Jyske Bank A/S Ord

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

Thank you, Simon. And I'd also like to thank everybody for joining this conference call today. We closed 2025 on a strong note, delivering results above our previously guided ranges and growing EPS a full 18% year-on-year in Q4. This performance supported an upgrade of our outlook as well as our pre-announced results for 2025 in January. This morning we published the full set of results for 2025, including full details on strong capital position and updated capital targets. We now target a CET1 ratio of approximately 15% and a total capital ratio around 20%. This is at the lower end of our previous capital targets despite a systemic buffer of 0.9 percentage points. On the back of this, we have announced our largest capital distribution so far of 4.5 billion Danish in total, an increase of 20% year-on-year. We also provided our outlook for 26. We expect earnings per share in the range of 71 to 85, reflecting more normal levels of loan impairment charges and value adjustments following a favorable 25. We expect to continue to see positive core operating trends in 26. We are gaining personal customers in target segments, increasing our mortgage market share and have seen a healthy development with particularly larger corporates with high levels of customer satisfaction in all segments. The Danish economy is likely to show a balanced trajectory with a stable rate outlook as we maintain a solid credit quality with significant buffers in place. Overall, we enter 26 in a healthy position and we are well-placed to further build on our momentum. With that, let me hand over to Biwa for a walkthrough of our financial results.

Thank you, Lars. And as you may well know, the PL numbers and some of the balance sheet numbers were released back in mid-January. And as Lars alluded to, the metric environment is actually relatively stable. Average long-term growth around 2% is expected. Inflation is under control. We have a high and steady employment, and house prices are still on the rise, expectedly 3% during 26. And on top of that, the geopolitical uncertainty, of course, has and still can have some impact on the demand for credit facilities. Looking at the chart, a few comments. For 25 in total, the return on tangible equity was 11.9% and a cost-income ratio at 48, better than our projections for 28, and there are several reasons to that. One is that the decrease in interest rates was a quarter of a percentage point lower than expected. And value adjustments were very strong in 2025 for now the third consecutive year with a significant spread tightening with highly rated liquid Danish bonds. And thirdly, cost of risk was zero for the second year in a row. And finally, we upgraded our expectations after Q3 and again when we released the numbers in January. As you also can see, the EPS was in total 85 kroner in 25 with a strong end to the year both in Q3 and Q4 with 23 kroner in those quarters. And looking at the right-hand side of the graph or the slide, you can see that AUM is still on the rise. Q over Q, a 2% rise driven both by positive markets and net inflow of customers. And on the lending side, Q over Q, you can see that mortgages was up 1%, driven by private individuals, and bank lending was up a couple of percent, both primarily driven by corporates, despite the transfer of mortgage-like loans to the balance sheet of Jyske Realkredit. And when it comes to leasing, it was a bit more muted during the course of Q4. Deposits finally on an upward trend again, both driven by private individuals as well as time deposit from corporates. So a decent development in balances at the end of the year. The outlook for this year, 71 to 85 kroner, 4.3 to 5.1 billion after tax. The core income line was very steady from 24 to 25, and we expect a lower level in 26, primarily driven by value adjustments. Core expenses is also expected to be slightly lower in 26. We will see a lower level of one-offs, and we will also do some course initiatives that will outpace both inflation and wage inflation during the course of the year. Loan impairment charges, we expect an expense in 26, although a low one. We see significant post-model adjustments of 1.7 billion here by year-end. We have in the last 10 years seen zero basis points average-wise in impairments. We have low write-offs also in Q4, and the Stage 3 part of the total portfolio is down from 1.1 one end of 24 to now 0.9 end of 25. Net profit, I have referred to that. And finally, capital targets around 15 and 20%. I'll return to that in just a minute. And finally, also to mention that we don't see any further significant impact from upcoming regulation, primarily the output flow from CRR3, given the current risk weights. Lars? Yeah, thanks a lot, the viewer.

