Danske Bank A/S : Scope Ratings Danske rating report June 2024

Financial Institutions

25 June 2024

Danske Bank A/S

Rating report

Summary and Outlook

Danske's issuer rating of A+ reflects the following assessments:

• Business model assessment: Resilient (High). Danske combines broad geographic and business diversification in an integrated manner and this is a source of intra-groupsynergies. The bank also operates with a clear strategic roadmap, including a cost/income ratio at around
  45% in 2026, and a 13% return on equity target. Given the streamlining of the bank's activities in recent years, and the constant focus on risk management to meet regulatory expectations, Scope believes that meeting these targets in a sustainable manner is at reach.
• Operating environment assessment: Very supportive (Low). Danske is the leading bank in Denmark, the third bank in Finland and a challenger bank in Sweden and Norway. The four countries are relatively small but well-interconnected,wealthy and competitive economies. Control of inflation remains key for further policy rate cuts and confirmation of a moderate economic rebound in 2025. We view the Nordic banking systems as solid and resilient to shocks, imposing traditionally high capital requirements. How property markets adjust to interest rate changes remains an area of attention.

Issuer rating

Outlook

Lead Analyst

Nicolas Hardy

[e-mail]

Related publications

Scope affirms and publishes Danske Bank's A+ issuer rating with Stable Outlook

more research →

• Long-termsustainability assessment (ESG factor): Developing. The assessment balances i) the significant progress made with the implementation of governance-relatedmeasures ii) investments to operate with efficient digital capabilities, iii) the bank's initiatives to meet stakeholder demands in terms of environmental issues.
• Earnings and risk exposures assessment: Neutral. Asset quality metrics are robust, underpinned by a diversified and balanced loan book. Danske's 8bp cost of risk expectation for 2024 reflects confidence that credit risk will remain contained. The group's improved operating performance provides a solid buffer against potentially increasing cost of risk.

Table of contents

Summary and Outlook

Rating drivers

Credit ratings

Business model

Operating environment

Long-term sustainability (ESG-D)

• Financial viability assessment: Comfortable. Danske's conservative and articulated management of capital buffers is a rating strength. Capital adequacy ratios are high in comparison to European peers. The stated CET1 ratio objective is set at above 16% by 2026. Danske has the capacity to absorb evolving regulatory requirements and organic growth.
  Funding and liquidity are stable and benefit from diversified funding sources. Danske's high proportion of wholesale funding is driven in large part by covered bonds.

The Stable Outlook reflects Scope's view that risks to the group's credit profile are balanced over the next 12-18 months.

Earnings capacity and risk exposures

Financial viability management

Financial appendix

The upside scenario for the rating and Outlook (individually or collectively):

• Evidence that the group capitalises from its digital capabilities, having made significant progress enhancing its risk control framework.
• Stronger and less volatile operating performance, thanks to a decreased dependence on volatile capital markets operations, in line with the medium-term strategic objective

The downside scenarios for the rating and Outlook:

• Significant deterioration in loan quality as a result of a worsened economic environment and/or an unexpected downturn in the real estate markets.
• Higher than expected erosion of Danske's capital adequacy metrics in the medium term.

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Rating drivers

STEP 1

STEP3 STEP 2

Rating drivers

Assessment

Operating environment

Very

Constraining

Moderately

Supportive

Very supportive

constraining

supportive

Low/High

Low

High

Business model

Narrow

Focused

Consistent

Resilient

Very resilient

Low/High

Low

High

Initial mapping

a

Long-term

Lagging

Constrained

Developing

Advanced

Best in class

sustainability

Adjusted anchor

a

Earnings capacity & risk

Very constraining

Constraining

Neutral

Supportive

Very supportive

exposures

Financial viability

At risk

Stretched

Limited

Adequate

Comfortable

Ample

management

Additional factors

Significant

Material

Neutral

Material

Significant

downside factor

downside factor

upside factor

upside factor

Standalone rating

a+

External support

Not applicable

Issuer rating

A+

Credit ratings

							Credit rating			Outlook
	Issuer			Danske Bank A/S
				Issuer rating		A+		Stable
				Preferred senior unsecured debt rating		A+		Stable
				Non-preferred senior unsecured debt rating		A		Stable
				Tier 2 debt rating		BBB+		Stable
				AT1 debt rating		BBB-		Stable
				Short-term rating		S-1+		Stable
	Issuer			Realkredit Danmark A/S
				Issuer rating		A+		Stable
				Short-term rating		S-1+		Stable
	Issuer			Danske Mortgage Bank Plc
				Issuer rating		A+		Stable

