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JYSKE BANK GROUP CREDIT PROFILE
The Jyske Bank Group in brief
The merger with the Danish mortgage institution BRFkredit on 30
April 2014, firmly established the Jyske Bank Group as the fourth
largest financial service group in Denmark with total assets of DKK
542bn, a total of 4,191 employees, 890,000 customers and a market share of 8 % of aggregate Danish mortgage lending in addition
to Jyske Bank’s existing market share of around 7 % of bank lending and 8 % of bank deposit taking. The merger increased the diversification in the credit portfolio leading to a more balanced split
between the SME/corporate sector and the private individuals/
residential sector in the overall Group profile, which is expected to
underpin stability in future earnings. The Jyske Bank Group has a
strong nationwide market presence and an extensive distribution
platform with 101 branches focusing on retail clients, 31 branches
specialized in SME and corporate clients and nine private banking
branches throughout Denmark.
The Jyske Bank Group is a Danish SIFI. With a CET1 ratio of 15.3 % as
per 31 December 2014 the Jyske Bank Group is strongly capitalized
and already compliant with the fully loaded CET1 requirements of
the CRD IV and the Danish SIFI regulation. The Group remains well
positioned for organic growth as well as to continue being a strong
player in the consolidation in the Danish banking sector via select
acquisitions. Jyske Bank has recently expanded the product line
with competitively priced, collateralized home loans as part of the
strategic focus to become the “preferred bank of the Danish houseowners”. The Jyske Bank Group has 3 core business lines:
The Jyske Bank Group, Banking activities
Retail and commercial Banking in Denmark focusing primarily on
Danish individuals, families, SMEs, as well as local and regional
public institutions and state institutions. Customers are serviced
via the nationwide branch network and via the Internet and mobile
phone banking platforms. Jyske Bank offers a full range of financial
services in connection with financial solutions, including leasing
and financing activities, Mortgage and insurance products are offered via sourcing agreements with strategic partners such as DLR,
BRFKredit and PFA (life pensions).
The Jyske Bank Group, Trading and investment activities
Investment advice and asset management services, including
trading in fixed-income products, foreign currency, bonds, shares,
commodities and derivatives aimed at national and international
investors, partly through the activities in Jyske Markets in DK-Silkeborg, partly through the Private Banking entities in Zurich, Gibraltar
and Copenhagen.
The Jyske Bank Group, BRFkredit mortgage lending
activities
BRFkredit is Denmark’s fourth largest mortgage lender and carries
out the Jyske Bank Group’s mortgage lending activities, specialising in owner-occupied homes, vacation homes, commercial properties and subsidised housing. Mortgage products are distributed via
partners, an online web-platform and a mobile sales force.
The Jyske Bank Group’s structure
– with the most significant 100 % owned subsidiaries:
Jyske Finans
A/S
Jyske Bank
(Gibraltar) Ltd.
2013
Financial
performance highlights (DKKm)
Net interest income (NII)
Net fee & commission income
NII, fee & commission income
Value adjustments
Other operating income
Operating expenses,
depriciation & amortisation
Profit before loan imp. charges
Loan imp.charges & prov. etc.
Pre-tax profit
Tax
Net profit
Jyske Bank
(Schweiz) AG
BRFkredit
Bank A/S
Jyske Bank A/S · Vestergade 8-16 · DK-8600 Silkeborg
www.jyskebank.dk · www.jyskebank.info
Merete Poller Novak
Senior Vice President, Head of Debt IR & Capital Markets Funding
Tel. + 45 89 89 25 26 · Mobile + 45 40 64 25 96 · [email protected]
Steen Nøhr Nygaard
Senior Director, Head of Treasury Division
Tel. + 45 89 89 25 22 · Mobile + 45 40 64 25 50 · [email protected]
2014
Jyske Bank
Group
5,018
1,729
6,747
541
951
-4,791
3,448
-1,147
2,301
-493
1,808
6,615
1,759
8,374
-653
3,453
-5,533
5,641
-2,538
3,103
-14
3,089
Jyske Bank
Group
Key balance sheet items (DKKbn)
Bank loans
Mortgage loans
Total assets
Bank deposits
Issued bonds
Issued mortgage bonds
Total equity
Total RWA
111.1
262.0
115.8
27.8
17.5
111.3
120.4
218.9
541.7
128.3
43.4
208.5
27.6
176.4
Jyske Bank
Group
Selected key ratios
Pre tax return on opening equity (% p.a.)
