Danske Bank – Retail Banking Personal Banking Strategy in Sweden 14 May 2019 Anneli Adler Co-head Danske Bank Retail Sweden
Agenda 1 Danske Bank Group 2 Danske Bank - Banking SE 3 Danske Retail SE - A challenger in Sweden 4 Danske Hypotek – Going Forward
Danske Bank Group Q1 2019
Executive summary: A difficult start to the year • Net profit of DKK 3.0 bn, Lending growth of 3% y/y, driven by growth of 2% down 39% from Q1 2018 due y/y at Banking DK and 7% y/y at Banking Nordic to lower NII, as well as higher expenses and impairments 4.9 12.6 3.0 7.7 • ROE of 7.7% Trading income negatively affected by value adjustments and a regulatory one-off expense at Net profit (DKK bn) ROE (%) Danica Pension Q1 2019 Q1 2018 Total income by Business Unit, % Expenses up 9% y/y due mainly to investments related to regulatory requirements and compliance, 5% further AML efforts, digital transformation and SEB • Diversified income streams Pension Danmark 18% Northern Ireland • Continued growth in all 31% Banking DK Nordic lending markets Banking Nordic Significant funding issuance activity in Q1, totalling 23% Corporates & Institutions around DKK 51 bn, including our first green bond Wealth Management and a tier 2 instrument 23%
Recap of the Estonia case Our investigation continues and all findings are shared with relevant authorities through regular updates. Timing of completion is uncertain and subject to dialogue with authorities Ongoing investigations by Danish, Estonian, French and US authorities. Class action lawsuit filed in the US Number of FTEs allocated to AML up from 820 in 2017 and around 1,400 in 2018 to around 1,700 in Q1 2019 Investments of up to DKK 2.0 bn over the next three years specifically earmarked for AML digitalisation efforts. Expense impact of around DKK 0.3 bn in 2019 In total, we have so far spent around DKK 450 million on the Estonia investigation
Continued Growth in Banking SE, in a challenging market Income Total income NII 1.8 SEK bn +1% (y/y) Q1 2019 Fee income 0.4 SEK bn - 1% (y/y) 2.6 SEK bn Trading Income 0.4 SEK bn -17% (y/y) -2% (y/y) Growth Lending 371 SEK bn +9% (y/y) Profitability Profit before tax 1.6 SEK bn -18% (y/y)
A retail challenger in a dynamic Swedish market
Success as a Challenger on the Swedish Mortgage market 2018 Mortgage market growth 2018, SEK millions (source: SCB Bolånerapport)
Strengthening our position in the Swedish market Partners Customer Profitability satisfaction Online Controlled risks Cross BU collaboration Balanced organic growth
Growing with controlled risks Target the right customers Early actions to mitigate risks Strategic partnerships Ahead of credit regulations SACO & TCO customers Strategic partners Early actions to mitigate risks Higher credit quality than Debt-to-income (DTI) caps average Amortisation Higher use of digital tools 1,300,000 requirements 650,000 members and channels than average members LTV cap on high priced 14 affiliated 23 affiliated Faster to broaden their properties associations associations relation than average Launch Launch April 2017 February 2016
Online with Customer Holistic Approach Digital interfaces and processes Focus on customer value Digital on-boarding of new customers Life event based solutions with advice Simplicity & transparency Customer relations digital Customer Program Online bookings & meetings
Strong mortgage portfolio Mortgage portfolio compared to market average 1 Share of Swedish mortgage market Q1 2019 2 Higher resilience in stress tests Market share 3.8% Higher household income Share of market growth Q1 8.8% Higher amortization rate Share of market growth 2018 8.2% Larger share in urban areas 1) Finansinspektionen, The Swedish Mortgage Market , April 2019 2) SCB
Danske Hypotek – Plans going forward - 2019 Continue to maintain liquidity in our Danske Hypotek LF Bank Nordea SBAB • SEB Handelsbanken Swedbank outstanding bonds with daily quotes via 60 Basis points our market makers 50 40 DH2312 Fourth Benchmark bond to be launched 30 • during H1, subject to market conditions DH2212 20 10 DH2112 Intention to issue 1-2 benchmark bonds 0 • per year the coming years -10 -20 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Target funding volume of SEK 25-30bn • Actual asset transfer Planned asset transfer during 2019 120 Billion SEK 100 Planned asset transfer of SEK 10bn • 80 during H2 and hence increasing loan DHXX portfolio from SEK 78bn to SEK 88bn 60 (expected) . DH2312 40 DH2112 20 DH2212 0
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.
Appendix: Purpose and Structure Danske Bank Group has a strong commitment to the Swedish mortgage market • Ensure stable funding for our customers through the cycle • Long term funding solution for continued growth of Swedish retail mortgage business • Market communication; strong commitment to the Swedish Market Danske Hypotek pool (incl. indicative future transfer capacity) Danske Hypotek - Structure Origination SEK bn Principal and Swedish interest Danske Bank mortgage lending New lending 100 Sale of Parent Loan mortgages Swedish Danske mortgage lending Hypotek 2019 2020 2021 Longer term Principal and Bond interest proceeds Asset release Covered Bonds Existing cover Cover pool in pools Danske Hypotek EMTCN SEK Covered Programme Covered Programme New originated loans
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