Jyske Bank ABG Speed Dating - 1 October 2020 - Information for investors and ...
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Jyske Bank ABG Speed Dating 1 October 2020
Resilient mortgage lending growth amid COVID-19 outbreak
Mortgage lending is relatively low risk, stable growth, margins Mortgage-like share of lending up 11pp since merger to 78%
Increasing share of mortgage lending 100%
• Share of mortgage-like lending has increased 11pp to 78% (excl. repo) since 90%
merger with Jyske Realkredit in Q2 2014.
80%
• Mortgage-like lending continues to grow more than bank lending, underpinned
by structural trend. 70%
60%
Significantly more resilient growth prospects and lower cost of risk
50%
• Danish mortgage lending growth remained positive during the financial crisis and
has averaged 5% p.a. since 2003 vs. 3% p.a. for bank lending. 40%
• Impairment charges have averaged 5bp for Danish mortgage credit institutions 30%
vs. 51bp for Danish banks since 2000, peaking in 2009 at 20bp and 224bp,
respectively. 20%
Repatriation of Totalkredit loans following merger in 2014 fully accomplished 10%
• Following a prolonged period of above-market growth, the repatriation of 0%
Totalkredit loans has been fully accomplished. Coincidentally, a precautionary Q2'14 2014 2015 2016 2017 2018 2019 Q2'20
credit policy implemented due to a late-stage credit cycle has reduced growth. Mortgage loans (fair value) New home loans (mortgage-like) Bank loans (excl. repo)
Mortgage lending growth remains highly resilient Selective repatriation of Totalkredit loans fully accomplished
30% 170
25% 160
150
20%
140
15%
130
10%
120
5% 110
0% 100
-5% 90
-10% 80
Q2'14 Q4'14 Q2'15 Q4'15 Q2'16 Q4'16 Q2'17 Q4'17 Q2'18 Q4'18 Q2'19 Q4'19 Q2'20
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Mortgage loans (nominal) and new home loans
Bank loans (excl. repo) and leasing
Mortgage lending, Denmark (y/y) Bank lending, Denmark (y/y)
Sources: Statistics Denmark, Danish FSA. 2Significant repricing initiatives to improve profitability
Recent repricing initiatives Total income is under pressure (trailing four quarters, DKKbn)
Lower deposit rates for private clients: Jyske Bank has successfully 10
introduced negative deposit rates for private clients’ deposits. 9
8
• A gross amount of DKK 10bn of private clients’ deposits impacted with 7
DKK 750K threshold from 1 December 2019. An additional DKK 25bn 6
(gross) of deposits impacted with DKK 250K threshold from 1 May 2020.
5
Lower deposit rates for corporate clients: Jyske Bank lowered deposit rates 4
for corporate clients during H2 2019. Furthermore, Jyske Bank recently 3
announced that corporate deposit rates will be lowered by an additional 2
15bp from 1 November 2020. 1
0
Changes to fee structure: During the last year, Jyske Bank has adjusted the
-1
fee structure to reflect the negative interest rate environment and
Q1'16 Q3'16 Q1'17 Q3'17 Q1'18 Q3'18 Q1'19 Q3'19 Q1'20
increasingly cashless society. Moreover, services involving assistance from
advisors as well as some basic banking services have been repriced. This Net interest income Net fee and commision income
should support fee income/productivity. Other income Income from operating lease (net)
Value adjustments Investment portfolio earnings
Increasing importance of deposit profitability (DKKbn) Lower deposit rates have increased interest income (DKKm)
40 80
35 70
60
30
50
25
40
20 30
15 20
10
10
0
5
-10
0 -20
-5 -30
2012 2013 2014 2015 2016 2017 2018 2019 H1'20 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20
Deposit surplus (excl. repo) Interest income from deposits (excl. repo, triparty)
3Accelerating cost initiatives to reflect structural trends
Cost-cutting to support profitability initiatives Expenses excl. one-off items (trailing four quarters, 2016=100)
120
A strong cost development despite challenging environment
• Since 2016, Jyske Bank has reduced underlying expenses by
115
approximately 3% compared with peers’ average increase of 7%.
Meanwhile, the number of employees has been reduced 14%.
110
• Cost reductions have been achieved, while increasing the market share
of lending and despite significant inflationary trends in the period. 105
Branch network to be reduced amid elevated pace of headcount reduction
100
• The number of branches will be brought down by approximately 20% and
the number of FTEs will be reduced by 4-6% by mid-2021.