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Business model

Danske offers a diversified business proposition combining a leading franchise in Denmark and strong presence in other Nordic markets. Sustainable revenue generation also stems from its diversified business mix. The 2026 medium-term strategy is well articulated and bring stability to Danske's KPIs and risk structure.

Danske benefits from a strong market position as one of the leading players in Denmark with around 25% of the domestic market in lending and deposits, and the second largest bank in the Nordic banking market by total assets, including one of the top three in Finland. Danske considers its core markets to be Denmark, Norway, Sweden and Finland, and is also present in 11 other countries mainly in Western Europe. The international presence has significant benefits in terms of revenue growth and resilience to shocks. Presence in Northern Ireland contributes to the bottom line. The medium-term strategic focus is on core Nordic markets.

'Resilient - high' business model assessment

Figure 1: Geographical breakdown of revenue		Figure 2: Breakdown of revenue by business segment
				DKKbn
6%	3%	Denmark	60									Total Group
					6%
50
10%		Sweden						3%			Group functions
			40				3%	4%1%	30%
8%		Norway				4%			Nothern Ireland
						24%
		Finland	30				28%				Danica
	60%					29%
13%	UK							24%
	20								Large corporates
	Other				20%
												and Institutions
			10
						25%	28%	34%			Business customer
			0									Personal customer
			-10
			2018	2019	2020	2021	2022	2023
Data as of YE 2023. Source: Danske, Scope Ratings			Data as of YE 2023. Source: Danske, Scope Ratings

Personal Customers, Business Customers and Large Corporates and Institutions segments generate most revenue. The leading retail and commercial banking franchise is complemented by specialised business units and subsidiaries in asset management, pension schemes and insurance (life insurance company Danica Pension), and investment banking activities. Seeking to meet the different priorities of clients, Danske also offers leasing and real estate brokerage. Customer satisfaction levels have risen following progress made addressing remediation cases. The multi- channel distribution strategy is realised through mobile apps, online banking services, an adjusted branch network, and specialised subsidiaries, which are also taking leading positions.

Danske is well-positioned to continue progress towards ambitious targets for 2026 (RoE of 13%, CET1 ratio above 16%, cost/income ratio around 45%). We value the clear segmentation of business and geographic priorities. Ongoing strategic projects include the exit from the retail market in Norway or the strategic IT partnership with Infosys. Personal customers in Sweden and asset management are segments where Danske has ambitions to grow further.

Net interest income accounts for about two thirds of operating income. The lower domestic interest rate environment and strong competition exert pressure on the net interest margin. Danske continues to develop capital-light activities, generating fees and commissions, complementing banking activities, e.g., pensions and asset management. The completion of remediation programmes, the integration of all updated compliance and control frameworks into day-to-day operations and further investment in IT are key to strengthening the group's resilience, expand customer reach and maintain the group's competitiveness.

