Financial results for Q New strategy

Transcription

1 ROADSHOW Financial results for Q October 2012

2 Agenda Financial results Capital, funding and liquidity Outlook for 2012 Q&A session Appendix: Trends in focus areas & business units 2

3 New Standards for Danske Bank 3

4 New vision for 2015 Recognised as the most trusted financial partner New mission Setting new standards in financial services 4

5 Nordic relationship bank with expertise Strategic units Danica Danske Capital Nordania Finland Norway Sweden Estonia Latvia Denmark Lithuania Northern Ireland Ireland 5

6 The most trusted financial partner Customer satisfaction 2015 We want to be in the top two in customer satisfaction among our prioritised customer segments Financial results 2015 We want to be in the top three among Nordic peers measured by return on equity (ROE) 6

7 Financial targets Q Ambitions ROE 3.8% Above 12% in 2015 Ratings S&P/Moody s/fitch A-/Baa1/A Improve ratings at least one notch Core tier 1 Total capital Liquidity 12.7% Minimum 13% by the end of % Minimum 17% by the end of 2013 Meet EU 2015 LCR requirement by the end of 2012 Nominal cost FTE C/I ratio 2012 guidance at 27bn Below DKK 26 bn in ,651 To be reduced by 2,000 in % Below 48% in 2015 Dividend payments Nil for 2012 About 40% of annual net profit, but lower until we have reached capital and rating targets 7

8 ROE above 12% in 2015 ROE development from 2012 to M 2012 annualised (after tax) 3.8% Management actions (pre-tax) 4 6% points Declining loan losses (pre-tax) 5 6% points Short term rates (pre-tax) 4 5% points Capital, regulation, inflation, tax 6 7% points 2015E (after tax) ROE above 12% in

9 Financial results: 9M 2012 shows strong improvement, Q3 showed stable development Income statement & key figures (DKK m) 9M M 2011 Index Q Q Index Net interest income 18,588 17, ,198 6, Net fee income 6,129 6, ,116 2, Net trading income 7,469 5, ,785 2, Other income 2,323 2, Net income from insurance business 1, Total income 35,819 31, ,215 12, Expenses 19,598 19, ,116 6, Profit bef. loan imp. charges 16,221 11, ,099 5, Loan impairment charges 9,910 8, ,879 3, Profit before tax 6,311 3, ,220 2, Tax 2,708 2, , Net profit 3,603 1, ,317 1, Net profit ex non-core Ireland 7, ,645 2, Return on avg. shareholders' equity (%) C/I ratio (%) Core tier 1 capital ratio (%) Risk-weighted assets (bn) Total loans ex repos (bn) 1,700 1, ,700 1, Deposits (ex repos) & RD bonds (bn) 1,471 1, ,471 1, Total assets (bn) 3,599 3, ,599 3, Loan loss ratio (bp) Key points for the first nine months Strong improvement in net profit Improvement driven by strong income growth Expenses flat despite restructuring charges Impairments higher than 9M 2011 owing to deterioration of the macroeconomic climate Key points Q3 Flat net interest income despite lower short-term rates Solid trading income within guidance Declining expenses, mainly seasonal effect Lower impairments, drop in Denmark but increase in CIB Lower RWA and higher CT1 ratio 9

10 Net interest income: Headwind from lower short-term rates neutralised by higher lending margins Quarterly net interest income (DKK m) Net interest income drivers 6,182 6,172 6,218 6,198 Positive Increased lending rates, mainly in Denmark 6,016 Negative Low and declining central bank rates Sensitivity Short-term interest rate sensitivity across all currencies + 25 bp = DKK +800 m 25 bp = DKK 800 m 10

11 Net fee income: Growth in financing fees because of repayment of state-guaranteed bonds Quarterly net fee income (DKK m) Fee income drivers Portfolio fees Activity fees 1,938 2,218 1,987 2,026 2,116 Activity levels remain stable Increase in portfolio-based fees driven by repayment of bonds issued with state guarantee (quarterly effect of DKK 70 m) Activity-based fees stable despite summer season 1,374 1,499 1,299 1,386 1,457 Fee income split, Q (%) Banking Activities ex CIB Danske Capital CIB

