Danske Bank A/S · OMXCOP:DANSKE
Danske Bank A/S — Q1 2017 Earnings Presentation
33 slides from Danske Bank A/S's earnings presentation, Apr 28, 2017
Slide 1: Financial results – first quarter 2017
Financial results – first quarter 2017 Thomas F. Borgen Chief Executive Officer Jacob Aarup-Andersen Chief Financial Officer 28 April 2017
Slide 2: Agenda
Financial results – first quarter 2017 Agenda Executive summary 2 Business unit update 4 Selected topics 6 Outlook for full-year 2017 9 Q&A 10 Appendix 11 1
Slide 3: Executive summary: A good start to 2017
Financial results – first quarter 2017 Executive summary: A good start to 2017 Financial results, Q1 2017 Macroeconomic data indicate a good start • Net profit of DKK 5.5 bn, up 12% from Q1 to the year for the Nordic economies 2016, which included the sale of headquarters • ROE of 14.4% • Strong cap
Slide 4: Net profit: DKK 5.5 bn, up 12% from Q1 2016
Financial results – first quarter 2017 Net profit: DKK 5.5 bn, up 12% from Q1 2016* Income statement and key figures (DKK m) Key points, Q1 2017 vs Q1 2016 Q1 2017 Q1 2016 Index Q4 2016 Index • Return on equity of 14.4% Net interest income 5,739 5,259 109 5,790 99 • Total income up 10%, driven by al
Slide 5: Banking units: Loan growth and higher activity continue at the Nordic banking units
Financial results – first quarter 2017 Banking units: Loan growth and higher activity continue at the Nordic banking units Pre-tax return on allocated capital (%) Financial highlights, Q1 2017 vs Q1 2016 Q1 2017 Q1 2016 Personal Banking • Total income up, driven by all income lines 24.4 • Expenses u
Slide 6: C&I and Wealth Management: Increased client activity at C&I; rebound in fee income
Financial results – first quarter 2017 C&I and Wealth Management: Increased client activity at C&I; rebound in fee income at Wealth Management C&I: Financial highlights, Q1 2017 vs Q1 2016 Wealth Management: Financial highlights, Q1 2017 vs Q1 2016 • Total income up 50% compared to income in challen
Slide 7: Expenses: Up 8% from a low level in Q1 2016
Financial results – first quarter 2017 Expenses: Up 8% from a low level in Q1 2016 owing to activity- driven costs, regulatory compliance and digitalisation Change in expenses (DKK m) Total expenses ex goodwill charge (DKK m) 39 Severance payments 39 134 Deposit guarantee and resolution funds 79 Amo
Slide 8: Impairments: Loan loss ratio of -5 bp in the first quarter of 2017
Financial results – first quarter 2017 Impairments: Loan loss ratio of -5 bp in the first quarter of 2017 Group impairments,* 2012 to Q1 2017 (DKK bn/bp) Impairment drivers, Q1 2017 vs Q4 2016 Impairments Loan loss ratio* (rhs) • Credit quality continued to improve, resulting in a net reversal 18 70
Slide 9: Capital: Strong capital base; CET1 capital ratio of 15.5%
Financial results – first quarter 2017 Capital: Strong capital base; CET1 capital ratio of 15.5% net of full share buyback Capital ratios, under Basel III/CRR (%) Capital highlights, Q1 2017 Tier 2 Hybrid T1/AT1 Pillar II CET1 CET1 • Reported CET1 of 15.5% net of full DKK 10 bn share buy-back; 21.8
Slide 10: Outlook for full-year 2017 unchanged
Financial results – first quarter 2017 Outlook for full-year 2017 unchanged: We expect net profit in the range of DKK 17-19 bn Net interest We expect net interest income to be higher than in 2016, as we will benefit from income volume growth and lower funding costs Net fee Net fee income is expected
Slide 11: Q&A session
Financial results – first quarter 2017 Q&A session Press * then 1 to ask a question Press * then 2 to cancel Press “Ask a question” in your webcast player Want easy access to all relevant Danske Bank material? Download the Danske Bank MyInvestor app on your iPhone, iPad or Android device! www.danske
