Danske Bank and the financial crisis

Transcription

1 Danske Bank and the financial crisis Danske Markets Banking Seminar Peter Straarup, CEO and Chairman of the executive board September 2, 2009

2 Shock waves hitting i the financial i industry 1st wave: Financial crisis 2nd wave: Recession 2

3 Two sides of the same coin from the significant global instability High income High impairment charges 3

4 Group financial results, H Sharp rise in income finances high loan impairment charges Income statement DKr m H H Index Net interest income 12,901 14, Net fee income 4,271 3, Net trading income 3,518 12, Other income 1,968 1, Income from insurance Total income 21,821 32, Operating expenses 12,933 12, Goodwill, fee gov't guarantee 0 2,667 - Profit before credit losses 8,888 16, Credit loss expenses ,114 14,531 - Profit before tax 7,774 2, Tax 1,967 1, Net profit 5,

5 Net trading income - Favourable market conditions % EUR/SEK 12M volatility ticks Bid/offer spreads, 8Y Danish govts - High FX volatility boosts activity - Government bonds have become profitable Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 0 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Market position in the Nordics - Among top three in all main product areas % 5.0 DKK yield curve -Steeper yield curve improves earnings Product area / # Nordic Fixed income Forex Derivatives Equities Source: Prospera 2008/ /12/ /03/ /06/ Year 5

6 Loan impairment charges - Impairment charges still high, but gradually declining from Q4 08 level DKr m 10,000 8,000 6,000 Quarterly loan impairment charges 100% 173 bp Collective 156 bp Individual 80% 64 bp 31 bp 131 bp 11 bp 60% Impairments by customer segment - SMEs account for most of the Groups impairments Personal Financials Large corp. 4, bp 125 bp 120 bp 40% 2, bp 33 bp 20% SMEs 0-2,000 0% Q2 08 Q3 08 Q4 08 Q1 09 Q Q Q Total quarterly impairments DKr 9.2 bn DKr 8.0 bn DKr 6.6 bn 6

7 Upgrades/total rating changes ratio Downturn Upturn Downturn Note: Values above 0.5 means more upgrades than down grades 7

8 Risk concentrations Financial institutions Ireland and Northern Ireland Baltic countries ti Private equity 8

9 Where do the losses come from? Lower global economic growth affects Packaging Graphics Machinery Pulp and paper Shipping Transport Falling consumer spending affects Car dealers Retailers Airlines and tourism Distressed property markets affects Building materials - suppliers Developers Commercial property Contractors 9

10 Strengthened credit organisation i Focus on current customers Action plans Upgrade of workout teams Tighter credit policy 10

11 BUSINESS TRENDS Capital management - Improving capital ratios Capital ratios CRD/Basel II - Strong improvement due to new hybrid capital and reduced assets % Q Q Q Core (tier 1) ratio ex hybrid Core (tier 1) ratio incl convertible hybrid Core (tier 1) ratio Solvency ratio Leverage ratio, unadj Leverage ratio, US GAAP * Leverage ratio, adj. ** Total assets (DKr bn) 3,544 3,344 3,240 * Netting of derivatives and ex securities sold in repos and intangibles. ** US GAAP and ex insurance assets and Realkredit Danmark lending. 11

12 Two Danish banking packages 1 0 Sept 10 3 State guarantee on all liabilities 2 State hybrid loan capital 31 Dec 13 State guarantee on individual loans Repay at Repay at Repay at 100% 105% 110% 11 1 Apr May May 15 12

13 The cost of the banking packages for Danske Bank DKr m 1200 Quarterly costs NII hybrid capital Guarantee fee (Expense) 0 Q309 - Q310 Q410 - repaid) 13

14 Regulation: It will never be the same again More and better capital Less procyclicality (dynamic provisioning) Leverage ratio, etc. Branch vs. subsidiary Strict liquidity management Macro-prudential oversight Lord Turner, chairman of the UK FSA: The changes recommended are profound, and the banking system of the future will be different from that of the last decade. Source: The Turner Review, published March 18, 2009, by UK FSA. 14

15 The strategy going forward Credit management Prepare for life without government support Re-establish establish profitability Customer needs and image 15

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17 Disclaimer 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 or an inducement to enter into investment activity. No part of this presentation, nor the fact of its distribution, ib i should form the basis of, or be relied on in connection with, any contract or commitment or investment decision whatsoever. This presentation contains forward-looking statements that reflect managements 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 Banks control. This presentation does not imply that Danske Bank has undertaken to revise these forward This presentation does not imply that Danske Bank has undertaken to revise these forwardlooking 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.