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Operating environment

Box A: Focus on Danske's country of domicile: Denmark

	Economic assessment:																	Soundness of the banking sector:
	•	The country has a resilient economy to withstand the current		•	The Danish banking system is solid and resilient to shocks. It
		pressures of elevated inflation, higher interest rates, falling			is highly interconnected with other European countries,
		house prices and heightened geopolitical uncertainty.						particularly the Nordics.
	•	Denmark is a relatively small but well-integrated, wealthy and		•	Danish banks operate in a highly regulated environment and
		competitive economy with one of the world's highest per			are supervised by the Danish Financial Supervisory Authority
		capita incomes. We anticipate GDP growth to remain broadly			and the Danish Central Bank. Denmark is subject to the
		stable over 2024-2025 at c. 2%.												CRR/CRD/BRRD.
	•	Denmark benefits from strong public finances and low public		•	The banking sector is highly consolidated, with a few large
		debt. The fiscal outlook is supported by the country's			commercial banks controlling most of the market, and smaller
		forward-looking pension policy in the face of an ageing			regional savings banks. The three largest banks account for
		population.																		around 80% of the sector's assets.
	•	Household debt, while declining from a high level, remains		•	Asset quality is strong, with ratios below the European
		one of the highest among OECD countries. Moreover, the			average and in line with other Nordic peers. CRE risks,
		widespread use of riskier variable-rate mortgages, especially			including cross-border exposures, remains an area of
		interest-only mortgages, entails a higher risk.									attention. CRE debt accounts for about 30% of domestic
	•	Because of the high level of mortgage debt, and linkages with			corporate debt.
		the financial system, a severe and prolonged price correction		•	The overall profit of credit institutions for 2023 was the
		in the housing market could have spillover effects on the			highest ever thanks to interest rates hikes and low cost of
		wider economy.																		risk. Banks will strive to preserve profitability metrics as
	•	House prices have been volatile since their peak in Q2 2022			interest rates decrease.
		as the economic slowdown and rising interest rates trigger a		•	Banks are subject to high regulatory capital requirements and
		market correction. We see signs of normalization.						have above-average solvency ratios compared to other
																					European countries. Excess cover for the	capital
																					requirements is solid. The activation of a systemic risk buffer
																					in relation to real estate exposure is credit positive.
																				•	Liquidity is sound. Mortgage banks are required to provide
																					additional collateral in case of a property price decrease.
		Key economic			2021			2022			2023			2024F			2025F				Banking system			2019			2020			2021			2022			2023
		indicators														indicators
		Real GDP growth, %		6.8		2.7		1.9		2.0		1.9				ROAA, %		0.5		0.2		0.5		0.2		0.7
		Inflation, % change		1.9		7.7		3.3		1.6		1.9				ROAE, %		8.8		4.5		8.4		4.1		12.3
		Unemployment rate, %		5.1		4.5		5.1		4.7		4.4				Net interest margin, %		1.0		0.9		0.9		0.9		1.3
		Policy rate, %		-0.6		1.8		3.6		2.8		2.0				CET1 ratio, %		17.9		18.8		18.6		18.6		19.7
		Public debt, % of GDP		36		30		29		27		26				Problem loans/gross
										customer loans, %		1.9		1.8		2.0		1.6		1.6
		General government
		balance, % of GDP		4.1		3.3		3.1		2.2		1.3				Loan-to-deposit ratio, %		92.3		83.5		86.7		89.0		82.4
	Source: Scope Ratings, Scope Macroeconomic Board's forecasts								Source: SNL, Scope Ratings

Figure A: House prices in Denmark versus interest rates

Figure B: Households indebtedness, % of GDP

Source: Eurostat, DFSA, Central Bank of Denmark, Macrobond, Scope Ratings

Source: Source: BIS, Macrobond, Scope Ratings

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Long-term sustainability (ESG-D)

The assessment balances i) the significant progress made with the implementation of governance- related measures ii) investments to operate with efficient digital capabilities iii) initiatives to meet stakeholder demands in terms of environmental issues.

Exposure to and management of governance related issues are important rating considerations given the past governance issues relating to the money laundering case in its Estonian branch and other failures that had increased reputational risks for the group. We consider that the group has made significant progress with the implementation of remediation actions. The Group Financial Crime Plan was concluded end 2023 and follow-up activities are due to be completed in 2024. Final resolutions were reached with the Danish and US authorities in December 2022 and since the group has entered the post-resolution phase under a three-year probation framework.

Over the years, we consider that the various remediation actions have positively transformed the group's risk culture and risk governance framework. The operational effectiveness of the enhanced framework is put to a test in 2024. Banking activities remain inherently risky. The confirmation of the robustness of the framework will also indicate the transition to a business-as- usual phase, and that it will no longer deserve specific attention compared to peers.

As part of Forward '28 strategy, Danske has ambition to operate as a leading digital bank. Nordic markets are among the most digitally advanced banking sectors. Around 90% of Danske's customers use digital channels. We value the approach to rely on a single-channel platform to achieve a balance between digital self-service and personal advice. To support the digital strategy, Danske also entered a strategic partnership with Infosys, a global leader in digital services and consulting. Information security is a top risk concern and a strategic priority.