Net return on total assets (% p.a.)
Net return on RWA (% p.a.)
Total capital ratio (%)
CET1 ratio (%)
Impairment ratio for the period (%)
Acc. impairment ratio (%)
Balance of imp. charges and prov. &
balance of discounts for assets taken over/
total loans advances & guarantees (%)
Loans & advances/equity
Equity/total assets (%)
2013
Proforma JB
Group incl.
BRFkredit
6,995
1,892
8,887
316
907
-5,749
4,361
-1,652
2,709
-603
2,106
Proforma JB
Group incl.
BRFkredit
110.1
198.9
480.5
121.1
36.6
184.2
27.8
168.6
Proforma JB
Group incl.
BRFkredit
10.6
0.4
1.3
16.3
16.1
-
14.7
0.7
1.6
16.0
15.3
0.8
3.1
17.8
0.6
1.8
16.4
15.3
0.7
1.7
3.8
2.4
-
7.5
6.7
13.1
5.1
12.0
5.8
S&P’s view on the merger with BRFkredit
The strategic position of the Jyske Bank Group is strengthened by the merger based on the prospects for cross sales activity.
Through the more diversified retained earnings the Jyske Bank Group has
the potential to achieve a stable RAC-ratio above 10% which will underpin
existing rating despite potential future removal of state support.
S&P relies on the Groups commitment to reduce the dependence on short
term funding (predominantly BRFkredit’s short term funding via 1 year
ARM mortgage loans) over the coming quarters.
Jyske Bank issuer rating profile
Senior unsecured
A-
Jyske Bank A/S
BRFkredit
A/S
February 2015
Short Term debt
A-2
Stand Alone Credit Profile
bbb+
Outlook
Stable
Latest macro economics
for Denmark compared
to Euro Area
Real GDP y/y growth, %
(Q3)
Unemployment rate, %
(Dec 2014)
HICP growth (Jan 2015), %
Current account balance,
% of GDP (2014 /E.A. 2013)
Public budget balance,
% of GDP (2013)
Public gross debt,
% of GDP (2013)
Euro
DK Area
1.0
0.8
6.4 11.4
-0.3 -0.6
6.3
2.4
-0.7 -2.9
45.0 90.9
BRFkredit mortgage bond ratings
CRD-compliant covered bonds AAA
from Capital Centre E
UCITS-compliant mortgage
bonds from Capital Centre B
and the General Capital Centre
AAA
GDP growth, %
4
2
0
-2
-4
-6
-8
05 06 07 08 09 10 11 12 13 14
Denmark
Euro area
JYSKE BANK GROUP CREDIT PROFILE
February 2015
Group funding profile
The Jyske Bank Group’s bank lending activities
are primarily funded via customer deposits
which ensures stability in long term funding.
Longer term capital market funding is done via
public benchmarks and private placements under Jyske Bank’s USD 8bn EMTN program. Short
term funding sources include the interbank market, repo markets and the French CD market.
Mortgage lending activities
Mortgage lending in BRFkredit is regulated by
the “balance principle”, where mortgage loans
and the issued mortgage bonds have matching
conditions and the underlying payments from
lenders to bondholders are matched.
