Danske Bank A/S · OMXCOP:DANSKE
Danske Bank A/S — Q1 2015 Earnings Presentation
35 slides from Danske Bank A/S's earnings presentation, Apr 30, 2015
Slide 1: Financial results for Q1 2015
Financial results for Q1 2015 Thomas F. Borgen Chief Executive Officer Henrik Ramlau-Hansen Chief Financial Officer 30 April 2015
Slide 2: Agenda
Financial results for Q1 2015 2013 Agenda Executive summary and financial results 3 Business unit update 5 Selected topics 7 Outlook for full-year 2015 12 Q&A 13 Appendix 14 2
Slide 3: Executive summary Q1 2015
Financial results for Q1 2015 2013 Executive summary Q1 2015 Net profit & ROE Net profit of DKK 5.0 bn and ROE of 13.2% Income Total income of DKK 12.2 bn – up 18% vs Q1 2014 Expenses Expenses of DKK 5.4 bn – flat vs Q1 2014 – and cost/income ratio of 44.5% Impairments Impairments of DKK 0.5 bn – do
Slide 4: Net profit: DKK 5 bn, up 76% from Q1 2014
Financial results for Q1 2015 2013 Net profit: DKK 5 bn, up 76% from Q1 2014 Income statement & key figures (DKK m) Key points, Q1 2015 vs Q1 2014 Q1 2015 Q1 2014 Index Q4 2014 Index • Return on equity improved from Net interest income 5,313 5,155 103 5,742 93 7.7% to 13.2% Net fee income 3,046 2,56
Slide 5: Banking units: Strong performance vs. Q1 2014 at all units
Financial results for Q1 2015 2013 Banking units: Strong performance vs. Q1 2014 at all units Pre-tax return on allocated capital ex goodwill charge (%) Financial highlights, Q1 2015 vs Q1 2014 Q1 2014 Q1 2015 Personal Banking • Lower NII offset by higher fees and trading income 20.1 18.7 • Expenses
Slide 6: Danske Capital and Danica Pension: Strong performance continued in Q1 2015
Financial results for Q1 2015 2013 Danske Capital and Danica Pension: Strong performance continued in Q1 2015 Danske Capital: Financial highlights, Q1 2015 vs Q1 2014 Danica Pension: Financial highlights, Q1 2015 vs Q1 2014 • Total income up 15% owing primarily to an increase in • Result from insura
Slide 7: Expenses: Flat vs. Q1 2014 despite higher activity, bonuses and one-off pension charge
Financial results for Q1 2015 2013 Expenses: Flat vs. Q1 2014 despite higher activity, bonuses and one-off pension charge Total expenses ex goodwill charge (DKK m) Change in expenses ex goodwill (DKK m) Consultants etc. Bonuses Severance payments Other costs Q1 2014 5,432 Deposit scheme guarantee /
Slide 8: Impairments: Loan loss ratio for Q1 of 11 bp for core activities and 8 bp for the Group
Financial results for Q1 2015 2013 Impairments: Loan loss ratio for Q1 of 11 bp for core activities and 8 bp for the entire Group Group impairments, 2011 to Q1 15 (DKK bn/bp) Impairments (DKK m) Impairments Loan loss ratio* (rhs) Q115 Q114 Index Q414 Index Personal Banking 245 337 73 517 47 99 Busin
Slide 9: Capital: Solid capital base, CET1 ratio of 14.1%
Financial results for Q1 2015 2013 Capital: Solid capital base, CET1 ratio of 14.1% net of full share buy-back, volume growth and Danica phase-in Capital ratios, under Basel III/CRR (%) Capital drivers Tier 2 Hybrid T1 / AT1 Common Equity Tier 1 • In Q1 2015, total REA increased to DKK 896 bn, mainl
Slide 10: Non-core: Sale of SME portfolio agreed, transfer of Baltic personal customers
Financial results for Q1 2015 2013 Non-core: Sale of SME portfolio agreed, transfer of Baltic personal customers to Non-core in Q1 Key points New Non-core loan portfolio,* Q1 2015 (DKK bn) • The profit before tax increased to DKK 0.1 bn compared Allowance account Performing credit exposure with a lo
Slide 11: Impact of monetary policy events in early 2015 by business unit
Financial results for Q1 2015 2013 Impact of monetary policy events in early 2015 by business unit Illustration of “ceteris paribus” impact Short-term Long-term Loan losses Personal Banking NII Fees Loan losses Business Banking NII Activity Yield curve C&I Trading Volatility Danske Capital Inflow As
Slide 12: Outlook for 2015: Net profit of above DKK 14 bn