Sustainability is a key component of the medium-term strategy. Danske's exposure to environmental risks is similar to peers. In the short term, it mainly relates to meeting stakeholder demands, starting with regulatory expectations. Management of these risks is adequate. Responsibility for managing climate risks starts at the Board level and is reinforced through the integration of sustainability KPIs into the performance management framework. The climate action plan launched in 2023 for the entire group sets additional decarbonisation targets by 2030. In asset management, the integration of sustainability into investment decisions is a cornerstone of the group's fiduciary duty. Targets are set for investments in funds with sustainable objectives.

Danske is one of the country's largest employers and wants to be seen as an attractive workplace. Initiatives focus on building a diverse and inclusive corporate culture and among them the objective to increase the share of the underrepresented gender in management and senior positions to 40% and general leadership positions to 45%.

Figure 3: Long-term sustainability overview table1

		Industry level					Issuer level
		Materiality			Exposure			Management
	Low	Medium	High	Low	Neutral	High	Weak	Needs	Adequate Strong
	attention
E Factor
S Factor
G Factor
D Factor

Source: Scope Ratings

'Developing' long-term sustainability assessment

Governance

Digital

Environment

Social

1 The overview table illustrates how each factor informs our overall assessment. Materiality refers to our assessment of the credit relevance of each factor for the entire European banking industry. Exposure refers to what extent the bank is exposed to risks or benefits from opportunities compared to peers, given its business model and countries of operation. Management refers to how we view the bank's navigation through transitions.

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Earnings capacity and risk exposures

Danske's earnings capacity provides an adequate cushion to absorb potential credit impairments and this first line of defence has improved further in the context of rising interest rates.

We consider the objectives to reach a return on equity of 13% by the end of 2026 realistic and a cost to income ratio at 45% achievable. Danske already made significant progress in recent quarters getting closer to those targets.

Rising interest income mainly derives from the optimization of the group's net interest margin. Loan growth in retail will likely remain muted, or at best moderate. On a positive note, fee income and business momentum with corporate clients are sustained. Trading activities and fair value adjustments remain a source of income volatility. Cost management initiatives stay high on the agenda in times of inflationary pressures.

Headline asset quality metrics are solid compared to European peers, but marginally weaker than those of Nordic peers. Asset quality trends are well controlled. As a result of higher for longer inflation, high interest rates and slower economic growth, impairment charges could be higher in 2024. Danske expects credit impairment charges to stand at about 8 bp through the cycle, which represents an historical average. Q1 2024 figures were much lower. Given the low level of defaulting customers, charges in relation to macro models and post model adjustments are also a source of impairment volatility.

'Neutral' earnings capacity and risks exposures assessment

Figure 4: Pre-provision income and provisions

	Credit and other financial impairments		Pre-provision profit

35

30

25

20

15

10

5

0 -5

2014	2015	2016	2017	2018	2019	2020	2021	2022	2023	2024
										Q1

Note: annualised Q1 2024. Source: SNL, Scope Ratings

Figure 5: Peer comparison

	Cost of risk		Pre-provision profit/average net loans

3,5%
3,0%
2,5%
2,0%
1,5%
1,0%
0,5%
0,0%
-0,5%	DNB	SEB	Swedbank	Nordea	OPFG	SHB		Nykredit
Sydbank	Jyske

Note: Three-year averages based on 2021-2023.

Source: SNL, Scope Ratings

The quality of the loan book is robust. Danske's loan portfolio is diversified by industries and granular by clients. Retail loans dominate the group's gross credit exposure. The large proportion of low-risk mortgages provides some cushioning to absorb higher credit risk from the corporate portfolio. Pressure on asset quality derives from exposure to some more vulnerable sectors: commercial property, shipping, oil and gas and agriculture.

CRE loans are highly sensitive to interest rate increases and typically face tighter refinancing conditions. Danske's CRE portfolio includes a majority of non-residential properties. Danske has a relatively lower exposure to CRE (at around 10%) compared to its Nordic peers. CRE relates to Nordic countries with around half located in Denmark, 25% in Sweden, c.12% in Norway and c.8% in Finland. Loan-to-value ratios remain adequate in the 45%-55% range for non-residential and 50% to 60% for residential properties. We consider CRE exposures manageable.

