Danske Bank A/S Q4 2024 Earnings Call Transcript

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

Question: Mathias Nielsen - Nordea - Analyst : I'll try to limit to 2, maybe 2.5 question. But on NII, like the dynamics during '25, how should we think about that? I think you already said that it should flatten out, but you also said that last time and now we saw NII grow quarter on quarter during Q4 again. Do you expect the same thing into Q1 when adjusting for the interest [dates]? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 07, 2025 / 7:30AM, DANSKE.CO - Q4 2024 Danske Bank A/S Earnings Call And then secondly, that's my half question. On the total income, was it correctly understood that, Stephan, you said that '24 was looking like a normalized year. So moving into '25, it offers a good baseline where we can, as analysts, just add the growth rate cuts, et cetera, and all those movements? And then lastly, on the capital distribution, just to clarify, I think you made it clear that we should not expect interim dividends this year. But like you also set the bar at 100% payout ratio this year. Would it be fair to assume that it could be 100% next year as well? Or do you think that growth will be so strong that you would move too fast towards the CET1 ratio if you did 100% on payout in '25?

Question: Tarik El El Mejjad - Bank of America - Analyst : A couple of quick ones. First, I would like to come back on the capital distribution. Yes, you stick to your guidance. Now we are closer to the end of the so-called provision period for settlements. Should we expect or hope for some acceleration of distribution above the 100% payout now that you kind of finalized remediations and you to run down the surplus capital a bit faster? And second question on -- you touched on it a bit in the presentation, but maybe ask more about this on the impairments. So you still decreased a bit the post-model adjustments to DKK5.9 billion, but stock is still high. What should we watch actually to see if this stock of post-model adjustment should come down further from here? Or this is the level you're comfortable to keep given the global context? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 07, 2025 / 7:30AM, DANSKE.CO - Q4 2024 Danske Bank A/S Earnings Call

Question: Namita Samtani - Barclays - Analyst : My first one, could I understand the assumptions behind the NII guide of above DKK35 billion in 2025 a bit better? Like what exact terminal rate are you assuming? Because at the end of January, I see the one-year forward curve in Denmark at 1.6. And what loan growth assumptions are you using? And secondly, I wanted to ask about your strategy in Sweden. I see you paid 25 bps on savings accounts, which is less than the incumbent banks. You seem to be struggling to gain market share on the mortgage side. So would you consider disposing this business like you did with Norway? And if you wouldn't consider to dispose, what's the rationale for keeping it right now?

Question: Sofie Peterzens - JPMorgan - Analyst : Yes. This is Sofie from JPMorgan. Sorry for going back to the NII, but could you maybe also a little bit talk about when we should expect the net interest income trough because it looks like you had quite a lot of benefits in treasury and other? Will any of that kind of reverse of the DKK0.6 billion? And do you think -- or one of your peers basically said NII could trough around six months after the last rate cut, do you think that would also apply for Danske? Or how should we think about the kind of quarter, the NII trough? And then my second question would be how do you think about tariffs for Denmark. You have a quite big pharma industry. Also there seems to be quite a lot of discussion around Greenland and the future. How does this impact, if at all, Danske? And how do you think about this in your provisions going forward? And also if you could just let us know if you have any exposure to Greenland.

Question: Sofie Peterzens - JPMorgan - Analyst : Okay. And just on the net interest income hedge, is it still -- sorry, it's roughly DKK150 billion. And if you could just remind us how much the yield is on the hedge.

Question: Patrik Nilsson - Goldman Sachs - Analyst : I was just wondering if you could elaborate a bit on the moving parts in your guidance. So you've given the net profit range of DKK21 billion to DKK23 billion. So what are the scenarios there that could make you being in the top end versus the lower end? Is it more on the income side? It could be better or worse than expected? Or do you see maybe provisions also potentially surprising in either direction? And then my second question was just if you've seen any impact on product pricing in Denmark recently following the recent M&A activity that took place in the end of last year with one of your competitors. So if mortgage pricing or if you've seen any impact on anything else.

Question: Martin Birk - SEB - Analyst : Just a couple of follow-ups here. First off, if we assume that the US President is going to impose a 25% tariffs on EU, what would your first response be? Would this be an excuse to buffer up your PMAs once more? Or how do you see it? And then second of all, the DKK170 billion that you guided for in equity in 2026, does that still stand firm?

Question: Martin Birk - SEB - Analyst : Okay. Stephan, the DKK170 billion, is that average equity over the year? Or is it sort of Q4 2026?

Question: Martin Birk - SEB - Analyst : Is it average?

Question: Martin Birk - SEB - Analyst : Okay. Even if you pay out 100% from hereon, then it seems like you are a notch above that equity base, right?

Question: Jan Gjerland - ABG - Analyst : Jan Erik Gjerland from ABG. I have a question on the cost line. The first one is on the IT and investment side where you picked up a little bit speed here now with DKK300 million a quarter, having DKK900 million roughly for the full year. Is the DKK300 million the new baseline for your investments into 2025 and '26 when it comes to your guiding up to the DKK26 billion? And secondly, the number of FTEs, this has come off a little bit in the Personal Customer area, probably from sale of the Norwegian banking area. What should we expect going forward? And finally, just the 2.5 question, the bank taxes and resolution fees. What do you reckon for '25 on that line?

Question: Jan Gjerland - ABG - Analyst : And the bank taxes?

Question: Jan Gjerland - ABG - Analyst : Also in Sweden or just Denmark?

Question: Riccardo Rovere - Mediobanca - Analyst : Couple, if I may. The first one is on the capital distribution policy. So the dividend policy does not change, as far as I understand, 40% to 60%. But Carsten, if I understand correctly, at the beginning of the call, you stated that the 100% payout is something that you have in mind also for 2025. So I would imagine the rest should be a buyback. Now does your thinking about the mix of the two changes depending on the share price of Danske Bank? So the more the share price goes up and maybe the smaller could become the SBB component? Or does it make any sense what I'm saying? This is the first question. The second question I have is on the post-model adjustments. Before COVID, you had DKK4 billion, now you are at DKK5.9 billion, if I remember correctly. Is the delta DKK1.9 billion that you can really use or the DKK5.9 billion? Because I imagine a portion of that should stay there in any case, I imagine. So the portion that was built after COVID was a couple of billions, so DKK2.5 billion at some point. So just any thoughts on these.

Question: Riccardo Rovere - Mediobanca - Analyst : Just a clarification. So implicitly, you're saying that the amount that existed in 2019 may not be the floor.

Question: Johannes Thormann - HSBC - Analyst : Johannes Thormann, HSBC. Just two follow-ups, please. First of all, on your mortgage business, what growth is really possible this year if rates continue to drop? Could we also see double-digit mortgage volume growth in Denmark, for example? And then probably on group strategy, what happens with Northern Ireland if there is probably further talks between Ireland and Northern Ireland about reunification? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 07, 2025 / 7:30AM, DANSKE.CO - Q4 2024 Danske Bank A/S Earnings Call

Question: Hari Sivakumaran - KBW - Analyst : I wanted to ask on the year two and year three NII sensitivity and how relevant they are for where we are in the cycle. I think the main components are the bond portfolio and the three-year Swedish mortgages. Mortgage bonds are paying around 2.4%. I guess the Swedish mortgages are still rolling, but look about there. So if long rates stay where they are, would there still be negative impacts in year two and three? And then on the Pillar 2 requirement, can you just remind us how much is still there for Estonia?