UBS Nordic Banking Conference

Transcription

1 UBS Nordic Banking Conference Revenue drivers in recovering economies Peter Straarup, CEO, Danske Bank 26 August 2004

2 Macro development - Economy about to pick up GDP % YOY GDP Growth USA Euroland Investments (index) Germany USA Denmark pct. Short Term Money Market Rates Euroland USA Equity markets E300 Index (Europe) SPX Index (US) KFX Index (DK) Source: Danske Analyse

3 Key agenda points in the future Distribution capabilities Staff quality Product quality Customer focus & segmentation Cost development Shareholder relations 3

4 DKr mn Five year summary - Significant cost improvement Costs ( 8 pct.) pct. 65 C/I ( 7.5 pct. points) H H ,000 Employees ( 17 pct.) 700 Branches ( 22 pct.) , , H H

5 Margins in Denmark - Effective mortgage market with low margins Danske Bank C/I ratio (2003) Reported: Nordic margins: European margins: 40 pct Net interest income/average RWA European average: 3.3% (Simple) Grece Benelux Spain UK Austria Source: UBS and Danske Bank Italy Ireland France Germany Nordic Danske Bank 5

6 Central platform since Central Development Reporting Risk management Production e-banking Fokus Bank in 2001 BG Bank in 2002 London Branch in 1998 Hamburg Branch in 1999 Östgöta Enskilda in 2000 & 2002 Danske Bank Intl. Lux. in 2003 Danske Bank Polska in

7 Effective use of IT Shared data Multi currency Multi language Full product range Flexible distribution Effective production Data safety Resilience Branches Call centre Netbank ATM Datawarehouse CRM STP Etc. Consolidated IT platform Products and services Common Data Store Finance centres 7

8 Open architecture Sales channels Products Internal provider External provider Branches Real estate agencies Merchant Bank e-banking Etc. Danske Prioritet BG Bolig Plus DuoFlex FlexLån Danica Link (DK) Danica Link (S) Danica Link (N) Danske Invest Danske Forsikring 8

9 Employee and private customers -Building on core values Core values Integrity in business conduct and in dealings with the community at large Accessibility electronic and physical in business and communications Value creation for shareholders, customers and employees Expertise through high standards of quality and professionalism Commitment to customers financial affairs 9

10 Employee and private customers - Rising satisfaction Index Customers Index Employees DB BG DB BG DB BG DB BG Satisfaction Loyalty Satisfaction & Motivation Loyalty 10

11 Customer Relationship Management CRM - Allows us to lead a targeted dialog with the customer Full view over engagement Customer signals Customer possibilities Notes about the customer 11

12 e-banking Restructuring the Danish distribution - To provide financial solutions Comprehensive internet banking solution 24/7 telephone bank for handling most common transactions Market share above 30% Market share around 30% Market share around 20% Branches Finance centres Retail and SME customers Standard packages Focus on advice Easy access Relationship Manager Private banking and large corporate customers Complex competencies Tailor-made solutions First floor banking RM and specialist team 12

13 Branding in Denmark - Two strong brands Banking Activities, Denmark 173 app.10% > 900,000 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 291 >20% > 1,600,000 Blue segment: contemporary, individualistic, pragmatic Very loyal customers with sound satisfaction level Separate credit department 13

14 Innovation in Retail - New products are contributing to core earnings Core earnings supported by strong growth in sales of new products i.e. Open plan Customer packages Unit link Number of packages Customer packages in Banking Activities Denmark Q Q Q Q Q Q Q Q Q Packages in Danske Bank brand Packages in BG Bank brand Open plan products in Banking Activities Denmark Unit link volume Billions May Jun. Jul. Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May Billions ,1 5,8 3,3 1, H 2004 Danske Prioritet BG Bolig Plus Unit link volume 14

15 Sweden Take off for Nordic franchise - Local presence with a central backbone Norway Branches, 46 total <<Branch openings* Lending>> H 2004 *Accumulated SEK bn Branches, 64 total <<Branch openings* Lending>> H 2004 *Accumulated NOK bn

16 Successful start-up of new banks and branches Danske Bank Sweden has today 45 branches About 50% of the branches have started or relocated after Danske Bank acquired Östgöta Enskilda Bank Average time to break even under 2 years Average time to pay back under 4 year Branch openings Deficit Break even Payback Start up of new banks The flow to profitability

17 Value creation in Danske Bank Size Earnings Growth in EPS Effective use of Capital 17

18 Focus on shareholder interests DKr 15.0 EPS ( 61pct.) Pct. 40 RAROC H 2004* * 2x 1H H 2004 DKr bn 12 Total distribution e Share repurchases Dividends DKr bn Economic Capital H

19 Developments since the merger Solid improvement in EPS EPS EPS up 61% Profit after tax up 40% Number of shares down 15% DKr EPS H1 2004* * 2xEPS 1H

20 First half of 2004 Core earnings affected by lower interest rates Net profit for the period 8% to DKr 4.4bn Core income declined 5% Operating expenses and depreciation fell 5% Provisions for bad & doubtful debts remain low Acceptable return on investment portfolios, given market conditions (DKr m) 1H H 2004 Index Core income 13,872 13, Expenses 7,494 7, Core earnings before prov. 6,378 6, Provisions for bad debts Core earnings 5,431 5, Earnings from inv. portfolios 1, Profit before tax 6,713 6, Tax 1,910 1, Net profit for the period 4,803 4, Banking lending ex repos 7% Corporate lending picked up again in 1H 2004 Strong growth in retail lending Mortgage lending rose 5% Loans ex repos (end-period) (local currency, bn) H 2004 Index Danske Bank - Retail Danske Bank - Corp BG Bank - Retail BG Bank - Corporate BA NO - Retail BA NO - Corporate BA SE - Retail BA SE - Corporate

21 Effects of lower interest rates DKr bn 8,500 Net interest income 8,000 Adjusted NII Total effect: Since 1H 2002: Dkr1.7bn 7,500 Reported NII 7,000 1H '02 2H '02 1H '03 2H '03 1H '04 21

22 First half of 2004 Core earnings affected by lower interest rates Net profit for the period 8% to DKr 4.4bn Core income declined 5% Operating expenses and depreciation fell 5% Provisions for bad & doubtful debts remain low Acceptable return on investment portfolios, given market conditions (DKr m) 1H H 2004 Index Core income 13,872 13, Expenses 7,494 7, Core earnings before prov. 6,378 6, Provisions for bad debts Core earnings 5,431 5, Earnings from inv. portfolios 1, Profit before tax 6,713 6, Tax 1,910 1, Net profit for the period 4,803 4, Banking lending ex repos 7% Corporate lending picked up again in 1H 2004 Strong growth in retail lending Mortgage lending rose 5% Loans ex repos (end-period) (local currency, bn) H 2004 Index Danske Bank - Retail Danske Bank - Corp BG Bank - Retail BG Bank - Corporate BA NO - Retail BA NO - Corporate BA SE - Retail BA SE - Corporate

23 Core earnings - More than 2/3 in banking activities Share First half First half Index First half (DKr m) / Banking Activities, Danske Bank 1,548 1, % Banking Activities, BG Bank % Banking Activities, Norway % Banking Activities, Sweden % Other Banking Activities % Total Banking Activities 3,623 3, % Mortgage Finance 1,094 1, % Danske Markets % Danske Capital % Danica Pension % Other areas % Total Group 5,672 5, % 23

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