Exposure to cyclical fossil fuel industries such as oil, gas (including shipping) and coal-fired power and heat utilities are reducing and account for less than 2% of total exposure.

Problem loans and cost of risk are not as low as some of Nordic peers, but their levels compare very well to other European peers. Stage 3 loans are mainly made of loans to retail customers,

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shipping, oil and gas sector, CRE and agriculture. Stage 2 loans stood at about 6% (EU average: 9.6% as of YE 2023).

Figure 6: Credit exposure by industry

Figure 7: Asset quality - peer comparison

		Personal customers
2%4%		Commercial property
	Public institutions
3%
1%		Co-ops & Non-profit
2%
2%		Financials
2%
34%	Agriculture
3%
3%		Automotive
4%		Capital goods
	Services
1%
	Consumer goods
2%
6%		Pharma and medical
	Construction and building
8%		Pulp, paper and chemicals
12%	Retailing
11%		Utilities and infrastructure

Shipping, oil and gas

Other

Note: Total DKK 2,476bn. Data as of end-March 2024

Source: Danske's data, Scope Ratings

			Stage 1 loans			Stage 2 loans			Stage 3 loans
			Stage 3 coverage			Stage 3 ratio (RHS)
100%													3,0%
80%													2,5%
											2,0%
60%
											1,5%
40%
											1,0%
20%
											0,5%
0%													0,0%
			Q1'24	Q1'24			Q1'24	Q1'24	Q1'24	Q1'24
	2021 2022 2023	2021 2022 2023	2021 2022 2023	2021 2022 2023	2021 2022 2023			2021 2022 2023
	Danske	Nykredit	SHB	SEB	Nordea	DNB

Source: SNL, Scope Ratings

Financial viability management

Danske's conservative and articulated management of capital buffers is a rating strength. Similar to other Nordic banks, Danske displays robust capital metrics compared to those of European peers. This reflects the conservative approach of the Danish regulator and the bank's approach to buffer management. The CET1 capital ratio stood at a solid 18.5% at end-March 2024. The recent increase in the national countercyclical buffer rates in Denmark, Norway and Sweden has brought the transitional CET1 requirement to 14.4% from end-March 2024.

The stated CET1 ratio objective is set at above 16% by 2026. The bank has the capacity to absorb evolving regulatory requirements and organic growth. Danske resumed dividend payments in 2023. Additional distribution is an option in order to get closer to the target level and would be subject to market conditions. The leverage ratio is stable at 4.8%, in the lower end of the range compared to Nordic peers.

'Comfortable' financial viability management assessment

Figure 8: Capital profile

			CET1 %		AT1 %				T2 %		Asset risk intensity (RHS)
25%														28%
20%
												21%
15%
												14%
10%
												7%
5%
0%														0%
				2017
2014	2015	2016	2018	2019	2020	2021	2022	2023	2024
														Q1

Source: SNL, Scope Ratings

Figure 9: Capital profile - peer comparison

			CET1 %			AT1 %		T2 %	Asset risk intensity (RHS)
30%															48%
25%															40%
20%															32%
15%															24%
10%															16%
5%															8%
0%															0%
Nykredit			DNB	SEB		SHB				Nordea
		Swedbank				Sydbank	Jyske	OPFG

Source: SNL, Scope Ratings

The group largely meets minimum requirements for own funds and eligible liabilities (MREL) with an average excess buffer of c.670bp over the last four quarters, in the high end of the range compared to peers. Danske expects to cover MREL needs with both preferred and non-preferred senior. Requirements are adjusted for Realkredit Danmark since mortgage credit institutions are exempt from the MREL.

Danske's customer deposit base represents about 60% of total funding. Insured retail and corporate deposits accounts for about 60% of the total. The customer deposit base is geographically diversified and some volatility stems from currency fluctuations.

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Danske is an established international borrower. Two-thirds of Danske's wholesale funding consists of covered bonds, the primary source of funding for mortgage loans in the country. In addition, first lien mortgage lending in Denmark has historically been funded by covered bonds. The Danish covered bond market is deep and has proven over time to be a stable and liquid source of funding with a diverse investor base.