Financial results for Q1 2015 2013 Outlook for 2015: Net profit of above DKK 14 bn Macro Economic growth remains slow and fragile, with low interest rates Total income Income is expected to be around the same level as in 2014 Expenses Expenses are expected to be below DKK 22 bn Impairments Impairmen
Slide 13: Q&A session
Financial results for Q1 2015 2013 Q&A session www.danskebank.com/ir 13
Slide 14: Appendix
Financial results for Q1 2015 2013 Appendix Business units 15 Special topics: NII, trading income and expenses 20 Impairments 23 Macro, credit quality and portfolio reviews 25 Funding, liquidity and ratings 30 Tax 33 Contact details 34 14
Slide 15: Personal Banking: Positive trend in impairments and income except for NII
Financial results for Q1 2015 2013 Personal Banking: Positive trend in impairments and income except for NII; good momentum in Norway Income statement & key figures (DKK m) Lending volume by country,* Q4 2013 = Index 100 Q1 2015 Q4 2014 Index Denmark Norway Net interest income 2,398 2,660 90 Net fee
Slide 16: Business Banking: Positive trend in most income lines and impairments
Financial results for Q1 2015 2013 Business Banking: Positive trend in most income lines and impairments; good momentum in Nordic lending Income statement & key figures (DKK m) Lending volume by country,* Q4 2013 = Index 100 Q1 2015 Q4 2014 Index Denmark Norway Net interest income 2,224 2,301 97 Net
Slide 17: Corporates & Institutions: Trading income drives PBT higher
Financial results for Q1 2015 2013 Corporates & Institutions: Trading income drives PBT higher as client activity increased and market conditions improved Income statement & key figures (DKK m) Key points, Q1 15 vs Q4 14 Q1 2015 Q4 2014 Index Net interest income 660 717 92 • Profit before tax up 126
Slide 18: Danske Capital: Higher AuM drives 3% increase in total income
Financial results for Q1 2015 2013 Danske Capital: Higher AuM drives 3% increase in total income, excluding performance fees; expenses down 4% Income statement (DKK m) Key points, Q1 15 vs Q4 14 Q1 2015 Q4 2014 Index • Non-performance-based income was up 3% Net interest income -2 2 - Net fee income
Slide 19: Danica Pension: Strong improvement in insurance result
Financial results for Q1 2015 2013 Danica Pension: Strong improvement in insurance result; full risk allowance booked for all four interest rate groups Income statement (DKK m) Investment allocation for Danica Traditionel, end-Q1 15 (%) Q1 2015 Q4 2014 Index Equities Credit bonds Alternative investm
Slide 20: Net interest income: Q1 affected by lower interest rate environment
Financial results for Q1 2015 2013 Net interest income: Q1 affected by lower interest rate environment Quarterly net interest income (DKK m) Quarterly changes in net interest income (DKK m) +3% 5,735 5,742 Q4 14 5,742 5,681 5,313 5,155 Lending effect 189 Q114 Q214 Q314 Q414 Q115 Deposit effect 425 B
Slide 21: Trading income: High customer activity in financial markets
Financial results for Q1 2015 2013 Trading income: High customer activity in financial markets and positive fair value adjustments in Q1 Trading income by business unit (DKK m) Key points Other incl. Treasury C&I Business Personal • Trading income increased owing to 2,715 high customer activity in f
Slide 22: Expenses: Drop of 11% owing to seasonality and restructuring charges in Q4 2014
Financial results for Q1 2015 2013 Expenses: Drop of 11% owing to seasonality and restructuring charges in Q4 2014 Total expenses ex goodwill charge (DKK m) Change in expenses ex goodwill (DKK m) Consultants etc. Bonuses Severance payments Other costs Q4 2014 6,090 Deposit guarantee scheme/bank pack
Slide 23: Impairments: Positive underlying trend in impairments continues
Financial results for Q1 2015 2013 Impairments: Positive underlying trend in impairments continues; Q4 impairments included AQR charges Impairments by business unit (DKK bn) Individual loan impairment charges,* ex Core Baltics (DKK bn) Non-core C&I Business Personal New Increased Reversal 1.3 0.8 0.
