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Equity Story
3 February 2015
Equity Story
Key messages
Nordic universal bank – Solid foothold across all our four Nordic markets
Good earnings trajectory – 2014 result the best since 2007
Strong capital position, share buy-back programme to adjust capital structure
Traction towards 9.5% ROE in 2015 is on track
Target above 12.5% ROE in 2018 at the latest
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Equity Story
Financial targets: Target for ROE of above12.5% in 2018
Target
Status at
31 December 2014
Comments
2015 ambition
9.5%
Return on equity
Above 12.5%*
8.5% before goodwill
impairments
Initiatives progressing
as planned
Ratings
A ratings
S&P/Moody’s/Fitch
Negative/Stable/Stable
In progress, upgrade
S&P rating outlook
from S&P in April 2014 improved to stable
and from Moody's in
November 2014
15.1%
19.3%
Met since end-2012
Met since end-2012
Around 14%
Well above 17%
Met with 2015payments (proposed)
Payout of 40-50% of
net profit
A/A3/A
CET1 ratio
Total capital ratio
Minimum 13%
Minimum 17%
Dividend payments
Payout of 40-50% of net 43% of net profit before
profit
goodwill impairments
(proposed)
* 2018 at the latest
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Equity Story
Bridge to above 12.5% ROE in 2018 with unchanged macro,
CET1 ratio of around 14% and capital management actions
Change in ROE (%, after tax)
ROE 2015E*
Costs
Funding & ratings
9.5%
0.5-1%
0.5-1%
Volume effect
0.5-1%
Income initiatives
0.5%
Loan losses
& other
0.5-1%
Capital effect
ROE 2018E
0.5%
Above 12.5%
* Based on our external 2015 ROE target of 9% adjusted for the goodwill write-down of DKK 9.1 bn.
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Equity Story
Strategy execution in focus
Recognised as the most trusted financial partner
Customer
satisfaction
Financial
results
Setting new standards in financial services
Advisory
services
Digitalisation
Openness &
Transparency
Simplicity
Efficiency
Internal focus areas
Customer
attention
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Equity Story
Overview: Danske Bank has a strong Nordic franchise
Facts
Danske Bank market share**
3.7 million customers
329 branches*
15 countries
18,478 full-time employees
Finland
Business units
Sweden
Personal Banking
5%
Business Banking
Corporates & Institutions
Danica Pension
Danske Capital
For divestment
Non-core (Ireland & Conduits)
10%
Norway
Estonia
5%
7%
Latvia
Northern
Ireland
Denmark
19%
27%
Ireland
2%
Lithuania
6%
4%
Personal banking activities in
the Baltics
* Excluding agricultural centres in Denmark.
**Market share by lending
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Equity Story
Share performance in line with European bank sector
Share price development (index)
Danske Bank
140
MSCI Banks
Key figures, Q4 2014 (%)
C20 Cap*
Earnings per share: DKK -6.4**
1 year development
120
Book Value per share: DKK 147.5
100
80
Q4 13
Q1 14
Q2 13
Q3 14
Market cap: DKK 167,298 m
3 year development
200
Issued shares: 1,008.6 m
150
100
50
Q4 11
150
Q3 12
Q1 14
Q3 14
Q3 11
Q4 12
Q4 14
5 year development
100
50
Q1 10
*C20 Cap data available from 28 November 2011. **Shows EPS incl. goodwill write down
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Equity Story
Shareholder base at end-2014
Shareholder distribution (%)
Other
Rest of Europe
9%
UK
1%
Cevian Capital
9%
16%
23%
AP Møller Mærsk
19%
USA/Canada
22%
Rest of Denmark
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Equity Story
Nordic footprint across sectors
Lending in Personal and Business Banking, Q4 2014 (%)
Credit exposure by industry, Q4 2014 (%)
37
Personal customers
57
Denmark
12
Commercial property
9
Other
11
Sweden
8
Norway
3
N. Ireland
Baltics
C&I
1
11
6
Non-profit & Associations
9
Finland
Total lending of
DKK 1,564 bn
Investment funds
5
