PRE-TAX PROFIT OF DKK 491 MILLION, ROE OF 10.6 % AND COST/INCOME RATIO DOWN TO.59 SOLID DELIEVERY ACCORDING TO PLANS. Presentation of Q1-Q3 2013

Transcription

1 PRE-TAX PROFIT OF DKK 491 MILLION, ROE OF 1.6 % AND COST/INCOME RATIO DOWN TO.59 SOLID DELIEVERY ACCORDING TO PLANS Presentation of Q1-2

2 KEY MESSAGES 1 Core income 15 % up (y/y) : NII grew by 17 % and net fees and commissions grew by 27 % 2 Lower than expected cost growth following merger Cost/Income Ratio down to.59 3 Core earnings before impairment of DKK 841 million 16 % up from H1 2 4 Loan losses of DKK 35 million or.95 % of loans and guarantees slightly lower than expected 5 Bank lending stabilized at DKK 34.1 billion bank deposits down DKK.4 billion in driven by move to investment schemes 6 CET 1 ratio of 14., solvency ratio of 17.7 and excess capital coverage of DKK 3.2 billion Page 2

3 HEADLINES FROM THE INCOME STATEMENT SOLID DELIVERY ACCORDING TO PLANS SPAR NORD BANK Realized Realized 2 2 Change in pct. Net interest income 1,32 1,8 17 Net fees, charges and commissions Market-value adjustments Other income Core income 2,67 1,82 15 Staff costs Operating expenses etc Costs 1,225 1,74 14 Core earnings before impairment Impairments of loans and advances, etc Core earnings Investment income Profit/loss on ordinary activities Sector Fund Cost related to merger Profit from continuing operations Profit from discontinued operations Profit before tax side 3

4 : A QUIET PERIOD WITH FIRM COST CONTROL SPAR NORD BANK Realized Realized Change Realized 2 Q2 2 in pct. 2 Change in pct. Net interest income Net fees, charges and commissions Market-value adjustments Other income Core income Staff costs Operating expenses etc Costs Core earnings before impairment Impairments of loans and advances, etc Core earnings Investment income Profit/loss on ordinary activities Sector Fund Cost related to merger Profit from continuing operations Profit from discontinued operations Profit before tax side 4

5 NII: VOLUMES AND MARGINS STABILIZED IN NII of DKK 1,32 million up 17 % from Q1-2 1 % up Q/Q Positive trends Volume taken over in merger secures growth Lower funding costs due to solid liquidity position Volumes stabilized from Q2 to Margins stabilized from Q2 to Negative trends Demand remains modest in spite of significant net customer influx in 2 bank lending is down DKK.8 billion Low market interest rates deposit margin remains negative Outlook Volumes have we finally seen the bottom? Competition puts pressure on lending margins 75 Pct Q4 2 Net interest income NII and lending volume Q1 2 Q2 2 Loans, banking activities Udvikling Interest i rentemarginal DKKb Q11 Q21 1 Q41 Q111 Q Q411 Q1 Q2 Q4 Q1 Q2 Interest margin (Deposits) Interest margin (Loans) Interest margin side 5

6 STRONG GROWTH IN NET FEES AND COMMISSIONS Net fees and commissions of DKK 53 million 27 % up from Q1-2 Generally fee income has been taken to new level after merger especially in the mortgage area Securities Værdipapirhandel trading etc. Y/Y: 3 pct Asset Kapitalforvaltning management Y/Y: 65 pct. But organic growth is also high Growth in asset management driven by customers move towards more active investment strategies Strong volume trend in the mortgage-credit area Further growth expected in Q4 as Nykredit s mortgage margin hikes kick in Q4 Q1 Q2 Q4 Q1 Q2 Nettogebyrindtægter fee income Loan Lånesagsgebyrer transaction fees Other fees 75 / : 27 pct. 25 Y/Y: 24 pct. 25 Y/Y: 3 pct Q4 Q1 Q2 Q4 Q1 Q2 side 6

7 MARKET-VALUE ADJUSTMENTS: FIVE STRONG MONTHS FOLLOW BY FOUR-MONTH SLUMP Market-value adjustments and dividends of DKK 143 million DKK 5 million down on Q1-2 but still higher than expected January-May: Strong performance on bond portfolio, especially related to spread between Danish mortgage bonds and interest swaps June-September: Market turmoil and higher volatility Market-value adjustments Growth in market-value adjustments and dividends on portfolio of shares in financial-sector companies (DLR Kredit, BankInvest, PRAS mv.) 2 Q4 2 Q1 2 Q2 2 2 Customers interest and FX related activity on par with last year Break-down on types 2 2 Change Market-valued adjustments in Trading, Financial Markets & The International Division Tangible assets Currency trade and -agio Total side 7

8 COSTS LOWER THAN EXPECTED Total costs Omkostninger and Cost/Income og O/I Ratio Total costs and expenses of DKK 1,225 million up 14 % on Q1-2 - Increase exclusively related to merger - Increase lower than expected 1,5 1,25 1,.6.59 Payroll costs 15 % up on Q1- last year - Total headcount (FTE) 169 higher than months ago - But down 2 Operating expenses up 15 % - Driven by merger, especially higher IT-costs and cost of premises Improvement of Cost/Income Ratio to.59 Breakdown on types, branches have been closed or merged - 5 related to merger with SPARBANK - 7 in North Jutland - 2 in the Skive-region Costs () 2 2 Change in pct. Staff costs Operating expenses Depreciation Costs 1,225 1,74 14 Operating expenses () 2 2 Change Staff-related expenses Travel expenses Marketing costs IT expenses Cost of premises Other administrative expenses Operating expenses side 8

