Danske Bank 12-06-2013  · 3.638 2.012 341 296 2.265 5.452 Other income Net income from . Insurance business . Net trading income . Net fee income . Net interest income . Q1 13 Q1

12 June 2013

Danske Bank Group strategy and financial performance

Den Danske Finansanalytikerforenings Virksomhedsdag 2013

Henrik Ramlau-Hansen CFO & Member of the Executive Board

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DDF – Virksomhedsdagen 2013

Market position: Challenger Branches: 44 Market share: 5% Market rank: 5

Sweden Market position: Challenger Branches: 34 Market share: 5% Market rank: 3

Norway

Market position: Leader Branches: 215 Market share: 28% Market rank: 1

Denmark

Market position: Challenger Branches: 12 Market share: 6% Market rank: 5

Lithuania

Market position: Challenger Branches: 14 Market share: 7% Market rank: 4

Estonia

Market position: Challenger Branches: 3 Market share: 2% Market rank: 12

Latvia

Market position: Leader Branches: 85 Market share: 11% Market rank: 3

Finland

*. Excluding agricultural centres in Denmark Data from end Q1 2013

5.0 million customers

2.2 million active internet customers

469 branches and presence in 15 countries*

20,184 full-time employees

Market position: Challenger Advisory centres: 9 Market share: 4% Market rank: 6

Ireland

Market position: Leader Branches: 62 Market share: 20% Market rank: 1-2

Northern Ireland

Danske Bank has created a strong Nordic franchise through mergers and acquisitions

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DDF – Virksomhedsdagen 2013

Danske Bank’s organisation

CEO Eivind Kolding

Chairman of the Executive Board

Personal Banking Tonny Thierry

Andersen

Business Banking Lars Mørch

Corporates & Institutions

Thomas F. Borgen

Group Risk Management

Robert Endersby

Group Finance & Legal Henrik Ramlau-Hansen

Separate entities Group HR

Helle Havgaard

Group Communications

Eva Hald

Group IT Peter Schleidt

Group Services Peter Wonder

Danica Pension Per Klitgaard

Danske Capital Niels-Ulrik Mousten

Nordania Leasing Henrik Bech-Hansen

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DDF – Virksomhedsdagen 2013

Share performance in line with European bank sector

0

25

50

75150

100

50

0 Q1

2012 Q4

2012 Q3

2012 Q1

2013 Q2

2011 Q3

2011 Q4

2011 Q2

2012

73.0

81.4

95.7

104.0

95.3

77.5

94.5

Book Value per share: DKK 135.3

Market cap: DKK m 104,052

Issued shares: 1,008.6 m

Earnings per share (YTD): DKK 1.5

Share price development (DKK)

MSCI European banks (rhs) Danske Bank (lhs)

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DDF – Virksomhedsdagen 2013

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)

Vision — Recognised as the most trusted financial partner

Mission — Setting New Standards in financial services

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DDF – Virksomhedsdagen 2013

Executing New Standards

Think Simple Performance

Culture

Key priorities

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DDF – Virksomhedsdagen 2013

Think Simple to drive customer experience through Lean

Think Simple through Lean Think Simple outcomes

Simplified processes

Seamless automation

Offshoring Management programme

Best customer experience through short response time and

first time right

High efficiency with simple automated processes will free-up

capacity

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DDF – Virksomhedsdagen 2013

Personal Banking: New customer programme is well on track and customer satisfaction score is high New customer programme Satisfaction score at branch meetings (%)

650,000 customers have registered and the market share in Denmark improved in Q1 13

32,000 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

Simple & transparent

Fair

More benefits

6

53

41

Average

7–9

1–6

10 9

Scale 1-10

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DDF – Virksomhedsdagen 2013

A customer loyalty programme launched in Denmark

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DDF – Virksomhedsdagen 2013

Personal Banking: Integrated multi-channel distribution reduces branch footprint Our new mobile payment tool enables money transfer between smartphones Number of transactions and branches

Branch density per 100,000 adults

-52%

-50%

Target 2010 2011 2012 2009

Branches Cashier transactions

8

16

2326

41

Electronic wallet

Uses contacts

Instant transfer

Integrated multi-channel

distribution

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DDF – Virksomhedsdagen 2013

Corporates & Institutions is executing a range of strategic initiatives to drive income growth