Public institutions
4
Other financials
4
Banks
4
Industrial Services etc
4
Agriculture
3
Consumer
3
Insurance
2
Other commercial
2
Energy & Utilities
2
Shipping
2
Constr. & building products
2 Total credit exposure
1 of DKK 2,268 bn
Credit Institutes
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Equity Story
Result highlights
Income statement (DKK millions)
2014
2013
2012*
2011
2010
Net interest income
23,107
22,077
22,778
23,537
23,843
Net fee income
10,491
9,468
8,866
8,298
8,699
Net trading income
6,562
5,799
10,562
7,325
7,707
Other income
1,344
1,308
1,285
3,648
3,882
Net income from insurance business
2,362
1,088
2,171
569
2,146
Total income
43,866
39,740
45,662
43,377
46,277
Expenses
22,641
23,794
24,642
25,987
26,010
9,099
-
-
-
-
12,126
15,947
21,020
17,390
20,267
Loan impairment charges
2,788
4,111
7,680
13,185
13,817
Profit before tax, core
9,338
11,836
13,340
Profit before tax, Non-core
-1,503
-1,777
-4,801
Profit before tax
7,835
10,059
8,539
4,205
6,450
3,989
3,846
12,945
2,944
7,115
7,115
3,814
4,725
4,725
2,482
1,723
1,884
2,786
3,664
3,664
Goodwill impairment charges
Profit before loan impairmnet charges
Tax
Net profit for the year
Net profit for the year before goodwill impairments
*Restated due to changed reporting structure
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Equity Story
Danske Bank’s credit ratings
Danske Bank’s long-term issuer rating and outlook*
Moody’s
Stable
S&P
Negative
Fitch
Stable
Aaa
AAA
AAA
Aa1
AA+
AA+
Aa2
AA
AA
Aa3
AA-
AA-
A1
A+
A+
A2
A
A
A3
A-
A-
Baa1
BBB+
BBB+
Baa2
BBB
BBB
Baa3
BBB-
BBB-
…
…
…
Ca
D
D
Rating agency issues
General comments
• Performance: Our performance recovery is on track. Revenues, cost,
and impairments are moving in the right direction
• Capital: We have materially strengthened capitalization and have
the capacity to do more
• Funding and liquidity: Our funding and liquidity position has
strengthened materially.
• Macroeconomic environment: Rating agencies have yet to
recognize the slow recovery in Denmark. The high gross leverage in
the household sector remain concerns.
Standard & Poor’s, negative outlook: The negative outlook on Danske
Bank is a result of the introduction of BRRD. We expect to neutralize
the expected loss of government support by improved capitalization
(RAC > 10%), a large buffer of subordinated instruments (ALAC >
5%), and improved earnings.
Moody’s revised criteria: The most likely impact on Danske Bank from
the new criteria is neutral to slightly positive.
Expects no change in our rating from Fitch in 2015:
Our rating from Fitch is already at a satisfactory level and we should
not expect a positive move on our rating from their side in 2015.
* The long-term rating and outlook from S&P was changed from A- and stable to A and Negative respectively in April 2014 . The outlook from Fitch was changed from negative
to stable in June 2013 and the outlook from Moody’s was affirmed stable in December 2014.
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Equity Story
Three distinct methods of rating banks
Rating methodology
Danske Bank’s rating
Anchor
SACP*
bbb+
+
1
+1
+
2
+
3
0
+
0
4
=
0
SACP
=
Extraord.
+
Support
Add.
factors
+2
a-
=
Issuer
Rating
A
(Negative)
-1
1=Business Position 2=Capital & Earnings 3=Risk Position 4=Funding & Liquidity
Bank
Financial
Strength
Rating
Baseline
Credit
Assessment (BCA)
C-
Baa2
+
Individual Rating/Viability Rating
Parental and
Cooperative
Support
0 notches
=
Adjusted
BCA
Baa2
+
Systemic
Support
=
1 notch
* Stand-Alone Credit Profile.
A3
(Stable)
a
Issuer Default Rating (IDR)
IDR is the higher of the Viability Rating
and the Support Floor
Support Rating/Support Rating Floor
Issuer
Rating
A
(Stable)
A-
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Equity Story
Personal Banking
Personal Banking
Income distribution, Q4 2014 (%)