A bit of a business slide, I'm afraid here, but let's see if we can follow the logic. Moving from the left-hand side here, we have the results or the outcomes, the financial targets that you know from our strategy. And in the middle, you have the priorities, the activities that we do to make sure that we deliver on the left-hand side. And on the right hand side you have the specific more detailed examples of the things that we managed to deliver in 2025. So taking a look at the middle here. you see the ambition that we want to increase the quality of the service that we deliver, but also we want to increase the quantity of the meetings and the interactions that we have with the clients. In order to support that, we have the activities on the right-hand side here, and I'll just mention a couple of them. First, on the personal customer part, automated data collection for credit processing That ensures higher quality and obviously also higher speed. More digital solutions that make saving and investment easier. Again, potential for more and at the same time higher quality customer experience. New AI assistance and co-pilot for advisors streamlining workflows, supporting meeting preparations and making things easier inside. on the business and corporate side automated price setting data collection and guarantee creation faster customer responses should be ensured that way also new meeting concept for larger customers making sure that we have a tighter link between the objectives and the financial solutions we also have an upgraded risk management tool that can enhance the quality of the of the service that we give to our clients and the value of the advice linking the business strategy with the interest rate risks and financing risks all together. So this is basically just showing that we are steaming forward in order to deliver on the right-hand side here to support that we see the clients more often and that we deliver more value to the clients when we meet. And obviously then again is able to deliver on the left-hand side here the financial targets and the volume targets here.

Yes, and looking at the net interest income, you can see the uplift in 22 and 23 was, of course, driven by the merger with Handelsbank Denmark and PFA Bank. And for the quarter, we saw an increase of NII of 1%. And if we include a one-off, and a net interest income of 38 million related to tax matters, it is more or less a flattish development from Q3 to Q4. During 26, we hope to see an increase, of course, very much dependent on the volume development during the course of the year.

On the personal customer side of the business, we've been under pressure in terms of the volume and in terms of customer satisfaction for some years from approximately 2020 up until late 2024. Now we have a number of consecutive quarters where we are building on the higher customer satisfaction and building more volume, which is part of the aims that we had in the strategy. The change have come a little bit faster than we anticipated, but we're pleased to see that we are building momentum here. We have, as of today, announced some price changes on our mortgage products. These are changes that will ensure that we are also going forward competitive, both in short-term loans and in the 30-year mortgage loans and a couple of the loans in between. We see a limited financial impact on the results in 26 and fully phased in. This will be approximately on the low end of 100 million. not taking into account the dynamic effects, which obviously, if we are not competitive, will also have an impact on the volumes that we are able to write going forward. So altogether, we think we are still very competitive, and at the same time, it will not have very significant financial implications for the group.

We have seen higher activity levels during 25 and also during the fourth quarter net interest net fee income was up a full 11 percent in 25 and actually if we merge the large last five years up 45 percent of course inclusive of the acquisitions we made i have mentioned several times during the course of 25 that there are several factors behind this but just to replicate again and and and mention again, markets have been favorable, new customers have entered, and we have done more business with existing customers. And also, very importantly, that the turnover in the housing market is more or less normalized after a period with low turnover, And of course, together with our momentum in the segment for mortgages for private individuals has lifted the total income. So the fee uplift as you see here on the chart is driven by higher number of transactions and higher volumes. Costs are expected to decrease in 26. The underlying costs were moderate in 25. And if we look at Q4 in isolation, The underlying increase was around 2%, where inflation and salary increases were partly offset by 2% lower FTEs in Q4 of this year versus 2024. The strategy going forward, as we also mentioned back in the autumn of 2024, is a CI level below 50 and to the extent possible stable uh costs we saw one of course in 25 especially related to the expansion of bank data and going into 26 as we say lower costs from from the level of 6.6 billion in 25 but be aware that when we announced the strategy in the autumn of 24 we talked about a level around 6.5 billion and also be aware that we of course together with some efficiency initiatives we also have initiated a marketing campaign with a new corporate visual identity that will take place during the course of this year moving on to capital We have finalized the latest year buyback program here by the end of January, two and a quarter of a billion, with an average price of DKK 680. And now we are heading for record-setting capital distribution in 26, where we expect to distribute 84% of the result after tax to shareholders. split between 1.5 billion in dividend, which will be proposed to the AGM here in March, and 3 billion in buybacks. And we have engaged with Bank of America to execute the program. And the program will start as of today and end by January 27 at the latest. Then finally looking into capital targets, we have now changed a bit the outlook and expectations for the level of CET1 and the capital ratio. Now we are talking about around 15% and around 20%, and that includes the systemic risk buffer of 0.9%. We know that the Systemic Risk Council has recommended reduction in that risk buffer. It is yet to be decided by the government, and the implications will be of a minor extent if that were to be implemented here during 26. But overall, you can see that we have a 16.1% CT1 ratio by end year, well above the target of around 15%, and if we then include the reservations for expected payouts, they actually consume 1.4% in total. So, 17.5% is actually the buildup for future need of capital. And we will, of course, during the course of the year, reserve for buybacks and dividends quarter by quarter.

Thank you, Bjørn, and thank you, Lars. We'll now open up for questions. If you would like to ask a question, please raise your hand and unmute your device. And the first question in line comes from Mathias Nielsen from Nordea. Please go ahead.

