Danske Hypotek AB – investor presentation March 2017
Danske HypotekQ1 2017 Agenda Danske Bank Group 1 2 Danske Bank - Personal Banking SE 3 Danske Hypotek – Structureand roadmap 4 Danske Hypotek – Availability of assets for future Cover pool 5 Danske Hypotek - Funding 6 Appendix 1
Danske Bank Group
Danske HypotekQ1 2017 Overview: Danske Bank has a strong Nordic franchise Danske Bank lending breakdown* Facts 3.4 million customers 272 branches 1 15 countries 19,303 full-time employees Finland Business Units (% of total lending) 8% Norway Sweden Personal Banking (43%) 10% 12% Business Banking (39%) Corporates & Institutions (12%) Denmark Wealth Management (4%) Northern Baltics Ireland 51% Northern Ireland (3%) 3% For divestment Non-core (Ireland & Conduits) Personal banking activities in Estonia 1 . Excluding agricultural centres in Denmark * Total lending before loan impairment charges. Lending by country excludes Corporates & Institutions and Wealth Management, however 3 most of these are Nordic clients.
Danske HypotekQ1 2017 Executive summary: A satisfactory financial result for 2016 Financial results, 2016 Low economic growth – full year of negative • Net profit of DKK 19.9 bn, up 12% from 2015* interest rates • ROE of 13.1% • Strong capital position, with a CET1 capital ratio of 16.3% Volume growth and stronger client activity • Dividend of DKK 9.0 proposed and further benefited NII and trading income DKK 10 bn share buy-back programme • Net profit for 2017 is expectedto be in the range of DKK 17-19 bn Costs below 2015 level; loan loss ratio of zero driven by improved credit quality 19.9 17.7 13.1 11.6 Customer satisfaction improved further, bringing us to a satisfactory position in most Net profit (DKK bn) ROE (%) markets 2015* 2016 * Before goodwill impairment charges in 2015. 4
Danske HypotekQ1 2017 Overview: Danske Bank Group Covered Bond Universe • Danske Bank PLC , • Danske Hypotek AB, • Danske Bank A/S, • RealkreditDanmark , which has been a Covered Bond which is to be a Covered Bond which has been a Covered which has been a Covered issuer since 2005 issuer from 2017 Bond issuer since 2007 Bond issuer since 1851 • Sampo Pankkichanged name to • Based on Swedish legislation • Cover-Pools D, I and C • Based on Danish Danske Bank Plc on 15 • Fully-owned subsidiary in legislation • Based on Danish legislation November 2012 Danske Bank Group • Specialized Mortgage Bank • Loans from the Group’s • Based on Finnish Legislation • Only loans from Sweden banking activities in • Fully-owned subsidiary in • Fully-owned subsidiary in the Denmark, Norway and • Funding via frequent tap issues Danske Bank Group Danske Bank Group – we are Sweden in SEK through the Swedish • Primarily loans from looking into the possibilities of Market, potentially • Issued directly on the Denmark merging the subsidiary and our supplemented by EUR balance sheet • Follows the “Specific Finnish branch into a single benchmarks • Multiple Cover Pool set-up Balance Principle”= branch • Expected AAA rating from S&P matched funding • Follows the “General • Issued directly on the balance Balance Principle” • Funding via daily tap issues sheet in DKK through the Danish • Multi currency benchmarks • Only residential loans from Market and PP, € 30 bn Global Finland Covered Bond • AAA/AA+ rating • Funding through benchmarks in programmeme EUR, € 10 bn Medium Term Note • AAA/AAA programme and Covered Bond programme rating • Aaa programme rating 5
Danske Bank – Personal Banking SE - strategy in Sweden
Danske HypotekQ1 2017 Personal Banking SE March 2017
Danske HypotekQ1 2017 Strategy - balanced organic growth Strengthening our position in the Swedish market as the Partnerships Modern Challenger Customer Profitability satisfaction Online Sales Controlled Cross BU collaboration risks 8
