Danske Bank A/S · OMXCOP:DANSKE
Danske Bank A/S — Debt Investor Presentation (2019)
31 slides from Danske Bank A/S's debt investor presentation, Apr 21, 2019
Slide 1: Debt investor update Q4 2018
Debt investor update Q4 2018 Bank
Slide 2: Agenda
Debt investor update – Q4 2018 Agenda Group financial update 2 Capital and funding 11 Covered bond universe and ratings 17 Appendix 19 1
Slide 3: Executive summary: 2018 was a challenging year
Debt investor update – Q4 2018 Executive summary: 2018 was a challenging year Financial results, 2018 Lending growth of 3% y/y, driven by growth of 1% y/y at Banking DK and 5% y/y at • Net profit of DKK 15.0 bn, down 28% from 2017 due Banking Nordic to lower trading income and donation. Excluding th
Slide 4: Recap of the Estonia case
Financial results 2018 Recap of the Estonia case On 19 September 2018, findings of the internal investigation was published Our investigation continues and all findings are shared with relevant authorities through regular updates. Timing of completion is uncertain and subject to dialogue with author
Slide 5: Upscaling of AML efforts in 2018 creates cost overhang in 2019
Financial results 2018 Upscaling of AML efforts in 2018 creates cost overhang in 2019; Accelerated digitalisation efforts over next three years Since 2014, Danske Bank has made substantial investments to improve our set-up, capabilities and competencies for combating financial crime. However, as fin
Slide 6: We are a Nordic universal bank with strong regional roots
Debt investor update – Q4 2018 We are a Nordic universal bank with strong regional roots Norway (AAA) Finland (AA+) Challenger position 3rd largest Market share: 6% Market share: 10% Share of Group lending: 9% Share of Group lending: 8% GDP growth 2018E: 2.2% GDP growth 2018E: 2.3% Unemployment 2018
Slide 7: Strong footprint within retail lending
Debt investor update – Q4 2018 Strong footprint within retail lending Lending by business unit*; %; Q4 2018 Credit exposure by industry; %; Q4 2018 Banking DK Wealth Management Retail customers 29 Banking Nordic Northern Ireland Agriculture 17 C&I Other Commercial property 12 Shipping 10 3% Consumer
Slide 8: Financial results overview
Debt investor update – Q4 2018 Financial results overview Total income; DKK bn Total expenses; DKK bn Net interest income 48.0 48.1 Donation 25.0 3.1 1.6 44.4 1.5 Net fee income 0.7 Underlying costs 7.1 4.7 Net trading income 8.6 Other income 15.7 15.4 14.2 22.6 22.7 23.5 22.0 23.8 23.6 2016 2017 20
Slide 9: Net profit: DKK 15.0 bn, down 28% from 2017
Debt investor update – Q4 2018 Net profit: DKK 15.0 bn, down 28% from 2017 due to lower trading income and donation Income statement and key figures (DKK millions) Key points, 2018 vs 2017 2018 2017 Index Q4 2018 Q3 2018 Index • Return on equity of 9.8% Net interest income 23,571 23,806 99 5,895 5,8
Slide 10: Expenses: 2018 impacted by donation, AML & SEB Pension DK
Debt investor update – Q4 2018 Expenses: 2018 impacted by donation, AML & SEB Pension DK; 2019 expected to be driven by AML, SEB, VAT & activity Change in expenses (DKK millions) Expense drivers 72 2018 vs 2017 • Expenses up 10% y/y, due mainly to the 1,500 donation. Excluding the donation, expenses
Slide 11: Impairments: Q4 net impairment reversal
Debt investor update – Q4 2018 Impairments: Q4 net impairment reversal driven by Banking DK and Banking Nordic Group impairments,* 2012-2018 (DKK billions/bp) Impairment drivers, Q4 2018 vs Q3 2018 Impairments Loan loss ratio* (rhs) • Net impairment reversal driven by Banking DK and Banking 14 70 No
Slide 12: Capital: Strong capital base; CET1 capital ratio of 17.0%
Debt investor update – Q4 2018 Capital: Strong capital base; CET1 capital ratio of 17.0% Capital ratios, under Basel III/CRR (%) Estimated capital buffer structure, % Tier 2 Pillar II component (total 3.8%) Countercyclical capital buffer CET1 target (16%) Hybrid T1/AT1 CET1 Capital conservation buff
Slide 13: Strong CET1 capital build-up since 2008
Debt investor update – Q4 2018 Strong CET1 capital build-up since 2008; Available Distributable Items (ADI) in excess of DKK 100 bn Common Equity Tier 1, 2008 – 2018; DKK billion +DKK 56 bn 130 134 133 133 127 126 119 107 79 85 77 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018* REA, CET1, pr
Slide 14: Update on MREL Requirement & Issuance
Debt investor update – Q4 2018 Update on MREL Requirement & Issuance MREL resources and requirements, pro forma Q4 2018 incl. NPS Overview of MREL Considerations issuance in January 2019 (% of REA)** Calibration towards July 2019: The Group has to meet both an Senior <1Y Potential MREL add-on in nex
Slide 15: Funding structure and sources
Debt investor update – Q4 2018 Funding structure and sources: Danish mortgage system is fully pass-through Loan portfolio and long-term funding, Q4 2018 (DKK billions) Funding sources (%) Q3 2018 1,996 Q4 2018 120 Senior & 51 52 NPS debt 1,769 Bank loans 612 894 Deposits Bank mortgages 358 183 Cover
Slide 16: Funding programmes and currencies
