Chairman’s report Ole Andersen Chairman, Board of Directors 18 March 2015
Word of the Year 2014 2
Reporting in both Danish and English 3
Improvement in the economy, but also headwinds GDP growth (%) Interest rates and yields (%) 2014 7.4 15.0 12.5 10-year government bond 10.0 3-month CIBOR 7.5 5.0 2.6 2.5 2.4 Certificate of deposit 1.8 0.0 1990 1995 2000 2005 2010 2015 -2.5 0.9 0.9 -0.2 China 4 Source: Danske Bank and Nasdaq OMX.
Best financial results since 2007 Net profit before goodwill impairments rose 82%, from DKK 7.1 to 12.9 billion Income rose 10% Expenses fell 5% Impairment charges fell 32% Return on equity of 8.5% 5
Increase in top line despite weak macroeconomic conditions 2014 2013 43,866 Total income 39,740 23,107 Net interest income 22,077 10,491 Net fee income 9,468 6,562 Net trading income 5,799 1,344 Other income 1,308 2,362 Insurance 1,088 6
Impairment charges remain low Loan impairment charges, 1 2008 – 14 (DKK billions) Impairment charges Impairment ratio 1 (rhs) 1.4 30 1.4 1.2 25 1.0 20 0.7 0.8 0.7 0.6 15 0.6 26 0.6 10 0.3 0.4 14 13 13 0.2 12 5 0.2 5 4 0 0.0 2008 2009 2010 2011 2012 2013 2014 7 1. The impairment ratio is defined as the Group’s annual impairment charges as a percentage of loans and guarantees.
Personal Banking Profit before tax Total income Expenses Impairment charges (DKK millions) (DKK millions) (DKK millions) ( DKK millions) 2013 16,524 2013 11,738 2013 1,887 2013 2,899 +1% -9% -25% +60% 2014 10,626 2014 1,412 2014 4,648 2014 16,686 8
Business Banking Profit before tax Total income Expenses Impairment charges (DKK millions) (DKK millions) (DKK millions) ( DKK millions) 2013 12,071 2013 5,482 2013 1,751 2013 4,838 +1% -42% +18% 2014 5,473 2014 1,007 2014 5,733 2014 12,213 9
Corporates & Institutions Profit before tax Customer-driven Expenses Impairment charges (DKK millions) income (DKK billions) (DKK millions) ( DKK millions) 2013 7 2013 4,588 2013 473 2013 3,374 +17% +1% -21% +23% 2014 4,614 2014 372 2014 4,135 2014 8 10
Danske Capital Profit before tax Total income Expenses Assets under mgt (DKK millions) (DKK millions) (DKK millions) (DKK millions) 2013 2,164 2013 1,033 2013 727 2013 1,131 +11% -3% +9% +24% 2014 999 2014 795 2014 1,406 2014 2,405 11
Danica Pension Net income Premiums Insurance result (DKK millions) (DKK millions) (DKK millions) 2013 26,808 2013 1,511 2013 1,088 0% 0% +117% 2014 26,822 2014 1,508 2014 2,362 12
Danske Bank is solid and well-capitalised Common equity tier 1 capital ratio in the EBA’s severe stress test scenario Requirement: 5.5% Danske Bank: 11.7% 11.7% 13
Proposal for dividend Dividend and share buy- back DKK 5.5 per share, or 43% of net profit before goodwill impairments Share buy-back programme for DKK 5 billion in 2015 14
Improved ratings in 2014 2013 2014 Stable outlook Negative outlook A- A Positive outlook Stable outlook Baa1 A3 Stable outlook Stable outlook A A 15
Status of our strategy Digitalisation Trust & Advisory transparency services VISION Recognised as the most trusted financial partner Customer Financial satisfaction results 16
Return on equity of at least 12.5% by 2018 Key elements ROE after tax, before goodwill impairments (%) Over 12.5 Rising income 9.5 1 Improved ratings and lower funding 8.5 costs Gradual gains in efficiency 5.0 Business volume growth 3.6 2.1 Lower impairment charges/Non- core Capital structure ‘ 11 ‘ 12 ‘ 13 ‘ 14 ‘15E ‘18E 17 1 Based on our ROE target of 9% adjusted for goodwill impairments of DKK 9.1 billion.
Customer satisfaction ratings are moving in the right direction Personal Banking On target in 1 of 5 markets Business Banking On target in 4 of 5 markets Corporates & Institutions On target in 57 of 84 surveys 18
A strong Nordic bank 19
Regulations 20
Board of Directors matters 21
Management changes Gilbert Kohnke Chief Risk Officer 2005 – 2014: OCBC Bank, Singapore 1996 – 2005: CIBC World Markets, London, Singapore & New York 1988 – 1996: Royal Bank of Canada 22
Remuneration of the Executive Board Fixed salaries unchanged Closer alignment of interest with shareholders Long-term incentive programme based on “total shareholder return” Variable remuneration linked to shares 23
Outlook for 2015 Continuation of fragile economic growth and low interest rates Income Expenses Expected to be in line with 2014 Reduced to less than DKK 22 level billion Impairment charges Net profit Expected to remain low Net profit of more than DKK 14 billion 24
THANK YOU FOR YOUR ATTENTION 25
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, or an inducement to enter into investment activity. No part of this presentation, nor the fact of its distribution, should form the basis of, or be relied on in connection with, any contract or commitment or investment decision whatsoever. The securities referred to herein have not been, and will not be, registered under the Securities Act of 1933, as amended, and may not be offered, exercised or sold in the United States absent registration or an applicable exemption from registration requirements. References to a potential share offering by Danske Bank are included herein pursuant to Rule 135c of the Securities Act of 1933, as amended. This presentation contains forward- looking statements that reflect management’s current views with respect to certain future events and potential financial performance. Although Danske Bank believes that the expectations reflected in such forward- looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct. Accordingly, results could differ materially from those set out in the forward-looking statements as a result of various factors many of which are beyond Danske Bank’s control. This presentation does not imply that Danske Bank has undertaken to revise these forward-looking statements, beyond what is required by applicable law or applicable stock exchange regulations if and when circumstances arise that will lead to changes compared to the date when these statements were provided. 26
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