PRESS CONFERENCE New Standards - Strategic review Financial results for Q3 2012 Ole Andersen Chairman of the Board of Directors Eivind Kolding CEO & Chairman of the Executive Board Henrik Ramlau-Hansen CFO & Member of the Executive Board 30 October 2012 The press conference will be webcast live on www.danskebank.com
Financial results for first nine months of 2012: Profit more than doubled, despite higher impairment charges Income statement (DKK m) 9M 2012 9M 2011 Index Net interest income 18,588 17,355 107 Net fee income 6,129 6,080 101 Net trading income 7,469 5,687 131 Other income 2,323 2,799 83 Income from insurance bus. 1,310-407 - Total income 35,819 31,514 114 Operating expenses 19,598 19,528 100 Profit bef. loan imp. charges 16,221 11,986 135 Loan impairment charges 9,910 8,396 118 Profit before tax 6,311 3,590 176 Tax 2,708 2,067 131 Net profit 3,603 1,523 237 Non-core, Ireland -3,613 - - Net profit, core 7,216 - - Key points Total income up 14% Stable expenses despite restructuring costs Impairment charges higher Net profit more than doubled another step forward Net profit for core business of DKK 7.2 bn 2
Increase in income driven by higher net interest and trading income and normalised income from insurance business Income breakdown (DKK m) 9M 2011 9M 2012 Net interest income 17,355 18,588 Net fee income 6,080 6,129 Net trading income 5,687 7,469 Other income 2,799 2,323 Net income from insurance bus. -407 1,310 3
Expenses were held in check, and the cost/income ratio declined because of higher income Expenses (DKK bn) Cost/income ratio (%) 19.5 19.6 62.0 54.7 9M 2011 9M 2012 9M 2011 9M 2012 4
Impairment charges remained high, but have shown a falling trend since Q4 2011 Loan impairment charges (DKK bn) Ireland (incl Non-core) Northern Ireland Denmark Other 8.4 +18% 9.9 Loan impairment charges (DKK m) -40% 4,789 3,922 4.7 4.3 3,109 2,879 1.1 1.7 3.0 2.6 1.5-0.6 9M 2011 9M 2012 Q4 2011 Q1 2012 Q2 2012 Q3 2012 5
All Banking Activities units showed a profit except Non-core Ireland Profit before tax broken down by activity, 9M 2012 (DKK m) Banking Activities ex Non-core Danske Markets Danica Danske Capital Non-core 4,660 4,298 1,310 543-3,613 6
Outlook for 2012 as a whole: Earnings remain low but are moving in the right direction Macro Economic growth to remain low in most markets Income Continued focus on strengthening income Expenses Expected to rise 4% above 2011 level (including restructuring costs) Impairments Same level as in 2011: about DKK 13 bn Net profit Low profit for full-year 2012 7
New Standards for Danske Bank 8
We are operating in a New Normal 9
New Normal Lack of trust 10
New Normal Regulations 11
New Normal Customer behaviour 12
New Normal Complexity 13
New Normal Economic uncertainty 14
We continue to perform an important service for society Deposits Lending Advisory services Pension & life insurance Transactions Risk management Investments 15
New vision for 2015 Recognised as the most trusted financial partner 16
Nordic relationship bank with expertise Strategic units Danica Danske Capital Nordania Finland Norway Sweden Estonia Latvia Denmark Lithuania Northern Ireland Ireland 17
New mission Setting new standards in financial services 18
New Standards Customer focus Advisory services Digitalisation Openness & responsibility 19
Customer focus From one size fits all to targeted products and offers that match customers needs New personal customer concept New and more specialised concepts for business customers Stronger product offerings for business customers, for example new financing solutions 20
Advisory services Investment in staff development and training Gradual decline in number of branches in step with construction of new, state-of-the-art advisory centres Advisers gathered in larger units, improving access to specialists Development of Navigator and wealth planner already market-leading More tools that help customers make financial decisions 21
Digitalisation Increased digital application processing and signing (90% of all loan applications to be signed digitally) Quicker and automated credit decisions, for example car loans in 10 minutes Spending overview in Danske ebanking and the mobile and tablet solutions Online advisory meetings More customer involvement in developing our market-leading mobile and tablet solutions 22
Openness & responsibility Openness on pricing different offers for different customer needs Openness and predictability regarding the basis of decisions on everything from credit to interest rates Closer dialogue with stakeholders increased use of social media Instruction in online banking and step-by-step meetings about the use of NemID, payment cards and direct debit targeted at senior citizens Education of more young people about personal finances 23
The most trusted financial partner Customer satisfaction 2015 We want to be in the top two in customer satisfaction among our prioritised customer segments Financial results 2015 We want to be in the top three among Nordic peers measured by return on equity (ROE) 24
Towards 2015 Execute New Standards in the individual business units Enhance process efficiency through Lean and other measures Invest in development of competencies and enhance performance culture 25
Financial targets Profitability Return on equity: Above12% in 2015 Capital & liquidity Core tier 1 ratio: 13% in 2013 Total capital ratio: 17% in 2013 Liquidity: Meet EU 2015 LCR ratio requirement already at end-2012 Ratings Ratings: Improve ratings at least one notch Efficiency Nominal costs: Below DKK 26 bn in 2015 FTE: To be reduced by 2,000 in 2013-15 Cost/income ratio: <48% in 2015 Dividend policy Dividend payments: About 40% of annual net profit, but lower until we have reached capital and rating targets and nil in 2012 26
Return on equity above 12% in 2015 - assuming more normalised market conditions Return on equity (ROE) after tax (%) 9M 2012 annualised 3.8% Own initiatives 4-6%-points Declining loan losses 5-6%-points Rising interest rates 4-5%-points Regulation, inflation, tax etc. 6-7%-points 2015E ROE above 12% in 2015 27
Equity issue: We plan to raise about DKK 7 bn Amount: About DKK 7 bn Price: To be determined Method: Accelerated book-building without pre-emption rights for current shareholders Why: To accelerate rating improvements and achievement of our capital targets, strengthen our funding position and better align us with Nordic peers CT1 ratio will increase by about 0.8%-point and RAC ratio by about 0.4%-point Funding, market positioning and other benefits are expected to mitigate earnings dilution from the offering Disclaimer This communication includes references to a potential share offering by Danske Bank. This communication does not constitute an offer to sell, or a solicitation of offers to purchase or subscribe for, securities in the United States or in any other jurisdiction. The securities referred to herein have not been, and will not be, registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. 28
One bank one brand 29
New Normal 30
Disclaimer Important Notice 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, including the United States, or an inducement to enter into investment activity. No part of this presentation, nor the fact of its distribution, should form the basis of, or be relied on in connection with, any contract or commitment or investment decision whatsoever. The securities referred to herein have not been, and will not be, registered under the Securities Act of 1933, as amended ( Securities Act ), and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act. This presentation contains forward-looking statements that reflect management s 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 Bank s control. This presentation does not imply that Danske Bank has undertaken to revise these forward-looking 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. 31