Jyske Bank A/S Ord

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

Thank you, Simon. I would also like to welcome you to our conference call for Q3 2025. I know that our figures have been awaited with somewhat less anticipation than normally. And in that light, I'm extra pleased that you've decided to spend time with us here. We've had a strong 2025 so far, reaching our highest earnings per share for the first three quarters of a year. This builds on the positive momentum from recent quarters with earnings per share growing 7% year-on-year in Q3, despite the backdrop of significantly lower short-term interest rates. Based on this positive development, we have upgraded our earnings outlook for 2025, now targeting a net profit of between 4.9 and 5.3 billion Danish. We are also making progress on key initiatives with focused cost management while improving both personal business and corporate customer satisfaction significantly. Higher customer satisfaction affects customer flows and the number of personal, private banking and business clients have improved during the last year. The outlook is for balanced development for the Danish economy and a stabilization of short-term interest rates. Additionally, credit quality remains very solid with a continued low level of loan losses and a significant post-model adjustments in place in order to mitigate potential repercussions of the elevated geopolitical uncertainty. Overall, our results puts us in a healthy position as we look to further strengthen our momentum. With that, let me hand over to you, Bevor, for a walkthrough of our financial results.

Thank you, Lars. And as you can see, the strongest quarter we delivered in the last seven quarters was here in Q3 with an earnings per share of 23 kroner and simultaneously with lower short-term interest rates as already mentioned. If I look at Jyske Bank at a glance here, Return on tangible equity 12%, well above the 10% mark in the long term. Cost-income ratio well below 50%. And cost of risk just around zero basis points actually for several quarters now in a row. And the C2-1 ratio at 16.2%. A small dip from Q2 due to higher market risk, operation risk, and credit risk, the latter due to higher mortgage lending and property lending, and so inclusive of a reservation for capital distribution of 71%, we end up at 16.2% this quarter, still well above our long-term targets. If you look at the bottom in the middle, you can see that a P&L statement demonstrates that the NII line is now only dropping 1% from Q2 to Q3, so actually a bit more stable now than we have seen in the former quarters. The fee and commission income continuously grow and remain strong, both over the quarter and over the year. We still see strong value adjustments. Cost is under control, and we deliver, as we say, as we mentioned, 1.455 billion net profit in the quarter. At the right-hand side, you can see that business volumes is somewhat different. Well, it differs a bit because the AUM is on the rise, steadily going quarter by quarter, whereas property lending is also rising steadily on a quarterly basis around 1%, and bank lending is a bit more subdued with a drop of 1% here in the quarter. Deposits stable going from Q2 to Q3. Looking at the expectations, we lifted our expectations on the 9th of October and 2025 actually could end up being the second strongest year in history. And we now expect 77 to 84 kroner per share. And we also adjust our expectations for core expenses where we now state that they will be approximately stable in 24 versus 25 due to slightly lower cost here after Q3 relative to last year. Moving on to the AEM development, as I said, steady going. We have seen net inflow of customers and positive financial markets again this quarter leading to a 2% lift quarter or quarter, 7% over the year, and that is inclusive of the market setback we saw back in Q1 of this year. Looking at the underlying deposit base, we have been able over the last year also to grow the stable part of deposits with now 5% higher level here in Q3 versus last year, which is more in line with our market share. And now more than 90% of our deposit base is what is characterized as stable deposits. If we take a glance at the Danish economy, we are operating in a Danish economy that is very resilient, strong labor market, historically high employment, stable inflation, and actually we have since 2019 outpaced the EU growth. And if you take the layoffs in Novo as an example, it is less than 0.2% of Danish employment. So we are in a very steady environment and also despite the geopolitical uncertainty that we still see around us. Moving on to short-term interest rates. We now expect no further rate cuts from the ECB. And our net interest income expects to bottom out within the next couple of quarters. And the reason for that is primarily due to some bond issuances, both liquidity and capital issuances here also in Q3. And of course, if we look into and when we look into 26, much depends upon the volume development in that year. When we see on the next slide the development in value adjustments, you can see that over several years we have been able to actually lift the level of value adjustments in average to a level around 900 million per annum. And that actually includes the sharpest interest rate increase in decades in 22, 23, but also the sharpest, a very sharp rebound in 24, 25. And if we look at the composition of the value adjustments, approximately 80% is customer-driven, and the rest is placing of excess liquidity and our sector shares that are needed to support our business. Moving on to costs, as you can see, since the acquisition of Handelsbanken Denmark and PFA Bank, we have had very steady costs. are actually down 2% year-over-year in the last four quarters, but the underlying we see an increase of below 1% adjusted for one-offs. We still, of course, see inflation present in all areas of the group. Waste agreements are up 2.5%. And please bear in mind that Q3 was a slim quarter when we look at costs, and we expect slightly higher Q4 numbers. and therefore we state now that 25 is expected to be approximately at the same level as 24. Then moving to the last slide I will comment upon now is our credit quality and actually the story is very much the same as we have seen in former quarters, a very stable portfolio. Stage 3 exposures are up from or sorry, are down from 1.2% to 1.0% over the year. Stage 1 exposures, the very strong part of the portfolio has grown from 95% to 95.8% over the year, and management estimates or post-model adjustments are at 1.9 billion unchanged from Q2. And still we see a very low level of write-offs. So all in all, a very strong portfolio, low impairments and very low write-offs in the book. And I think that concludes our initial remarks.