12 Trading income: Q within expectations, strong improvement over Q Quarterly trading income (DKK m) Trading income drivers 3,222 Solid trading income, mainly from bond and derivatives activities Q3 includes DKK 124 m realised loss from AFS portfolio off set in total income 2,462 Interest rate sensitivity (Group) 1 pp increase in yield curve: DKK -316 m 1,638 1,785 Trading income split, Q (%) FX & money market Repos & derivatives Bonds & DCM Equities

13 Insurance: Result closer to normal, boosted by good investment returns Quarterly insurance income (DKK m) Key points 976 Risk allowance booked for three out of four groups Strong result for unit-linked products Danish and German interest rate spread declined in Q3, increasing liabilities by DKK 700 m Shadow account of DKK 1.3 bn 184 Expect risk allowance for three groups for the full year Premiums declining because of intensified price competition in Denmark and Sweden

14 Expenses: Elevated by restructuring costs, but cost-savings programme on track Total expenses (DKK m) No. of staff, end of period ( 000) Adjustments (bonus, severance, dep. guarantee, asset write down) Adjusted expenses 6,850 6,632 6,459 6,116 5, Q * No. of branches, end of period 5,572 6,179 5,944 6,221 5, Q * * Estimated. 14

15 Impairments: Declining trend continues, mainly among personal customers and financials Impairments by customer segment (DKK bn) Impairment drivers Financials SMEs Large corp. Personal 4.8 Decline in impairments of DKK 230 m in Q3 Drop in impairments in Denmark and Finland; increase at CIB Lower impairments for personal and financial customers Some increases for large corporates and SMEs Q3 impairments related primarily to CRE in Non-core Ireland Shipping in CIB Impaired loans declined because of write-offs and new definition, which excludes loans with no impairments 15

16 Impairments: Lower impairments in Denmark, Finland and Northern Ireland Impairments (DKK m) Loan loss ratio (bp, annualised) Denmark Denmark Finland Finland Sweden Sweden 9 13 Norway 7 34 Norway 9 2 Northern Ireland Northern Ireland Ireland Ireland Baltics Baltics CIB CIB Non-core Ireland 1,374 1,350 Non-core Ireland 2,477 2,329 Group 3,109 2,879 Group

17 Capital: Earnings, tier 2 issue and sale of securitisation assets boost capital ratios Capital ratios, under CRD/Basel II (%) Total capital Tier 1 (including state hybrid) Core tier Solvency need Capital drivers State hybrid represents 2.8 percentage points of the tier 1 and total capital ratios Issuance of tier 2 capital in September 2012 raised total capital ratio by 0.7 of a percentage point Risk Adjusted Capital (RAC) ratio from S&P rose from 6.3% YE-11 to estimated 6.9%* RWA (DKK bn) Q Securitisation etc. 29 Market risk 13 Q4 11 Q3 12 Q * Assuming unchanged S&P RWA. 17

18 Raised DKK 7.1 bn through an accelerated book-building; significant tightening in spreads since September Details on the equity issue 5-years senior bond spread vs. peers; 6M ASW-Spread (bp)* Amount: DKK 7,150 m Price: DKK 93 per new share Swedbank Nordea Handelsbanken Danske Bank Method: Accelerated book-building without pre-emption rights to current shareholders Why: To accelerate rating improvements and achievement of our capital targets, strengthen our funding position and better align us with our Nordic peers Outcome: A outlook change from Stable to Positive from S&P and a positive reaction from Moody s New shares: 76.9 m shares bp 29/10-5/11: -21bp Total number of shares: 1,008.6 m shares 0 Jun 2012 Jul 2012 Aug 2012 Sep 2012 Oct 2012 Nov 2012 * Outstanding senior benchmark issues with maturity in February 2017 (SHB in July 2017). 18

19 Deposits and funding: Small improvement in deposits after rating downgrade, 2013 funding plan started Deposits, end of period (DKK bn) Long term funding Markets CIB BA, other Funding raised by end of Q3 2012: 43 % covered bonds 48 % senior debt 9 % tier 2 capital DKK 25 bn of 2013 plan pre-funded Funding plan for 2013 reflects large redemptions in 2014 Goal: LCR compliant end 2012 Long term funding (DKK bn) 2013 funding plan pre-funded Completed Q3 11 Q4 11 Q1 12 Q2 12 Q * 2013 * End of Q