Client focus

Markets operation

Dept capital markets

Transaction banking

Acquisition leveraged finance

Further integrate client value chain to improve cross sales Target advisory activities on key clients

Increase share of stable client driven income Retain leadership position and expand product suite Adapt product offering to new regulation

Increase income from growing corporate client issuance Proactively grow new markets (e.g., DKK bond market)

Maintain superior product quality Increase focus on sales and client needs

Concentrate on Tier 1 Nordic focused P/E funds Implement cautious, stable and transparent credit policy

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DDF – Virksomhedsdagen 2013

Customer satisfaction; Q1 2013

Corporates & Institutions customer satisfaction on target

Areas measured:

•Relationship management

•Transaction banking

•Capital markets

•Sales & Trading

All four areas are on target

•Main target is to be ranked No. 1, 2 or 3 in selected customer surveys

•Rank is based on 24 selected surveys from Prospera covering the strategically prioritised fields within the four areas

•A minimum of 75% of the rankings in each area should be on target

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DDF – Virksomhedsdagen 2013

SWOT analysis for Danske Bank

S W

O T

Strong technical infrastructure

5 million customers

Execution power

Strong capital ratio

Lower credit ratings than peers

Low image

Ireland

Further re-pricing on lending and fees

Multi channel distribution

Improving customer satisfaction

Cost savings

Regulatory requirements

High funding costs

Low economic growth in main markets

Lack of systemic support

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DDF – Virksomhedsdagen 2013

Net profit improved 29% from Q4 12

Total impairments down compared with Q4 12

Total income lower than expected and below our ambitions

Strong capital and liquidity levels – CT1 of 15.1% and LCR of 126%

ROE improved from 3.7% in 2012 to 4.3%

Financial results: Lower impairments key driver for profit improvement, however, profit lower than expected

Outlook for net profit in 2013 of DKK 7.5-10 bn

Expenses 10% below Q4 12 and cost programme on track

Income statement & key figures (DKK m)

Q1 13 Q1 12 Index Q4 12 Index

Net interest income 5,452 5,650 96 5,713 95

Net fee income 2,265 2,012 113 2,671 85

Net trading income 1,775 3,638 49 1,830 97

Other income 296 321 92 306 97

Net income from insurance business 341 164 208 925 37

Total income 10,129 11,785 86 11,445 89

Expenses 5,905 6,324 93 6,591 90

Profit before loan impairment charges 4,224 5,461 77 4,854 87

Loan impairment charges 1,459 2,913 50 1,420 103

Profit before tax, core 2,765 2,548 109 3,434 81

Profit before tax, Non-core -549 -973 - -1,179 -

Profit before tax 2,216 1,575 141 2,255 98

Tax 744 797 93 1,110 67

Profit 1,472 778 189 1,145 129

Return on avg. shareholders' equity (%) 4.3 2.5 3.5

Cost/income ratio 58.3 53.7 57.6

Core tier 1 capital ratio (%) 15.1 12.0 14.5

Key messages in Q1 13

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DDF – Virksomhedsdagen 2013

Positive development in net fee income, though a small drop in net interest income

5.650

321

1.775

164

3.638

2.012

341

296

2.265

5.452

Other income

Net income from Insurance business

Net trading income

Net fee income

Net interest income

Q1 13

Q1 12

Key points

Net interest income fell by 4% due to lower interest rates, deposit margins, volumes and seasonality

Net fee income up 13% mainly due to Danske Capital driven by solid increases in AuM

Q1 12 included fees for state guaranteed bond issue

Trading income Q1 13 below expectation owing to low market activity

Q1 13 trading income included DKK 137 m in refinancing income on floaters in RD

Stronger insurance income in Q1 13 due to higher inclusion of risk allowance

Income breakdown (DKK m)

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DDF – Virksomhedsdagen 2013

Expenses: Underlying costs flat, declining one-off costs

5.516 5.560 5.2795.913

5.585

Q113

5,905

Q412

6,591

Q312

5,680

Q212

6,047

Q112

6,324

Adjusted expenses

Adjustments*

*Q1 13: Performance-based compensation and severance payments.