The group issues covered bonds through Danske Bank A/S and Realkredit Danmark in Denmark, and through its mortgage covered bond subsidiaries Danske Hypotek AB in Sweden and Danske Mortgage Bank Plc in Finland2. Realkredit Danmark, whose assets are match-funded by its covered bond issuance, represents a core, stable and predominantly low-risk business.

Danske's solid liquidity position is supported by cash, central bank reserves and liquid securities. LCR was comfortable at 168% at end-March 2024, albeit volatile, and NSFR also well above requirements.

Figure 10: Overview of distance to requirements as of end-March 2024

			Pillar 1 req.		Pillar 2 req.		Capital conservation buffer		Systemic buffer		Countercyclical buffer		Minimum requirement		Buffer to requirement
50%															44,7%				300%
45%
40%															8,6%				250%
35%																	168%			200%
30%
25%												23,0%								150%
					18,5%											68%	125%
20%				16,0%			19,8%	19,1%	3,9%
			16,4%					25%
14,4%	4,1%	3,4%	2,0%				36,1%		100%
			2,0%
15%	2,0%	1,6%			3,5%
			3,5%		2,5%
10%	3,5%	14,4%	14,4%	2,5%	16,4%	3,1%	19,1%	4,8%			100%	100%	50%
5%	2,5%	2,4%
1,9%				6,0%		8,0%		1,8%
	4,5%
0%								3,0%						0%
		CET1	Mgmt.	CET1		Tier 1	Tier 1		TC	Total		Leverage		MREL	LCR		NSFR
			req.	target			req.			req.	capital		ratio	(RWAs)

Note: transitional ratios capital ratios. MREL adjusted for Realkredit Danmark. Source: Danske's data, Scope Ratings

2 Editorial note: the report was edited on 26 June 2024, to clarify the list of entities issuing covered bonds by country.

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Financial appendix

I. Appendix: Selected financial information - Danske Bank A/S

			2020		2021		2022		2023		Q1 2024
	Balance sheet summary (DKK m)
	Assets
	Cash and interbank assets		402,130		364,542		235,838		373,969		355,059
	Total securities		979,719		813,367		926,221		832,103		763,184
	of which, derivatives		379,566		260,224		430,123		351,722		293,463
	Net loans to customers		2,047,930		2,051,903		2,015,495		1,846,867		1,857,453
	Other assets		679,452		706,022		613,002		718,042		734,112
	Total assets		4,109,231		3,935,834		3,790,556		3,770,981		3,709,808
	Liabilities
	Interbank liabilities		211,182		172,976		138,777		154,608		173,742
	Senior debt		1,273,081		1,262,675		1,131,763		1,173,879		1,192,238
	Derivatives		366,985		242,004		435,141		340,918		267,044
	Deposits from customers		1,333,781		1,292,030		1,262,293		1,222,203		1,171,291
	Subordinated debt		32,337		39,321		38,350		38,774		39,674
	Other liabilities		723,186		750,124		623,954		664,860		692,402
	Total liabilities		3,940,552		3,759,130		3,630,278		3,595,242		3,536,391
	Ordinary equity		160,171		171,207		160,278		175,739		173,417
	Equity hybrids		8,508		5,497		0		0		0
	Minority interests		0		0		0		0		0
	Total liabilities and equity		4,109,231		3,935,834		3,790,556		3,770,981		3,709,808
	Core tier 1/ common equity tier 1 capital		143,728		151,935		149,197		155,308		149,810
	Income statement summary (DKK m)
	Net interest income		28,118		26,774		25,104		34,972		9,142
	Net fee & commission income		11,426		12,117		13,750		12,904		3,376
	Net trading income		19,428		32,861		728		2,613		769
	Other income		-12,178		-24,625		809		2,488		648
	Operating income		46,794		47,127		40,391		52,977		13,935
	Operating expenses		32,443		30,786		26,539		25,452		6,337
	Pre-provision income		14,351		16,341		13,852		27,525		7,598
	Credit and other financial impairments		7,089		141		1,502		262		101
	Other impairments		0		36		1,668		26		0
	Non-recurring income		-579		407		1,420		-555		20
	Non-recurring expense		379		0		13,800		0		0
	Pre-tax profit		6,304		16,571		-1,697		26,682		7,517
	Income from discontinued operations		0		0		0		0		0
	Income tax expense		1,715		3,651		2,883		5,420		1,888
	Other after-tax Items		0		0		0		0		0
	Net profit attributable to minority interests		0		0		0		0		0
	Net profit attributable to parent		4,589		12,920		-4,580		21,262		5,629