95
Q4'16 Q2'17 Q4'17 Q2'18 Q4'18 Q2'19 Q4'19 Q2'20
• The initiatives reflect an increased demand for digital banking services Jyske Bank Peer 1 Peer 2
and normalization of market share of branches following period of Peer 3 Peer 4 (pro forma) Peer 5
Peer 6
above-market growth.
Reduction of headcount has accelerated since 2017 Branch network under structural pressure from digital banking
4,300 140
4,100 120
3,900 100
3,700 80
3,500 60
3,300 40
3,100 20
2,900 0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 H1 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 H1 H1
2021 2020 2021
Locations in Denmark
Full-time employees Targeted 150-200 reduction by mid-2021
Targeted 20% reduction by mid-2021
Danish branches, sector (rebased, 2007=Jyske Bank)
Source: Company data, FinansDanmark. Note: Reported expenses excluding disclosed one-off expenses. Please note that non-pro forma figures could be impacted by M&A. 4Shareholder yield in focus
Shareholders’ view Total payout ratio
Book value per share has increased 39% since 2015, as the number of 90%
shares outstanding was reduced 18%. 80%
70%
Total payout ratio has increased in recent years with an increasing share of
share repurchase programmes, despite cancellation of remaining DKK 60%
412m of a share repurchase programme due to the COVID-19 outbreak.
50%
Solid capital position with capital ratio of 22.2% and CET1 ratio of 17.3% vs. 40%
targets of 20-22% and 15-17% for the next 2-3 years, respectively. 30%
Potential for capital distribution is underpinned by increasingly low risk 20%
business model. The Supervisory Board of Jyske Bank will consider the 10%
possibilities of activating the capital distribution policy, when the economic
0%
consequences of the COVID-19 outbreak have been clarified to a greater
2015 2016 2017 2018 2019
extent.
Share repurchase programmes Dividends
Book value per share (DKK) Capital ratios
500 24%
450 22%
20%
400
18%
350
16%
300 14%
250 12%
200 10%
8%
150
6%
100
4%
50 2%
0 0%
2015 2016 2017 2018 2019 Q2'20 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20
Book value per share Common Equity Tier 1 Additional Tier 1 Tier 2
5Material COVID-19 impact followed by period of stabilisation
COVID-19 has increased unemployment by approx. 20,000 Danish consumer and business confidence remain subdued
200,000 3
180,000 2
160,000 1
140,000
0
120,000
-1
100,000
-2
80,000
-3
60,000
40,000 -4
20,000 -5
0 -6
Sep 9
Jul 1
Apr 22
May 20
Jun 3
Aug 12
Aug 26
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Jul 15
Jul 29
Mar 11
Mar 25
Apr 8
May 6
Jun 17
Recipients of unemployment benefit Recipients of social assistance Consumer confidence index (standardised) Business confidence index (standardised)
High activity levels and resilient real estate prices (y/y) Impact from COVID-19 has decreased since April
7% 100%
Hundreder
90%
6%
80%
5% 70%
4% 60%
50%
3% 40%
2% 30%
20%
1%
10%
0% 0%
Sep.
Sep.
Sep.
Sep.
June
July
Aug.
June
July
Aug.
June
July
Aug.
June
July
Aug.
May
May
May
May
April
April
April
April
-1%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug
Retail Service Building and Manufacturing
'19 '19 '19 '19 '19 '19 '19 '19 '19 '19 '19 '19 '20 '20 '20 '20 '20 '20 '20 '20
construction
One-family houses Owner-occupied flats No effect from COVID-19 Small effect Some effect Large effect
Source: Statistics Denmark, Boligsiden. 6Wide-ranging government initiatives underpin liquidity
Comments Compensation schemes by sectors (DKKbn/share of total)
Compensation schemes of an accumulated DKK 23bn largely ended in August Commerce 22%
2020.
• Commerce, hotels and restaurants and transport have received 51% of COVID- Hotels and restaurants 18%
19 compensation. The sectors make up approximately 4% of Danish sector
lending. Transport 11%
Manufacturing 9%
• Approximately 277,000 workers have at some point been covered by salary
compensation scheme. Knowledge-based services 7%
Postponed taxes and VAT of potentially DKK >100bn to be paid by mid-2021. Travel agent, cleaning etc. 6%
• Postponed VAT of DKK ~50bn to be paid by double payments due in September,
Human health and social work 6%
October 2020 and March 2021. VAT loans of DKK 7bn due in April 2021.