Thank you very much and congratulations on this strong N225. If we start on a very high-level note, like it looks like you are ahead of the plans that you set out in the strategy a bit more than a year ago, can you maybe say a bit about it? Is that just things happening faster than you expected, or is it also the potential for more that has actually been a bit bigger than what you initially expected, if I start there?

Yeah, good question, Matthias Lars. I think it's a combination of internal matters and the market. So if you look at the market, that has been a little bit more gentle than we anticipated when we launched the strategy by the end of 24. And we've seen interest rates at a different level than what we anticipated. So we've had some help, basically. But we also see that internally we are able to move a bit faster than we anticipated on some of the initiatives. It's still early days. There's a lot of work still in the strategy on our platform, on IT and so on. But so far we are definitely on plan and hopefully we will be a little bit ahead of plan when we move further into 26.

Thank you. That was very clear. And then maybe a bit of a nerdy question, but bear with me. So this bank data one-off cost, like you seem to be the only bank so far that is taking a one-off cost. Can you maybe explain a bit of the dynamics, like why you're taking it? Is it something that we should expect them to be a tailwind in the coming years because you have revaluation gains? How should we think about it? Just stand out a bit as the ugly one out with taking the ride down.

Yeah, I can start and then be with you if you want to add. I think it's clear with the agreement that is between Bankdata and Sydbank and being finalized and the integration that is being prepared that there are two different alleys you could take as a bank here. We've decided to take the alley that we've normally taken in Jyske Bank, which is a bit on the conservative side. I've noticed that some of the other banks on bank data, or at least I've seen one bank doing it differently so far, which is fully understandable because that's also possible to handle it this way. The thing is, bank data has a fairly strong balance sheet. and that can potentially give, and we think that's the base case, so we think that's very possible, give bank data the possibility to handle the cost of this integration within that balance sheet. And then from 28 and forward, we'll get an even stronger bank data with more volume on this, and then it will be able to handle the cost basically that we have. getting Arbeidlandslandsbank and Eskilsbank on board. We've taken a more cautious route on this, which is, as I said, in line with how Jyske Bank have handled these kind of things in the past and in agreement with our external auditors who acknowledge that it can be done both ways, but also support this as the right one for Jyske Bank to take.

Maybe just to extend a bit, when we talk with the auditors and when we look at the regulation in Denmark, we know there is a cost to be paid as a member of Bankdata. We don't know the timing and we don't know the amount. It's uncertain, but it's then a normal procedure actually to be careful and to book the cost after a best estimate in the court where you get the knowledge.

But you're right, Matthias. There is obviously a possibility of that not showing to be needed.

And then would it then come back in one go or would it be like over the years, like what is the dynamics if it shows, it turns out that Banklager can handle this by themselves, how would that work like from an accounting perspective in Jyske Bank?

Well, of course, there are bills to be paid over the next couple of years with the migration costs and other costs related to the agreement with Südbank. And, of course, when those bills are up for payment, things will be settled also in our books, of course.

Okay, thanks a lot. Maybe that's the last question and then I'll jump back in the queue. So when I listen to the comments on hope to see NRI coming up and guy down on cost, like... Isn't it difficult to see the bottom of the guidance range unless loan losses spike? Is there any broad comments you can make on what's the assumption of the top and the bottom of the guidance that could help us understand how you would even in a quite negative scenario end up at the bottom of the range?

We usually use the 800 million as an interval, so that's sort of the base case, but that's not the... to say that it's not related somehow to the numbers. So what we do is usually we look at the volatility of value adjustment and investment portfolio earnings. And we also set in some scenarios related to loan impairment charges as those are the most volatile components of our P&L. So that is how we come up with the interval. And I agree that if we are to end up at the lower end of the interval, that would mean materially higher loan impairment charges than what we've seen in recent years, but also lower value adjustments likely.

Thanks a lot. That was very helpful.

You're welcome, Mattias. And next in line is Alexander Wilstrup-Jonsson from DNB Carnegie. Please go ahead.

Yes. Thank you for taking my questions. So I have two questions. First on core expenses. One of your peers recently flagged low IT costs driven by economies of scale in the bank data as a platform. So I was just wondering if you could elaborate on your own expectations for cost savings at bank data and maybe also include the timing and magnitudes, any potential reductions.

