PRE-TAX PROFIT OF DKK 491 MILLION, ROE OF 10.6 % AND COST/INCOME
RATIO DOWN TO .59 – SOLID DELIEVERY ACCORDING TO PLANS
Presentation of Q1-Q3 2013
KEY MESSAGES
1
Core income 15 % up (y/y) : NII grew by 17 % and net fees and commissions grew by 27 %
2
Lower than expected cost growth following merger – Cost/Income Ratio down to 0.59
3
Core earnings before impairment of DKK 841 million – 16 % up from H1 2012
4
Loan losses of DKK 305 million or .95 % of loans and guarantees – slightly lower than expected
5
Bank lending stabilized at DKK 34.1 billion – bank deposits down DKK 0.4 billion in Q3
driven by move to investment schemes
6
CET 1 ratio of 14.0, solvency ratio of 17.7 and excess capital coverage of DKK 3.2 billion
Page 2
HEADLINES FROM THE INCOME STATEMENT
– SOLID DELIVERY ACCORDING TO PLANS
SPAR NORD BANK
DKKm
Net interest income
Net fees, charges and commissions
Market-value adjustments
Other income
Core income
Staff costs
Operating expenses etc.
Costs
Core earnings before impairment
Impairments of loans and advances, etc.
Core earnings
Investment income
Profit/loss on ordinary activities
Sector Fund
Cost related to merger
Profit from continuing operations
Profit from discontinued operations
Profit before tax
Realized
Realized
YTD 2013
YTD 2012
Change
in pct.
1,320
530
143
74
2,067
729
497
1,225
841
305
536
41
577
-83
-43
451
40
491
1,128
419
194
61
1,802
636
438
1,074
728
438
290
25
315
-44
-9
262
23
285
17
27
-26
21
15
15
14
14
16
-30
85
65
83
-89
72
75
72
side 3
Q3: A QUIET PERIOD WITH FIRM COST CONTROL
SPAR NORD BANK
DKKm
Net interest income
Net fees, charges and commissions
Market-value adjustments
Other income
Core income
Staff costs
Operating expenses etc.
Costs
Core earnings before impairment
Impairments of loans and advances, etc.
Core earnings
Investment income
Profit/loss on ordinary activities
Sector Fund
Cost related to merger
Profit from continuing operations
Profit from discontinued operations
Profit before tax
Realized
Q3 2013
Realized
Q2 2013
Change
in pct.
Realized
Q3 2012
Change
in pct.
436
158
22
20
636
211
155
366
270
102
168
11
179
-25
-4
150
9
159
432
176
44
30
683
264
169
433
250
95
155
14
169
-27
-23
119
21
139
1
-10
-50
-33
-7
-20
-8
-15
8
8
9
-19
6
6
84
27
-57
14
368
123
53
17
561
185
131
316
245
111
134
20
154
-16
-9
129
6
135
18
28
-58
19
13
14
18
16
10
-8
25
-46
16
-56
60
16
51
18
side 4
NII: VOLUMES AND MARGINS STABILIZED IN Q3
NII and lending volume
 NII of DKK 1,320 million – up 17 % from Q1-Q3
2013
DKKm
750
DKKb
50
– 1 % up Q/Q
 Positive trends
–
–
–
–
Volume taken over in merger secures growth
Lower funding costs due to solid liquidity position
Volumes stabilized from Q2 to Q3
Margins stabilized from Q2 to Q3
34.9
34.4
30.0
500
34.2
40
34.1
30
20
250
10
0
0
Q3
2012
Q4
2012
Q1
2013
Net interest income
Q2
2013
Q3
2013
Loans, banking activities
 Negative trends
– Demand remains modest – in spite of significant net
customer influx in 2013 bank lending is down DKK 0.8
billion YTD
– Low market interest rates – deposit margin remains
negative
Udvikling
i rentemarginal
Interest
margin
Pct.
7.00
6.00
5.00
 Outlook
– Volumes – have we finally seen the bottom?
