Danske Bank Investor Presentation Asia Investor Roadshow Henrik Ramlau-Hansen CFO & Member of the Executive Board Peter Holm Senior Vice President, Head of Funding and Cover Pool Management Hong Kong & Singapore, 10-11 September 2012
Danske Bank Investor Presentation Agenda Overview 3 5 Financial results Rating , funding & liquidity 18 New issue 24 Appendix: Trends in focus areas & business units 28 Outlook for 2012 25 29 2
Danske Bank Investor Presentation Danske Bank has created a strong Nordic franchise through mergers and acquisitions 5.0 million customers Finland 2.2 million active internet customers Market position: Leader Branches: 101 Market share: 12% 578 branches in 15 countries * Market rank: 3 Loan growth (Y/Y): 5% 20,997 full-time employees Estonia Market position: Challenger Branches: 14 Northern Ireland Norway Sweden Market share: 8% Market position: Leader Market position: Challenger Market position: Challenger Market rank: 4 Loan growth (Y/Y): ** -12% Branches: 66 Branches: 37 Branches: 46 Market share: 20-29% Market share: 5% Market share: 6% Market rank: 1-2 Market rank: 3 Market rank: 5 Latvia Loan growth (Y/Y): *** -12% Loan growth (Y/Y): *** 4% Loan growth (Y/Y): *** -1% Market position: Challenger Branches: 3 Ireland Market share: 2% Denmark Market rank: 12 Market position: Challenger Market position: Leader Loan growth (Y/Y): ** -12% Branches: 27 Branches: 271 Market share: 3% Market share: 28% Market rank: 6 Market rank: 1 Lithuania Loan growth (Q/Q): -2% Loan growth (Y/Y): 1% Market position: Challenger Branches: 13 Market share: 6% Market rank: 5 Loan growth (Y/Y): ** -12% Note: Market share represents market share of lending. * Excluding agricultural centres in Denmark. ** Loan growth represents total loan growth for Baltic countries. *** Loan growth is calculated in local currency. 3
Danske Bank Investor Presentation Overview of Danske Bank: Denmark is our main market, but we are present throughout the Nordics Income distributio n, H1 2012 (%) Lending by business unit, H1 2012 (%) Finland Finland Denmark Denmark 9 8 Sweden 8 Sweden 11 Norway 37 7 Norway 8 Northern Ireland 4 1 Ireland 1 55 2 Northern Ireland 3 Ireland, non-core 1 Baltics Ireland 2 6 1 CIB Non-core Ireland 6 Baltics 5 3 Other 22 CIB 1 Markets Markets Other Total income of Total lending of DKK 24,604 mio DKK 1,704 bn 4
Danske Bank Investor Presentation Overview Financial results Rating , funding & liquidity New issue Appendix: Trends in focus areas & business units 5
Danske Bank Investor Presentation Half-year results are a step in the right direction, but there is still a way to go Net profit (DKK m) and ROE (%) Net profit ROE (r.a.) 3,000 4.0 2,500 2,286 3.0 1,907 2,000 1,706 1,500 2.0 1,000 725 1.0 500 0 0.0 H1 09 H1 10 H1 11 H1 12 6
Danske Bank Investor Presentation Highlights Income statement & key figures (DKK m) Key points H1 • Best half year result since 2008 H1 2012 H1 2011 Index Q2 2012 Q1 2012 Index Net interest income 12,390 11,339 109 6,218 6,172 101 • Improvement driven both by a solid Net fee income 4,013 4,142 97 2,026 1,987 102 increase in net interest income and lower expenses Net trading income 5,684 5,420 105 2,462 3,222 76 Other income 1,634 1,974 83 846 788 107 • Impairments higher than H1 2011 Net income from insurance business 883 328 269 699 184 380 due to deterioration of the macro Total income 24,604 23,203 106 12,251 12,353 99 economic climate Expenses 13,482 14,029 96 6,632 6,850 97 Profit bef. loan imp. charges 11,122 9,174 121 5,619 5,503 102 Loan impairment charges 7,031 5,594 126 3,109 3,922 79 Profit before tax 4,091 3,580 114 2,510 1,581 159 Key points Q2 Tax 1,805 1,673 108 1,007 798 126 Net profit 2,286 1,907 120 1,503 783 192 • Resilient net interest income Net profit ex non-core Ireland 4,571 - - 2,840 1,731 164 • Solid trading income Return on avg. shareholders' equity (%) 3.6 3.3 109 4.7 2.5 189 • Danica: new discounting curve and C/I ratio (%) 54.8 60.5 91 54.1 55.5 98 risk allowance for 3 out of 4 groups Core tier 1 capital ratio (%) 12.1 12.3 98 12.1 12.0 101 • Declining expenses, cost Risk-weighted assets (bn) 893 860 104 893 900 99 programme on track Total loans ex repos (bn) 1,704 1,667 102 1,704 1,684 101 Deposits (ex repos) & RD bonds (bn) 1,486 1,492 100 1,486 1,536 97 • Lower impairments, in Denmark Total assets (bn) 3,481 3,127 111 3,481 3,500 99 and Northern Ireland in particular Loan loss ratio (%) 73 58 126 62 81 76 7