Yeah. Thanks a lot, Alexander. I saw that too, and I could follow his calculations. I think it was Ringkøbing that was out yesterday saying that we add volume to bank data, meaning that the expense will come down 17% like for like. I also saw that he then added that that can come as a cost saving or it can come as further investments into digitalization if it makes sense. We are trying to run a tight ship on bank data, so obviously we'll see if we can get some of it as cost savings, and then we'll see what is needed in potential investments. I think it's safe to say that this is now the cheapest and we also believe the best data platform in the country. And gain volume is going to take costs down, but it's also going to make it more resilient in terms of what is needed going forward to ensure a strong digital platform, both in terms of functionality for clients, but also in making sure that it's a resilient, strong platform. So he's right, John is right, 17% is what we've calculated so far that could be taken out of the cost of bank data for us also.

Okay, thank you. I also have a question regarding your ordinary bank loans. So to me, volumes for ordinary bank loans seems a tap down compared to last year. Is there any reason behind this? Shouldn't your volumes for ordinary bank loans increase as a result of your improved customer satisfaction ratings?

Not necessarily because we have still some of our hands banking customers that came from bank loans and are generally moving towards mortgage loans on our real credit set up. So that's the underlying trend here. That's what is able to turn into that one.

Makes sense. Thank you.

Thank you, Alexander. So next in line is Martin Diep from SED. Please go ahead.

Yeah, just two small questions from my side. First of all, I guess first question goes on the price analysis you took this morning in light of, I assume, peers also moving. How far are you willing to go? Is this only going to be a front book market share or should we also see the back book eventually getting the benefit without having to refinance? That's my first question. Then second question, coming back to capital and perhaps also less or more resiliency in stress tests and a 15% CT1 target, how does that position you for future payouts? Thanks.

Let me take the first one, Bjorn. You take the second one. The first one, thanks a lot, Martin, on the pricing on mortgages. We don't know where the competition is going to take the price level here. I think for us, a part of the reason why we make the decision, it's a front book that we adjust, is that when prices were adjusted upwards last time in the cycle, We did not really increase the prices on the back book in that scenario, which would then be a totally different way we would handle it if we lowered the prices. Then on our book, a lot of them are short loans, which means that they will be refinanced within a year. And we do not reduce prices on these ones. So that would be basically for free if we did it. And they can then move on to either the same product or onto one of the other new attractive products here. So I think now we have a very strong portfolio of loans, both the bank balance loans, but also the loans on the mortgage balance sheet. And we have them with the short interest rate. We have them with medium and we have them with long. So we have a strong portfolio when we meet the clients and I think we are priced to compete on this one without this meaning that we'll necessarily see a big drop in the income here because our clients will be moving from another competitively priced product, for instance, the F1s to the longer interest rates products, which again will also be competitively priced. So basically we will be following what is going on in the market. We think the reason why we've been winning market share is not because of generally the prices, it's because of the service model that we have and the turnaround that we've seen in number of volumes or a number of loans and in volumes on personal mortgages that has been done without us changing the price. And we've seen competitors moving down on price before us, and we've been able to keep that up. We'll ensure that we have a good product and an attractive price, but we think we're also driving the volume with having a good service model and being fast, basically.

Yeah, and then to the second question regarding the capital distribution and resilience in stress test, you're quite right that given some of the shifts we made in our model landscape and model setup recently, we are more resilient now to downturn and stress than we were formerly, especially because some of the segments are now managed under the foundation IRB setup versus an advanced IRB setup. And that, of course, leads us to a potential larger buffer. And before giving any guidance in the market, we, of course, need to have a dialogue with the FSA regarding their acknowledgement of of the new setup that we have and that will happen in the coming months, quarters. But you're quite right that there is a potential for a larger buffer. When we then look at the distribution and the split between dividends and buybacks, You have now heard us say that we have launched the largest buyback program of 3 billion in the market. And of course, there is a limitation when it comes to liquidity in the stock in general. So going forward, and if buffer will be extended, we of course need to adhere to the split between these two elements of distribution of capital.

Okay. But I guess the means of distribution, that can always be changed.

The split, of course, is up for debate, and especially if liquidity in the market is a limiting factor.

Okay. All right. Very clear. Thanks.

Thank you, Martin. And the next question in line comes from Asbjorn Mark from Danske Bank. Please go ahead.

Yes, good afternoon. Thanks for checking my questions. Most of them have already been answered, but I have basically more of a strategic pricing question last. Maybe it goes to you, but it's more like now you're lowering the prices on mortgages. Of course, I'm fully aware of how your competitors have reacted and hence it seems like more of a reaction to that, but I'm just trying to understand the rationale here because You had the lowest prices for a decade and you also alluded to it and you're basically losing market shares for many years now. That trend has changed over the last year or so, but obviously not due to prices. So just wondering, do you actually believe that the price is the sort of decisive factor for clients? Secondly, since you're cutting mainly in interest only and in the high LTV areas, how does this price reaction sort of go hand in hand with your strategy of growing in the more affluent areas as well on the private side?