20 Liquidity: Strong liquidity buffer despite deposit outflow 12-month liquidity*, end of period (DKK bn) Key points Q Q Q month liquidity of more than DKK 150 bn month liquidity curve remains positive for more than 2½ years Eligible liquidity buffer of more than DKK 300 bn 200 Bond portfolio rating, DKK 502 bn (%) AAA 100 A Other mos 6 mos 9 mos 12 mos 84 * Moody s Financial Strength. Main assumptions: No access to capital markets; no refinancing of debt to credit institutions, issued bonds or subordinated capital; moderate reduction of business activities. 20

21 Outlook for 2012 as a whole: Earnings remain low but are moving in the right direction Macro Economic growth to remain low in most markets Income Improvement of income is an ongoing process Expenses Expected to increase 4% above 2011 level, including restructuring costs Loan losses In line with 2011 level, around DKK 13 bn Net profit Results remain low but represent a step in the right direction Dividend No dividend payment is expected for

22 22

23 Appendix Macro 24 NII and margin developments 26 Expenses 29 Tax 30 Credit 31 Funding and rating 40 Business units 44 23

24 Macro trends Bankruptcies (index 1996 = 100) Business confidence indicator (index 1996 = 100) Denmark 400 Finland Norway Sweden Sweden 160 Finland Denmark Rating upgrades*, corporates, 12-month rolling average (%) Property prices, Nordic countries (index 1996 = 100) Denmark Norway Sweden Finland CIB Denmark Norway Sweden Finland Upgrades > downgrades Downgrades > upgrades * Relation between upgrades and total rating changes. From Q4 2011, ratings are affected by recalibration

25 Denmark: Stabilisation of house prices Danish house price by region (%) Region Prices Change Change in Preview* peaked since peak Q2 12 Q3 12 Copenhagen Q ,0 0,7 Zealand Q ,1 0,3 South Denmark Q ,8-1,4 Central Jutland Q ,5 1,7 Northern Jutland Q ,2 1,6 Nationwide Q ,7 0,6 0,5 Danish housing market (000 s) Affordability index, quarterly data from Fixed rate Mixed rate Average Above average = expensive Below average = cheap Unemployment and foreclosures (%) No. housing units for sale 80 House price per sq m (rhs) Y swap rate Unemployment No. of forced sales (rha) * Leading indicator, based on monthly statistics from home (Danske Bank s real estate agency) that cover about one-third of the market. Sources: Danske Research, Danmarks Statistik, Association of Danish Mortgage Banks, home, Adam, Danish Central Bank, Skat and own calculations

26 Net interest income: Margin improvement visible in most markets Quarterly change in net interest income (DKK m) Net interest margins, NII/loan stock (%) Q2 12 6,218 Denmark Q3 11 Q3 12 Deposit margin 222 Finland Equity 108 Sweden Lending volume 43 Lending margin 163 Currency Number of days Funding Norway N. Ireland Ireland* Baltics Other, incl RD 64 CIB Q3 12 6,199 Group * Margins for Q3 11 for Ireland is including non-core Ireland. 26

27 Higher lending margins are beginning to feed through Quarterly lending margins (%) Quarterly deposit margins (%) Denmark* Finland Q4 11 Q1 12 Q2 12 Q3 12 Sweden Norway Northern Ireland Ireland** Baltics CIB * Includes Realkredit Danmark. ** Non-core Ireland is included in margins for Ireland prior to. 27

28 Net interest income: Trend in Realkredit Danmark Net interest income at Realkredit Danmark, excluding lending margins (DKK m) Q1 Q2 Q3 Q4 28

29 Expenses: Cost-savings programme on track Expenses (DKK m) Quarterly change in expenses (DKK m) 9M M 2011 Index Q Q Index Expenses 19,598 19, ,116 6, Perf. based compensation Severance payments etc Deposit guarantee scheme Asset write-down Adjusted expenses 17,812 17, ,647 6, Q2 12 6,632 Holiday payments 257 Employees (number of FTEs) Sales of leasing assets ,624 22,093 21,522 21, Others ,651 Q3 12 6, Q

30 Adjusted tax rate at 25%, but actual tax rate remains high owing to Ireland Actual and adjusted tax rates (DKK m) Q Q Q Q Q Pre-tax profit 2,220 2,510 1, Pre-tax loss, Ireland core and non-core 1,374 1,616 1,371 1,524 1,490 Permanent non-taxable difference* Adjusted pre-tax profit, Group 3,569 4,034 2,986 2,070 1,492 Tax according to P&L 903 1, Taxes from previous years** Adjusted tax Adjusted tax rate 25.0% 24.4% 23.9% 20.1% 26.5% Actual tax rate 40.7% 40.1% 50.5% 67.5% NM * Permanent non-taxable differences are due primarily to value adjustments and the dividend from Nets. ** Taxes from previous years are due primarily to a reduction of the tax rate in the UK. 30

