Danske Bank A/S · OMXCOP:DANSKE
Danske Bank A/S — Debt Investor Presentation (2019)
37 slides from Danske Bank A/S's debt investor presentation, 2019
Slide 1: Debt investor update Q1 2019
Debt investor update a1 2019 Bank
Slide 2: Agenda
Debt investor update – Q1 2019 Agenda Group financial update 2 Capital and funding 14 Covered bond universe and ratings 20 Appendix 22 1
Slide 3: Executive summary: A difficult start to the year; outlook changed
Debt investor update – Q1 2019 Executive summary: A difficult start to the year; outlook changed to include expected gain from sale of Danica Pension Sweden* and lower NII DKK 3.0 bn Net profit, down 39% from Q1 2018 due to lower Loan growth of 3% y/y, driven by growth of NII, higher expenses and hi
Slide 4: Recap of the Estonia case
Debt investor update – Q1 2019 Recap of the Estonia case Our investigation continues and all findings are shared with relevant authorities through regular updates. Timing of completion is uncertain and subject to dialogue with authorities Ongoing investigations by Danish, Estonian, French and US aut
Slide 5: We are a Nordic universal bank with strong regional roots
Debt investor update – Q1 2019 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: 10% Share of Group lending: 8% GDP growth 2018: 2.2% GDP growth 2018: 2.3% Unemployment 2018:
Slide 6: Strong footprint within retail lending
Debt investor update – Q1 2019 Strong footprint within retail lending Lending by business unit*; %; Q1 2019 Credit exposure by industry; %; Q1 2019 Banking DK Wealth Management Personal Customers 39 Banking Nordic Northern Ireland Commercial Prop 13 C&I Other Public Institutions 9 Co-ops & Non-Profi
Slide 7: Financial results overview
Debt investor update – Q1 2019 Financial results overview Total income; DKK bn Total expenses; DKK bn Net interest income 48.0 48.1 Donation 25.0 1.6 44.4 1.5 Net fee income 3.1 Underlying costs 7.1 0.7 Net trading income 8.6 4.7 Other income 15.7 15.4 14.2 22.6 22.7 23.5 22.0 23.8 23.6 2016 2017 20
Slide 8: Net profit: DKK 3.0 bn, down 39% from Q1 2018
Debt investor update – Q1 2019 Net profit: DKK 3.0 bn, down 39% from Q1 2018 due to lower NII, higher expenses and higher impairments Income statement and key figures (DKK m) Key points, Q1 2019 vs Q1 2018 Q1 2019 Q1 2018 Index Q4 2018 Index • Return on equity of 7.7% Net interest income 5,520 5,946
Slide 9: NII: Down 7% y/y due to margin pressure, higher funding costs
Debt investor update – Q1 2019 NII: Down 7% y/y due to margin pressure, higher funding costs and transfer to Non-core Key points Change in net interest income, y/y (DKK m) Y/Y 5,946 165 • NII down 7%, as lending growth of 3% was offset by 326 29 193 74 lower lending margins, higher funding costs and
Slide 10: NII (cont'd): Solid volume growth at Banking Nordic and Northern Ireland
Debt investor update – Q1 2019 NII (cont’d): Solid volume growth at Banking Nordic and Northern Ireland. Positive development at Banking DK Key points Lending volume and development* (DKK billions) • Banking Nordic lending up 7% y/y with growth in Q1 2018 Q1 2019 all markets • Banking DK lending up
Slide 11: Fee income: Up 3% y/y
Debt investor update – Q1 2019 Fee income: Up 3% y/y, due primarily to the SEB Pension Danmark acquisition Key points Net fee income development, y/y (DKK m) Q1 2018 +3% Q1 2019 Y/Y -13% 3,762 3,869 +48% • Fees up 3%, due primarily to the acquisition of SEB Pension Danmark; AuM up 9% 1,406 0% 1,227
Slide 12: Trading income: Down 9% y/y but up 38% q/q
Debt investor update – Q1 2019 Trading income: Down 9% y/y but up 38% q/q due to less challenging market conditions Key points Group net trading income (DKK m) Y/Y • Trading income down 9% from Q1 2018, reflecting higher -9% negative value adjustments on the derivatives portfolio as well +38% as a r
Slide 13: Expenses: Up 9% y/y
Debt investor update – Q1 2019 Expenses: Up 9% y/y due to investments and SEB Pension Danmark acquisition Key points Change in expenses, y/y (DKK m) Y/Y 124 • Expenses up 9% y/y, due mainly to investments related to 88 regulatory compliance, AML and digitalisation. 30 49 228 248 174 • Costs related
Slide 14: Impairments: Loan loss ratio of 8 bp in core activities
Debt investor update – Q1 2019 Impairments: Loan loss ratio of 8 bp in core activities in Q1 Key points Impairment charges by business unit, Q1 2019 (DKK m) Y/Y • Charge of DKK 357 million; core loan loss ratio of 8 bp − Increased impairments against agricultural exposures, Banking DK +206 lower rev
Slide 15: Capital: Strong capital base; CET1 capital ratio of 16.7%
Debt investor update – Q1 2019 Capital: Strong capital base; CET1 capital ratio of 16.7% 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 16: Strong CET1 capital build-up since 2008
Debt investor update – Q1 2019 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 50 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 17: Update on MREL Requirement & Issuance
Debt investor update – Q1 2019 Update on MREL Requirement & Issuance Overview of MREL Considerations MREL resources and requirements, Q1 2019 (% of REA) Calibration towards July 2019: The Group has to meet both an Senior <1Y Own funds MREL requirement and a separate debt buffer requirement for RD. S
Slide 18: Funding structure and sources
