Danske Bank. Investment Ideas in Denmark. London, November 2003 Peter Straarup, CEO

Transkript

1 Danske Bank Investment Ideas in Denmark London, November 23 Peter Straarup, CEO

2 Danske Bank s business areas - Banking Activities is by far the largest area - Retail and corporate banking - Retail and corporate banking - Retail and corporate banking - Mortgage finance - Life & pensions One group, one system Local brands Shared Services Centre Shared product development 2

3 Key figures Improvement in all major ratios Q1-Q3 23 Q1-Q3 22 Earnings per share (DKr) Return on avg. shareholders' equity (% p.a.) RAROC before tax (% p.a.) Solvency ratio (%) Core (tier 1) capital ratio (%) Cost/core income ratio (%)

4 Steady performance - Delivering returns Return 17.5% ROE EPS 14 Kr. Competitive returns despite tough banking environment 15.5% 13.5% % 6 9.5% % Q3 '3 Excluding merger costs Cost/core income ratio Tight cost control Increased efficiency Synergies from the RealDanmark merger 75% 7% 65% 6% 55% 5% Q3 '3 Note: figures are for Danske Bank pre-merger. 4

5 Danske Bank - Well-positioned for growth in core business >1% loan growth No. 1 in customer satisfaction Market share target: 1% Good opportunities for organic growth > 1% loan growth No. 1 in customer satisfaction Market share target: 1% Good opportunities for organic growth Recovery of market shares for banking and mortgage finance Innovative new products Good growth opportunities for Danica Strong brands Competitive products Scalable IT platform 5

6 Branding in Denmark - Two strong brands Banking Activities, Denmark 174 >1% > 8, Green segment: contemporary and idealistic Loyal customers with rising satisfaction level Separate credit department Branches Market share No. of customers Customer type Customer satisfaction & loyalty 293 >2% > 1,5, Blue segment: contemporary, individualistic, pragmatic Very loyal customers with sound satisfaction level Separate credit department 6

7 Market shares, Denmark - Signs of improvement Loans Market share: 28% of loans Market share: 31.1% of retail bank loans; breakdown: BG Bank: 11.9% Danske Bank: 19.2% Innovative new products % Total Corporate Retail Sep Dec Mar Jun Sep Deposits Market share: 35% of deposits Market share: 34.5% of retail deposits; breakdown: BG Bank: 11.2% Danske Bank: 23.3% % Corporate Total Retail Sep Dec Mar Jun Sep

8 Products - New products support gains in market shares Customer packages sold Sales of customer packages proceeded satisfactorily, with a total of 444, sold: 1, pcs. 236, sold in Danske Bank , sold in BG Bank Danske Bank BG Bank Q2 Q3 Q4 Q1 Q2 Q Home financing products Sales of home financing products Danske Prioritet and BG Bolig Plus have shown a very favourable trend Total in Danske Bank: DKr2.6bn Total in BG Bank: DKr1.bn Average loan size: DKr5, DKr bn Danske Bank BG Bank Jun. Jul. Aug. Sep. Oct. 23 8

9 Core earnings in Banking Activities DK - Underlying growth in core earnings Core income, BA Denmark The short-term interest rate has fallen to 2.3% from 5.31%, a drop of 3.3 percentage points In Q3 23, income was DKr5m lower than in Q1 21 because of lower interest rates DKr m 4,5 4, 3,5 3, Core income Adjusted Actual Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q Core earnings before provisions Lower income because of lower interest rates has full effect on core earnings before provisions Adjusted core earnings before provisions has shown a steady increase since Q1 21 DKr m 2,5 2, 1,5 1, Core earnings before provisions Adjusted CAGR: 15% Actual Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q

10 Distribution power - Still potential for growth Market share Retail % Danske Bank BG Bank Total Urban areas Population > 5, Population < 5, Rural areas Average Market share above 3% Market share around 3% Market share around 2% 1

