Investor Presentation Progress in Q3 2018 1 November 2018 Árni Ellefsen, CEO
Disclaimer This presentation contains statements regarding future results, which are subject to risks and uncertainties. Consequently, actual results may differ significantly from the results indicated or implied in these statements. No representation or warranty (expressed or implied) is made as to, and no reliance should be placed on, the fairness, accuracy or completeness of the information contained herein. Accordingly, none of BankNordik, or any of its principal shareholders or subsidiary undertakings or any of such person’s officers or employees or advisers accept any liability whatsoever arising directly or indirectly from the use of this document. Interim report Q3 2018 Page 2
Overview • Highlights • Update on strategic initiatives • Financials • Banking • Insurance • Expenditures • Impairment charges • Capital ratios • Long-term financial objectives • Outlook 2018 • Appendices Retail banking Private banking Corporate banking Insurance Interim report Q3 2018 Page 3
Highlights – Positive developments in Q3 2018 Operational highlights New digital marketing campaign on limiting the use of banking jargon launched in the Danish market • • Reached out to over 7,000 customers in the peripheral customer base since August to strengthen relationships New DKK 15m share buyback programme launched • 9M 2018 financial highlights • Operating profit amounted to DKK 230m, up 60% compared to 9M 2017 (DKK 144m) Operating income down 1% YoY to DKK 479m in 9M 2018 (DKK 486m) • • Operating costs down 2% to DKK 342m (DKK 350m) • Net loan impairment charges were a reversal of DKK 93m (net reversal of DKK 9m) • Non-recurring items amounted to a gain of DKK 82m vs. a loss of DKK 17m in 9M 2017 • Value adjustments amounted to a loss of DKK 26m (gain of DKK 16m) Profit before tax increased to DKK 286m (DKK 143m) • • FY2018 net profit guidance raised from DKK 190-240m to DKK 240-280m (9M 2018: DKK 229m) Interim report Q3 2018 Page 4
9M 2018 financial results – Figures in DKKm 9M 2018 9M 2017 Index Q3 2018 Q2 2018 Index Net interest income 282 292 96 94 93 101 Net fee and commission income 130 143 93 43 43 99 Net insurance income 31 31 100 13 6 211 Other operating income 36 20 155 10 15 63 Operating income 479 489 99 160 157 101 Operating costs -342 -350 98 -111 -116 96 Profit & loss Sector costs -1 -2 29 0 0 100 Profit before impairment charges 137 135 102 49 42 116 Impairment charges, net 93 9 39 23 Operating profit 230 144 160 88 65 135 Non-recurring items 82 -17 -6 12 Market value adjustments -26 16 -3 -17 Profit before tax 286 143 200 78 59 133 9M 2018 9M 2017 Index Q3 2018 Q2 2018 Index Loans and advances 10,008 9,549 105 10,008 4,622 103 Deposits and other debt 13,163 12,983 98 13,163 13,147 100 Key metrics Operating cost / income, % 71 72 69 73 Total capital ratio, % 17.6 18.2 17.6 18.5 CET1 capital ratio, % 15.5 15.9 15.5 16.3 Interim report Q3 2018 Page 5
Increase in lending offset tighter margins Comments QoQ changes in net interest income (NII) DKKm 0,0 • Net interest income (NII) up DKK 1m QoQ and down 97 DKK 10m YoY. 0,0 96 • Lending volumes up DKK 266m QoQ and DKK 459m 95 94.3 1.8 YoY 2.3 0.0 0.3 0.0 94 0.0 93.2 0.9 Increase in lending volumes more than offset tighter • 93 interest margins 92 91 90 Q2 2018Lending Lending Deposit Deposit Liquidity Sub. Other Q3 2018 volume interest volume interest mgmt. debt Loans and deposits YoY changes in NII Loans Deposits DKKbn DKKm 14 13.5 13.2 13.1 13.1 13.0 300 12.6 13 9.5 292.1 18.4 290 12 0.0 2.6 6.2 7.3 0.0 281.8 11 280 10.0 9.7 9.6 10 9.5 9.5 9.4 270 9 260 8 9M Lending Lending Deposit Deposit Liquidity Sub. Other 9M Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 2017 volume interest volume interest mgmt. debt 2018 Interim report Q3 2018 Page 6
