Creating value in a deleveraging environment - Twelve drivers for - PowerPoint PPT Presentation

Creating value in a deleveraging environment - Twelve drivers for successful banking Morgan Stanley European Financials Conference 28 March 2012 CEO Rune Bjerke

Driver 1: Sustainable achievements – DNB has delivered as promised Development in pre-tax operating profit before write-downs (NOK billion) 2

Driver 2: A business model shaped for the future 50% 50% Private SME + individuals Corporate 3

Driver 3: A robust and consistent industry strategy Shipping & Seafood Energy Regional/ offshore global position Selective Healthcare Forest Telecom Media inter- products industries national position From Comm. Norwegian Retail Tech- Public real Service Finance to Nordic industry nology sector estate position International expansion based on industries with traditional Norwegian competence 4

Driver 4: Competence and experience in cyclical industries Write-downs NOK Exposure at default according to sector million DNB Group and shipping 29.02.2012 8.000 25 % Logistics; 5,7 Aviation; % 7.000 0,3 % Gas; 9,4 % 20 % Offshore; 6.000 27,1 % Other non- shipping; 3,2 5.000 % 15 % Other 4.000 shipping; 3,4 % 9 % 10 % 3.000 Chemical & 7 % product 2.000 tankers; 5 % 7,2 % 5 % 1.000 Crude oil 0 % 0 % tankers; 11,5 % - 0 % Dry; 13,9 % 2007 2008 2009 2010 2011 RoRo/PCC; International shipping 2,9 % Cruise; 3,5 % Total Container; Shipping in % of DNB Group 12,0 % 5

Driver 5: Sufficient solidity - DNB is among the most solid banks Equity Tier 1/total assets (“leverage ratio”) 4.9 % 4.2 % 3.9 % 3.2 % 3.1 % 2.6 % Bank 1 Bank 2 Bank 3 Bank 4 Bank 5 DNB 6 Source: Fourth quarter report 2011 from the financial institutions

Well capitalised by any measure Per cent EquityTier 1 capital as at 31 December 2011 (CET 1) 14.2 Adjusted for Nordic risk weight for 10.8 credit cards 9.4 Adjusted for Nordic risk weight for corporates Adjusted for Swedish risk weight for mortgage loans Adjusted for full IRB DNB risk weights Reported capital adequacy Pro forma full IRB IRB with "Nordic" risk weight 7

Driver 6: Favourable funding position NOK Spread Billion Maturity 3-month Euribor Covered bonds 34.0 7.6 72 175 Senior bonds 39.2 6.7 2012 Total 73.2 7.1 127 bp Subordinated loan 5.7 10nc5 340 ECB’s Liquidity Facility LTRO2) 9 3,0 i.a NOK Spread Billion Maturity 3-month Euribor Covered bonds 98.3 6.5 53 Senior bonds 27.8 8.8 108 2011 Total 126.1 7.0 65 bp ECB’s Liquidity Facility (LTRO1) 15.7 3.0 i.a NOK Spread Billion Maturity 3-month Euribor 2010 Covered bonds 84,4 7.5 49 Senior bonds 32.3 7.3 84 Total 116.6 7.5 59 bp 8

Driver 7: High deposit-to-loan ratio Deposit-to-loan ratio – Nordic banks 58% 56% 56% 54% 55% 46% 47% 46% 45% 37% DNB Bank 1 Bank 2 Bank 3 Bank 4 4Q10 4Q11 Source: Fourth quarter report 2011 from the financial institutions 9

Driver 8: Competitive on cost efficiency Cost/income ratio* – Nordic banks 2011 10 Source: Company reports *All figures are before adjustments for goodwill i.a.

Driver 9: A strong home market Annual budget deficit/surplus for General government net financial assets (As a percentage of nominal GDP 2011) 2012 (forecast ) Budget deficit Budget surplus Source: OECD Economic Outlook No. 90, November 2011 11 Note: Budget surplus/deficit calculated as a percentage share of country GDP; forecasts for 2012

Driver 10: Positioned for growth in non-capital intensive areas Development in income – DNB Markets NOK million 7243,2 6159,2 5685 5471,3 3872,5 3590,7 3216,9 3183,2 3092,5 2553 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 12

Driver 11: Strong growth in housing demand Net change of new houses in Norway (Completed new dwellings - Rise in number of households) 2004 + 6,240 2007 - 8,720 - 5,327 1H2011 13

Driver 12: Positive trend in margins Per cent 1.67 1.64 1.61 1.61 1.60 1.58 1.57 1.55 Lending spread 1.55 1.17 1.16 1.15 1.14 1.13 1.12 1.13 1.11 1.10 Combined spread - weighted average 0.41 0.33 0.32 0.31 0.29 0.29 0.28 0.27 Deposit spread 0.23 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 2) 14

DNB is not in a deleveraging mode - Financial targets 2012 still apply NOK 22-25 billion in pre-tax operating profit before write-downs NOK 2 billion in cost reductions Cost/income ratio below 46 per cent 15