31 Impairment dynamics Individual loan impairment charges, ex Baltics (DKK bn) Change in allowance account (DKK m) New Increased Reversals 5.4 Allowance end , Gross impairments 107,027 Reversals 25, Write-offs 39, Allowance end Q ,406 Q3 11 Q4 11 Q1 12 Q2 12 Q

32 Loan quality Impairment-tested loans (%) Coverage, individual allowance /impairment-tested loans (%) Q2 12 Q2 12 Q3 12 Q3 12 Denmark Denmark Finland Finland Sweden Sweden Norway Norway Northern Ireland Northern Ireland Ireland Ireland Baltics Baltics CIB CIB Non-core Ireland Non-core Ireland Group Group Note: Loans in rating categories 10 and 11 are subject to individual impairment testing. Q3 12 is excluding impaired portion. Rating category 10 contains exposures to customers which are not in default but for which evidence of impairment exists; rating category 11 contains exposures to customers in default. 32

33 Retail Banking Denmark, including Realkredit Danmark Impairments at Retail Banking Denmark, Q (DKK m) Individual Collective Total Bank Personal customers Agriculture Commercial property Other Total RD Personal customers Commercial Total Retail Banking Denmark Loans by LTV and rating, Realkredit Danmark, end-q (%) Rating Total Public LTV ratio guarantee > Total (DKK bn) month arrears, Realkredit Danmark (% of stock) Portfolio facts, Realkredit Danmark, end-q Q310 Q ,045 loans (residential and commercial) 3,031 loans in 3- and 6-month arrears (0.8%) 157 repossessed properties DKK 13 bn of loans with LTV > 100%, including DKK 3bn with public guarantee Average LTV ratio of 71% LTV ratio on origination (legal requirement) Residential: max. 80% Commercial: max. 60% 33

34 Mortgages: More risk-sensitive pricing is the name of the game Denmark, mortgage margins, 80 % LTV, owner occupied, (basis points) Margin increases All products 52 Fixed rate 73 Adjustable rate bp per refinancing bp per refinancing Margin increase on personal customers (Q1 12) Refinancing fee of 5 bp at each refinancing (introduced in Q4 11, booked as trading income) July 2012 Margin increase on loans with LTV > 60% Refinancing fee increased to 10 bp at each refinancing October 2012 Margin increase on loans with LTV > 60% Margin increase on interest only loans with LTV > 60% Refinancing fee increased to 20 bp at each refinancing 2011 Oct 12: with amortisation Oct 12: interest only 34

35 Limited exposure to agriculture and shipping Agriculture: breakdown of loan portfolio, Q (%) Mixed operations Grocery trade 6 16 Other 14 Pig farming 19 Agriculture 25 Agricultural exposure and allowance, Q (DKK bn) 21 Cattle breeding Business unit Gross Allowance Coverage exposure Realkredit Danmark % Retail Banking Denmark % - portion from pig farmers % Other business units % Total exposure % Shipping: breakdown of loan portfolio, Q (%) Ro-Ro Product tanker 2 5 Offshore supply 10 Other 11 Car carriers 8 Chemical tanker 9 Offshore rig 10 Crude tanker Gas tanker Dry bulk Cruise/Ferry Shipping exposure and allowance, Q (DKK bn) Business unit 7 Gross exposure 15 Container Allowance Coverage CIB % -portion from Danish customers % -portion from Norwegian customers % -portion from other customers % Other business units % Total exposure % 35

36 Denmark and Northern Ireland: Loan exposure Dividend Individual impairments Value of collateral Residential mortgage exposure Commercial property exposure Denmark (DKK bn) Northern Ireland (DKK bn) Denmark (DKK bn) Northern Ireland (DKK bn) Gross exposure Impaired loans Gross exposure Impaired loans Gross exposure Impaired loans Gross exposure Impaired loans Collective impairments 0.5 bn Impaired 2% Collective impairments 0.0 bn Impaired 3% Collective impairments 0.1 bn Impaired 14% Collective impairments 0.2 bn Impaired 43% Note: Value of collateral is capped by size of loan and reflects a haircut of at least 20%. Impaired loans are individually impairment tested (rating categories 10 and 11). Rating category 10 contains exposures to customers which are not in default but for which evidence of impairment exists; rating category 11 contains exposures to customers in default. 36