Debt investor update – Q1 2019 Funding structure and sources: Danish mortgage system is fully pass-through Loan portfolio and long-term funding, Q1 2019 (DKK billions) Funding sources (%) Q4 2018 Q1 2019 2,058 52 52 154 Senior & NPS bonds 1,793 Bank loans 616 909 Deposits Bank mortgages 373 191 Cove
Slide 19: Funding programmes and currencies
Debt investor update – Q1 2019 Funding programmes and currencies Covered bonds by currency, end-Q1 2019 Largest funding programmes, end-Q1 2019 EUR DKK Utilisation 3% SEK CHF EMTN Programme 16% 1% 36% NOK Limit: EUR 35 bn Global Covered Bond 86% 20% Limit: EUR 30 bn 61% ECP Programme 2% Limit: EUR 1
Slide 20: Funding and liquidity: DKK 51 bn issued in Q1 2019
Debt investor update – Q1 2019 Funding and liquidity: DKK 51 bn of long-term funding and capital instruments issued in Q1 2019; LCR compliant at 130% Changes in funding,1 2018-2019 (DKK billions and bp) Long-term funding excl. RD (DKK billions)2 Cov. bonds Senior Non-preferred senior Funding plan Co
Slide 21: Danske Bank covered bond universe
Debt investor update – Q1 2019 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 22: Danske Bank's credit ratings
Debt investor update – Q1 2019 Danske Bank’s credit ratings Long-term instrument ratings No rating actions on Danske Bank in Q1 2019 In 2018, all three credit rating agencies revised the outlook on Danske Fitch Moody’s Scope S&P Bank to negative following the publication of the Bruun & Hjejle report
Slide 23: Appendix
Debt investor update – Q1 2019 Appendix Business Units 23 Special topics 30 Macroeconomics 32 Contact details 35 22
Slide 24: Banking DK: Lending growth of 2% y/y; higher impairments
Debt investor update – Q1 2019 Banking DK: Lending growth of 2% y/y; higher impairments Income statement and key figures (DKK m) Key points Q1 2019 Q1 2018 Index Q4 2018 Index Y/Y Net interest income 2,181 2,213 99 2,252 97 • Total income down 4% Net fee income 789 886 89 802 98 • Expenses up 5% owi
Slide 25: Realkredit Danmark: Portfolio overview
Debt investor update – Q1 2019 Realkredit Danmark: Portfolio overview 49% of new retail lending in Q1 was fixed-rate vs 42% of stock Portfolio facts, Realkredit Danmark, Q1 2019 Retail loans, Realkredit Danmark, Q1 2019 (%) • Approx. 358,000 loans (residential and commercial) Fixed rate (10 yrs-30 y
Slide 26: Banking Nordic: Lending growth of 7% y/y
Debt investor update – Q1 2019 Banking Nordic: Lending growth of 7% y/y but higher interest rates squeezed margins Income statement and key figures (DKK m) Key points Q1 2019 Q1 2018 Index Q4 2018 Index Y/Y Net interest income 1,900 1,972 96 2,011 94 • NII down 4% as higher interest rates put Net fe
Slide 27: Lending growth: Banking DK and Banking Nordic
Debt investor update – Q1 2019 Lending growth: Growth of 2% y/y at Banking DK, solid growth of 7% at Banking Nordic Comments Banking Nordic: lending volume by segment and country* Banking DK • 83% of lending at Banking DK is at mortgage subsidiary Finland retail Sweden commercial Realkredit Danmark
Slide 28: Corporates & Institutions: NII and lending down
Debt investor update – Q1 2019 Corporates & Institutions: NII and lending down due to portfolio transfer to Non-core; underlying, NII was stable Income statement and key figures (DKK m) Key points Q1 2019 Q1 2018 Index Q4 2018 Index Y/Y Net interest income 930 1,002 93 954 97 • NII flat adjusted for
Slide 29: Wealth Management: AuM up 9% y/y
Debt investor update – Q1 2019 Wealth Management: AuM up 9% y/y, owing mainly to the acquisition of SEB Pension Danmark* Income statement and key figures (DKK m) Key points Q1 2019 Q1 2018 Index Q4 2018 Index Y/Y Net interest income 175 179 98 180 97 • AuM up 9%, owing mainly to the Net fee income 1
Slide 30: Northern Ireland: Lending and NII up y/y
Debt investor update – Q1 2019 Northern Ireland: Lending and NII up y/y despite continued Brexit uncertainty Income statement and key figures (DKK m) Key points Q1 2019 Q1 2018 Index Q4 2018 Index Y/Y Net interest income 386 364 106 383 101 • Lending and NII up despite continued Net fee income 96 95
Slide 31: Credit exposure: Limited agriculture and oil-related exposure
Debt investor update – Q1 2019 Credit exposure: Limited agriculture and directly oil-related exposure Agriculture exposure (3.0% of Group exposure) Oil-related exposure (0.7% of Group exposure) • Pork prices remained at a very low level, while milk prices weak- • Net exposure decreased to DKK 17.0 b
Slide 32: Non-core: Portfolio now includes all Baltic and Russian exposure
Debt investor update – Q1 2019 Non-core: Portfolio now includes all Baltic and Russian exposure Non-core loan portfolio, Q1 2019 (DKK billions) Non-core REA1 (DKK billions) Allowance account Non-core conduits etc. Non-performing credit exposure Non-core Banking Performing credit exposure 21 14 12 3
Slide 33: Nordic macroeconomics
Debt investor update – Q1 2019 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 34: Nordic macroeconomics
Debt investor update – Q1 2019 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) 33
Slide 35: Nordic housing markets
Debt investor update – Q1 2019 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 36: Contacts
Debt investor Financial update results – Q1 for Q1 2019 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 37: Disclaimer
Debt investor update – Q1 2019 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,