National Irish Bank and Danske Bank Andrew Healy CEO, NIB & Member of the Executive Board, DB
Martin Gottlob Head of Investor Relations, DB
Davy Irish Financials Site Visit, Dublin, 21 September 2006 Danske Bank Group Branches Market share
70 5% 57 5%
95 20% 291 25%
#1 i DK, #1 i S # 3 i No
173 10% 59 2% 33% (loan portfolio)
Lux Ger Pol Fin Three Phases Since 2000 - From merger via investment to growth
Domestic merger Growth with RD Business development and investment period Synergies/cost focus
Share price Acquisition of NIB and NB
High Dividends and share buy backs High RWA growth
2000 2001 2002 2003 2004 2005 06 Danske Bank Group - Performance
Dkr bn Dkr bn Total income Expenses 40 20
20 15
0 10 2001 2002 2003 2004 2005 H1 06 2001 2002 2003 2004 2005 H1 06 X 2 X 2
Dkr bn Dkr bn Profit before tax Lending 20 2000
15 1500 1000 10 500 5 2001 2002 2003 2004 2005 H1 06 0 X 2 2001 2002 2003 2004 2005 H1 06 Well Positioned for Further Growth
Growth High growth in new markets NII
Growth New trends, product innovation and cross-selling Net fee income
Growth Leverage platform - exploit economies of scale Cost containment
Growth Gradual introduction of CRD Capital management
The statements above are not part of Danske Banks profit guidance, but only an indication of future potential. Danske Bank Group the three Cs
CCross-sellingross-selling
CCostost containmentcontainment
CCapitalapital managementmanagement First Significant Acquisition Outside Scandinavia
Acquired Northern Bank and National Irish Bank from National Australia Group on 1st March 2005
Price GBP£ 967 million (1.5 billion) National Irish Bank 2005
Full service retail and business bank Market share 2% 740 employees 59 branches and 13 business centres Lending book 2.9 billion 168,000 customers National Irish Bank 2005 (contd.)
Brand and reputation damaged by troubled past Worst technology in Irish banking Business performance static missed out on economic boom Lack of investment in people, products and distribution channels
But Danske acquisition welcomed by staff and customers Air of anticipation The Competitive Environment Banking Landscape Market Share High
No. 1 Personal MT No. 2 Personal MT No. 1Personal Savings No. 2 Personal Savings Business banking, No. 4 Mortgages No. 3 Mortgages treasury and wealth No. 2 Business No. 1 Business management services. 75% of personal & business customers
Share
No. 2 Mortgages No. 4 Personal MT
Business Banking No. 3 Personal MT No. 4 Pers Savings and higher net No. 3 Pers Savings No. 3 Business worth personal Business and building a No. 1 Mortgages 47 branch retail network Limited Business Banking Full service retail bank With small share & scale
Low Focused Service Provision Full service Public Perception The Opportunity Rebuilding and Further Investment Immediate Priorities
Establish new structure Andrew Healy appointed CEO September 2005 Executive Team assembled quality external recruits Migration programme to Danske IT platform Development of new products and services based on Danske model Enabling Agreement with IBOA (staff union) Migration The Task
Amongst the most challenging and comprehensive change programmes in Irish banking National Irish Bank and Northern Bank operated on * 250 IT systems * 66 Legacy NAG systems Three countries each of which has its own * Legislation * Compliance * Currency * Culture Programme inclusive of every function of the Bank * Credit * Finance * HR * Product development * Support functions Migration - The Task
To Danske Bank single platform 150m investment in the two banks Migration to complete within 14 months - over Easter 2006 weekend Big Bang No room for error Staff walked out of old world on 14 April and opened doors to new world on 18 April Migration Successful Completion
National Irish Bank now has amongst the best technology in Europe
Engine to drive future growth scalable platform
As anticipated some post-migration issues - but these have been quickly addressed Relaunch National Irish Bank New Thinking in Banking National Irish Bank 2006
The Structure Powerful new business model Improving customer access
Personal Market Personal Packages Europes best eBanking service Market leading Mortgage Products New Savings & Investments range
Business Market First class Products & Services Business eBanking Powerful New Business Structure
Five Regions designed for growth
New management teams North West Midlands Significant number of new Dublin