37 Ireland: Breakdown of loan portfolio Dividend Individual impairments Value of collateral Personal mortgages (DKK bn) Other (DKK bn) Total (DKK bn) Arrears*, private customers (%) days 180+ days Market Gross exposure Impaired loans Gross exposure Impaired loans Gross exposure Impaired loans Collective impairments 0.4bn Impaired 12% Collective impairments 0.1 bn Impaired 5% Collective impairments 0.4 bn Impaired 9% Q2 10 Q4 10 Q2 11 Q4 11 Q2 12 Note: Value of collateral is capped by size of loan and reflects a haircut of at least 20%. Impaired loans are individually impairment tested (rating categories 10 and 11). Rating category 10 contains exposures to customers which are not in default but for which evidence of impairment exists; rating category 11 contains exposures to customers in default. *Number of arrears, excluding buy-to-let financing. 37

38 Non-core Ireland Dividend Individual impairments Value of collateral CRE (DKK bn) Personal mortgages (DKK bn) Other* (DKK bn) Total (DKK bn) Gross exposure Impaired loans Gross exposure Impaired loans Gross exposure Impaired loans Gross exposure Impaired loans Collective impairments 0.1 bn Impaired 83% Collective impairments 0.3 bn Impaired 20% Collective impairments 0.0 bn Impaired 75% Collective impairments 0.4 bn Impaired 63% Note: Value of collateral is capped by size of loan and reflects a haircut of at least 20%. Impaired loans are individually impairment tested (rating categories 10 and 11). Rating category 10 contains exposures to customers which are not in default but for which evidence of impairment exists; rating category 11 contains exposures to customers in default. * Consists primarily of consumer related industries. 38

39 Update on conduits: Exposure and risk reduced in 2012 Gross credit exposure (DKK bn) Credit exposure, rating categories, Q (DKK bn) Rating category Rating category Gross Credit Exposure Net Credit Exposure Q1 12 Q2 12 Q Credit exposure underlying asset class, Q (DKK bn) Credit exposure, mortgages, Q (DKK bn) Commercial mortgages Corporate risk Non-prime residential mortgages Prime residential mortgages 6% 7% UK, non-prime UK, prime NL, prime NL, non-prime 13% 5% 1% Other 20% 55% Other, non-prime 11% 12% 70% Total: DKK 19.7 bn Total: DKK 10.1 bn 39

40 Solid funding structure and liquidity position Loan portfolio and long-term funding, Q (DKK bn) Maturing funding (DKK bn) 1,700 1, Senior debt 70 Hybrid T1* Subordinated T2* Senior 58 Covered bonds Bank loans Deposits Bank mortgages Covered bonds RD mortgages Issued RD bonds Loans Funding * Maturity calculated to first possible call. 40

41 Well-diversified funding position Funding position Q3 12(%) Funding sources (%) Q4 11 Q3 12 Central banks Subordinated debt 7 3 Equity 5 Deposits Repos Banks 7 10 S-T bonds 1 L-T bonds 6 Covered bonds 6 25 Match-funded DK mortgage bonds 0 Central banks Due to credit inst. (ex CIB) Repos Short-term bonds Deposits Mortgage finance (match funded) Cov. bonds Long-term bonds Subord. debt Shareholders eq. Short-term funding Long-term funding 41

42 Danske Bank s ratings Danske Bank s long term issuer rating Moody s S&P Fitch Aaa AAA AAA Aa1 AA+ AA+ Aa2 AA AA Aa3 AA- AA- A1 A+ A+ A2 A A A3 A- A- Baa1 BBB+ BBB+ Baa2 BBB BBB Baa3 BBB- BBB- Ca D D Rating agency issues General focus Profitability: a sustainable improvement in net profit will be positive Asset quality: a significant decrease in nonperforming loans, impairments and actual losses will be positive Macroeconomic environment: an improvement of the economic conditions in Denmark and Ireland will be positive Standard & Poor s Capital strength: quality of current capital is good, but a RAC ratio sustainable above 7 % will have a positive effect on the rating (Q level of 6.3%) Moody s Liquidity: refinancing risks in the Danish mortgage system creates an instability in the Danish housing market Systemic support: only 1 notch uplift for Danske Bank, Swedish peers have 3 notches of uplift 42