Debt investor update – Q4 2018 Funding programmes and currencies Covered bonds by currency, end-Q4 2018 Largest funding programmes, end-Q4 2018 EUR DKK Utilisation 3% SEK CHF EMTN Programme 14% 1% 29% NOK Limit: EUR 35 bn Global Covered Bond 76% 18% Limit: EUR 30 bn 64% ECP Programme 7% Limit: EUR 1
Slide 17: Funding and liquidity: LCR compliant at 121%
Debt investor update – Q4 2018 Funding and liquidity: DKK 69 bn of long-term funding and capital instruments issued in 2018; LCR compliant at 121% Changes in funding,* 2018-2019 (DKK billions and bp) Long-term funding excl. RD (DKK billions)** Cov. bonds Senior Non-preferred senior Funding plan Comp
Slide 18: Danske Bank covered bond universe
Debt investor update – Q4 2018 Danske Bank covered bond universe, a transparent pool structure1 Residential mortgages from • Denmark, D-pool • Norway, I-pool + • Sweden, Danske Hypotek AB C-pool (AAA/AAA) • Finland, Danske Mortgage Bank Plc I-pool (AAA/AAA) Finland Commercial mortgages from Norway S
Slide 19: Danske Bank's credit ratings
Debt investor update – Q4 2018 Danske Bank’s credit ratings Long-term instrument ratings Comments Fitch Moody’s Scope Ratings S&P Moody’s revises outlook to negative and downgrades On 12 October 2018, Moody’s downgraded Danske Bank’s issuer and AAA1 Aaa AAA AAA senior unsecured debt ratings to A2 fr
Slide 20: Appendix
Debt investor update – Q4 2018 Appendix Realkredit Danmark 20 Business Units 22 Special topics 24 Macroeconomics 26 Contact details 29 19
Slide 21: Realkredit Danmark and the Danish housing market: Portfolio overview
Debt investor update – Q4 2018 Realkredit Danmark and the Danish housing market: Portfolio overview Portfolio facts, Realkredit Danmark, Q4 18 Stock of retail loans (DKK 449 bn), Realkredit Danmark, Q4 18 (%) • Approx. 362,000 loans (residential and commercial) Fixed rate (10yrs-30yrs) Interest-only
Slide 22: Realkredit Danmark: 47% of new retail loans are fixed-rate
Debt investor update – Q4 2018 Realkredit Danmark: 47% of new retail loans are fixed-rate; compliant with all regulatory requirements Key points Supervisory diamond for Danish mortgage credit institutions • 47% of new retail loans in Q4 were fixed-rate loans, and 40% were 5- to 10-year variable-rate
Slide 23: Banking units: Continued growth
Debt investor update – Q4 2018 Banking units: Continued growth, driven primarily by good momentum at Banking Nordic and stable growth at Banking DK Pre-tax return on allocated capital (%) Financial highlights, 2018 vs 2017 2018 2017 Banking DK • Total income unchanged 21.6 22.3 • Expenses up 2% owin
Slide 24: C&I and Wealth Management
Debt investor update – Q4 2018 C&I and Wealth Management: Difficult market conditions affected trading income; WM fees benefit from SEB Pension DK Corporates & Institutions: Financial highlights, 2018 vs 2017 Wealth Management: Financial highlights, 2018 vs 2017 • NII up 2% despite the transfer of l
Slide 25: Credit exposure: Limited agriculture and oil-related exposure
Debt investor update – Q4 2018 Credit exposure: Limited agriculture and directly oil-related exposure Agriculture exposure (3.0% of Group exposure) Oil-related exposure (0.8% of Group exposure) • Pork prices remained at a very low level while milk prices weak- • Net exposure increased to DKK 18.7 bn
Slide 26: Non-core: Deleveraging progressed according to plan
Debt investor update – Q4 2018 Non-core: Deleveraging progressed according to plan; REA of DKK 12 bn at end-2018 Non-core loan portfolio, Q4 2018 (DKK billions) Non-core REA (DKK billions) Allowance account Non-core conduits etc. Non-performing credit exposure Non-core Banking Performing credit expo
Slide 27: Nordic macroeconomics
Debt investor update – Q4 2018 Nordic macroeconomics Denmark Sweden Norway Finland EU Real GDP, constant prices (index 2005 = 100) Inflation (%) 2006 2008 2010 2012 2014 2016 2018 2006 2008 2010 2012 2014 2016 2018 Interest rates, leading (%) Unemployment (%) 2006 2008 2010 2012 2014 2016 2018 2006
Slide 28: Nordic macroeconomics
Debt investor update – Q4 2018 Nordic macroeconomics Denmark Sweden Norway Finland EU Current account (surplus+/deficit- , % of GDP) Gross public debt (% of GDP) 2006 2008 2010 2012 2014 2016 2018 Household debt burden (% of disposable income) Household interest burden (% of disposable income) 2006
Slide 29: Nordic housing markets
Debt investor update – Q4 2018 Nordic housing markets Denmark Sweden Norway Finland Property prices (index 2005 = 100) House prices/nom. GDP (index 2005 = 100) 2006 2008 2010 2012 2014 2016 2018 2006 2008 2010 2012 2014 2016 2018 Apartment prices (index 2005 = 100) Apartment prices/nom. GDP (index 2
Slide 30: Contacts
Debt investor Financial update results – Q4 for Q1 2018 2013 Contacts Christoffer Møllenbach Claus Ingar Jensen Head of Group Treasury Head of IR Direct: +45 45 14 63 60 Direct: +45 45 12 84 83 Mobile: +45 21 55 10 52 Mobile: +45 25 42 43 70 E-mail: [email protected] E-mail: [email protected] Bent
Slide 31: Disclaimer
Debt investor update – Q4 2018 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 States,