Jyske Bank A/S Ord

Hi, everyone. Thank you for joining us in Jyske Bank's conference call for the financial results for the first quarter of 2025. This is Simon Haubert from Investor Relations speaking. With me, I have Jyske Bank's CEO Lars Merck and CFO Johan Nielsen. Lars and Bjørn will walk you through our prepared remarks. Afterwards, we'll open up for questions. I will now hand over to Lars.

Thank you, Simon. And thank you all of you for joining this conference call for the Q1 results 2025. We have had a strong start to the year, building upon the positive momentum from recent quarters and growing EPS 2% year-on-year, and that is despite significantly lower Danish policy rates. The operating performance is supported by improved momentum with personal clients, higher assets under management and increased activity levels. Net fee income, thus, rose a full 20% year-on-year. In addition, effective cost management reduced the cost base by 3% year-on-year. Credit quality remains very solid, and we have increased our buffer for macroeconomic risks even further. In the last year, we've improved customer satisfaction significantly in all areas, This reflects a number of efforts, including bootcamps, reorganization and increasingly proactive interactions with clients. On the back of this, mortgage financing for personal customers in Q1 reached the highest organic growth rate since 2018. We look to build further upon this as strong customer relationships remain an integral part of our strategy. Lastly, we've gained improved visibility on the impact from upcoming regulation following the implementation of Basel IV input floors on 1st of January this year. This has increased rare and reduced the CET1 ratio a bit shy of one percentage point. This is in line with what we have guided. We are comfortable with our current capital position in the lower half of the 15% to 17% target interval. and we'll look to update our capital targets in the coming quarters. We expect no significant impact from upcoming regulation, entailing that future earnings largely can be reserved for other purposes, including obviously growth and capital distribution. Overall, Jyske Bank is in a solid position with a positive momentum, and we are ready to support our customers.

Yes, and moving on and looking at the financial numbers in a bit more detail. Overall, we have a higher downside risk now on interest rates than we had back in 24. We expect two further cuts for the rest of the year, and that is one more than we expected formally. And secondly, the uncertainty is higher regarding the macro environment due to the trade war. And finally, the third remark initially is that it has led to higher volatility in the financial markets. Looking at the numbers, we are still on a good footing when it comes to ROTE, about 11 percent, cost-income ratio well above 50, cost of risk still very, very close to zero, earnings per share 19.4 kroner, very much aligned with what we've seen in the former quarters. And then the C to 1 ratio saw a drop to 15.7% relating to what Lars referred to before and the new implementation of the regulation. If we look at the profit loss statement in the middle of the chart, you can see that NII is down only 1% QOQ and 10% over the year, whereas fee income is up 20% over the year and value adjustment this quarter has performed well due to healthy customer activity. Core expenses is under control and actually down 3% year over year. On the right-hand side, volumes, asset under management has been on the rise for many quarters, but here in the first quarter of this year, we saw a slightly dip due to the higher volatility in the market, but still a net inflow of funds under management. If we look at the lending line, lending is mortgage-wise up 1%, and we saw the highest growth for mortgage lending to private individuals in one quarter since 2018. On the bank lending side, it's very stable. Public entities required fewer loans, whereas corporate was slightly up in the quarter. And finally, when I look at deposits, you can see there is a slight uptick of 1%, which is driven both by private individuals as well as corporations. The outlook for the year is unchanged relative to Q4, and please bear in mind that loan impairment charges still is expected to be low in 2025, despite the higher uncertainty.