43 Three different methods to rate banks Rating method Danske Bank s rating Anchor SACP* Business Capital & Risk Funding & Extraord = SACP + = position Earnings position Liquidity Support Issuer rating BBB+ +1 notch -1 notch -1 notch 0 notches BBB 2 notches A- Bank Financial Strength Rating Baseline Credit Assessment (BCA) Parental and Adjusted Systemic + Cooperative = + = BCA Support support Issuer Rating C- Baa2 0 notches Baa2 1 notch Baa1 Individual rating/viability rating Support rating/support rating floor a A- Issuer Default Rating (IDR) IDR is the higher of the Viability Rating and the support floor A * Stand-alone credit profile (SACP) 43

44 Retail Banking Denmark: Higher NII owing to several margin increases, but higher impairments reduce the result Income statement (DKK m) Trend in lending volume, average (DKK bn) 9M M 2011 Index Net interest income 9,387 9, Net fee income 2,408 2, Other income Total income 12,490 12, Total expenses 6,813 6, Profit bef. loan imp. charges 5,677 5, Loan impairment charges 3,027 2, Profit before tax 2,650 3, Retail Corporate % -2% ROE before loan imp. charges Margin trends, ex RD (%) Market shares, incl. CIB and repo lending*, ex RD (%) Lending Deposits Lending Deposits * Danske Markets. 44

45 Retail Banking Finland: Visible increase in net interest income, but low result because of low margins and higher loan losses Income statement (DKK m) Trend in lending volume, average (DKK bn) 9M M 2011 Index Net interest income 1,650 1, Net fee income Other income Total income 2,705 2, Total integration expenses Expenses ex total intgr. exp. 1,902 1, Profit bef. loan imp. charges Loan impairment charges Profit before tax ,809 ROE before loan imp. charges Retail Corporate % +5% Margin trends (%) Market shares, incl. CIB (%) Lending Deposits Lending Deposits

46 Retail Banking Sweden: High return held up by 19 % increase in net interest income partly due to stronger SEK Income statement (DKK m) Trend in lending volume, average (DKK bn) 9M M 2011 Index Retail Corporate Net interest income 2,082 1, Net fee income Other income Total income 2,637 2, Expenses 1,260 1, Profit bef. loan imp. charges 1,377 1, Loan impairment charges Profit before tax 1,062 1, % +12% ROE before loan imp. charges Margin trends (%) Market shares, incl. CIB (%) Lending Deposits Lending Deposits

47 Retail Banking Norway: Solid increase in total income; pre-tax profit more than doubles as impairments losses decline Income statement (DKK m) Trend in lending volume, average (DKK bn) 9M M 2011 Index Net interest income Net fee income Other income Total income Expenses Profit bef. loan imp. charges Loan impairment charges Profit before tax Retail Corporate % +13% ROE before loan imp. charges 16,1 10,4 Margin trends (%) Market shares, incl. CIB (%) Lending Deposits Lending Deposits

48 Banking Activities Northern Ireland: Moving in the right direction with higher income and lower impairments Income statement (DKK m) Trend in lending volume*, average (DKK bn) 9M M 2011 Index Net interest income Net fee income Other income Total income 1,285 1, Expenses Profit bef. loan imp. charges Loan impairment charges 1,120 1, Profit before tax ,317 - ROE before loan imp. charges Retail 16 Corporate +14% -2% Margin trends (%) Market shares (%) Lending Deposits Retail Corporate * Corporate lending volume excludes lending to public sector. Volume positive affected by currency change 48

49 Banking Activities Ireland: Still higher expenses owing to restructuring of the continuing business Income statement (DKK m) Trend in lending volume, end of period (DKK bn) 9M M 2011 Index Net interest income Net fee income Other income Total income Expenses Profit bef. loan imp. charges Loan impairment charges 559 4, Profit before tax ,474 - Retail Corporate % -33% ROE before loan imp. charges Margin trends (%) Market shares (%) Lending 2 Deposits 4 Lending Deposits Note: Figures from Q and back are not restated after non-core split-up from Banking Activities Ireland. 49

