Jyske Bank in brief 3

Transcription

1 Jyske Bank Q1 213

2 Agenda Jyske Bank in brief Macro Economy & Danish Banking Focus in Q1 213 Strategic issues Jyske Banks performance Volumes Capital Structure Liquidity Q1 213 in figures Credit quality Danish FSA Fact Book 2

3 Jyske Bank in brief 3

4 Jyske Bank in brief Jyske Bank focuses on core business Description Branch Network Established and listed in nd largest Danish bank by lending Total lending of approx. DKK 129bn 111 domestic branches Approx. 675, domestic customers Business focus is on Danish private individuals, SMEs and international private and institutional investment clients International units in Hamburg, Zürich, Gibraltar, Cannes and Weert A de-centralised organisation 3,86 employees (end of Q1 213) Full-scale bank with core operations within retail and commercial banking, customer driven trading, asset management and private banking Flexible business model using strategic partnerships within life insurance (PFA), mortgage products (Nykredit, DLR, BRF), credit cards (SEB), IT operations (JN Data) and IT R&D (Bankdata) 4

5 Jyske Bank in brief Jyske Bank wants to be Denmark s most customer-oriented bank by providing high standard personal financial advice and taking a genuine interest in customers Jyske Bank has a differentiation strategy Jyske Differences The strategy is to position Jyske Bank as a visible and distinct alternative to more traditional providers of financial services, with regard to distribution channels, products, branches, layout and communication forms Equal treatment and long term relationships with stakeholders Core values driven by common sense Strategic initiatives: Valuebased management Differentiation Risk management Efficiency improvement Acquisitions (Q4) 211/212

6 Macro Economy & Danish Banking 213 6

7 Jyske Bank forecasts The Danish economy Real growth (%) DKKbn * 214* Private spending Public spending Fixed gross investment Inventory investment** Exports Imports Gross domestic product (GDP) Current account - DKKbn - percentage of GDP Public budget balance - DKKbn - percentage of GDP Unemployment -Unemployed (thousands), gross - Percentage of the workforce Employment (thousands) Inflation (%) Wage index(manufacturing industry, %) * House prices (nominal prices, %) Nationalbanken s lending rate, year-end end * Jyske Bank's forecast ** Contribution to growth as a percentage of preceding year's GDP 7

8 The Danish economy: - currently in a low growth mode Denmark is a small open economy affected by the slow down in the EURO area and private saving is still record high both in households and the SME/corporate sectors 1, 1, 7,5 7,5 % % 5, 5, Growth in Growth in % of GDP 2,5, 2,5, % of GDP -2,5-2,5-5, , Source: Danmarks Statistik 8

9 with subdued sentiment indicators 9

10 and a private sector that is reluctant to lend 1

11 Why are Danish households so reluctant to spend? Burst of the housing bubble : Average LTVs in Danish housing market 27 : approx. 45 % 212 : shy of 7 % Combined with the financial crisis: -Net wealth 25 % below peak levels in 27 and slightly higher than in 24 and Increased household leverage Index 2 8=1 Index 2 8=1 11

12 Household debt is high, but assets are high too. also in international comparison 1,2 1, Households balance sheet (21) 1,2 1, 8 8 income % of disp income % of disp NO FI US PT IE DE AT SE DK CA AU JP GR NL FR IT Housing Pension Other assets Liabilities Net wealth GB BE ES Source: Danmarks Nationalbank 12

13 .and Denmark has a healthy public sector economy 13

14 and overall strong structural features Net assets against the rest of the world (21) Denmark net assets against the rest of the world are significantly higher today : around 35 % of GDP % of GDP PT IR GR ES IT US GB CAAT FR SE FI DK NL DE JP BE NO % of GDP Source: Danmarks Nationalbank 14

15 ensure low interest rates, and unemployment has been stable for more than two years , 25, 6 6 2, 2, , 15, 3 3 1, 1, 2 1 jan 2 1 jul jan jul jan jul jan jul jan jul jan jul jan Denmark Germany Spain Italy Source: Reuters EcoWin 5, 5,,, Denmark Euro area Sweden Norway UK Spain Source: Reuters EcoWin 15

