Strategic update and execution of business strategy

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Garey McLaughlin
3 years ago
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What type of customers does Nykredit focus on?
What is the goal of the Totalkredit strategy?
What is the key to Nykredit's relationship with the loan underwriting system?

1 Strategic update and execution of business strategy Capital Markets Day 11 November 2015 Michael Rasmussen, Group Chief Executive

2 Strategy process Analysis "Nykredit 2015" New organisation New strategy Business plan

3 Market participants unchanged the past year Four major financial groups Others 3

4 Market for personal full-service customers: Nykredit's part of major business alliance The three major banks The remaining banks 4

5 Nykredit's strategic course Winning the Double Focus on fullservice customers Develop partner activities Winning homeowners over as satisfied and loyal full-service customers Taking the Totalkredit partnership to a higher level 5

6 Strategy implementation on track Focus on full-service customers Develop partner activities Focus on full-service customers Banking for homeowners New standard banking IT platform (BEC) instead of customised system New product offerings for Private Banking New product offerings for SME customers Digitisation of customer communication taken to the next level Coming soon Partner activities Secured homeowner loans and a return to simpler mortgage products Improvements in the loan underwriting system (Xportalen) Streamlining work processes with partner banks Commercial mortgages Digitisation and IT infrastructure New mutual business areas Cost effectiveness General cost restraints Increased focus on efficiencies Optimising processes based on customer needs IT reorganisation 6

7 A coherent product range for personal customers Focus on full-service customers Bank BoligBank BoligBank Private Banking Private Bankin g Private Bankin g Elite BoligBank has generated a net increase in the customer base of more than 1,000 new full-service homeowner customers per month. 7

8 Targeted offers to commercial customers Focus on full-service customers What we focus on Targeted value offers to small, medium-sized and large commercial customers and owner-managers Focus on full-service customer relationships the more profitable the customer relationship, the better the terms offered to our customers Focus on capital and return management What we can deliver Our products and advisory services cater for most commercial customers We offer everything in property finance, daily operations and investment including trade finance and cash management Unique specialist skills for customers with complex advisory needs within finance, investment and wealth management solutions 8

9 Developing the partnership our joint competitive power Develop partner activities Sector cooperation is history The three largest market participants can and will reap their own benefits of large-scale operations We need each other in competing with the three major banks We will boost volumes in the partnership to achieve synergies and efficiency gains Totalkredit is our common road to economies of scale Totalkredit alliance of decisive importance to the Nykredit Group Full-service customer focus Develop partner activities 9

10 Developing the partnership Develop partner activities Stabilisation One-tier mortgaging and guarantee model Secured homeowner loans Organisation Improvements in Xportalen Improvement Commercial mortgages Development plan for Xportalen Development plan for Ongoing digitisation in general Expansion Administration? Technology? Savings? Etc.? 10

11 Totalkredit's commercial mortgages Develop partner activities Participation is optional Segregation Totalkredit/Nykredit An obstacle has been removed Property types Office and retail Residential rental Industry and trades Wide and competitive product range The bank determines the margin Credit granting and assessment are undertaken by Totalkredit Totalkredit's commercial mortgage concept strengthens the alliance by redefining the partnership in the commercial area and ensuring favourable competitive conditions 11 Source: Jyllands-Posten

12 Q1-Q3 Interim Report 2015 in brief DKK million Q1-Q3/ 2014 Q1-Q3/ 2015 Income from core business 7,887 8,667 Costs of core business (3,765) (3,649) Impairment losses on loans and advances (1,457) (693) Profit from core business 2,665 4,325 10% -3% -52% 62% DKK million Q1-Q3/ 2014 Q1-Q3/ 2015 Goodwill impairment Totalkredit 0 (1,907) Value adjustment of swaps (1,993) 212 Profit and return Q1-Q3/ 2014 Q1-Q3/ 2015 Profit before tax, DKKm 1,550 3,111 Business return on core business, % pa 7.3% 12.3% Note: Business return excl value adjustments and business capital relating to swaps, and excl investment portfolio income and business capital relating to Group Treasury and goodwill impairment for Totalkredit. 12

13 Run-off on Jyske Bank portfolio Loans originated by Jyske Bank Distribution of run-off DKKbn Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 DKKbn 2 0 1,2 1,2 1,4 1,0 0,7-2,3-2 -3,7-6,1-7,0-4 -7, Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Run-off to Partner Banks or Totalkredit Jyske Bank portfolio run-off Note: Cash debt outstanding. As of Q3/2015, Jyske Bank customers also include other non-totalkredit customers. Note: Bond debt outstanding. DKK 40bn of the original DKK 87bn has been refinanced Today, DKK 7bn has been captured by partner banks and Nykredit/Totalkredit For Q3/2015 the amount is DKK 0.7bn Net run-off on the Jyske Bank portfolio totals DKK 33bn 13

14 Business Plan 2018 the means to deliver our targets Deliver capital target in 2019 Requires a return of 11% pa before tax Assuming unchanged economic climate and continued fierce competition in the sector An ambitious, action-oriented plan prioritising customers, business and resources 14

15 Business Plan 2018 is rooted in already launched initiatives - and is aligned with Winning the Double Return Business Plan 2018 Winning the Double Top line Costs Reinvestment Nykredit 2015 DKK +1.0bn DKK -0.5bn DKK +0.1bn DKK +1.25bn DKK -0.25bn Time 15

16 Key plan elements Market position developing focus areas selecting activities Business optimisation increased commercial focus profitable customer relationships prioritising resources Digitisation improving customer experiences enhanced efficiency 16

17 We are fully committed To ensure AAA-rated bonds To ensure a ROE of 11% in 2018 To ensure Nykredit's capital strength To ensure that Nykredit meets future regulation and challenges 17

18 Strategic update and execution of business strategy Capital Markets Day 11 November 2015 Michael Rasmussen, Group Chief Executive

Annual Report 2014. Nykredit Realkredit Group

Annual Report 2014. Nykredit Realkredit Group Annual Report 2014 CONTENTS MANAGEMENT'S REVIEW Group Chief Executive's Statement 1 Company details 2 Group chart 3 Financial highlights 4 Nykredit's strategy 6 2014 in brief 8 Results relative to 2013

Strategic update and execution of business strategy

What type of customers does Nykredit focus on?

What is the goal of the Totalkredit strategy?

What is the key to Nykredit's relationship with the loan underwriting system?