50 Non-core Ireland: Dominated by high impairments Income statement (DKK m) Trend in lending volume, end-of-period (DKK bn) 9M M 2011 Index Net interest income Net fee income Other income Total income Expenses Profit bef. loan imp. charges Loan impairment charges 3, Profit before tax -3, Retail Corporate Included in BA Ireland % -17% Margin trends (%) Portfolio breakdown, Q3 2012(%) Lending Deposits CRE Personal mortgages Other 25% Included in BA Ireland % 46% Note: Figures from Q and back are not restated after non-core split-up from Banking Activities Ireland. 50

51 Banking Activities Baltics: Higher income and impairment reversals raise pre-tax profit by 60 % Income statement (DKK m) Trend in lending volume, average (DKK bn) 9M M 2011 Index Net interest income Net fee income Other income Total income Expenses Profit bef. loan imp. charges Loan impairment charges Profit before tax Retail 12 9 Corporate % -10% ROE before loan imp. charges Margin trends (%) Market shares, lending (%) Lending Deposits Estonia Latvia Lithuania

52 CIB: Solid NII growth but significantly higher loan losses, mainly from shipping Income statement (DKK m) Trend in lending volume, average (DKK bn) 9M M 2011 Index Net interest income 1,584 1, Net fee income Other income Total income 2,235 2, Total integration expenses Expenses ex total intgr. exp Profit bef. loan imp. charges 1,451 1, Loan impairment charges 1, Profit before tax 397 1, ROE before loan imp. charges Margin trends (%) Geographical breakdown of lending, Q (%) Lending Deposits Sweden Denmark Finland Norway 52

53 Danske Markets & Treasury: Solid earnings due to high activity including Q3 Income statement (DKK m) Trading income split, Q M M 2011 Index Danske Markets 6,775 3, Group Treasury Total income 6,555 4, Expenses 2,297 1, Profit bef. loan imp. charges 4,258 2, Loan impairment charges Profit before tax 4,298 3, FX & money market Repos & derivatives Bonds & DCM Equities ROE before loan imp. charges Impairments (DKK m) Trading activities, accumulated income (DKK bn) ,000 6, ,000 2,000 0 Q1 Q2 Q3 Q4 53

54 Danske Capital: Lower fee income owing to change in asset mix and one-offs; margins remain flattish Income statement (DKK m) AuM customer breakdown (DKK bn) 9M M 2011 Index Private equity Institutional Retail* Life insurance Net interest income Net fee income portion from performance fees Other income Total income Expenses Profit bef. loan imp. charges Loan impairment charges Profit before tax Margin trends** (%) AuM asset breakdown (%) Cash Equities Bonds * Retail includes Danske Invest. ** Margin for asset management is adjusted income, including performance fees, divided by business volume, end of period. 54

55 Danica Pension: Strong investment result and partially booked risk allowance Income statement (DKK m) Investment allocation for Danica Traditionel, end-q (%) 9M M 2011 Index Premiums (bn) Danica Traditionel (insurance result) Unit-linked (insurance result) Health and accident (ins. result) Investment result Financing result Special allotments Net income bef. postp. risk allow. 1,416 1, Change in shadow account ,576 - Net income 1, Possibility of booking risk allowance in 2012*, end-q (%) Equities Bonds Credit bonds Property % change in equities 100% 50% 0% -50% Full risk allowance Partial risk allowance No risk allowance -100% -2.00% -1.00% 0.00% 1.00% 2.00% % point change in interest rate New schemes Low 17 9 Medium High * Under assumption of a rolling yield spread of 0 between Danish and German government bonds at the end of

56 Danica Pension s profit model = Profit model Condition/ sensitivity Q1-Q DKK m Danica Traditionel. Mainly risk allowance 69 bp of technical provisions (DKK 173 bn) Unit-linked business. Longterm: approximately 0.4% of AuM Can be booked only if investment return is high enough and if no use of bonus potential of paid-up policies Prices and volume Risk allowance Other Solid income base but also price competition 1, Health and accident business Combined ratio Price competition -94 Return on investment portfolio at shareholders risk Financing result Special allotments, depending on profit and business volume Shadow account Equity markets, interest rates S-T interest rate (equity allocated capital) Expected to be around DKK 0.1 billion in 2012 if investment return is at normal level Uncertainty because of dependency on investment return for the rest of the year Annualised investment return: 3.6% Low short-term interest rate -73 Total 1,

57 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 ( Securities Act ), and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act. 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. 57