– Competition puts pressure on lending margins
4.22
4.15
4.02
4.27
4.88
4.82
4.64
4.44
4.83
5.16
4.93
4.66
5.04
5.00
4.12
4.00
3.00
2.00
4.00
4.14
4.13
4.11
3.91
1.00
0.00
0.02
0.01
0.09
0.33
0.36
3.62
0.50
4.19
4.71
4.99
5.08
5.32
5.83
5.71
5.68
0.45
0.11
-0.11
-0.26
-0.66
-1.00
5.60
-0.68
-0.68
-0.72
-0.65
Q110 Q210 Q310 Q410 Q111 Q211 Q311 Q411 Q112 Q212 Q312 Q412 Q113 Q213 Q313
Interest margin (Deposits)
Interest margin (Loans)
Interest margin
side 5
STRONG GROWTH IN NET FEES AND COMMISSIONS
 Net fees and commissions of DKK 530 million – 27 %
up from Q1-Q3 2012
 Generally fee income has been taken to new level
after merger – especially in the mortgage area
 But organic growth is also high
– Growth in asset management driven by customers’ move
towards more active investment strategies
– Strong volume trend in the mortgage-credit area
 Further growth expected in Q4 as Nykredit’s
mortgage margin hikes kick in
Værdipapirhandel
Securities
trading etc.
DKKm
150
DKKm
100
50
50
0
Q3 Q4 Q1 Q2 Q3
12 12 13 13 13
YTD YTD
12 13
0
Lånesagsgebyrer
Loan
transaction fees
DKKm
250
YTD 12/YTD 13: 27 pct.
500
250
0
YTD 12
150
100
Nettogebyrindtægter
Net fee income
750
Y/Y: 30 pct.
Kapitalforvaltning
Asset
management
YTD 13
Y/Y: 24 pct.
250
200
150
150
100
100
50
50
0
Q3 Q4 Q1 Q2 Q3
12 12 13 13 13
YTD YTD
12 13
Q3 Q4 Q1 Q2 Q3
12 12 13 13 13
YTD YTD
12 13
Other fees
200
0
Y/Y: 65 pct.
Y/Y: 3 pct.
Q3 Q4 Q1 Q2 Q3
12 12 13 13 13
YTD YTD
12 13
side 6
MARKET-VALUE ADJUSTMENTS: FIVE STRONG MONTHS
FOLLOW BY FOUR-MONTH SLUMP
 Market-value adjustments and dividends of DKK
143 million – DKK 50 million down on Q1-Q3
2012 but still higher than expected
 January-May: Strong performance on bond
portfolio, especially related to spread between
Danish mortgage bonds and interest swaps
 June-September: Market turmoil and higher
volatility
 Growth in market-value adjustments and
dividends on portfolio of shares in financial-sector
companies (DLR Kredit, BankInvest, PRAS mv.)
Market-value adjustments
DKKm
100
75
50
25
0
Q3
2012
 Customers’ interest and FX related activity on par
with last year
Q4
2012
Q1
2013
Q2
2013
Q3
2013
Break-down on types
DKKm
Market-valued adjustments in Trading, Financial
Markets & The International Division
Tangible assets
Currency trade and -agio
Total
YTD
2013
YTD
2012
Change
53
31
39
122
119
19
40
177
-66
12
-1
-55
side 7
COSTS LOWER THAN EXPECTED
Omkostninger
og O/I Ratio
Total costs
and Cost/Income
 Total costs and expenses of DKK 1,225 million – up
14 % on Q1-Q3 2012
- Increase exclusively related to merger
- Increase lower than expected
 Payroll costs 15 % up on Q1-Q3 last year
- Total headcount (FTE) 169 higher than 12 months ago
- But down 132 YTD
 Operating expenses up 15 %
- Driven by merger, especially higher IT-costs and cost of
premises
DKKm
1,500
1,250
0.60
0.59
YTD
2012
YTD
2013
1,000
750
500
250
0
0.0
Breakdown on types
 Improvement of Cost/Income Ratio to 0.59
 YTD, 12 branches have been closed or merged
- 5 related to merger with SPARBANK
- 7 in North Jutland
- 2 in the Skive-region
Costs
(DKKm)
Staff costs
Operating expenses
Depreciation
Costs
Operating expenses
(DKKm)
Staff-related expenses
Travel expenses
Marketing costs
IT expenses
Cost of premises
Other administrative expenses
Operating expenses
YTD
2013
729
445
52
1,225
YTD
2012
636
386
52
1,074
Change
in pct.
