Danske Bank A/S Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Gulnara Saitkulova - Morgan Stanley - Analyst : Hi. This is Gulnara. Thanks for taking my questions. First question on the end of the probation period. So now you are approaching the end of this three-year probation period with the US Department of Justice. Can you clarify whether this unlocks any strategic or operational flexibility for you. How should we think about the potential uses of the excess capital that will be freed up at the end of the provision? Would you prefer to top up shareholder return, support loan growth or new product rollout, and that the end of the probation period could potentially open the door for the M&A opportunities? And the second question on the market share in Denmark. So you previously acknowledged market share losses during the AML crisis period. What exact initiatives are you implementing to win back lost customers? And how are you measuring success of those efforts? And what type of annual growth would you target for the coming years? Thank you.

Question: Sofie Peterzens - JPMorgan - Analyst : Yeah. Hi. Thanks for taking my question. So My first question would be that if we hadn't had the uncertainty of all the trade wars, would you have considered upgrading any of your 2025 guidance lines? For example, if I looked at the loan impairment charges of DKK1 billion versus just the median in the first quarter and Danske having close to DKK6 billion of overlay provisions, it just seems like quite conservative. So would there have been any upgraded guidance if there hadn't been any trade wars would be my first question. And then my second question is on net interest income. It was very helpful that you said NII will be over DKK35 billion in 2025. But how should we

Question: Sofie Peterzens - JPMorgan - Analyst : Okay. And sorry, the NII drop will be in the third quarter or fourth quarter this year? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 02, 2025 / 6:30AM, DANSKE.CO - Q1 2025 Danske Bank A/S Earnings Call

Question: Namita Samtani - Barclays Bank - Analyst : Good morning, and thanks for taking my questions. Firstly, just on capital return, is it still only around 100% of earnings payout possible per year? I just wonder because you've got tons of capital now like CRR3 as a tailwind. You could even get a reversal of the commercial real estate buffer plus a couple of add-ons and your CET1 requirement. So I'm trying to ask, can you do above 100% payout? And secondly, the DKK35 billion NII guidance, what assumptions is that based on terminal rates and loan growth? Thank you.

Question: Johannes Thormann - HSBC - Analyst : Good morning, everybody. Some questions from my side as well, please. So first of all, your cost mix changed a bit over the last years, now seeing continued increase in IT costs and then the other costs going down, especially due to regulatory costs coming down this quarter. Is this something we should factor in also for the next years? And then second technical question just on the tax rate for the full year and the future. What is your best guess for that level? And last but not least, a more strategic one. Your insurance business delivered several disappointments partly due to legacy cases in the last years and quarters. What is the benefit of keeping this business instead of selling it to a partner and distributing his products? Thank you.

Question: Shrey Srivastava - Citigroup Inc. - Analyst : Hi. Thank you very much for taking my questions. My first is that in light of the better REA seen today from the CRR3 reversal, does your guidance for a 1% impact from regulation from 2022 to '26 still hold?

Question: Shrey Srivastava - Citigroup Inc. - Analyst : Okay. Understood. Thank you. And my second question is actually on Personal Customers in Sweden. If you look within Personal Customers, the Swedish business actually seems like a relative bright spot. And I'd like to ask what are the exact initiatives that are seeming to start to bear fruit in this business? Thanks.

Question: Shrey Srivastava - Citigroup Inc. - Analyst : Yes.

Question: Jan Erik Gjerland - ABG Sundal Collier - Analyst : Thank you for taking my questions as well. I have a follow-up on the hedges. It looks like the hedges increased from [DKK636 million to DKK767 million] this quarter. Is this a projectory where we should think about it increasing in size, although not fully mitigating your deposit margin loss this quarter mainly because of the larger drop we have seen in the interest rate? So how are you on this DKK150 billion of investment? Is this the full return? Or is it more to come when it comes to an increase or further decrease going forward? Second on your bank lending, it seems like you are moving upwards very positively. Could you shed some more light into what kind of categories or industries you're seeing this good benefit? And finally, on the cost side, the long-term financial crime cost, how large should it really be down the line you think versus the DKK1.7 billion you mentioned towards the end of this year. Thank you.

Question: Jan Erik Gjerland - ABG Sundal Collier - Analyst : Okay. Just one follow-up on the DKK150 billion. You said that the running yield is still picking up. For how long do you think it will continue to move upwards when it comes to this versus your reinvestment into the bonds? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 02, 2025 / 6:30AM, DANSKE.CO - Q1 2025 Danske Bank A/S Earnings Call

Question: Jan Erik Gjerland - ABG Sundal Collier - Analyst : Okay. And on the bank lending, have you seen any changes in the customer behavior or interest in doing bank lending with you after the turmoil and the tariff trade situation?

Question: Mathias Nielsen - Nordea Markets - Analyst : Thank you very much. So following on the last question from Jan Erik. Maybe could you also say a bit about how it has started on the asset management side? What have you seen on side in Q2 so far? Obviously, the market development, that we can figure out ourselves, but maybe also like what are the discussions with clients? Have you seen any significant changes to your flows on that part? And then the second question. So we also see some of your peers now reversing some of those PMAs. And it seems like you're just moving around a different bracket. So you could either say it in a positive way you seem more cautious and conservative, while the others are more aggressive. And if you take the negative approach, you also say like you hold a lot of capital buffers that way around as well. So what should we think about those PMAs? Like when should we think them to be released? It seems like it's just moving around the brackets instead of actually seeing any releases. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 02, 2025 / 6:30AM, DANSKE.CO - Q1 2025 Danske Bank A/S Earnings Call

Question: Mathias Nielsen - Nordea Markets - Analyst : Maybe a follow-up question on the flows changing a bit from where they are placed. Like is there any difference in your margins across Europe versus US equities? And maybe also, do you see yourself of having a competitive advantage on the European equities given being placed in Europe so you actually could see a bit higher flows from the capital being reallocated towards Europe?

Question: Martin Gregers Birk - SEB - Analyst : Thank you so much. First question is on the mortgage mpargins -- Danish mortgage margins. We see one of your competitors today is out lowering their front book mortgage margins, and given your performance in RD over the past many quarters and many years, I wonder why isn't that you? That's my first question. Then my second question just coming back to talks of excess capital. I guess you have a lot of buffers these years that are moving around. Could you please give us an update on your commercial real estate buffer and the buffer that you hold for your hold-to-maturity portfolio and also the last remaining bit of your Pillar 2 add-on from the DKK10 billion buffer that DFSA gave you years ago?

Question: Martin Gregers Birk - SEB - Analyst : Okay. Thanks. Just maybe a follow-up on mortgage pricing. I mean, the initiatives that you have taken. But if you look at RD's performance over the past many years, it's just been steadily going down measured on mortgage shares -- market share, sorry. And if you look at what TK is offering, they're offering a pricing that is second to none. When I look at -- now I listen to you guys reiterate your NII guidance and based on my numbers, it has never been cheaper in relative money to match TK pricing. Why isn't now the right time to finally turn around RD and start to get some of those market share gains? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 02, 2025 / 6:30AM, DANSKE.CO - Q1 2025 Danske Bank A/S Earnings Call