Customer activity higher in Q3 2018 Comments QoQ changes in fee and commission income DKKm • Net fee and commission income flat QoQ and down 45 DKK 14m YoY 43.0 1.0 1.1 42.7 1.0 0.6 • YoY drop in fee and commission income offset by an increase in other operating income 40 • Restructuring of asset management activity relating to MiFID II has led to reclassification of income previously recognised in fee and commission income 35 Q2 2018 Investment Loan, Mortgage Other fee Q3 2018 and trading guarantee, broking and comm. comm. insurance services income comm. Other operating income YoY changes in fee and commission income DKKm DKKm 150 40 143.3 140 30 12.8m 15.4 129.7 0.7 3.9 130 20 5.0 36.3 23.5 120 10 110 0 9M 2017 Investment Loan, Mortgage Other fee 9M 2018 9M 2017 9M 2018 and trading guarantee, broking and comm. comm. insurance services income comm. Interim report Q3 2018 Page 7
Development in business volumes Lending Mortgages DKKbn DKKbn 11 Millioner Millioner 12 10 9 12.1 11 10.0 11.9 11.9 11.8 9.7 9.5 9.6 11.7 9.5 11.7 9.4 8 7 10 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Guarantees Assets under management DKKbn DKKbn 6 3 4 2 2.8 2.6 2.7 4.6 4.7 2.5 2.5 4.2 2.4 2 4.0 3.7 3.2 1 0 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Interim report Q3 2018 Page 8
Development in fee and commission income Income from mortgage brokering Guarantee commissions DKKm DKKm 22 6 20 5 18 4 16 3 20.4 4.9 4.8 4.8 4.6 18.8 18.5 4.5 18.3 14 17.8 4.2 2 17.2 12 1 10 0 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Investment and trading commission Income from other activities DKKm DKKm 20 20 15 15 10 10 17.9 15.5 14.2 14.2 14.2 12.9 10.7 5 5 8.2 6.8 6.8 5.8 2.7 0 0 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Interim report Q3 2018 Page 9
Trygd: Another quarter of solid growth Comments Premium and claims DKKm Premium income, net Claims, net • Combined ratio of 94% in 9M 2018 compared to 84% 80 in 9M 2017 • Net premium income up by DKK 8m YoY and up by 60 DKK 1m QoQ 40 78.2 Net claims up by DKK 14m YoY and down by DKK 6m • 70.6 QoQ in particular due to a single large claim in Q2 55.1 41.6 2018 20 26.0 26.7 23.3 17.2 • Profit before tax of DKK 4m in 9M 2018 relative to DKK 0 11m PBT in 9M 2017 and DKK 3m PBT in Q3 2018 9M 2017 9M 2018 Q2 2018 Q3 2018 relative to DKK 4m loss in Q2 2018 Profit before tax • Trygd expects to continue attracting new customers DKKm and growing premium income in 2018 12 10 8 6 11.5 4 2 4.1 3.4 0 -2 -3.7 -4 9M 2017 9M 2018 Q2 2018 Q3 2018 Interim report Q3 2018 Page 10
Expenses managed with discipline in 9M 2018 Comments QoQ changes in operating costs DKKm • Operating costs down DKK 5m QoQ and down by DKK 120 8m YoY 115.5 • A general curb in expenditures contributed to the YoY 115 2.5 0.2 0.7 fall in operating costs 1.7 110.9 110 Marketing costs will increase in Q4 2018 as the Group • has recently launched a comprehensive digital 105 marketing campaign in Denmark • BankNordik targets zero expenditure growth in 2018 100 Q2 2018 Staff IT Marketing Other Q3 2018 expenses Average number of employees (FTE) YoY changes in operating costs DKKm 500 355 0 66 0 349.7 65 350 26 25 400 26 26 24 24 26 4.4 0.6 0.6 24 2.2 24 26 26 0.3 345 341.6 340 300 390 390 386 381 383 384 380 375 367 367 371 335 330 200 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 325 2016 2017 2018 320 9M 2017 Staff IT Marketing Advisory Other 9M 2018 Group excl. Vörður and Trygd Trygd Vörður services expenses Interim report Q3 2018 Page 11
Well diversified and low risk loan-portfolio Low-risk portfolio structure Net impairment charges DKKm • Net impairment charges were a 148 148 reversal of DKK 93m in 9M 2018 101 85 • No individual sector accounting for more than 5% of the loan 20 portfolio -12 -60 • Two thirds of the loan portfolio -93 allocated to personal lending 2011 2012 2013 2014 2015 2016 2017 9M 2018 Accumulated impairment ratio Loans by sector - excl. remaining Danish corporate loans % 6 6% 5% 9% 5 4 31% DKK 9.7bn DKK 3.0bn 5% 63% 3 5.5 3% 4.9 2 4.0 3.8 4% 4% 1 Private sector Transport & HoReCa Trade 0 Corporate sector Manufacturing & mining Real estate 2015 2016 2017 9M 2018 Public sector Agri. & fishing Other Interim report Q3 2018 Page 12
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