15
15
1
14
YTD
2013
31
10
68
225
69
41
445
YTD
2012
31
8
65
185
54
42
386
Change
-1
2
3
39
16
-1
59
side 8
LOAN LOSSES IN LINE WITH GUIDANCE
 Total loan losses of DKK 305 million corresponding to .95
% – in line with guidance
Loan impairment and impairment percentage
DKKm
750
 Impairment percentage including mortgage lending: .40
Pct.
1.6
 Breakdown on segments
1.0
500
– Household: DKK 50 million corresponding to 0.4 %.
– Corporate: DKK 255 million corresponding to 1.3 %
1.5
250
 FSA report confirms
– Adequate provisioning level
– Adequate ICAAP ratio
– Strong centralized credit management
0
-1.5
YTD
2012
YTD
2013
gennemsnit
for udlån
og garantier
Note: Beregnet
Based on på
average
loans and
guarantees
 Guidance 2013
– Impairment ratio still expected in the 1 % range
Historisk
udvikling
Recent
years’
trend ini nedskrivningsprocent
impairment percentage
Nedskrivninger
og nedskrivningsprocent
Loan
impairment and
impairment percentage
DKKm
1.50%
400
300
1.40%
1.20%
1.2
1.6
1.0
0.9
1.10%
~1.00%
1.0
-0.40
200
100
0
-7.00
Q3
2012
Q4
2012
Q1
2013
Q2
2013
Q3
2013
2009
2010
2011
2012
Guidance ’13
side 9
STRONG CUSTOMER INFLOW SECURE GROWTH IN TOTAL
BUSINESS VOLUME
 Bank lending stabilized after long decline
- DKK 34.1 billion end of Q3 – same level as end of Q2
- DKK 0,8 billion decline YTD – solely attributable to run-off portfolio from SPARBANK and public sector
 Very satisfactory growth in mortgage-credit distribution
- Total lending up to DKK 59.2 billion – hereof DKK 50.7 billion in Totalkredit and DKK 8.5 billion in DLR Kredit
 Great demand for investment products lead to small decline in bank deposits
- Bank deposits up DKK 0.5 billion (1%) YTD – but down DKK 0.4 billion Q/Q
- Deposits in pooled schemes up DKK 1.5 billion (21%) YTD
- In the same period, AUM from household segment has grown by DKK 2.1 billion
Bank
lending
Bankudlån
Bank
deposits
Bankindlån
Mia. kr.
50
Q2/Q3: -1 pct.
Pooled
Indlån schemes
i puljer
Mia. kr.
10
Q2/Q3: 7 pct.
Guarantees
Garantier
Mia. kr.
10
40
8
8
30
6
6
20
4
4
10
2
2
0
0
Q2/Q3: -5 pct.
Mortgage
lending
Realkredit
Investments
Depoter
Mia. kr.
35
Q2/Q3: 5 pct.
30
25
20
15
10
Q3 12 Q4 12 Q1 13 Q2 13 Q3 13
Q3 12 Q4 12 Q1 13 Q2 13 Q3 13
0
5
0
Q3 12 Q4 12 Q1 13 Q2 13 Q3 13
Q3 12 Q4 12 Q1 13 Q2 13 Q3 13
side 10
CAPITAL POSITION FURTHER STRENGTHENED
 Strategic targets
– Core equity tier 1 ratio (CET1): minimum 12 %
– Solvency ratio: minimum 15 % (at least 3 pp above ICAAP
ratio)
 End of Q3 2013 CET1 stands at 14.1 % - up from
12.1 % at YE 2012
 Solvency ratio stands at 17.4 % – up from 15.5 %
at YE 2012
Solvency and subordinated capital
Pct.