Danske Bank Investor Presentation Net interest income: Resilient, but strong underlying drivers – both positive and negative Quarterly net interest income (DKK m) Net interest income drivers Positive • Increased lending rates +7% 6.218 Negative 6.182 6.172 • Low and declining central bank rates • Increased funding cost 6.016 Sensitivity Short term interest rate sensitivity 5.785 across all currencies + 25 bp = DKK +800 m – 25 bp = DKK – 800 m Q211 Q311 Q411 Q112 Q212 8
Danske Bank Investor Presentation Trading: Strong H1 2012, but outlook is uncertain Quarterly trading income (DKK m) Trading income drivers • Solid trading income mainly from bond 3.222 and derivatives trading • Q2 gain on unlisted shares DKK 283 m and DKK 396 m on pension plans Prospera Ranking • Danske Markets selected most valued 2.462 2.445 player in the Nordic bond and derivatives markets Interest rate sensitivity (group) • 1 pp increase in yield curve: DKK -128 m 1.638 Trading income split , Q2 2012 (%) FX & money market Bonds & DCM Repos & derivatives Equities 4 18 33 267 45 Q211 Q311 Q411 Q112 Q212 9
Danske Bank Investor Presentation Expenses: Elevated by restructuring costs, but cost programme on track Total expenses (DKK bn) No. of staff, end of period (‘000) Adjustments (bonus, severance, dep. guarantee, asset write down) 24 Adjusted expenses 6,850 22 6,678 6,632 21 6,459 20 5,499 18 2007 Q2 12 2013* No. of branches, end of period 6.226 6.221 6.179 900 5.944 5.572 700 578 500 Q211 Q311 Q411 Q112 Q212 2007 Q2 12 2013* * Estimated. 10
Danske Bank Investor Presentation Impairment dynamics Individual loan impairment charges, ex Baltics (DKK bn) Change in allowance account (DKK m) New Increased Reversals Allowance, end-2007 4.900 5.4 3.8 3.1 3.5 2.3 Gross 104,082 impairments 1.8 Reversals 25,507 3.6 Write-offs 29,467 -1.8 Allowance 54,007 end-Q2 2012 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 11
Danske Bank Investor Presentation Impairments: Declining trend in recent quarters due to personal customers and SME’s Impairments by customer segment (DKK bn) Impairment drivers Financials • Decline in impairments of DKK 800 m in Q2 SMEs 4.8 Large corp. • Drop in impairments in Denmark Personal and Northern Ireland 3.9 • Q2 impairments primarily related to 2.8 • SME’s in Denmark and Ireland 2.8 3.1 • Large corporates, including CRE in Ireland and shipping • Personal customers across geographies • No significant changes due to new rules from Danish FSA • DKK 1.4 bn of total impairments from non-core Ireland Q211 Q311 Q411 Q112 Q212 12
Danske Bank Investor Presentation Capital: Earnings and capital efficiency increases tier 1 and core tier 1 Capital drivers Capital ratios, under CRD/Basel II (%) Total capital • RWA of DKK 893 bn Tier 1 (including state hybrid) • Government hybrid contributes Core tier 1 with 2.7 percentage point of the ---- Solvency need Tier 1 and total capital ratios • DKK 2 bn state hybrid in Realkredit Danmark repaid in May 2012 17.9 17.7 16.2 16.0 RWA ----------- 10.4 ---------- Q1 12 900 Capital 12.1 11.8 efficiency 10 programme Other 3 Q2 12 893 Q4 11 Q2 12 13
Danske Bank Investor Presentation Peer comparison of core tier 1 demonstrating strength of Bank Capital ratios, Q2 2012 (%) Solvency ratio Total tier 1 ratio Core tier 1 ratio 17.7 16.6 16.5 16.1 16.2 15.0 14.3 14.7 12.8 13.5 13.4 13.0 13.3 13.6 12.7 11.8 10.9 10.2 12.1 11.8 11.3 11.1 10.9 10.9 10.3 10.2 9.6 Danske Bank Lloyds Barclays ING Deutsche BNP Paribas Nordea Unicredit DnB Bank 14
Danske Bank Investor Presentation Strategy process: On track, to be completed in Q3 and reported in Q4 Corporate strategy Vision/Mission Corporate Story Corporates & Institutions Business Banking Personal Banking strategy strategy strategy Short-term measures 15
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