11 Christiansø Skagen Hasle Allinge-Gudhjem Hirtshals Rønne Frederikshavn Åkirkeby Neksø Sindal Hjørring Løkken-Vrå Sæby Brønderslev Læsø Pandrup Dronninglund Åbybro Brovst Hanstholm Hørsholm Fjerritslev Hals Aalborg Allerød Birkerød Thisted Nibe Søllerød Løgstør Sejlflod Farum Støvring Års Skørping Lyngby-Tårnbæk Morsø Værløse Sydthy Farsø Sundsøre Hadsund Gentofte Sallingsund Nørager Arden Gladsaxe Ledøje-Smørum Herlev Ålestrup Ballerup Mariager Thyborøn-Harboør Thyholm Hobro Glostrup Spøttrup Møldrup Albertslund Rødovre Frederiksberg Skive Nørhald København Purhus Rougsø Høje Tåstrup Tjele Brøndby Lemvig Randers Nørre Djurs Struer Vinderup Vallensbæk Hvidovre Fjends Viborg Sønderhald Ishøj Tårnby Bjerringbro Dragør Langå Midtdjurs Grenå Holstebro Hvorslev Hadsten Rosenholm Greve Karup Avlum-Haderup Rønde Ulfborg-Wemb Kjellerup Hinnerup Hammel Ebeltoft Gjern Trehøje Silkeborg Ikast Galten Århus Ringkøbing Herning Græsted-Gilleleje Videbæk Ry Hørning Helsingør Them Helsinge Skanderborg Hundested Holmsland Fredensborg-Humlebæk Skjern Nørre Snede Brædstrup Frederiksværk Hillerød Åskov Karlebo Nykøbing-Rørvig Gedved Odder Skævinge Brande Trundholm Jægerspris Tørring-Uldum Horsens Slangerup Egvad Frederikssund Give Samsø Stenløse Dragsholm Ølstykke Jelling Hedensted Holbæk Skibby Blåbjerg Ølgod Grindsted Juelsminde Bjergsted Svinninge Gundsø Bramsnæs Vejle Kalundborg Varde Egtved Tornved Jernløse Lejre Roskilde Blåvandshuk Børkop Hvidebæk Hvalsø Billund Helle Høng Tølløse Ramsø Fredericia Bogense Gørlev Dianalund Stenlille Solrød Brørup Otterup VejenLunderskov Esbjerg Holsted Middelfart Kerteminde Skovbo Bramming Søndersø Ringsted Køge Kolding Munkebo Slagelse Sorø Nørre Åby Ejby Fanø Vamdrup Vallø Vissenbjerg Odense Rødding Årup Langeskov Suså Christiansfeld Ullerslev Nyborg Korsør Hashøj Haslev Stevns Fuglebjerg Ribe Tommerup Årslev Rønnede Glamsbjerg Holmegård Fakse Gram Vojens Næstved Ørbæk Skælskør Assens Broby Ringe Haderslev Hårby Ryslinge Fladså Skærbæk Nørre Rangstrup Gudme Præstø Fåborg Egebjerg Rødekro Bredebro Åbenrå Vordingborg Løgumkloster Svendborg Langebæk Nordborg Tranekær Højer Møn Sundeved Augustenborg Tønder Tinglev Lundtoft Rudkøbing Ravnsborg Gråsten Sønderborg Sydals Nørre Alslev Ærøskøbing Stubbekøbing Bov Broager Marstal Nakskov Højreby Sydlangeland Maribo Sakskøbing Rudbjerg Nykøbing Falster Rødby Holeby Nysted Sydfalster New product - Strong market share of interest-only loans Geographical location of loan offers Loan offers at RD of around DKr19.6bn, a market share of >5% Strong interest in eastern part of DK, matching the general market share RD s product has a comparative advantage DKr3.6bn DKr2.3bn DKr1.3bn Område Jylland Midt Område Nord Område Syd Område Øst DKr12.4bn Loan offers at RD Loan offers are made through both RD and bank branches The key factors of distribution power and a strong product make an effective combination DKr bn Sep. Bank branches RD Total Loan offers 23 Nov. 11

