 Net interest income 4.410 4.315 102 1.186 1.091 1.066 1.067 1.080 Dividends, etc. 17 20 85 0 1 14 2 0 Net fee and commission income 1.310 1.322 99 387 306 292 325 417 Net interest and fee i
Slide 30: Core earnings before loan impairment charges
Core earnings before loan impairment charges 3,500 1,000 900 3,000 800 DKKm DKKm 2,500 700 600 2,000 500 400 1,500 300 1,000 200 100 500 0 0 2007 2008 2009 2010 2011 • Hit by value adjustments of DKK -44m in 2011 • NII improving in second half of 2011 • Expected to improve in 2012 due to actions in
Slide 31: Credit quality
7 Credit quality A/\.—
Slide 32: Loans and advances split by sector
Loans and advances split by sector Jyske Bank A/S Balance of loan Loan impairment impairment charges and Loans, advances and guarantees as well as loan charges and provisions for impairment charges and provisions for guarantees Loans, advances provisions for guarantees by sector and guarantees guara
Slide 33: Large exposures
Large exposures per cent of capital base 70% 60% 50% 40% 30% 20% 10% 0% 2007 2008 2009 2010 2011 • Long-term strategy is intact to reduce dependence of large corporates •Minor change in definition of large exposures in 2011 (covered bonds)
Slide 34: Loan impairment charges
Loan impairment charges 3,000 1,000 900 2,500 800 DKKm DKKm 700 2,000 600 500 1,500 400 300 1,000 200 100 500 0 0 2007 2008 2009 2010 2011 • Strong performance throughout 2010 • Positive trend reversed in Q2 2011 driven by economic standstill • New level of impairment charges, particularly driven by
Slide 35: Balance of loan impairment charges
Balance of loan impairment charges 5000 5000 4500 4500 4000 4000 DKKm DKKm 3500 3500 3000 3000 2500 2500 2000 2000 1500 1500 1000 1000 500 0 500 Q12009 Q22009 Q42009 Q22010 Q32010 Q42010 Q12011 Q22011 Q32011 Q32009 Q12010 Q42011 0 2007 2008 2009 2010 2011 Balance of loan impairment charges Losses Ba
Slide 36: Balance of loan impairment charges
Balance of loan impairment charges pct. of loans and advances 3.5% 4.0% 3.5% 3.0% 3.0% 2.5% 2.5% 2.0% 2.0% 1.5% 1.5% 1.0% 1.0% 0.5% 0.5% 0.0% Q12009 Q22009 Q32009 Q42009 Q22010 Q32010 Q42010 Q12011 Q22011 Q42011 Q12010 Q32011 0.0% 2007 2008 2009 2010 2011 • Level of 2.8% from peak of 3.4% in Q3 2010
Slide 37: Earnings from investment portfolios
Earnings from investment portfolios 37
Slide 38: Earnings from investment portfolios
Earnings from investment portfolios 600 250 500 400 200 DKKm DKKm 300 150 200 100 100 0 -100 50 -200 -300 0 Q12009 Q22009 Q32009 Q42009 Q22010 Q32010 Q12011 Q22011 Q32011 Q42011 Q12010 Q42010 -400 2007 2008 2009 2010 2011 • Satisfactory return in 2011 of DKK 346m above 5-year average of DKK 193m aft
Slide 39: Fee and commission income
Fee and commission income A/\.—
Slide 40: Fee and commission income
Fee and commission income 2,000 450 1,800 400 1,600 350 DKKm DKKm 1,400 300 1,200 250 1,000 200 800 150 600 100 400 50 200 0 Q12009 Q22009 Q32009 Q42009 Q22010 Q32010 Q12011 Q22011 Q32011 Q42011 Q12010 Q42010 0 2007 2008 2009 2010 2011 900 800 700 DKKm 600 • Stable level in 2009-2011 500 • No major
Slide 41: Value adjustments
7 Value adjustments A/\.—
Slide 42: Value adjustments
Value adjustments 900 350 800 300 700 250 DKKm DKKm 600 200 500 150 400 100 300 50 200 0 100 -50 0 -100 Q32009 Q42009 Q12010 Q22010 Q32010 Q12011 Q22011 Q32011 Q42011 Q12009 Q22009 Q42010 -100 2007 2008 2009 2010 2011 400 300 • Low turnover (FX, derivatives trading) DKKm 200 • Negative value adj. fr
Slide 43: The Financial sector in Denmark
The Financial sector in Denmark 43
Slide 44: Danish financial institutions 2008
Danish financial institutions 2008 Equity *) 1 Danske Bank 104.355 2 Jyske Bank 9.704 3 FIH Erhvervsbank 7.849 4 Sydbank 6.697 5 Nykredit bank 6.099 6 Spar Nord 4.138 7 Arbejdernes Landsbank 2.951 8 Roskilde Bank 2.633 9 Amagerbanken 2.319 10 Forstædernes Bank 2.208 11 Kronjylland, Sparekassen 2.191
Slide 45: Questions
Questions 45