16 causing only few household defaults. But the business sector still suffers from weak demand 16

17 The outlook for 213: subdued growth in an overall strong economy The slowdown is set to continue through 213 due to a weak Euro area, weak real wage development, and continued private sector saving However, some improvement is likely driven by a stronger housing market and rising economic sentiment in Europe, in general A small fiscal tightning in 213 is counteracted by government initiated investments The overall structural features of the Danish economy continue to look strong with large net foreign assets, a current account surplus at 5.7 % of GDP in 212, and a low public debt level. 17

18 Market conditions Shrinking volumes also in 213 Earnings capacity close to maximum; further growth via higher volumes Capital shortage in some banks due to maturing Tier II capital instruments More stringent assessment of solvency requirement (Pillar I+) can lead to lower capital buffers in some banks Strategic capital to acquire portfolios limited and only a few larger banks are interested 18

19 Focus in Q

20 Focus in Q1 213 ROE pre tax 14.3% (opening equity) satisfactory Spar Lolland DKKm Fair value adjustments of acquired net assets 97 Layoffs in 213 and anticipated staff reductions in Rental obligations -21 Other integration costs -4 Effect on operations in Q Expected integration costs -25 Net -7 Solvency ratio 15% due to acquisition and redemption of Tier II. Capital buffer 5.3 percentage points Strategy to acquire and capital target are unchanged 2

21 Strategic issues 21

22 Strategic issues Spar Lolland Bank loans DKK 6.3bn, bank deposits DKK 9.5bn, total assets DKK 13bn Branch mergers finalized by Q2 213 It migration and further staff reduction in Q2 214 Long term earnings fully in line with earnings from other branches Capital Core Tier 1:13.7% Redemption of Tier 2 loan DKK 1.1bn in april Tier 2 issues DKK.3bn CRD IV: expected.2-.5 pp. Jyske Bank proposed to become a systemic bank in Denmark among 6 institutions in DKK Liquidity Liquidity reserve DKK 5bn; liquidity after 12 mths run-off DKK 14bn Acquisitions with deposits surplus; Fjordbank Mors approx. DKK 1bn; Spar Lolland approx. DKK 2.5bn Benchmark issue of EUR 5m 2.5 year FRN in Q4 212 (Euribor + 117bp) Issued AAA-rated bonds via BRFkredit DKK 4bn by Q1 213 Refinancing of all 213 redemptions of senior debt (EMTNs) fully accomplished 22

23 Jyske Bank performance

24 Profit before tax and DPCA DKKm 1,6 1,4 1,2 1, % 16% 14% 12% 1% 8% 6% 4% 2% % DKKm Q1211 Q2211 Q3211 Q4211 Q1212 Q2212 Q3212 Q4212 Q1213 2% 15% 1% 5% % -5% -1% -15% -2% -25% Profit before tax DPCA Profit before tax DPCA ROE (pre-tax) ROE (pre-tax before DPCA) ROE (pre-tax) ROE (pre-tax before DPCA) 24

25 4% 3% 2% 1% % -1% -2% -3% 5% Pre-tax prof it (ROE on avg. equity) 11% 87% Average: 19%

26 Volumes 26

27 Bank loans and deposits DKKbn 1 DKKbn Q1211 Q2211 Q3211 Q4211 Q1212 Q2212 Q3212 Q4212 Q1213 Bank loans Bank deposits Bank loans Bank deposits Bank loans: Spar Lolland +5.8% Bank loans: 4.1% y/y 5.4% q/q 27

28 Capital Structure 28

29 Capital structure Core Tier 1 above 12% Optimize risk and maximize earnings Exploit the market to buy portfolios with an acceptable risk pct pct Q1211 Q2211 Q3211 Q4211 Q1212 Q2212 Q3212 Q4212 Q1213 Core Tier 1 Hybrid Tier 1 Tier 2 Core Tier 1 Hybrid Tier 1 1,4 Tier 2 Core Tier 1: 13.7% Tier 1: 14.3%; 2 perpetuals DKK 1.3bn Solvency: 15.%; 4 Tier II issues DKK.3bn; Capital buffer 5.3 pp Spar Lolland RWA DKK 5.8bn 29