Personal Banking serves personal and private banking
customers through a large network of branches, call centres
and online channels.

The unit offers a wide range of financial products and
services within banking, property financing, leasing,
insurance and pensions.
Northern Ireland Other
Norway
6 2
9
Sweden
6
Finland
12
65
Income statement & key figures (DKK m)
Denmark
Income distribution of group total, Q4 2014 (%)
Net interest income
Net fee income
Net trading income
Other income
Total income
Expenses
Goodwill impairment charges
Profit before loan impairment charges
Loan impairment charges
Profit before tax
Profit before tax excl. goodwill
Q4 2014 Q3 2014
2,660
2,761
1,224
1,157
264
141
137
165
4,285
4,224
2,839
2,509
5,539
-4,093
1,715
517
342
-4,610
1,373
929
1,373
Index
96
106
187
83
101
113
151
68
Lending
Deposits
FTE
794,063
329,463
6,617
98
100
97
806,466
330,717
6,796
38%
Personal
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Equity Story
Business Banking
Business Banking


Income distribution, Q4 2014 (%)
Business Banking serves small, medium-sized and large
businesses through a large network of finance centres,
branches, contact centres and online channels.
Baltics
Northern Ireland
8
The unit offers leading solutions within financing, investing,
cash management and risk management.
Norway
6
10
52 Denmark
Sweden
15
10
Finland
Income statement & key figures (DKK m)
Income distribution of group total, Q4 2014 (%)
Net interest income
Net fee income
Net trading income
Other income
Total income
Expenses
Goodwill impairment charges
Profit before loan impairment charges
Loan impairment charges
Profit before tax
Profit before tax excl. goodwill
Q4 2014 Q3 2014
2,301
2,309
552
513
192
130
136
114
3,181
3,066
1,555
1,269
3,559
-1,933
1,797
161
342
-2,094
1,455
1,465
1,455
Index
100
108
148
119
104
123
47
101
Lending
Deposits
FTE
633,746
259,770
3,608
100
101
100
636,507
258,044
3,607
Business
28
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Equity Story
Corporates & Institutions
Corporates & Institutions


Income distribution, Q4 2014 (DKK m)
Corporates & Institutions is a leading provider of wholesale
banking services for the largest institutional and corporate
customers in the Nordic region.
1,106
794
Products and services include cash management, trade
finances and custody services; equity, bond, foreign
exchange and derivatives products; corporate finance; and
acquisition finance.
230
-27
General
Banking
Income statement & key figures (DKK m)
Capital
Markets
Sales &
Research
Market
Making
Income distribution of group total, Q4 2014 (%)
Net interest income
Net fee income
Net trading income
Other income
Total income
Expenses
Goodwill impairment charges
Profit before loan impairment charges
Loan impairment charges
Profit before tax
Profit before tax excl. goodwill
Q4 2014 Q3 2014
717
713
405
428
978
1,342
4
1
2,103
2,483
1,196
1,115
907
1,368
177
-15
730
1,383
730
1,383
Index
101
95
73
85
107
66
53
53
Lending
Deposits
FTE
172,393
174,221
1,643
98
101
109
175,743
171,715
1,508
C&I
19
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Equity Story
Danske Capital
Wealth management

Asset under management, Q4 2014 (%)
Develops and provides asset and wealth management
products and services that are marketed through Personal
Banking and directly to businesses, institutional clients and
external distributors.

The unit also supports advisory and asset management
services for Personal Banking customer segments.