Slide 24: Group impairments: DKK 40.9 bn in the allowance account
Financial results for Q1 2015 2013 Group impairments: DKK 40.9 bn in the allowance account Allowance account (DKK m) Impairment drivers Personal Banking Corporates & Institutions • Personal Banking: Down from Q4 level owing to Business Banking Non-core collective AQR charges of DKK 0.3 bn in Q4; ind
Slide 25: Nordic macro
Financial results for Q1 2015 2013 Nordic macro Real GDP, (constant prices, index 2005 = 100) Inflation, (%) Denmark Sweden Norway Finland Denmark (CPI) Norway (CPI) 130 Sweden (CPI) Finland (HICP) 6 120 4 110 2 100 0 90 2006 2008 2010 2012 2014 -2 2006 2008 2010 2012 2014 Interest rates, (leading,
Slide 26: Nordic housing market
Financial results for Q1 2015 2013 Nordic housing market House prices, (index 2005 = 100) House prices/nom. GDP, (index 2005 = 100) Denmark Sweden Norway Finland Denmark Sweden Norway Finland 200 130 180 120 160 110 140 100 120 90 100 2006 2008 2010 2012 2014 2006 2008 2010 2012 2014 Apartment price
Slide 27: Realkredit Danmark and the Danish housing market: Portfolio overview
Financial results for Q1 2015 2013 Realkredit Danmark and the Danish housing market: Portfolio overview Portfolio facts, Realkredit Danmark, end-Q1 15 Stock of retail loans, Realkredit Danmark, end-Q1 15 (%) • Approx. 379,000 loans (residential and commercial) Variable rate instalments Variable rate
Slide 28: Realkredit Danmark: Increase in fixed-rate loans driven by very low interest rates
Financial results for Q1 2015 2013 Realkredit Danmark: Increase in fixed-rate loans driven by very low interest rates Key points Expected development in RD portfolio* (%) • Trend away from short-term Flexlån® continued in Q1 Interest-only Amortising 2015 • The share of total new mortgages represente
Slide 29: Credit exposure: Limited agriculture and shipping/oil exposure
Financial results for Q1 2015 2013 Credit exposure: Limited agriculture and shipping/oil exposure Agriculture exposure (2.8 % of Group exposure) Shipping and oil related exposure (2.3 % of Group exposure) • Market conditions remain weak although output prices have • The shipping portfolio is mainly
Slide 30: Funding and liquidity: DKK 20 bn of long-term funding issued in Q1
Financial results for Q1 2015 2013 Funding and liquidity: 20 bn of long-term funding issued in Q1; expensive funding up for redemption in 2015 Changes in funding , 2014 (DKK bn and bp*) Long-term funding ex RD (DKK bn) Cov. Bonds Senior Tier 2 Tier 1 Funding plan 107bp Completed 95 51bp 73 64 50-70
Slide 31: Funding: Structure and sources; Danish mortgage system is fully pass-through
Financial results for Q1 2015 2013 Funding: Structure and sources; Danish mortgage system is fully pass-through Loan portfolio and long-term funding, Q1 15 (DKK bn) Funding sources (%) Q4 2014 Q1 2015 1,880 110 Senior debt 45 1,605 Bank loans 541 827 Deposits 21 Bank mortgages 315 194 Covered bonds
Slide 32: Three distinct methods of rating banks
Financial results for Q1 2015 2013 Three distinct methods of rating banks; Moody’s rating under review for possible upgrade Rating methodology Danske Bank’s rating Anchor Extraord. Add. Issuer + 1 + 2 + 3 + 4 = SACP = + = SACP* Support factors Rating bbb+ +1 0 0 0 a- +2 -1 A (Negative) 1=Business Po
Slide 33: Tax
Financial results for Q1 2015 2013 Tax Actual and adjusted tax rates (DKK m) Tax drivers Q12015 Q42014 Q32014 Q22014 Q12014 • The difference between profit Profit before tax 6,362 -5,298 4,503 5,000 3,630 before tax and adjusted pre-tax Ireland core and non-core -433 434 79 87 140 profit relates mai
Slide 34: Contacts
Financial results for Q1 2015 2013 Contacts Henrik Ramlau-Hansen Direct: +45 45 14 06 66 Chief Financial Officer Mobile: +45 22 20 73 10 [email protected] Claus Ingar Jensen Direct: +45 45 12 84 83 Head of IR Mobile: +45 25 42 43 70 [email protected] John Bäckman Direct: +45 45 14 07 92 Chief IR
Slide 35: Disclaimer
Financial results for Q1 2015 2013 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 Sta