Slide 12: Appendix
Financial results – first quarter 2017 Appendix Business units 12 Special topics 17 Macro and portfolio reviews 22 Funding, liquidity, ROE bridge and ratings 26 Tax 30 Contact details 31 11
Slide 13: Personal Banking: Profit before impairments up 17%
Financial results – first quarter 2017 Personal Banking: Profit before impairments up 17%; strong growth in Sweden and Norway continues Income statement and key figures (DKK m) Lending volume by country* (Q4 2015 = Index 100) Q1 2017 Q4 2016 Index Denmark Finland Sweden Norway Net interest income 1,
Slide 14: Business Banking: Profit before impairments up 7%
Financial results – first quarter 2017 Business Banking: Profit before impairments up 7% on higher fee income and lower costs Income statement and key figures (DKK m) Lending volume by country* (Q4 2015 = Index 100) Q1 2017 Q4 2016 Index Denmark Finland Sweden Norway Net interest income 2,135 2,148
Slide 15: Corporates & Institutions: Strong start to 2017
Financial results – first quarter 2017 Corporates & Institutions: Strong start to 2017 with high client activity in FICC and Capital Markets Income statement and key figures (DKK m) Income breakdown (DKK m) Q1 2017 Q4 2016 Index FICC Capital Markets General Banking Net interest income 758 795 95 Net
Slide 16: Wealth Management: AUM up 3%
Financial results – first quarter 2017 Wealth Management: AUM up 3%; fees down owing to booking of performance fees and shadow account in Q4 2016 Income statement and key figures (DKK m) Key points, Q1 2017 vs Q4 2016 Q1 2017 Q4 2016 Index • Assets under management up 3% on performance, net sales Ne
Slide 17: Non-core: Deleveraging progressed according to plan
Financial results – first quarter 2017 Non-core: Deleveraging progressed according to plan; REA of DKK 11 bn at Q1 2017 Non-core loan portfolio, Q1 2017 (DKK bn) Non-core REA (DKK bn) Allowance account Non-core conduits, etc. Non-performing credit exposure 24 Non-core Banking Performing credit expos
Slide 18: Net interest income: Up 9% owing mainly to volume growth
Financial results – first quarter 2017 Net interest income: Up 9% owing mainly to volume growth Change in net interest income (DKK m) 5,739 304 37 59 132 45 37 204 5,259 Q1 2016 Lending Lending Deposit Deposit Days effect FX effect Other* Q1 2017 volume margin volume margin * Other includes income f
Slide 19: Trading income: Strong client activity in the financial markets
Financial results – first quarter 2017 Trading income: Strong client activity in the financial markets resulted in high net trading income in Q1 2017 Trading income by business unit (DKK m) Key points, Q1 2017 vs Q4 2016 Other incl. Treasury Wealth Management Business • Trading income up 16% in Q1 N
Slide 20: Expenses: Down 5% owing to seasonally higher expenses in Q4
Financial results – first quarter 2017 Expenses: Down 5% owing to seasonally higher expenses in Q4 Total expenses ex goodwill charge (DKK m) Change in expenses ex goodwill (DKK m) Severance payments Bonuses Deposit guarantee scheme/resolution fund Other costs Q4 2016 6,056 -5% 6,056 Staff costs ex 4
Slide 21: Credit quality: Positive trend continues; NPLs decreased 14% y/y
Financial results – first quarter 2017 Credit quality: Positive trend in credit quality continues; NPLs decreased 14% y/y Individual loan impairment charges* (DKK bn) Gross non-performing loans (DKK bn) New Individual allowance account Net exposure in default Increased Net exposure not in default Re
Slide 22: Credit exposure: Agriculture and oil-related exposure
Financial results – first quarter 2017 Credit exposure: The agriculture industry benefits from improved output prices; limited oil-related exposure Agriculture exposure (2.4 % of Group net exposure) Oil-related exposure (0.9 % of Group net exposure) • The pressure on the Danish agricultural industry