Arts, entertainment, recreation svcs. 6%
• Postponed taxes etc. of up to DKK 74bn to be paid with double payments due in
January, March and May 2021. Other service activities 5%
Holiday allowance of potentially DKK 39bn (net) to be paid out in October 2020. Information and communication 4%
Construction 2%
Workers covered by salary compensation scheme (#) Education 2%
300,000 Agriculture, forestry and fishing 1%
250,000 Real estate 1%
Finance and insurance 1%
200,000
Mining and quarrying 0%
150,000
Water supply, sewerage etc. 0%
100,000
Publ. adm., defence and police 0%
50,000 Electricity, gas, steam etc. 0%
0 Activity not stated 0%
Week 11
Week 13
Week 15
Week 17
Week 19
Week 21
Week 23
Week 25
Week 27
Week 29
Week 31
Week 33
Week 35
0 1 2 3 4 5
Workers covered by salary compensation scheme Salary expenses Self-employed Fixed costs
Source: Danish Business Authority, Ministry of Finance, Danish Tax Agency, Ministry of Taxation, Statistics Denmark. Note: As of 21 September 2020. 7Disclaimer
This presentation and the information contained therein is furnished and has been prepared solely for information purposes by Jyske Bank A/S. It is furnished for
your private information with the express understanding, which recipient acknowledges, that it is not an offer, recommendation or solicitation to buy, hold or
sell, or a means by which any security may be offered or sold.
The information contained and presented in this presentation, other than the information emanating from and relating to Jyske Bank A/S itself, has been
obtained by Jyske Bank A/S from sources believed to be reliable. Jyske Bank A/S can not verify such information, however, and because of the possibility of
human or mechanical error by our sources, Jyske Bank A/S or others, no representation is made that such information contained herein is accurate in all
material respects or complete. Jyske Bank A/S does not accept any liability for the accuracy, up-to-dateness, adequacy, or completeness of any such
information and is not responsible for any errors or omissions or the result obtained from the use of such information. The statements contained herein are
statements of our non-binding opinion, not statement of fact or recommendations to buy, hold or sell any securities. Changes to assumptions may have a
material impact on any performance detailed. Historic information on performance is not indicative of future performance. Jyske Bank A/S may have issued, and
may in the future issue, other presentations or information that are inconsistent with, and reach different conclusions from, the information presented herein.
Those presentations or the information reflect the different assumptions, views and analytical methods of the analysts who prepared them and Jyske Bank A/S
is under no obligation to ensure that such other presentations or information are brought to the attention of any recipient of the information contained herein.
Nothing in this presentation constitutes investment, legal, accounting or tax advice, or a representation that any investment or strategy is suitable or
appropriate to your individual circumstances, or otherwise constitutes a personal recommendation to you. This presentation is intended only for and directed to
persons sufficiently expert to understand the risks involved, namely market professionals. This publication does not replace personal consultancy. Prior to
taking any investment decision you should contact your independent investment adviser, your legal or tax adviser, or any other specialist for further and more
up-to–date information on specific investment opportunities and for individual investment advice and in order to confirm that the transaction complies with
your objectives and constraints, regarding the appropriateness of investing in any securities or investment strategies discussed herein.
Jyske Bank A/S or its affiliates (and their directors, officers or employees) may have effected or may effect transactions for its own account (buy or sell or have a
long or short position) in any investment outlined herein or any investment related to such an investment. Jyske Bank A/S or its affiliates may also have
investment banking or other commercial relationship with the issuer of any security mentioned herein. Please note that Jyske Bank A/S or an associated
enterprise of Jyske Bank A/S may have been a member of a syndicate of banks, which has underwritten the most recent offering of securities of any company
mentioned herein in the last five years. Jyske Bank A/S or an associated enterprise may also have, within the last three years, served as manager or co-manager
of a public offering of securities for, or currently may make a primary market in issues of, any or all of the entities mentioned herein or may be providing, or have
provided within the previous 12 months, significant advice or investment services in relation to the investment concerned or a related investment.
Any particular security or investment referred to in this presentation may involve a high degree of risk, which may include principal, interest rate, index, currency,
credit, political, liquidity, time value, commodity and market risk and is not suitable for all investors. Any securities may experience sudden and large falls in their
value causing losses equal to the original investment when that investment is realized. Any transaction entered into is in reliance only upon your judgment as to
both financial, suitability and risk criteria. Jyske Bank A/S does not hold itself out to be an advisor in these circumstances, nor does any of its staff have the
authority to do so.
8You can also read