DKKm
20
1,500
1,200
15
900
10
1,265
600
5
550
300
400
 Individual solvency need (ICAAP ratio) of 10.1 %
– Capital surplus of DKK 3.2 billion (7.3 pp)
0
2009 2010 2011 2012
Solvency ratio
YTD
2013
Core tier 1 ratio
58
0
2013
2014
2015
2016
Hybrid capital
2017
->
Subordinated loan capital
Capital base
Pct.
Core tier 1 ratio
Hybrid capital
Deductions in hybrid capital
Tier 1 ratio
Subordinated debt
Deductions in capitalbase
Solvency ratio
Q3
2013
14.0
4.2
-1.0
17.2
1.3
-1.0
17.4
2012
12.1
3.9
-1.0
15.1
1.4
-1.0
15.5
2011
10.4
3.8
-0.9
13.3
1.6
-0.9
14.0
2010
9.5
3.8
-0.2
13.2
2.0
-1.8
13.4
page 11
COMFORTABLE STRATEGIC LIQUIDITY OF DKK 15.9 BILLION
 Strategic liquidity of DKK 15.9 billion – up DKK
1.1 billion YTD
Strategisk
likviditet
Strategic liquidity
 Deposit base continues to grow
 Reduction in leasing and bank lending
 Redemption of DKK 6.3 billion bond issues in
Q1-Q3 2013
 Last state guaranteed bonds issue redeemed in
July
YTD
2013
42.0
3.3
8.7
54.0
34.1
2.5
-1.5
15.9
DKKb
Deposits, banking activities
Seniorfunding
Core capital and sub. capital
Stable long term funding
Loans, banking activities
Loans, leasing activities
Maturity < 1 year
Liquidity target
Q2 13
42.4
5.3
8.6
56.3
34.2
2.9
-3.5
15.7
2012
41.9
9.6
8.5
60.0
34.9
4.0
-6.3
14.8
Forfaldsstruktur
Maturity
Loan to deposit ratio
Pct.
DKKb
200
150
148
128
120
126
123
93
100
87
3.0
50
0
2013
2007
2008
2009
2010
2011
2012
Q3 '13
Issued bonds
0.3
0.0
2014
2015
0.1
2016
2017->
Senior loans
page 12
GUIDANCE AND SHARE PERFORMANCE
okt 2013
jul 2013
apr 2013
jul 2012
 Contributions to sector-wide solutions: DKK 107
million
apr 2012
 Special merger-related items: DKK 40 million
50
45
40
35
30
25
20
15
10
5
0
jan 2012
 Impairment still expected to amount to approx.
1,0 % of loans and guarantees
DKK
 Core earnings before impairment and one-offs
still expected in the DKK 1,000-1,100 million
range
jan 2013
Share
Aktiekurs
price
okt 2012
Forventninger
Guidance for
til2013
2013
 Positive contribution from discontinued activities –
potentially as high as DKK 55-60 million
Share price
Market cap
EPS (2012)
EPS (2013)1
P/B (10/ 2013)
46,00
5,775
1.7
3.7
0.90
DKK
DKKm
DKK
DKK
1Concensus estimate
Source: Factset
page 13
THE ROAD TO AN AFTER TAX ROE OF 10 %
ROE
EKFhas
harbeen
været
modest
lav – og
– but
konkurrencedygtig
on par with peers
The
Målet
target
– og is
planen
an ROE
– er
of 10
10 %% efter
after skat
tax in
i 2015
2015
ROE, 2012 (%)
ROE, 2013-2015 (%)
EKF (%)
~10.0%
4,8%
Sydbank
4,4%
Nordea (DK)
~7,0%*
4,2%
Jyske Bank
4,0%
2013
Danske Bank
3,7%
State
hybrid
Loan
losses
Income
and costs
2015
* Based on Consensus estimates
page 14