Jyske Bank (JYSK) Danske bank danish banking trip presentation summary

Strategy and priorities

• Guiding principles include common sense, honesty, vigour, equal worth and an unpretentious approach; aim to run a sustainable, responsible business and positively develop the Danish banking market and society.

• Priorities: grow market share profitably, simplify customer interactions, act proactively, advise sustainably and maintain strong internal controls.

• Group action plans focus on future investment and pension offerings, housing, automated credit, digitally enabled advice and sales, and top-three compliance supported by improved IT.

• Initiatives include mortgage refinancing in 10 minutes, attractive-refinancing notifications, online scheduling, digital investment advice, Jyske Forsikring, Volvo Car Denmark partnership, sustainable mortgages and credit facilities, and Debt Solutions.

Q1 2022 financial performance

• Net profit was DKK 851m and annualized return on equity 9.3%; net interest income rose 7% YoY and net fee and commission income rose 19% YoY.

• Core income was DKK 2,189m, down 2% YoY; core expenses were DKK 1,160m, down 1% YoY, and cost/income ratio was 53.0%.

• Loan impairment charges were DKK -55m, reflecting a reduced COVID-19 management estimate partly offset by a new Russia/Ukraine estimate; investment portfolio earnings were DKK 4m.

• Bank lending grew 9% QoQ and 17% YoY in Q1, with accelerating corporate lending growth and gains in corporate lending market share.

• Net fee and commission income reached a historically high Q1 level, supported by high activity, higher business volumes and fee-structure changes.

Outlook, capital and risk

• 2022 outlook: bank lending and nominal mortgage lending to increase; core income lower than 2021 due to value adjustments; core expenses lower excluding one-off items; loan impairment reversals expected.

• 2022 net profit outlook is DKK 3.0bn–3.4bn; target CET1 ratio is 15%–17% and capital ratio 20%–22%.

• Estimated CET1 impact from upcoming regulation, including Basel IV, fell to 1.5 percentage points; Q1 reported CET1 was 17.2%, with a 10.0% requirement shown.

• Direct credit, fund and treasury exposure to the Russia/Ukraine war was limited; management estimates reflected war effects and elevated macroeconomic risks, including energy prices, labour markets and supply chains.

• Book value per share accretion was 9% p.a. since 2015, while shares in circulation fell 6% over the last two quarters.