First quarter of 2004

Transcription

1 First quarter of 24 Presentation of interim report Copenhagen, May 6, 24

2 Agenda Slide 1. Financial highlights 3 2. Business trends 5 3. Trends in business areas 9 4. Outlook for the remainder of

3 1. Financial highlights Q1 24 vs. Q Record-high core earnings Net profit for the period 8% to DKr2.4bn Core income declined 4% Operating expenses and depreciation fell 6% Provisions for bad & doubtful debts remain low Satisfactory return on investment portfolios Banking lending ex. repos 5% Negative currency translation effects on bank loans ex. repos of DKr4bn Corporate lending reflects sluggish business climate Strong growth in retail lending Mortgage lending rose 5% Q1 Q1 () Index Core income 7, 6, Expenses 3,679 3, Core earnings before prov. 3,321 3, Provisions for bad debts Core earnings 2,843 2, Earnings from inv. portfolios Profit before tax 3,72 3, Tax 813 1,2 125 Net profit for the period 2,259 2,44 18 Q1 Q1 At Mar 31, 24 () Index - Corporate loans Retail loans Bank loans ex. repos Repo Mortgage loans Bonds and shares Deposits Shareholders' equity Total assets 1,764 1,

4 1. Financial highlights Key figures and ratios - Improvement in all key indicators Rise in return on equity Net profit growth boosted ROE to 15.9% C/I ratio improved from 52.6 to 51.6 despite declining income Upgrade by Moody s to Aa1 Q1 Q1 FY Key ratios (%) 23 Net profit as % of avg. share. equity p.a Core earnings as % of avg. sh. equity p.a Cost/core income ratio Core (tier1) capital ratio Solvency ratio Earnings per share 13% Earnings per share for the period rose 13% to DKr3.6 Share repurchase worth DKr698m Remainder of total share buyback of DKr3bn will be carried out in Q2 24 DKr Earnings per share QoQ unchanged YoY 13% 4

5 2. Business trends Net interest income - Higher business volume could not offset falling interest rates Net interest income 8% Average money market rate in DK fell from 2.81% to 2.3% Lower mortgage refinancing activity Effect of falling money market rates in DK, SE and NO estimated at DKr27m Net interest income % 5. Danish money market rate Q2 Q3 Q Lending growth in the Nordic countries Growth in retail Growth in market shares in Denmark, Norway and Sweden continued Corporates in Denmark still hampered by weak business climate Loans, end period Q1 Q1 Local currency (bn) Index Danske Bank - Retail 35,7 45,1 126 Danske Bank - Corporate 16,8 99,9 94 BG Bank - Retail 22,5 25,4 113 BG Bank - Corporate 23,2 22,7 98 BA NO - Retail 27,8 31,9 115 BA NO - Corporate 28, 29,8 16 BA SE - Retail 23,2 26,2 113 BA SE - Corporate 59, 7, 119 5

6 2. Business trends Fee and commission income (net) - Gain in fees driven by capital market activities Fee and commission income (net) 6% Commissions on security trades rose 11% because of increased activity in capital markets Mortgage refinancing fees declined 12% since refinancing activity in Q1 23 was extraordinarily heavy Refinancing & processing fees QoQ 3% YoY 12% 6 5 Securities & custody comm. QoQ 34% YoY 11% 275 QoQ 2% YoY 5% Payment services fees Fees and commissions (net) 4 3 Guarantee & other comm. QoQ 7% YoY 6% QoQ 9% YoY 25%

7 2. Business trends Costs - Positive trend continues Costs 6% Costs amounted to DKr3.5bn 4.5 Costs Cost/core income ratio % 6 Cost/core income ratio improved to long-term goal remains The efficiency gains will have an effect on future costs 3. 5 Underlying costs 3% Severance payments of DKr7m Headcount reduced 5% Underlying cost base Q1 Q1 Index Q4 () 23 Costs 3,679 3, ,83 Bonuses Severance payments Underlying cost base 3,289 3, ,668 FTE staff (end period) 17,559 16, ,935 7

8 2. Business trends Provisions for bad & doubtful debts - Still low provisioning ratio & high loan portfolio quality Provisions for bad & doubtful debts 33% Provisions equal 11 bp of loans & guarantees pro anno Average expected loss over a business cycle of 19 bp pro anno Provisions for bad & doubtful debts Average Q2 Q3 Q Trend in accumulated provisions Accumulated provisions amount to DKr12.6bn Non-accrual loans represent DKr4.7bn Accumulated provisions equal 27% of nonaccrual loans Accumulated provisions Q1 Q1 () Beginning of year 13,166 12,69 + new & increased provisions reversed provisions written off Market value adjustments Other increases & decreases -4 4 End of period 13, 12,629 8

9 3. Trends in business areas Banking Activities Danske Bank - Increased business volume offset drop in interest rates Core earnings before provisions unchanged Core income maintained despite drop in money market rates Increased income from customers security trading Retail lending rose 26% Rise in market share of retail customers Core earnings before provisions Core earnings before prov. 6 % 1,1 adj. for interest rate changes 8 Danske Prioritet Stock, end period % Market shares, lending 23 1, Total Retail 98 Q1 Q1 Interest rate Q1 24 Jun. Sep. Dec. Mar. 19 Jan. Jun. Dec. Mar

