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) 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

• Warning! GuruFocus has detected 4 Warning Signs with SCMWY.

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.