recruits South East
Local autonomy South West Closer to the customer Faster decision making • 59 Branches Unified team no turf wars • 13 Business Centres Improving Customer Access
Further €20 million investment programme - 15 new branches over next 3 years
North West Midlands
Mobile business banking teams Dublin
South East
Plus South West Europes leading internet banking service • 59 Branches • 13 Business Centres Europes Leading Internet Banking Service
Giving customers a 360o view of all their bank accounts Easy customer control standing orders, direct debits, on-line statements Free Text Messaging service nothing like it in Ireland Trade Stocks & Shares online Packages - A New Approach to Pricing & Value
All Packages: • Same rate for Overdraft & Credit Card • interest rates from 8.50% to 9.75% - best in market
• No overdraft arrangement fees
• Referral fees abolished – first bank
• Transaction-free banking in credit or debit (some restrictions)
• Open to existing as well as new customers Top Two Packages: • Fixed quarterly fee – covering all transactions • Free foreign exchange • Credit current account interest from 1.25% to 2.00% - best in market • Preferential savings rates • Dedicated relationship manager • Travel benefits worth €150 to €550 per annum Mortgages Leading the Market
Today Consistently best in market with tracker and fixed rate products Tracker: 3.79% 2 year fixed: 4.35%; 3 year fixed: 4.55% - lower than most variable rates in market Q1. 2006 - 60%+ new business from other banks
Going Forward Continue to lead and innovate Savings Best for SSIAs & More
ECB Tracker Deposit Account Tiered rates up to ECB + 0.50% Minimum opening balance €5,000 Up to 3.5% - tracking rates up Instant access Regular Savings Account ECB + 0.5% No minimum amount Todays rate 3.50% Instant access Danske Capital Managed Funds for 5 year+ investments • Different risk levels – no capital guarantee • Typical return 4-5% for lower risk, upwards for higher risk options • Innovative, transparent products - online tracking of value, buy and sell online Business eBanking - World Class Capability
Elements include:
Cash Management Tools to help SMEs manage working capital - account information, payments, file transfers
Interest Rate Management Helping SMEs to manage interest rate risk range of structured loans
Markets OnLine mini trading desk in customers office securities, foreign exchange, forward contracts, swaps and options New Thinking in Banking New Thinking in Banking New Thinking in Banking Media Spend Overview
Category dominated by AIB/BOI, Huge increases across all spenders (except first active) 8,000,000 +88% 6,961,590 7,000,000 6,000,000 5,000,000 +60% 2005 4,000,000 3,709,705 3,846,226 2006 3,000,000 2,406,749 +49% +73% +344% +256% -60% 1,702,438 2,000,000 1,301,950 +26% 1,522,320 1,192,446 1,130,531 745,858 873,579 991,189 1,000,000 590,139 335,148 448,666 343,100 0
e t k B B B c n AI BOI tiv NI S re BOS c T i t r Ba t A en bod e a t irs an s F R Ul rm e P Business Performance Asset Growth How we Compare (June 2006)
Assets Mortgages
AIB 16%
Permanent TSB 21% 22%
Bank of Ireland 23% 27%
Ulster Bank 23% 31%
BOSI 39%
Average 24% 27%
NIB 54% 55% Best Financial Institution Awards 2006
Technology Project of the Year 2006 Our Goals The Bottom Line
To deliver profitable income growth and prudent cost management, achieving Danske Bank Group Return on Equity and Cost Income ratio by 2010 Achieving Our Goals
Build a strong brand, unique in our market
Aggressively acquire SME business and Mass affluent and HNW personal customer relationships
To be respected for our integrity and values in all our business conduct and dealings with the stakeholders and communities that we serve Achieving Our Goals
To be renowned for the quality of our customer service and local decision-making
To attract, retain and develop highly capable people, hungry for success and who outperform our competitors Changing the Banking Landscape
Personal Credit cards Best ‘Real’ Credit €100 ‘Beat the Free personal packages & overdrafts mortgage Interest Competition’ transactions - Ireland’s matched rates – another first challenge first –best - referral fees in market
Pioneering eBanking Text Fast 15 new service SMEs get SSIA messaging & local branches - business Corporate tracker online stocks decision -€20m & personal benefits deposit & shares making investment
New Thinking in Banking