Danske HypotekQ1 2017 Market response 2016 SW E D I SH QUA LI TY I NDEX 2 0 16 ( SK I ) B A NK OF T H E Y EAR 2 0 16 1. Danske Bank 8,1 (8,0) 1. Handelsbanken 8,1 (7,9) 3. SEB 7,7 (7,7) 4. Swedbank 7,2 (7,3) 5. Nordea 7,1 (7,2) All competitors 7,6 (7,6) Peer competitors 7,4 (7,5) 9
Danske HypotekQ1 2017 Strategic partnerships 7 447 new customers of 11 854 total Launch 5 April Saco customers 14 of 14 member unions signed > 90 % onboarding online Market planning together with largest Main new customer groups: member unions - Civil engineers 33 % Preparing for 4 scenarios - Medical practioners 19 % - Legal & Economists 13 % - Civil economists 7 % 10 10
Danske HypotekQ1 2017 TCO members - well educated, urban customers with good incomes Repayment type Professional classes • Management position Stronger credit quality 10% Senior officials 17% • Lower L TV ratio Officials, post secondary education • Lower risk of unemployment Officials, secondary education • Higher income 40% 33% • Lower exposure in rural low growth areas Unemployment, % Distribution of monthly income, SEK ‘000 TCO (members with mortgages) Danske Bank (FSA data sample 2016) Sweden 6.2% 36% 35% 23% SACO 2.9% 21% 20% 19% 19% 19% 6% TCO 2.4% 3% <20 20-30 30-40 40-50 >50 11 11
Danske HypotekQ1 2017 Business volumes 2016 L E ND I NG VOL UME ( B n SE K ) SHARE O F MARK ET & MARK ET GRO WTH 10% 90 9% 8% 80 7% 70 6% 60 5% 4% 50 3% 40 2% 30 1% 20 0% Jan Feb Mar Apr Maj Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr Maj Jun Jul Aug Sept Okt Nov Dec -16 -16 -16 -16 -16 -16 -16 -16 -16 -16 -16 -16 -16 -16 -16 -16 -16 -16 -16 -16 -16 -16 -16 -16 Market Share Share of Market Growth 12 12
Danske Hypotek AB - Structure and roadmap
Danske HypotekQ1 2017 Purpose and Structure Danske Bank Group has a strong commitmentto the Swedish mortgagemarket • 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 - Structure Transfer capacity of eligible assets into Danske Hypotek Origination SEK bn Principal and Swedish interest Danske Bank mortgage lending 100 New lending Sale of Parent Loan mortgages Swedish “Danske mortgage lending Hypotek AB” 2017 2018 2019 2020 2021 Principal and Bond interest proceeds Asset release Covered Bonds Existing cover Cover pool in pools Danske Hypotek EMTCN SEK Covered Programme Covered Programme New originatedloans 14 14
Danske HypotekQ1 2017 Governance model Funding, Hedging, Liquidity and Capitalisation Governance model Funding • Danske Hypotek will primarily fund itself in the Swedish Covered Benchmark market • EMTCN programme to be viewed as a complement mainly for private placement purposes • Danske Hypotek’s primary interim source of liquidity will be Governancemodel through a parent loan Hedging • Danske Bank A/S will be Danske Hypotek’s primary swap counterpart • ISDA with unilateral CSA to be established SLA- • On the liability side, all cash flows from issued bonds will be Dedicated Steering management organisation swapped to 3m Stibor based flows documentation / Outsourcing • On the asset side, all cash flows from the mortgages will be swapped to 3m Stibor based flows Liquidity and capitalisation III • Danske Hypotek will meet SFSA liquidity requirements I II • Danske Hypotek will ensure compliance with current and Key capabilities and resources within Danske future capital requirements as stated in e.g. CRR/CRD IV Bank Group as well as specific Swedish regulation and guidelines on capital requirements 15 15
Danske HypotekQ1 2017 Roadmap towards first issuance Remaining steps • Final stages of SFSA processes • Finalizing internal processes and systems • Finalizing documentation • Rating process well under way We are optimistic to issue during 2 nd Quarter (2nd Quarter) Investor Receipt of AAA -Rating Capital Firstissue Asset SFSA Confirmation Roadshow injection of bonds transfer approvals 16 16
Danske Hypotek - Availability of assets for future Cover pool
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