12 Norwegian branch network - Good prospects for geographical expansion Benefits of being a part of a leading financial services group in the Nordic region: 3 Financial strength Shared, scalable IT platform Global network 7 Specialist know-how Products Total branches: 63 12

13 Market share in Norway - Acceptable development Loans Market share of almost 5% Realignment of the loan book Local branding Most satisfied customers in Norway % Year Q3 Q4 Q1 Q Deposits Market share of around 4.5% % Opening of new branches in selected areas Year Q3 Q4 Q1 Q Source: Norges Bank 13

14 Core earnings in Banking Activities Norway - Strongly affected by one-off costs Core earnings before provisions DKr m 2 Core earnings before provisions have shown steady improvement Q4 21 was affected by one-off costs related to the IT conversion and staff reductions Adjusted CAGR: 14% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q Customer satisfaction Fokus Bank has the most satisfied customers in Norway DnB has the least satisfied customers, giving Fokus Bank an opportunity to gain market shares in connection with DnB/GNor merger Index Fokus Skandia Nordea Sparebank Source: Gallup GNor Post DnB 14

15 Swedish branch network - Local branding important Benefits of being a part of a leading financial services group in the Nordic region: Financial strength Shared, scalable IT platform Global network 1 Specialist know-how Products Total branches: 45 15

16 Market share Sweden - Strong development in loan book Loans Market share of 8% Local branding Most satisfied customers in Sweden, again % Jan Jun Jan Jun Jan Jun Jan Sep Deposits Market share of 3% Opening of new branches in selected areas % Jan Jun Jan Jun Jan Jun Jan Sep Source: Riksbanken 16

17 Core earnings in Banking Activities Sweden - Sound growth in business activity Core earnings before provisions DKr m 2 Adjusted CAGR: 26% Adjusted core earnings before provisions have shown solid improvement The adjustments are related to the IT conversion and pension obligations Actual Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q Customer satisfaction Ösgöta Enskilda Bank has the most satisfied customers in Sweden for the third consecutive year Index ÖEB SHB SWED Nordea SEB Source: Svensk Kvalitetsindex 17

18 Danske Bank - Well positioned for growth in core business >1% loan growth No. 1 in customer satisfaction Market share target: 1% Good opportunities for organic growth > 1% loan growth No. 1 in customer satisfaction Market share target: 1% Good opportunities for organic growth Recovery of market shares for banking and mortgage finance Innovative new products Good growth opportunities for Danica Strong brands Competitive products Scalable IT platform 18

19 Developments since the merger Clear improvements and large distributions to shareholders Costs have been reduced by DKr3.2bn, or 2%, since the merger DKr bn Costs in 2 plus inflation Actual costs costs = Q1-3 annualised Total dividends and repurchases since the merger equal the price of RealDanmark DKr bn Price of RealDanmark Share repurchases Dividends RD price 23: dividend = Q1-3 annualised Share repurchase = DKr5bn 19

20 Development in EPS - Danske Bank compares favorably Reported EPS Q3 23 SEB SHB SWED Danske 1 87* Nordea DnB *Incl. merger costs 1999 = 1 (Nordea: 2=1) 2

21 Interest rates - Exposure to Danish interest rates has upside potential A 1 percentage point change in the short-term money market rate Change in pre-tax profit of DKr1.2bn, through higher interest earnings on equity lower level of floor risk higher margins on the non-funded loans in the accumulated provisions that are still performing DKr m 1, Equity Floor risk Performing part of accumulated provisions 9 1,19 Total 21

22 Key points Good growth opportunities in Danske Bank s core markets Committed to delivering competitive return to shareholders 22

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