Total expenses (DKK m) FTEs, end of period (000s)

21.2

-5%

Q1 13

20.2

Q4 12

20.4

Q1 12

Branches (number of branches)

2012

491

Q1 13

469

-27%

2011

645

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DDF – Virksomhedsdagen 2013

Impairments: At the lowest level since the beginning of the crisis Impairments, 2008 to Q1 13 (DKK bn/bp)

10

9

8

7

6

5

4

3

2

1

0

Q1 13

Q4 12

Q3 12

Q2 12

Q1 12

Q4 11

Q3 11

Q2 11

Q1 11

Q4 10

Q3 10

Q2 10

Q1 10

Q4 09

Q3 09

Q2 09

Q1 09

Q4 08

Q3 08

Q2 08

Q1 08

Impairments Impairment ratio

10 bp

173 bp

57 bp

99 bp

41 bp

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DDF – Virksomhedsdagen 2013

Capital: Strong capital ratio, well above the recommended target for Danish SIFIs - total capital target for 2015 is min. 17% Capital ratios, under CRD/Basel II (%)

RWA (bn)

Capital drivers

Lower RWA effect accounts for rise in CT1 of 0.4 %-point

State hybrid represents 3%-points of tier 1 ratio and total capital ratio

Lower tier 2 ratio due to repayment of subordinated bond in March

Individual solvency need ratio was 11.4 % at end of Q1

4,44,5

2,4 2,0

17,6

SIFI incl. CRD 4 by 2022 Q113

21.6

15.1

Q412

21.3

14.5

Core tier 1

Tier 1 (including state hybrid)

Tier 2

Total DB SIFI requirement*

14

8

Q1 13

Q4 12

Portfolio

797

Capital efficiency

819

* Based on Q1 13 individual solvency need of 11.4%.

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DDF – Virksomhedsdagen 2013

CRD 4 and recommended SIFI capital requirements for Danske Bank Danske Bank capital composition, 2022 (% of RWA)

3,5

1,5

2,1

Total capital

17.6

Capital conservation

2.5

SIFI

3.5

Pillar 2, excl. Basel 1 f loor

Crisis mgt. buffer (SIFI)

Crisis mgt. buffer (CRD 4)

CRD 4

4.5

Total capital

AT1/T2 COCO

CET1/AT1/T2 COCO

CET1

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DDF – Virksomhedsdagen 2013

Financial targets: Four targets already reached

Ratings

Core tier 1 ratio

Total capital ratio

LCR compliance

Nominal costs

C/I ratio

FTE target 2012

FTE target 2015

Dividend payment

ROE

S&P/Moody’s/Fitch

A-/Baa1/A

Pos./Stable/Stable

15.1%

21.6%

126%

DKK 5.9 bn

58.3%

20,184

4.3%

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-2012

Below DKK 24 bn in 2015

Below 46% in 2015

Reduced by 1,000 in 2012

Reduced by 2,000 in 2013-2015

About 40% of annual profit, although lower until capital and rating targets are reached

Above 12%

In progress

Improved SACP* from S&P

Above

Above

Above

In progress

In progress

Reached

In progress

In progress

In progress

Financial target End-Q1 13 (adj.) Ambitions Status

* Stand Alone Credit Profile.

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DDF – Virksomhedsdagen 2013

Outlook for 2013: Unchanged guidance despite slow start to the year

Macro Economic growth remains low; growth forecast revised down in most markets

Expenses Cost programme on track; full-year guidance of flat expenses (2012: DKK 24.6 bn)

Loan losses Core activities: Slightly below 2012 level (DKK 7.7 bn) Non-core activities: Significantly below 2012 level (DKK 4.9 bn)

Net profit* Net profit guidance unchanged in the range of DKK 7.5-10 bn, management actions expected to mitigate slow start to the year

Income NII likely flat at 2012 level (DKK 22.8 bn) Increasing net fee income (2012: DKK 8.9 bn) Trading income and insurance income below 2012 levels (DKK 10.6 bn and DKK 2.2 bn)

* The profit guidance is subject to uncertainty and depends on normalised trading income and insurance income.

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DDF – Virksomhedsdagen 2013

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