Through Danske Bank International Luxembourg, Danske
Capital provides private banking services to clients outside
Danske Bank’s home markets.
Assets under management (bn)
Equities
1
59 Bonds
Facts
Q4 2014 Q3 2014
2
-1
825
554
287
13
2
827
555
253
258
574
297
574
297
795
3
37
Income statement & key figures (DKK m)
Net interest income
Net fee income
- portion from performance fees
Other income
Total income
Expenses
Profit bef. loan imp. charges
Loan impairment charges
Profit before tax
Cash Private equity
791
Index
149
149
98
193
193
FTEs:
506
Asset under management DKK bn
795
Growth in AuM (Y/Y):
9%
Market share in the Nordic:
11%
101
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Equity Story
Danica Pension
Life insurance and pension




Customer fund distribution, Q4 2014 (%)
Provides life insurance and pension products to both
personal and business customers.
The products are marketed especially through Personal
Banking and Danica Pension’s own insurance brokers and
advisers. Cross-synergies with bank.
Danica Pension offers three unit-linked products: Danica
Balance, Danica Link and Danica Select. These products
allow customers to select their own investment profiles,
and the return on savings depends on market trends.
Danica Pension also offers Danica Traditionel. This product
does not offer individual investment profiles, and Danica
Pension sets the rate of interest on policyholdes’ savings.
Income statement & key figures (DKK m)
Premiums
Danica Traditionel (insurance result)
Unit-linked (insurance result)
Health and accident (ins. result)
Result from insurance business
Return on investments
Financing result
Special allotments
Net income bef. postponed risk allow.
Change in shadow account
Net income
Q4 2014 Q3 2014
6,477
5,981
289
311
95
176
-28
-146
356
341
78
126
-20
-22
-10
-21
404
423
628
65
1,032
488
Danica Link
21
Danica Balance
23
56 Danica Traditionel
Facts
Index
108
93
54
104
62
96
211
FTEs:
772
Total premiums DKKm:
6,477
Investment return on customer funds, (%):
14.6
Customer funds DKKbn:
314
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Equity Story
Outlook for 2015: Net profit above DKK 14 bn
Macro
Economic growth remains slow and fragile, with low interest rates in our core markets
Total income
Income is expected around the same level as 2014
Expenses
Expenses are expected to be below DKK 22 bn
Impairments
Impairments charges in our core activities are expected to remain at a low level
Net profit
Net profit above DKK 14 bn
This guidance is subject to uncertainty and depends on economic conditions., including the development in monetary policy by the central banks
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Equity Story
Appendix
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Equity Story
Danske Bank timeline
Den Danske Landmandsbank
was founded
Handelsbanken was founded next door
to the bank
The bank shortens its
name to Danske Bank
Thomas Borgen
appointed CEO
Shipowner A.P. Møller becomes
chairman of the board
1958
1871
1873
1968
1928
2012
1976
2000
2013
The bank now has 58 branches in Greater
Copenhagen, and even more spread around
the country
The launch of Pondus savings bank. In two
weeks 50,000 children join the Pondus Club
The bank changed its name
to Den Danske Bank
All brands gathered under one
name: Danske Bank. Three new
business units established:
Personal Banking, Business
Banking and C&I
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Equity Story
Historical expansion through mergers and acquisitions
Denmark
Northern Ireland/Ireland
Sweden
1990
1999
1995
2001
1997
2007
2005
Norway
Finland/the Baltic states
Denmark
The bank merges with Handelsbanken and
Provinsbanken
Denmark
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Equity Story
Contacts
Henrik Ramlau-Hansen
Chief Financial Officer
Direct: +45 45 14 06 66
Mobile: +45 22 20 73 10
[email protected]
Claus Ingar Jensen
Head of IR
Direct: +45 45 12 84 83
Mobile: +45 25 42 43 70
[email protected]
John Bäckman
Chief IR Officer
Direct: +45 45 14 07 92
[email protected]
Robin Hjelgaard Løfgren
IR Officer
Direct: +45 45 14 06 04
Mobile: +45 24 75 15 40
[email protected]
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Equity Story
Disclaimer
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 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.
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.
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