Banking Activities Norway Growth and profitability Copenhagen, January 2006 Thomas F. Borgen, Managing Director
From consolidation to expansion, growth and profitability 2007 2006 20 20 2003 2002 2001 2000 1999 Growth and profitability New branches, recruitment and product development Consolidation and credit clean up Fokus Bank acquired by Danske Bank 2
Banking Activities Norway building blocks Ownership Profitability Growth Infrastructure Competence Customer Satisfaction/ Loyalty Branding 3
Being part of DB means competitive advantages Demanding core values Integrated IT template Services Products Processes Strong risk management Credit policy & processes Market risks Administrative support Standardizing Scale advantages Solid capital base Credit power Funding stability & ability 4
Expansion new Branches and Business Areas 5
Distribution 70 branches 21 new branches since 2002 Fokus Dialog call centre Internet banking Telephone banking Real estate agency 2,650 km... multi-channel accessibility and branch network almost complete 6
Start-ups new branches - finished in 2006 25 20 15 10 11 3 2 21 Break even Cost of capital 5 0 5 2 2002 2003 20 20 2006 y1 y2 y3 y4 y5 y6 (Only private customers - time to breakeven shortens with corporates included) 7
Investment in new branches - substantial gearing effect in 2007 onwards Financial status - new branches 25 Number of branches 20 15 10 5 0 20 20 2006 2007 Minus Break-even Positive 8
Banking is people The right people on the buss 500 new employees (>50%) 20 70 10 Training Fokus Ambassador 9
Customer centric organisation Group Finance CEO Thomas F. Borgen Danske Markets Group Support CFO Leif J Laugen Fokus Markets Anders Eide Credit - Jens Jørgen Jensen Legal - Thorbjørn Gjerde Support Jan-Frode Janson Region North Trondheim Trond Mellingsæter Region West Bergen Jan Hjellestad Region South Stavanger Torill Nag Region East Skien Øyvind Hurlen Region Oslo-area Oslo Morten Bjørnsen 10
Branding in a holistic perspective - Brand creation in every single contact with the customer Products Leadership Marketing/ Sponsoring Media/ press Core values Systems Distribution Personal interaction 11
Positioning -On our way to a clear and visible position the challenger 2001 Modernism 20 Modernism Pragmatism Idealism Pragmatism Idealism Traditionalism Traditionalism 12
Growth - Gaining Momentum, especially from 20 Credit Volume (NOK bill) 90 85 80 Market in general made comparable by indexing to BA Norway 31.12.2002 (NOK bill) 89 84 79 CAGR BA Norway*) (18,3%) 75 70 65 60 55 56 58 60 61 62 64 4Q 02 03 03 03 4Q 03 4Q *) Includes loans booked in London, Oslo Branch and Nordania Leasing as well as in Fokus Bank. Creates comparability to other Norwegian financial institutions. 67 71 **) 74 All banks**) (10,6 %) Includes credit from private financial institutions except credit to other financial institutions, government bodies, municipalities and customers operating and domiciled outside Norway 13
Customer Satisfaction - Corporate customers DnB NOR 4,01 Nordea Sp.b. 1/SR 4,09 4,1 Fokus bank 4,29 3,8 4 4,2 4,4 Research International - 800 companies; turnover above NOK 25 mill; Equity > 20% 14
Market share - Corporate customers Turnover per year 2002 2003 20 April 20 40 100 mill 4,7% 5,9% 6,6% 7,1% 100 300 mill 5,6% 6,9% 8,1% 8,3% 300 1.000 mill 5,8% 7,9% 10,2% 10,5% Over 1.000 mill 9,2% 11,3% 14,6% 13,4% (Corporate customers with Fokus Bank as main bank) 15
Customer Satisfaction - Private customers Nordea DnB Nor Postbanken SpareBank 1 69,6 69,7 70,1 70,4 Fokus Bank 73,3 66 68 70 72 74 Oslo Business School/The Norwegian Customer Survey - 100 services companies 16
Market share - Private customers 6 5 Income groups 20 1999 6 5 4 4 3 3 2 2 1 1 0 Under 200 201-300 301-400 401-500 501-600 Over 600 0 (Private customers with Fokus Bank as main bank) 17
Private customer loans market shares DnBNOR 4 savings banks Nordea 38 % 15 % 13 % 6 % 14 % 12 % 5 % 37 % 13 % 11 % 4 % 36 % 12 % 10 % 3 % 35 % 4Q 11 % 4Q 9 % 4Q 2 % 4Q 18
Corporate customer loans market shares DnBNOR 4 savings banks Nordea 44 % 11 % 22 % 8 % 43,1 % 43 % 10 % 21 % 7 % 42 % 41,7 % 9 % 9,1 % 9,0 % 9,0 % 9,1 % 9,0 % 8,9 % 8,7 % 20 % 20,1 % 20,0 % 19,7 % 19,8 % 19,6 % 20,0 % 6 % 5,8 % 5,8 % 6,1 % 6,2 % 6,3 % 41,3 % 41,2 % 41,2 % 41,4 % 5,3 % 5,4 % 41 % 40,7 % 8 % 19 % 19,0 % 5 % 40 % 4Q 7 % 4Q 18 % 4Q 4 % 4Q 19
Profit before losses - Develops according to plan NOK mill 200 175 150 149 125 100 90 107 117 88 125 113 75 50 25 0 4Q 20
ROE before tax and value creation 120 Quarterly AVA and ROE before tax 30 % 100 25 % AVA mill nok 80 60 40 < 20 % 15 % 10 % ROE in pct 20 5 % - Q1- Q2- Q3- Q4- Q1- Q2- Q3-0 % AVA ROE before tax 21
P/L Jan 1st Sept 30th 20 NOK mill 1-20 1-20 Change NOK Change percent Net interest income 10 941 64 7% Other income 416 261 155 59% Top line 1421 1202 219 18% Expenses 1034 888 146 16% Profit before losses 387 314 73 23% Loan losses -70 5-75 - Profit after losses 457 310 148 47% 22
Macro economic development - expectations Inflation : 1,6% i 2,2% i 06 GDP : 3,7% i 2,9% i 06 Interest rate : (3 months) 2,5% p.t to 4% in 12 months (10 year) 3,8% p.t to 4,40 in 12 months Credit growth : Households still rising, but more moderate : Corporate sector stabilizing around 10% 23
Banking Activities Norway