10 3. Trends in business areas Banking Activities BG Bank - Core income maintained despite drop in interest rates Core earnings before provisions 7% Lending rose because of good sales of BG Bolig Plus Retail lending grew 13% Market shares stabilised Cost/core income ratio improved from 62.2 to Core earnings before provisions Core earnings before prov. 17 % 44 adj. for interest rate changes 4 BG Bolig Plus Stock, end period % Market shares, lending 14 Retail Total 34 Q1 Q1 Interest rate Q Jun. Sep. Dec. Mar. Jan. Jun. Dec. Mar

11 3. Trends in business areas Banking Activities Norway - Business growth pressured by falling interest and FX rates Core earnings before provisions 42% ( 35% in local currency) Average Norwegian money market rate plummeted from 6.12% to 2.11% Lending grew 11% in local currency New branches opened in Oslo, Bergen & Trondheim 2 1 Core earnings before provisions Core earnings before prov. 4 % 15 adj. for int. & FX rate changes NKr bn 63 Trend in lending volume Ex. repos, end period QoQ 4% YoY 11% % Market shares 5 Deposits Lending Q1 Q1 Interest FX Q1 rate Q2 Q3 Q4 Q

12 3. Trends in business areas Banking Activities Sweden - Positive business trend constrained by lower interest rates Core earnings before provisions 6% ( 6% in local currency) Average money market rate fell from 3.75% to 2.66% Lending grew 17% in local currency Rise in fees from capital market activities New head office & two new branches in Stockholm Core earnings before provisions Core earnings before prov. 16 % 25 adj. for int. rate changes SKr bn 1 Trend in lending volume Ex. repos, end period QoQ 5% YoY 17% % Market shares 1 Lending Q1 Q1 Interest rate FX Q Deposits Q2 Q3 Q4 Q

13 3. Trends in business areas Other banking activities - Earnings level unchanged Core earnings before provisions 1% (Unchanged in local currency) Lower costs offset the lower level of activities in the UK Other US UK 5 25 Core earnings before provisions Banking Activities UK 3% ( 3 % in local currency) 2 Banking Activities USA 4 % ( 32% in local currency) 1 25 Other banking activities 12%

14 3. Trends in business areas Mortgage Finance - Lower core income because of lower refinancing activity Core earnings before provisions 13% Core income lower because refinancing activity last year was extraordinarily heavy Interest-only loans totalled DKr35bn, representing a market share of 41% Market share under pressure from the Group s own banking products Core earnings before provisions Core earnings before prov. 8 % 64 adj. for change in int. rates 55 Gross lending Lending portfolio 51 % Market shares 4 Gross lending Net new lending 48 Q1 Q1 Interest rate Q Q2 Q3 Q4 Q

15 3. Trends in business areas Danske Markets - Earnings remain healthy Core earnings before provisions 12% Income level remained satisfactory Maintained position as leading player in the Scandinavian fixed income markets Increase in earnings from equity trading and corporate finance Moderate risk profile 4 2 Core earnings before provisions % 2 Danske Equities share of core income incl. corporate finance 7 Equity trading volume CSE Market share % 25 4 Int. rate risk Average period Estimated loss upon a general 1 percentage point rise in interest rates, in Jan. Maj Sep. Jan

16 3. Trends in business areas Danica Pension - Increase in core earnings from insurance activities Core earnings 17% Risk allowance increased by 17% Return on investment of customers funds of 3.2% Gross premiums unchanged Collective bonus potential rose from DKr3.9bn to DKr8.1bn () Q1 23 Q1 24 Index Q4 23 Risk-free return on share. equity Risk allowance Unit-linked policies & health ins Core income from insurance bus Funding, net Core earnings from insurance bus Technical provisions () Gross premiums Single premiums Regular premiums Real property Asset allocation 9% 1% Bonds Equities. 81 % % Return on investments customers funds 16

17 3. Trends in business areas Danske Capital - Trend in capital markets led to rising income Core earnings before provisions 46% Assets under management rose to DKr383bn Positive turnaround in sales to institutional customers Of assets under management, equities represented 18% and bonds 79% Costs reduced Core earnings before provisions 19 Equities as % of AuM End period % bp 4 AuM End period QoQ 3% YoY 1% 21 Core income/aum

18 3. Trends in business areas Earnings from investment portfolios - Good performance continues Earnings from inv. portfolios 128% Sound return on investments Falling yields in fixed income market and increased optimism in equity markets Defensive risk profile () Q1 23 Q1 24 Index Q4 23 Fixed-income & FX Shares, listed Shares, unlisted Costs Investment earnings, banking Investment earnings, Danica Investment earnings, total Average period 1,4 Estimated loss upon a general 1 percentage point rise in interest rates, in Int. rate risk % Gov t bond yields 5 On Equity index average for Q4 Q1 the period Index KFX On bp. 17 bp. 44 bp. 27 bp. 37 bp. 3m 1 yr 2 yr 5 yr 1 yr Maturity OMX Dow Jones 9,858 1, SP5 1,56 1, MSCI World

19 4. Outlook for the remainder of 24 Outlook for the remainder of 24 - Outlook unchanged since 23 Annual Report Core income in line with 23 Costs a little lower than in 23 Credit quality of the loan portfolio is expected to remain sound, resulting in a low provisioning level Core earnings slightly higher than in 23 Investment earnings in banking and insurance businesses depend as usual on the trend in the financial markets Group s tax rate expected to be 3% of profit before tax 19

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