Release Date: May 07, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Jyske Bank AS (FRA:JYS1, Financial) reported a 2% year-on-year growth in EPS despite lower Danish policy rates.
- Net fee income increased by 20% year-on-year, driven by higher assets under management and increased activity levels.
- Effective cost management led to a 3% reduction in the cost base year-on-year.
- Customer satisfaction has significantly improved across all areas, contributing to the highest organic growth rate in mortgage financing for personal customers since 2018.
- The bank is comfortable with its current capital position and expects no significant impact from upcoming regulations, allowing future earnings to be reserved for growth and capital distribution.
Negative Points
- There is a higher downside risk on interest rates, with expectations of two further cuts this year, leading to increased uncertainty in the macro environment.
- The CT1 ratio saw a drop to 15.7% due to the implementation of Basel 4 regulations.
- Asset under management experienced a slight dip due to higher market volatility, despite a net inflow of funds.
- The trade war has introduced greater uncertainty, impacting the financial markets and potentially affecting future earnings.
- The bank's interest rate sensitivity has been larger than expected, which could lead to higher implications on the NII line due to downside risks in policy rates.
Q & A Highlights
Q: Can you elaborate on the impact of the expected rate cuts on net interest income (NII) and how management decisions might mitigate this pressure?
A: Unidentified_3: We conduct thorough investigations whenever there is a rate cut from the Danish central bank to manage rates efficiently. While we will continue this approach, the impact on NII might be slightly higher due to increased downside risk with policy rates. Unidentified_1 added that deposit rates for transaction accounts were lowered to 0% in April, and savings products have been gradually adjusted, with a positive impact from repricing in Q1 that won't recur in Q2.
Q: How sustainable is the mortgage NII expansion seen in Q1, considering Basel 4 and commercial real estate risk buffers?
A: Unidentified_1: The expansion is highly sustainable as it reflects repricing to account for systemic risk buffers and Basel 4 impacts. This is a sector-wide issue, and the profitability adjustments are expected to remain. Unidentified_3 emphasized that the repricing aligns with higher charges on corporate exposures, making it sustainable.
Q: Can you explain the rationale behind maintaining a high accrual ratio for capital, despite other banks having lower ratios?
A: Unidentified_3: The decision for an equal treatment of buybacks and dividends was made after discussions with the FSA. Unidentified_2 added that the dialogue with the FSA is ongoing, and until finalized, the capital targets remain unchanged.
Q: How do you view the systemic risk buffer for commercial real estate, and what happens if it is removed?
A: Unidentified_3: The CRE buffer will be reassessed, and while its removal is uncertain, the pricing adjustments made are sustainable due to higher capital charges from Basel. Unidentified_2 noted that pricing is not directly linked to the buffer, so changes may not necessitate price reductions.
Q: What is the outlook for lending growth, particularly in personal and corporate banking?
A: Unidentified_2: Personal banking seems less affected by current conditions, with momentum likely to continue. Corporate demand has not significantly changed, though some investment postponements could occur due to uncertainties like tariffs. Optimism remains in the market, and no major changes in demand are expected.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