DKKbn Bank loans, bank deposits and the funding
130
gap. Apr. 2010 - Feb. 2015
120
110
100
90
80
70
60
50
40
30
20
10
0
-10
-20
Redemption profile as per February 2015
DKKbn
6
4
2
04-10
07-10
10-10
01-11
04-11
07-11
10-11
01-11
04-12
07-12
10-12
01-13
04-13
07-13
10-13
01-14
04-14
07-14
10-14
01-14
Bank lending activities
Deposits from corporates and Institutional customers
Core deposits from personal customers and SMEs
Bank loans ex. home loans funded by BRF
Home loans funded by BRF
Net funding gap (DKKbn)
0
2015 2016 2017 2018 2022>2026
Jyske Bank senior unsecured EMTN bonds
BRF senior secured bonds
BRF senior unsecured bonds
Bank lending – credit quality
Break down of the Jyske Bank
Groups portfolio of bank loans and
guarantees
6
6
4
40
3
2
5
3
20
6
Public Authorities
Agriculture, hunting, forestry,
fishing industry
Manufacturing, mining
Energy supply
Building, construction
Commerce
Transport, hotels, restaurants,
information, communication
Finance, insurance
Real property
Other Sectors
Personal
5
Jyske Bank A/S
Public authorities
Agriculture, hunting, forestry,
fishing industry
Manufacturing and mining, etc.
Energy supply
Building and construction
Commerce
Transport, hotels and restaurants
Information and communication
Finance and insurance
Real property
Other sectors
Corporates individually assessed total
Corporates collectively assessed
Total balance corporate customers
Personal individually assessed
Personal collectively assessed
Total balance personal customers
Total all customers
2014
2014
Balance Loans,
of loan advances
impair- & guarments in antees
% of total
loans etc. (DKKm)
0.0%
10,027
2014
Loss
for the
period
2014
Loan impairment
charges
(DKKm)
0
(DKKm)
0
2014
2013
2012
Balance of
loan impairment
charges and provisions
for guarantees
0
(DKKm)
0
0
11.1%
7,328
159
359
810
568
619
3.2%
0.5%
4.0%
3.6%
2.4%
4.4%
1.8%
13.3%
2.7%
5.5%
1.8%
3.8%
5,565
4,379
1,871
6,923
2,797
434
41,932
9,435
6,814
87,478
58,880
156,385
35
0
19
93
10
7
148
205
50
726
0
726
190
0
190
916
72
1
16
118
12
10
191
280
161
1,220
504
1,724
313
58
371
2,095
177
24
75
250
66
19
755
1,256
183
3,615
1,219
4,834
737
338
1,075
5,909
132
22
77
211
61
16
690
1,150
54
2,981
659
3,640
576
275
851
4,491
173
13
74
241
37
5
594
1,051
148
2,955
717
3,671
532
263
795
4,467
Mortgage lending – key numbers
Selected key ratios – mortgage lending
BRFkredit a/s – 31 December 2014
Loan loss provisions (% of mortgage lending)
90 days arrears in % of installment payments
90 days arrears in % of total lending
Average loan-to- value (%)
Private (owner
Subsidised
Private rental
occupied & vacahousing
properties
tion homes) (rental housing) (rental housing)
0.32
0.05
1.93
0.61
0.07
0.85
0.01
0.00
0.01
70.10
49.20
73.60
BRF Mortgage lending – mainly housing purposes
13
11
19
44
2
Ho 19
4%
usin
g p urp oses 8
Owner-occupied
Vacation homes
Private rental
Subsidised
Office & business
Industry
Prop. for educ. etc.
Offices &
Business
properties
1.61
1.14
0.01
66.30
Other
(agriculture,
industry & crafts)
0.33
0.01
0.00
58.70
Total
0.74
0.56
0.01
65.80
LTV brackets
Refinancing profile BRFkredit mortgage bonds
100
100
75
75
50
25
0
Q4 2014
>100%
80% - 100%
60% - 80%
40% - 60%
20% - 40%
0% - 20%
50
25
0
Q4 2014
Other loan types
Refinancing
beyond one year
Refinancing
within one year
Annual refinancing