Source: SNL, Scope Ratings

Note: Figures above may differ from reported figures.

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Danske Bank A/S | Rating report

II. Appendix: Selected financial information - Danske Bank A/S

			2020		2021		2022		2023		Q1 2024
	Funding and liquidity
	Net loans/ deposits (%)		87%	89%	93%	83%	85%
	Liquidity coverage ratio (%)		153%	164%	151%	170%	168%
	Net stable funding ratio (%)		NA	131%	123%	126%	125%
	Asset mix, quality and growth
	Net loans/ assets (%)		49.8%		52.1%		53.2%		49.0%		50.1%
	Problem loans/ gross customer loans (%)		1.6%		2.3%		1.6%		1.8%		1.8%
	Loan loss reserves/ problem loans (%)		70.6%		48.5%		60.8%		61.6%		59.6%
	Net loan growth (%)		-4.8%		0.2%		-1.8%		-8.4%		2.3%
	Problem loans/ tangible equity & reserves (%)		18.0%		24.6%		18.5%		17.2%		18.1%
	Asset growth (%)		9.3%		-4.2%		-3.7%		-0.5%		-6.5%
	Earnings and profitability
	Net interest margin (%)	0.8%	0.8%	0.8%	1.1%	1.2%
	Net interest income/ average RWAs (%)	3.6%	3.3%	2.9%	4.2%	4.5%
	Net interest income/ operating income (%)	60.1%	56.8%	62.2%	66.0%	65.6%
	Net fees & commissions/ operating income (%)	24.4%	25.7%	34.0%	24.4%	24.2%
	Cost/ income ratio (%)	69.3%	65.3%	65.7%	48.0%	45.5%
	Operating expenses/ average RWAs (%)	4.2%	3.8%	3.1%	3.1%	3.1%
	Pre-impairment operating profit/ average RWAs (%)	1.9%	2.0%	1.6%	3.3%	3.7%
	Impairment on financial assets / pre-impairment income (%)	49.4%	0.9%	10.8%	1.0%	1.3%
	Loan loss provision/ average gross loans (%)	0.3%	0.0%	0.1%	0.0%	0.0%
	Pre-tax profit/ average RWAs (%)	0.8%	2.0%	-0.2%	3.2%	3.7%
	Return on average assets (%)	0.1%	0.3%	-0.1%	0.6%	0.6%
	Return on average RWAs (%)	0.6%	1.6%	-0.5%	2.6%	2.8%
	Return on average equity (%)	2.8%	7.5%	-2.7%	12.7%	12.9%
	Capital and risk protection
	Common equity tier 1 ratio (%, fully loaded)	18.0%	17.4%	17.4%	18.6%	18.4%
	Common equity tier 1 ratio (%, transitional)	18.3%	17.7%	17.8%	18.8%	18.5%
	Tier 1 capital ratio (%, transitional)	20.5%	20.0%	19.6%	20.5%	19.8%
	Total capital ratio (%, transitional)	23.0%	22.4%	22.1%	23.1%	23.0%
	Leverage ratio (%)	4.4%	4.8%	4.9%	5.1%	4.8%
	Asset risk intensity (RWAs/ total assets, %)	19.1%	21.9%	22.1%	22.0%	21.8%
	Market indicators
	Price/ book (x)		0.5x		0.6x		0.7x		0.9x		1.0x
	Price/ tangible book (x)		0.6x		0.6x		0.8x		0.9x		1.1x
	Dividend payout ratio (%)		42.3%		13.7%		NA	58.7%		NA

Source: SNL, Scope Ratings

Note: Figures above may differ from reported figures.

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