Danske Bank A/S : Conference call presentation - First Half 2021

Financial results - first half 2021

Presentation for Conference Call

Carsten Egeriis		Stephan Engels
Chief Executive Officer		Chief Financial Officer

Financial results - first half 2021

Agenda

01.	Summary	2
02.	Group income statement	4
03.	Business unit results	5
04.	Key lines	8
05.	Capital	13
06.	Financial outlook for 2021	14
07.	Q&A	15
08.	Appendix	16

Financial results - first half 2021

Rebound in economies led to high customer activity and lower impairments in H1, while we continue to build a better bank

Total income up for the first half of 2021 driven by almost all income lines. NII stable and positively impacted by repricing, however, margin pressure continues

Strong credit quality given improved macro conditions, which support significantly lower loan impairment charges and improved outlook

Record-high customer activity in capital markets - our offering supports customers in their sustainability transition

On 8 July, the outlook for 2021 was revised upwards to a net profit of more than DKK 12 billion

Execution of cost management visible in H1, as total underlying expenses continued to decrease (-7%) from the same period last year

We continue to deliver on our Better Bank 2023 ambitions and will continue to execute on our commercial priorities

Profit development H1-21 vs H1-20 (DKK m)

7,783

Lending, deposit growth (DKK m)

Group cost/income ratio* (%)

4,532

252

1,894

1,181

85

162

H1-20

NII

Fee/

Insurance

Expenses

Impairments

H1-21

PBT, core

trading/

business

PBT, core

other

Lending
-1%
1,823	1,810
H1-20	H1-21

Deposits
+10%
	1,198
1,092
H1-20	H1-21

	65	66	60
	H1-20		H2-20	H1-21

* Excl. impairment charges on intangible assets

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Financial results - first half 2021

First impression as incoming CEO: A strong foundation and momentum towards becoming a Better Bank; strong efforts to sharpen the commercial initiatives

Compliance function taken to		Improving and digitising
the next level		customer journeys

On the forefront of supporting customers' commercial and sustainability ambitions

Rebuilt compliance organisation with an operating model built on best practice and led by profiles with extensive and international experience

Launched comprehensive Financial Crime Plan covering all initiatives required by regulation and recommended by best practice

Significantly upgraded IT systems and processes from an E2E perspective, including ODD and transaction monitoring

Fundamentally changed the entire Danske Bank development organisation, while maintaining momentum on deliveries

Prioritised all development resources according to E2E journeys with a focus on taking our digital platforms even further by improving the time to market for products

Continuous improvement on digitalisation; 95% of mortgage applications in Sweden run digitally, solid results for new digital car loan process in Norway and widening toolbox for homeowners in Denmark

Continuously supporting our customers' sustainability transition through innovative products and our leading position in sustainable finance; good progress towards our 2023 sustainability targets

Strong momentum with corporate customers; leading CSAT position and significant capital raising activity for customers across debt and equity capital markets

Solid offerings within Asset Management resulting in positive net sales for several quarters and above benchmark performance in the majority of our funds

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Financial results - first half 2021

Group: Higher customer activity, stringent cost focus and strong credit quality drive improved performance

Income statement and key figures (DKK m)

	H1-21	H1-20	Index		Q2-21	Q1-21	Index
Net interest income	10,965	11,127	99	5,515	5,450	101
Net fee income	6,595	5,956	111	3,193	3,402	94
Net trading income	2,291	1,897	121	1,025	1,266	81
Net income from insurance business	982	897	109	491	491	100
Other income	457	309	148	262	195	134
Total income	21,291	20,185	105		10,486	10,805	97
Expenses	12,770	13,022	98	6,497	6,273	104
Profit before loan impairment charges	8,521	7,163	119	3,989	4,531	88
Loan impairment charges	737	5,269	14	240	497	48
Profit before tax, core	7,783	1,894	-		3,750	4,034	93
Profit before tax, Non-core	17	-446	-	-3	20	-
Profit before tax	7,801	1,449	-	3,747	4,054	92
Tax	1,869	413	-	955	914	104
Net profit	5,932	1,036	-	2,792	3,139	89

RoE (%)		C/I *(%)		CET1 (%)		REA (DKK bn)	EPS
Q2-21	6.6	Q2-21	62	Q2-21	18.0	Q2-21	816	Q2-21	3.1
Q1-21	7.5	Q1-21	58	Q1-21	18.1	Q1-21	798	Q1-21	3.5
Q4-20	3.4	Q4-20	69	Q4-20	18.3	Q4-20	784	Q4-20	1.6

Key points, H1-21 vs H1-20

• Total income up 5% driven by higher customer activity and supportive market conditions, which was positive for almost all income lines
• Net interest income benefited from deposit repricing during 2021, however, the positive effect was offset by margin pressure across the Nordic countries
• Other income up, driven by stronger housing market activity in Denmark
• Underlying costs down approx. 7% adjusted for one-offs
• Number of FTEs reduced by around 700 from the peak in Q3-2020, with AML, Estonia costs trending down according to plan

Key points, Q2-21 vs Q1-21

• Total income slightly down, primarily as fee income in Q2 was lower due to lower refinancing activity at Realkredit Danmark and trading income was seasonally high in Q1
• Fee and trading income reflect high customer activity and market conditions. Q1 was impacted by one-off sale of VISA (DKK 0.2 bn) and larger transactions at LC&I
• Expenses in Q2 were impacted by a one-off of DKK 0.4 bn related to the VAT setup in Sweden and higher performance based compensation
• Strong credit quality and low level of actual credit deterioration

* Excl. impairment charges on intangible assets

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