Slide 23: Nordic macro economy
Financial results – first quarter 2017 Nordic macro economy Denmark Sweden Norway Finland Real GDP, constant prices (index 2005 = 100) Inflation (%) 135 6 4 120 2 105 0 2006 2008 2010 2012 2014 2016 90 2006 2008 2010 2012 2014 2016 -2 Interest rates, leading (%) Unemployment (%) 6 10 5 8 4 6 3 4 2 1
Slide 24: Nordic housing markets
Financial results – first quarter 2017 Nordic housing markets Denmark Sweden Norway Finland Property prices (index 2005 = 100) House prices/nom. GDP (index 2005 = 100) 220 140 200 130 180 120 160 110 140 120 100 100 90 2006 2008 2010 2012 2014 2016 2006 2008 2010 2012 2014 2016 Apartment prices (ind
Slide 25: Realkredit Danmark and the Danish housing market: Portfolio overview
Financial results – first quarter 2017 Realkredit Danmark and the Danish housing market: Portfolio overview Portfolio facts, Realkredit Danmark, Q1 2017 Stock of retail loans (DKK 433 bn), Realkredit Danmark, Q1 17 (%) • Approx. 370,000 loans (residential and commercial) Fixed rate (10yrs-30yrs) Int
Slide 26: Realkredit Danmark: 45% of new retail loans are fixed rate loans
Financial results – first quarter 2017 Realkredit Danmark: 45% of new retail loans are fixed rate loans; compliant with all regulatory requirements Key points Supervisory diamond for Danish mortgage institutions • 45% of new retail loans in Q1 were fixed-rate loans and 38% were 5- to 10-year variabl
Slide 27: Funding and liquidity: DKK 31 bn of long-term funding issued in Q1 2017
Financial results – first quarter 2017 Funding and liquidity: DKK 31 bn of long-term funding issued in Q1 2017; LCR-compliant at 156% Changes in funding,* Q1 2017 (DKK bn and bp) Long-term funding ex RD (DKK bn) Cov. bonds Senior Tier 2 Tier 1 Funding plan Completed 82bp 85 50bp 19bp 70-90 70 64 65b
Slide 28: Funding structure and sources: Danish mortgage system is fully pass-through
Financial results – first quarter 2017 Funding structure and sources: Danish mortgage system is fully pass-through Loan portfolio and long-term funding, Q1 2017 (DKK bn) Funding sources (%) Q4 2016 1,969 Q1 2017 55 54 151 Senior debt 1,705 Bank loans 587 884 Deposits Bank mortgages 343 159 Covered b
Slide 29: ROE of 13.1% in 2016; longer-term ambition maintained
Financial results – first quarter 2017 ROE of 13.1% in 2016; longer-term ambition maintained with unchanged assumptions ROE 2015-18E, after tax (%) Status at year-end 2016 Overall status of ROE bridge to 2018 • On track ROE 2015* 11.6% • Underlying assumptions are unchanged Adjustments** 0.2% Costs
Slide 30: Three distinct methods of rating banks
Financial results – first quarter 2017 Danske Bank’s rating Three distinct methods of rating banks Rating methodology Anchor Extraord. Add. Issuer + 1 + 2 + 3 + 4 = SACP = + ALAC + = SACP1 Support factors Rating bbb+ +1 +1 0 0 a 0 0 0 A (Stable) 1=Business Position, 2=Capital & Earnings, 3=Risk Posi
Slide 31: Tax
Financial results – first quarter 2017 Tax Actual and adjusted tax rates (DKK m) Tax drivers, Q1 2017 Q12017 Q42016 Q32016 Q22016 Q12016 • The actual tax rate 22.5 % is higher than Profit before tax 7,140 7,039 6,267 5,780 6,271 the Danish rate of 22% due to higher Ireland core and non-core 0 -96 -6
Slide 32: Contacts
Financial results – first quarter 2017 Contacts Direct: +45 45 12 84 83 Claus Ingar Jensen Mobile: +45 25 42 43 70 Head of IR [email protected] Direct: +45 45 14 07 92 John Bäckman Mobile: +45 30 51 46 85 Chief IR Officer [email protected] Direct: +45 45 14 06 04 Robin Hjelgaard Løfgren Mobile: +4
Slide 33: Disclaimer
Financial results – first quarter 2017 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