Yeah, thanks a lot. Good questions here. I think some of the history that you're describing here is not 100% right. because Jyske was actually winning market shares back in time on the mortgages and Jyske was winning up until 2019 and a number of things with changes to the organizational structure and service models in relation to clients pricing of other products meant that Jyske was losing out and that was what you saw on the graph here and with that I'm basically saying that price is an important factor, not the only factor and probably not the most important factor, but you need to be priced fairly competitive. I think we, in all honesty, were more competitively priced on the short end here with the loans, with refinancing often than with the longer. And we want to be competitive in both end of the scale here to support the clients and also to have a portfolio development that we would like to see in the bank. So what will happen here is probably they will go from one competitively priced product to another competitively priced products in a little bit larger scale than what we've seen before. Then you could also say that these are changes, directional changes that it was our plan to do. in terms of making sure that we have attractive product price across the different products here. Now we're doing that as a tactical changes also, but it fits within our strategy. We still have a strategy relating to our portfolio of products, which is also about making sure that we have differentiating products and we'll be able to, I think, launch new stuff within the not too far distance that will make us even more competitive, not from a price competitiveness only, but also from a product competitiveness part. So I think it's one factor. It needs to be right, but it's certainly not the only one. I have to say I'm fairly impressed with the organization being able to turn around the development without using the price basically as a differentiator during the last couple of years. If we'd not changed some of the prices now, it would have been a negative differentiator. I think we are moving in with the pack here and being more competitive or being very competitive on select products.

That's very clear. Then, if I may, on the sort of the competitive landscape and the consolidation that we've seen in the last five quarters, have you seen any reaction in the market from Nucleus Banor or change behavior, for that matter, or from the Yale Suidbank? And what should we sort of expect to be the Jyske Bank response? Not in terms of M&A, but more in terms of product launches or more aggressive behavior or something. Is there something out there we should expect from you, given all the turmoil in the market?

Yeah, I think if you look at our situation at the moment, we have the organization in place. We have no major projects going on. Obviously, we have the eyes on the possibilities in the market. And we have the muscles to also take advantage of some of these opportunities here. What we've seen so far is predominantly a number of employees. The number of people applying for jobs is increasing quite a bit, but will not go down. the different tracks that some of our competitors are doing and taking major teams from retail. We don't believe in that strategy. We think we are scalable with what we have today. And if we are adding, it will be select employees in select geographies and not the teams of eight or 10 spread across the country here. So you'll not see that kind of, we don't envisage that we'll have this kind of aggressive behavior on this. We've also seen that we've been gaining some customers, not very, very significant, but some and more during the last couple of months due to customers that thought, well, then that might actually be the reason why I'm looking for a new bank. And then I believe the next part will be when they migrate the banks. it's very difficult at that point in time because you'll be extremely busy internally and the focus on clients can be a little bit less. So maybe we'll also have an uptake at that point in time of new clients.

All right, that's very clear. Thank you.

Thank you, Eskian. Next question in line comes from Namita Samtani from Barclays. Please go ahead.

Hi. Thanks for taking my questions. The first one on the net interest income, did I hear you say that you hope it goes up year on year versus 2025? And my second question, how do you see competition and pricing on the bank lending side? Thank you.

Yeah, so maybe I'll start on the net interest income year over year. So we haven't provided exact guidance for 2026 versus 2025. What we said was basically we expect Q1 2026 to be the low point. That is due to Q4 having a one-off positive impact of 38 million, and there will also be two fewer days of interest in Q1. So On the line, we believe we have seen a trough in terms of NII, but we need to go into Q1 to see the actual trough, and then we'll expect to grow from there. Whether that's enough to keep NII stable year on year, I think consensus is for a slight decline, and I get how you could end up there.

Looking at the competitive landscape, I think for bank lending, I think it's fair to say that there is ample liquidity and capital still within the banks. So that leads us to a relatively fierce competitive situation in 2025. which also actually was the case if you go back in 24 but it seems to us that there's been even more competitive there's more competitiveness in the market now than there was one year ago and you need to couple that with what I said initially, that the demand for credit facilities may be a bit subdued due to the geopolitical uncertainty around Denmark, because if you look at Denmark in isolation, we are still on a good footing when it comes to the economic development.

Thank you.

Thank you, Namita. So there are no further questions in line and with that we would like to thank you for participating in today's conference call. A recording of the call will be made available on our IR website in the coming days. Please do not hesitate to contact us if you have further questions and we appreciate your interest in Jyske Bank and wish you a nice day.