DNB Group Deutsche Bank conference, June 3 rd 2015 Rune Bjerke, CEO of DNB
Financial ambitions - 2016 and 2017 Return on equity > 12 per cent Min. 14% CET1 ratio* as capital level > 50% dividend Once capital level is reached 2 * Based on transitional rules
Four most frequently asked questions by investors 3
I Are you on track to meeting your current and future capital requirements? 4
Strong capital accumulation driven by gross earnings CET 1 capital ratio, transitional rules as at 31 March, per cent CET 1 capital ratio, Basel III* as at 31 March, per cent Leverage ratio, Basel III as at 31 March, per cent 8.6 9.2 9.3 10.6 11.9 12.7 10.6 12.1 14.2 14.6 4.1 4.3 5.1 5.7 2010 2011 2012 2013 2014 2015 2012** 2013 2014 2015 2012** 2013 2014 2015 5 * Fully-loaded Basel III estimate ** As at 31 June 2012
Capital ratios are sensitive to currency fluctuations 9.00 USD/NOK* Factors affecting the CET1 ratio 2016 effect, bps 8.50 8.00 7.50 +15% USD/NOK EUR/NOK - 45 bps 7.00 6.50 6.00 +31% Currency effects 5.50 1.4.2014 1.7.2014 1.10.2014 1.1.2015 1.4.2015-15% USD/NOK EUR/NOK + 45 bps 6 *Updated as of May 29 th 2015,
The minimum 14% CET1 capital target remains firm - identified capital efficiency measures in the range of 80-100 bps* Financial restructuring Realisation of capital gains CET1 RWA CET1 ratio Asset disposal Active portfolio management Capital-efficient products IRB approvals (Do not apply under transitional rules) 7 *up to 2016 under transitional rules
DNB the relative winner? DNB risk weights transitional rules??? Future risk weights Basel 4???? Current IRB risk weights 8
II Will growth in quality earnings continue? 9
Continued growth in net interest income Net interest income NOK million 35 000 30 000 25 000 Net interest income expectations for 2015 Expected lending growth of 3-4 per cent Stable development in volumeweighted spreads 20 000 CAGR 8.5% 15 000 2010 2011 2012 2013 2014 10
Deposit repricing potential across customer segments Deposits in retail banking* Deposits with repricing potential Low-yielding deposits / other LCI** maturing volumes and spreads public clients NOK billion, bps 38% Total NOK 536 billion Total = NOK 522 billion 62% Average maturity May March April 11 * Personal customers and SMEs, ** Large Corporates and International
Sound growth in other quality earnings New pension products Assets under management, NOK billion Private banking Assets under management, NOK billion Corporate finance Revenues in NOK million Investments Deposits CAGR 55% 27 316 36 10 168 20 35 46 2012 2013 2014 Q115 2012 2013 2014 Q115 Expect underlying growth of 5% in net commissions and fees 12
III Will DNB be able to compete in a new digital banking reality? 13
Our customers prefer digital banking Share of customer traffic Sales digital vs. traditional Savings agreements Car loans Mobile banking: 42% Text message banking: 25 % Manual 14 % Digital 86 % Manual; 50% Digital; 50% Online banking: 30% Insurance Digital 11 % Consumer loans Manual; 36% Call Center: 2% Branch office: 1% Manual 89 % Digital; 64% 14
Modernising the way we do banking Number of manual transactions in branches Key takeaways Reduction so far: 67% Goal: 75% Fundamentally changing the way we operate our branches: o Eliminated manual cash handling o Moving manual banking transactions to digital channels Continued reduction in number of branches 15
Keeping our best-in-class cost-efficiency position Cost/income DNB vs peer groups Per cent C/I ambition for 2017 75 European banks (top 50)* Nordic peer group DNB 70 65 60 ~40% 55 50 45 40 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Combination of top-line growth and cost focus 16 * Based on total assets Source: SNL Financial
IV Lower oil price - Is there any sign of secondary effects for Norway and DNB? 17
Economic growth in Norway is slowing down - but the landing is soft and at a comfortable level GDP growth and unemployment Year on year, per cent 7% Mainland GDP growth Unemployment rate 6% 5% 4% 3.5 % 4.1 % 4.4 % 4.5 % 4.4 % 3% 2% 1% 0% -1% 2010 2011 2012 2013 2014 2015e 2016e 2017e 2018e -2% 18 Source: Statistics Norway/DNB Markets forecasts
Two powerful tools to ensure a stable macroeconomic development Central bank rates Per cent 7 6 5 4 3 2 1 0 Monetary policy Higher interest rates in Norway than in the rest of Europe ECB Sweden Norway -1 2008 2010 2012 2014 2016 2018 300 250 200 150 100 50 0 Fiscal policy Large public wealth gives ample leeway to smooth business cycles National budget structural, non-oil deficit 2015 prices, NOK billion Structural, non-oil deficit 4 per cent return on the fund capital 2001 2003 2005 2007 2009 2011 2013 2015e 88 19 Source: Thomson Datastream, DNB Markets
DISCLAIMER CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS The statements contained in this presentation may include forward-looking statements such as statements of future expectations. These statements are based on the management s current views and assumptions and involve both known and unknown risks and uncertainties. Although DNB believes that the expectations reflected in any such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct. Actual results, performance or events may differ materially from those set out or implied in the forward-looking statements. Important factors that may cause such a difference include, but are not limited to: (i) general economic conditions, (ii) performance of financial markets, including market volatility and liquidity (iii) the extent of credit defaults, (iv) interest rate levels, (v) currency exchange rates, (vi) changes in the competitive climate, (vii) changes in laws and regulations, (viii) changes in the policies of central banks and/ or foreign governments, or supra-national entities. DNB assumes no obligation to update any forward-looking statement. 20