30 Liquidity 3

31 Liquidity position and run-off DKKbn

32 Senior unsecured funding strategy Jyske will be a rare but regular issuer on the EMTN market Funding plans will depend on developments in the balance sheet (funding gap) and integrated part of policy is to maintain a deposit/loan ratio in the region of 9-1 % -but: DKKbn Jyske Bank will continue to maintain a conservative funding profile (May 213) 9,5 9 8,5 8 7,5 7 6,5 6 5,5 5 4,5 4 3,5 3 2,5 2 1,5 1,5 Integrated part of funding strategy to preserve a presence in the debt capital markets Looking at our maturity profile we will have an ongoing refinancing need in the years ahead Expect approximately one public benchmark a year and ongoing activities in the private placement market With a very limited funding gap, solid core deposits and the BRFKreditagreement new issue focus will be on 3 year maturities in 213 Refinancing of all 213 redemptions has been accomplished: 1)Via BRFKredit DKK 4.1bn (July 212-January 213) 2)Via senior unsecured 7bn all issued during 212: 2-3 year private placements of DKK 3bn (EUR 4m) 2.5 year public benchmark FRN of DKK 3.7bn (EUR 5m) '>23 DKK 4,35bn covered bonds issued via BRFkredit in July 212, October 212, January 213 and April

33 Q1 213 in figures 33

34 Net Interest Income 5, 1,2 DKKm 4,5 4, 3,5 3, 2,5 2, 1,5 DKKm 1,18 1,16 1,14 1,12 1,1 1,8 1,6 1,4 1, 1,2 5 1, Q1211 Q2211 Q3211 Q4211 Q1212 Q2212 Q3212 Q4212 Q

35 Return/risk-trade off 11 5% 14 6% DKKbn % 3% 2% 1% DKKbn % 4% 3% 2% 1% % % Q1211 Q2211 Q3211 Q4211 Q1212 Q2212 Q3212 Q4212 Q1213 Risk weighted assets NII/RWA (rhs) Risk weighted assets NII/RWA (rhs) 35

36 Fee and commision income 1,8 6 DKKm 1,6 1,4 1,2 DKKm 5 4 1, Q1211 Q2211 Q3211 Q4211 Q1212 Q2212 Q3212 Q4212 Q DKKm Securities trading and safe-custody services Money transfers and card payments Loan management fees Guarantee commission Other fees and commissions 36 Q1212 Q1213

37 Net interest and fee income DKKm 7, 6, 5, 4, 3, 2, 1, 37% 63% 27% 31% 23% 23% 69% 77% 77% 73% DKKm 1,8 1,6 1,4 1,2 1, % 77% 22% 78% 22% 78% 25% 75% 26% 74% 24% 76% 26% 74% 32% 68% 28% 72% Q1211 Q2211 Q3211 Q4211 Q1212 Q2212 Q3212 Q4212 Q1213 Net interest income Net fee and commision income Net interest income Net fee and commision income 37

38 Value adjustments 9 2 DKKm DKKm Q1211 Q2211 Q3211 Q4211 Q1212 Q2212 Q3212 Q4212 Q1213 DKKm Bonds Shares, etc. Currency Derivatives Other assets Issued bonds Other liabilities 38 Q1212 Q1213

39 Gross earnings 6,7 6,6 6,5 6,4 2, 1,8 1,6 1,4 1,2 1, DKKm DKKm Q1211 Q2211 Q3211 Q4211 Q1212 Q2212 Q3212 Q4212 Q1213 6,3 6,2 6,1 6, 5,

40 Operating expenses and employees DKKm 5, 4,5 4, 3,5 3, 2,5 2, 1,5 1, ,1 4, 3,9 3,8 3,7 3,6 3,5 3,4 3,3 DKKm 1,6 1,4 1,2 1, Q1211 Q2211 Q3211 Q4211 Q1212 Q2212 Q3212 Q4212 Q1213 3,9 3,85 3,8 3,75 3,7 3,65 3,6 3,55 3,5 3,45 3,4 Operating expenses, depreciation and amortisation Number of full-time employees (rhs) Operating expenses, depreciation and amortisation Number of full-time employees (rhs) 4

