New Standards. Eivind Kolding CEO, Danske Bank

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1 New Standards Eivind Kolding CEO, Danske Bank 1

2 Why a new strategy for Danske Bank? Profit before tax (DKK bn) Losses (DKK bn) Global Industry Trust (%) Technology 79 Automotive Food and Bevarage Consumer Goods 62 Tele-communications Brewing and Spirits 59 Pharmaceuticals 56 Energy 53 Media Banks 47 Financial Services 45 Source: Edelman Trust Barometer

3 We are a universal bank in our Nordic home markets Strategic business units Divestment Non-core Ireland 3

4 New organisation to ensure optimal customer focus Personal Banking Business Banking Corporates & Institutions 4

5 Vision Recognised as the most trusted financial partner Customer satisfaction 2015 We want to be in the top two in customer satisfaction in our prioritised customer segments Financial results 2015 We want to be in the top three of our Nordic peer group as measured by return on equity (ROE) 5

6 Mission We are setting new standards in financial services Advisory services Digitalisation Corporate responsibility 6

7 Changed customer behavior Channels Customers 7

8 Customers have already abandoned the branch channel; Far fewer branches per capita in Sweden and Norway Number of teller transactions at Danske Bank Number teller transactions has fallen by more than 50% over the past four years -52% Number of branches per 100,000 adults 1 Number of branches in DK are two and four times higher than in SE and NO, respectively DK UK SE FI NO 1. IMF: 2010 figures for Denmark, Finland and Norway; 2009 figures for Sweden and the UK 8

9 New customer programme is well on track and customer satisfaction score is high New customer programme 650,000 customers have registered and the market share in Denmark improved in Q ,000 customers has left, primarily customers with a low business volume The programme has advantages for all customers the benefits depend on the customer s business volume The new prices in the programme will take effect on 1 September 2013 Customer satisfaction, Q Main target is to be ranked No. 1 or 2 among key peers in focus segments Additional target is to have a score above the average for all peers in focus segments Rank is based on 6-month moving average in survey conducted by Ennova on a monthly basis Simple & transparent Fair More benefits Initiatives Customer loyalty programme implemented in Denmark, to be followed in the other countries. Next in line: Finland Further investments in digitalisation to increase customer satisfaction and efficiency in delivery and distribution. Repricing of lending products continues in order to offset the adverse effects of lower interest rates 9

10 We are setting new standards Spending overview MobilePay 10

11 Business Banking s customer centric strategy is on track; building a more attractive bank while de-risking Initiatives, Q Selective expansion of Realkredit Danmark products to Norway and Sweden has been successful due to customer demand for this attractive loan type First successful corporate bond issue in the Danish SME segment Launch of Mobile Business, a market-leading app that lets customers do business banking on the go Customer satisfaction, Q Main target is to be ranked No. 1 or 2 among key peers in focus segments Additional target is to have a score above the average for all peers in focus segments Rank is based on 6-month moving average in survey conducted by Ennova on a monthly basis Initiatives going forward Development of Business Direct into an attractive new service channel with additional expertise, technology and resources Fee leakage initiatives have been identified across markets, and relevant actions have been planned or initiated Launch of large SME teams to increase product offerings and quality New unit for property customers that uses internal knowledge to benefit both customers and the Bank 11

12 C&I is executing a range of strategic initiatives to drive income growth and customer satisfaction Strategy Ambitions & initiatives Client focus Further integrate client value chain to improve cross sale Target advisory activities on key clients Markets operations Increase share of stable client driven income Retain leadership position and expand product suite Adapt product offering to new regulation Protect the franchise Debt capital markets Increase income from growing corporate client issuance Proactively grow new markets (e.g. DKK bond market) Transaction banking Maintain superior product quality Increase focus on sales and client needs Acquisition leveraged finance Concentrate on Tier 1 Nordic focused P/E funds Implement cautious, stable and transparent credit policy Selective growth 12

13 Think simple to drive customer experience through Lean Think simple through Lean Think simple outcomes Simplified processes Seamless automation Best customer experience through short response time and first time right Offshoring Management programme High efficiency with simple and automated processes will free-up capacity 13

14 More focus on customer satisfaction 3 x WIN Automated loan approvals in DK 24% 90% Integrated multi-channel distribution Today Ambition 14

15 Management actions announced with our Q results and status at end-q Pre-tax P/L effect (DKK bn) 2015E Planned actions 2012 to 2015 Pricing Sales 3 4 Costs 1.5 DKK 6 8bn Initiated actions Q1 12 to Q DKK 0.9bn 0.2 Elements Pricing Margins, including ongoing reprising of lending products Fee s, including customer programme in Personal Banking Sales Product offerings to increase business with prioritised segments Increase customer penetration, particularly within Transaction Banking, DCM and Danske Capital Selective increase of list prices and initiatives to reduce fee leakage Costs Distribution revamp, branch, teller and FTE reductions More efficient processes and back-office automation (lean, credit scoring models) Investments in IT & employee skills 15

16 Strong capital ratio, well above proposed target for Danish SIFI s and funding spread coming down Danske Bank s capital ratios before the crisis and today (%) Price of funding is coming down: 5Y senior spread to 6M swap rate (bp) Tier 1 & 2 Core tier % 200 Swedbank Nordea Handelsbanken Danske Bank Q Oct 2012 Jan 2013 Apr

17 Financial targets Four targets already reached Financial target End-Q1 13 (adj.) Ambitions Status ROE 4.3% Above 12% In progress Ratings Core tier 1 ratio Total capital ratio S&P/Moody s/fitch A-/Baa1/A Pos./Stable/Neg. 15.1% 21.6% LCR compliance 126% Improve ratings by at least one notch Min. 13% by end of 2013 Min. 17% by end of 2013 Meet EU 2015 requirement by end In progress Improved SACP 1 from S&P Above Above Above Nominal costs C/I ratio FTE target 2012 FTE target 2015 DKK 5.9 bn 58.3% 20,184 Below DKK 24 bn in 2015 Below 46% in 2015 Reduced by 1,000 in 2012 Reduced by 2,000 in In progress In progress Reached In progress Dividend payment About 40% of annual profit, although lower until capital and rating targets are reached In progress 1. Stand Alone Credit Profile 17

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