9 LOAN LOSSES IN LINE WITH GUIDANCE Total loan losses of DKK 35 million corresponding to.95 % in line with guidance Impairment percentage including mortgage lending:.4 Breakdown on segments Household: DKK 5 million corresponding to.4 %. Corporate: DKK 255 million corresponding to 1.3 % FSA report confirms Adequate provisioning level Adequate ICAAP ratio Strong centralized credit management Guidance 2 Impairment ratio still expected in the 1 % range Loan impairment and impairment percentage Note: Beregnet Based on på average gennemsnit loans and for udlån guarantees og garantier 1. 2 Pct Loan Nedskrivninger impairment and og nedskrivningsprocent impairment percentage Recent Historisk years udvikling trend in i nedskrivningsprocent impairment percentage % 1.2% 1.1% 1.4% ~1.% Q4 2 Q1 2 Q Guidance side 9

10 STRONG CUSTOMER INFLOW SECURE GROWTH IN TOTAL BUSINESS VOLUME Bank lending stabilized after long decline - DKK 34.1 billion end of same level as end of Q2 - DKK,8 billion decline solely attributable to run-off portfolio from SPARBANK and public sector Very satisfactory growth in mortgage-credit distribution - Total lending up to DKK 59.2 billion hereof DKK 5.7 billion in Totalkredit and DKK 8.5 billion in DLR Kredit Great demand for investment products lead to small decline in bank deposits - Bank deposits up DKK.5 billion (1%) but down DKK.4 billion Q/Q - Deposits in pooled schemes up DKK 1.5 billion (21%) - In the same period, AUM from household segment has grown by DKK 2.1 billion Bankudlån lending Bankindlån deposits Pooled Indlån schemes i puljer Guarantees Garantier Mortgage Realkredit lending Investments Depoter Mia. kr. 5 Q2/: -1 pct. Mia. kr. 1 Q2/: 7 pct. Mia. kr. 1 Q2/: -5 pct. Mia. kr. 35 Q2/: 5 pct Q4 Q1 Q2 Q4 Q1 Q2 Q4 Q1 Q2 Q4 Q1 Q2 side 1

11 CAPITAL POSITION FURTHER STRENGTHENED Strategic targets Core equity tier 1 ratio (CET1): minimum % Solvency ratio: minimum 15 % (at least 3 pp above ICAAP ratio) End of 2 CET1 stands at 14.1 % - up from.1 % at YE 2 Solvency ratio stands at 17.4 % up from 15.5 % at YE 2 Individual solvency need (ICAAP ratio) of 1.1 % Capital surplus of DKK 3.2 billion (7.3 pp) Pct Solvency ratio Solvency and subordinated capital Core tier 1 ratio 1,5 1, , > Hybrid capital Subordinated loan capital Capital base Pct Core tier 1 ratio Hybrid capital Deductions in hybrid capital Tier 1 ratio Subordinated debt Deductions in capitalbase Solvency ratio page 11

12 COMFORTABLE STRATEGIC LIQUIDITY OF DKK 15.9 BILLION Strategic liquidity of DKK 15.9 billion up DKK 1.1 billion Deposit base continues to grow Reduction in leasing and bank lending Redemption of DKK 6.3 billion bond issues in Q1-2 Last state guaranteed bonds issue redeemed in July Strategisk Strategic liquidity likviditet DKKb 2 Q2 2 Deposits, banking activities Seniorfunding Core capital and sub. capital Stable long term funding Loans, banking activities Loans, leasing activities Maturity < 1 year Liquidity target Loan to deposit ratio Pct. 2 DKKb Forfaldsstruktur Maturity ' > Issued bonds Senior loans page

13 GUIDANCE AND SHARE PERFORMANCE Forventninger Guidance for til 2 Share Aktiekurs price Core earnings before impairment and one-offs still expected in the DKK 1,-1,1 million range Impairment still expected to amount to approx. 1, % of loans and guarantees Special merger-related items: DKK 4 million Contributions to sector-wide solutions: DKK 17 million DKK jan 2 apr 2 jul 2 okt 2 jan 2 apr 2 jul 2 okt 2 Positive contribution from discontinued activities potentially as high as DKK 55-6 million Share price 46, DKK Market cap 5,775 EPS (2) 1.7 DKK EPS (2) DKK P/B (1/ 2).9 1Concensus estimate Source: Factset page

14 THE ROAD TO AN AFTER TAX ROE OF 1 % ROE EKF has har been været modest lav og but konkurrencedygtig par with peers The Målet target og is planen ROE er of 1 % efter after skat tax in i 215 ROE, 2 (%) ROE, (%) EKF (%) Sydbank 4,8% ~1.% Nordea (DK) 4,4% ~7,%* 4,2% Jyske Bank 4,% Danske Bank 3,7% 2 State hybrid Loan losses Income and costs 215 * Based on Consensus estimates page 14