41 Core earnings before loan impairment charges 3,5 8 3, 2, DKKm DKKm 2, 4 1,5 3 1, Q1211 Q2211 Q3211 Q4211 Q1212 Q2212 Q3212 Q4212 Q

42 Loan impairment charges 3, 2,5 2, 1,5 1, 5 1, DKKm DKKm Q1211 Q2211 Q3211 Q4211 Q1212 Q2212 Q3212 Q4212 Q

43 Core earnings 1,8 1,6 1,4 1, DKKm DKKm Q1211 Q2211 Q3211 Q4211 Q1212 Q2212 Q3212 Q4212 Q1213 1,

44 Earnings from investment portfolios DKKm DKKm Q1212 Q1211 Q2211 Q3211 Q4211 Q2212 Q3212 Q4212 Q

45 Credit quality 45

46 Loans and advances split by sector Jyske Bank A/S Loans, advances and guarantees Balance of loan impairment charges and provisions for guarantees Impairment charges and provisions for guarantees for the period Loss for the period Loans, advances and guarantees as well as loan impairment charges and provisions for guarantees by sector Q1 213 End-212 Q1 213 End-212 Q1 213 End-212 Q1 213 Q1 212 Public authorities 7,568 6,624 Agriculture, hunting, forestry, fishing 8,482 8, Fishing industry 2,515 2, Milk producers 1,468 1, Plant production 1,319 1, Pig farming 1,851 1, Other farming 1,329 1, Manufacturing, mining, etc. 7,434 6, Energy supply 3,49 2, Building and construction 2,398 2, Commerce 8,147 7, Transport, hotels and restaurants 3,14 2, Information and communication Finance and insurance 39,258 35, Real property 1,719 9,86 1,6 1, Lease of real estate 8,514 8, Buying and selling of real estate 1, Other real estate 1, Other sectors 5,546 4, Corporate customers, individually assessed, total 89,9 8,162 3,49 3, Corporate customers, collective impairment charges Personal customers, individually assessed 45,55 43, Personal customers, collective impairment charges Total 141,632 13,171 4,485 4,

47 Loans and advances split by sector Jyske Bank A/S Loans, advances and guarantees as well as loan impairment charges and provisions for guarantees (DKKm) Loans, advances and guarantees Balance of loan impairment charges and provisions for guarantees Loans, advances and guarantees Balance of loan impairment charges and provisions for guarantees Loss for the period/loans, advances Loan impairment charges for the period/loans, advances Q1 213 Q1 213 Change in pct. Change in pct. Pct. Pct. Public authorities 7, %.%.% Agriculture, hunting, forestry, fishing industry 8, % 25.%.2% 1.1% Fishing industry 2, % 39.6%.%.% Milk producers 1, % 45.9% 1.3% 4.% Plant production 1, % 97.%.%.1% Pig farming 1, % -3.4%.1% 1.6% O ther farming 1, % 54.7%.%.1% Manufacturing and mining, etc. 7, % 6.%.8%.6% Energy supply 3, % -25.%.%.% Building and construction 2, % -43.9%.9%.1% Commerce 8, % -6.6%.4%.2% Transport, hotels and restaurants 3, % 42.9%.1%.7% Information and communication % 157.1%.% 2.3% Finance and insurance 39, % 14.1%.%.% Real property 1,719 1,6 3.3% 27.6%.2%.3% Lease of real estate 8, % -26.%.3%.2% Buying and selling of real estate 1, % -23.1%.% 1.% O ther real estate 1, % 287.1%.%.4% Other sectors 5, % -21.1%.5% -.7% Corporate customers, individually assessed, total 89,9 3,49 3.8% 13.3%.2%.2% Corporate customers, collective impairment charges % Personal customers, individually assessed 45, % 19.9%.1%.% Personal customers, collective impairment charges % Total 141,632 4, % 2.5%.2%.2% 47

48 Large exposures per cent of capital base 7% 6% 5% 4% 3% 2% 1% % Q

49 Balance of loan impairment charges DKKm 5, 4,5 4, 3,5 3, 2,5 2, 1,5 1, DKKm 5, 4,5 4, 3,5 3, 2,5 2, 1,5 1, 5 Q1211 Q2211 Q3211 Q4211 Q1212 Q2212 Q3212 Q4212 Q1213 Balance of loan impairment charges Losses Balance of loan impairment charges Losses 49

50 Balance of loan impairment charges per cent of loans and advances 4.% 4.% 3.5% 3.5% 3.% 3.% 2.5% 2.% 1.5% 1.% 2.5% 2.% 1.5% 1.%.5%.5%.%.% Q1211 Q2211 Q3211 Q4211 Q1212 Q2212 Q3212 Q4212 Q1213 5

51 Exposures by credit rating Corporates Retail 3% 25% 25% 2% 2% 15% 1% 15% 1% 5% 5% % % Changes in corporates rating classes 1 and 8 are attributable to repo-transactions 51

52 Danish FSA Reports in 211, 212 and 213 New stringent guidelines for impairments 52

53 Danish FSA reports 211, 212 and 213 SME customers and IRB setup Decision making material satisfactory No ground for changing impairment charges IRB models satisfactory IT inspection Principles and policies meet required demands Market Risk and Compliance Management of market risk satisfactory Minor change in composition of the compliance report Custodian bank for Jyske Invest The bank should improve some of the control measures in relation to the management of the assets of Jyske Invest fully implemented Agricultural clients The bank s credit control in respect of agricultural clients is satisfactory No ground for changing impairment charges Management and control of credits The supervisory board s discussions and assessments of the bank s risks on the basis of the risk report are not sufficiently evidenced in the minutes. Apart from this, the inspection did not give rise to any important reactions on the part of the FSA. 53

54 New stringent guidelines for impairments Focus real estate portfolios and agriculture More stringent impairment principles (net exposures, asset values) Customers interest rate swaps at fair value One off effect Q2 212: Impairments DKK 543m Value adjustments DKK 357m Higher volatility in value adjustments and impairments when interest rates changes 54

55 Fact Book 55

56 Core earnings Profit for the period DKKm Q1 213 Q1 212 Index 13/12 Q1 213 Q4 212 Q3 212 Q2 212 Q Net interest income 1,19 1, ,19 1,67 1,121 1,135 1,148 4,471 Dividends, etc Net fee and commission income ,652 Net interest and fee income 1,557 1, ,557 1,571 1,513 1,53 1,556 6,143 Value adjustments Other operating income Income from operating lease (net) Gross earnings 1,856 1, ,856 1,797 1,747 1,285 1,88 6,637 Operating expenses, depreciation and amortisation 1,147 1, ,147 1,27 1,51 1,76 1,62 4,459 Profit on investments in associates and group enterprises Core earnings before loan impairment charges and provisions for guarantees ,19 Loan impairment charges and provisions for guarantees* ,842 Core earnings Earnings from investment portfolios Profit before contribution to the Guarantee Fund, etc The Guarantee Fund, etc Pre-tax profit

57 Profit/loss First quarter of 213 First quarter of 212 Core earning s Earning s on invest ment portfoli os The Guaran tee Fund, etc. Reclassi fication Core earning s Earning s on invest ment portfoli os The Guaran tee Fund, etc. Reclassi fication DKKm Total Total Net interest income 1, ,197 1, ,256 Dividends, etc Net fee and commission income Net interest and fee income 1, ,646 1, ,665 Value adjustments Other operating income Income from operating lease Gross earnings 1, ,82 1, ,57 Operating expenses, depreciation and amortisation 1, ,28 1, ,157 Profit on investments in associates and group enterprises 1 1 Core earnings before loan impairment charges and provisions for guarantees Loan impairment charges and provisions for guarantees* Pre-tax profit for the period

58 Questions 58