Earnings call transcript: Jyske Bank Q2 2025 beats EPS forecast, stock rises

Jyske Bank reported strong financial results for the second quarter of 2025, surpassing earnings expectations and driving a notable increase in its stock price. The bank achieved an earnings per share (EPS) of 20 DKK, exceeding the forecast of 16.75 DKK. This positive performance, coupled with an upward revision in its full-year net profit guidance, led to a 2.64% rise in its stock price, bringing it close to its 52-week high. According to InvestingPro analysis, the stock appears slightly undervalued based on its Fair Value calculation, presenting a potential opportunity for investors.

Key Takeaways

• Jyske Bank’s EPS of 20 DKK beat the forecast of 16.75 DKK.
• Stock price increased by 2.64%, nearing its 52-week high.
• Net profit rose by 2% to 1.3 billion DKK in Q2.
• The bank maintained high customer satisfaction and strong mortgage growth.
• Full-year net profit guidance revised to the upper end of 3.8-4.6 billion DKK.

Company Performance

Jyske Bank demonstrated resilience in Q2 2025, with a 2% increase in net profit to 1.3 billion DKK. The bank’s return on tangible equity stood at 11.5% for the first half of the year, reflecting its stable earnings performance. Despite pressures on net interest income from lower policy rates, the bank maintained its EPS at 20 DKK for six consecutive quarters. InvestingPro data reveals the bank has maintained strong financial health, earning an overall score of "GREAT" in its comprehensive analysis. Subscribers can access 7 additional exclusive ProTips and detailed financial metrics for deeper insights.

Financial Highlights

• Revenue: Not specified
• Earnings per share: 20 DKK (steady over six quarters)
• Net profit: 1.3 billion DKK (up 2% YoY)
• Return on Tangible Equity: 11.5% for H1 2025
• Cost-to-Income Ratio: 51% in Q2

Earnings vs. Forecast

Jyske Bank’s EPS of 20 DKK exceeded the forecasted 16.75 DKK, marking a significant beat. This performance aligns with the bank’s historical trend of stable earnings, reinforcing investor confidence.

Market Reaction

Following the earnings announcement, Jyske Bank’s stock price rose by 18 DKK, or 2.64%, closing at 700.5 DKK. This increase brings the stock close to its 52-week high of 715 DKK, reflecting positive investor sentiment driven by strong financial results and optimistic guidance. The stock has demonstrated remarkable momentum, with InvestingPro data showing a 30.28% return over the past six months and a 33.08% gain over the last year. Get access to comprehensive valuation analysis and more through InvestingPro’s detailed research reports, available for over 1,400 stocks.

Outlook & Guidance

Looking ahead, Jyske Bank has revised its full-year net profit guidance to the upper end of 3.8-4.6 billion DKK. The bank expects its earnings per share to reach the upper end of the 60-73 DKK range. While net interest income is anticipated to bottom out in 2026, potential margin pressure in asset management remains a concern.

Executive Commentary

CEO Lars Merk expressed optimism, stating, "We are now targeting the upper end of our outlook for 2025." Simon Harbard, Investor Relations, highlighted the bank’s ability to retain its deposit margin, saying, "We have been able to retain our deposit margin in the first half of the year to a very large extent." InvestingPro analysis indicates management’s confidence is backed by aggressive share buybacks, demonstrating their commitment to shareholder returns.

Risks and Challenges

• Continued pressure on net interest income due to low policy rates.
• Margin pressure in asset management.
• Interest rate fluctuations in the Danish market.
• Potential impact from Novo Nordisk’s market performance.
• Maintaining high customer satisfaction amidst competitive pressures.

Q&A

During the earnings call, analysts inquired about the potential impact of Novo Nordisk’s market performance and the bank’s capital allocation strategy. The management addressed concerns regarding net interest income outlook and credit quality, providing insights into their strategic focus moving forward.

Full transcript - Jyske Bank A/S (JYSK) Q2 2025:

Simon Harbard, Investor Relations, Juske Bank: Hi, everyone. Thank you for joining us on Uske Bank’s conference call for the financial results for the 2025. This is Simon Harbard from Investor Relations speaking. With me, I have Husker Bank’s CEO, Lars Merk and CFO, Bjorn Nielsen. Lars and Bjorn will walk you through our prepared remarks.

Afterwards, we’ll open up for questions. I’ll now hand over to Lars.

Lars Merk, CEO, Juske Bank: Thank you, Simon, and welcome to all of you on this call. Much appreciated that you’re taking the time to dial in. We’ve had another solid quarter of 2025 building upon the positive momentum from recent quarters and growing earnings per share compared to the year before despite the significantly lower short term interest rates. On the back of the positive development in the first half of the year, we are now targeting the upper end of our outlook for 2025. We continue to improve customer satisfaction in all areas.

In Q2, our private banking customer satisfaction was the highest in Denmark for the tenth consecutive year. Additionally, the satisfaction of corporate and business clients with 20 plus employees is also the highest, and personal customer satisfaction is showing a very strong momentum already reaching our 2028 target level with a top three position. The latter is a major progress compared to where we were a couple of years ago. The improved customer satisfaction has underpinned mortgage financing for personal clients, which reached the highest growth rates in several years as we continue to gain market share. Additionally, assets under management have been resilient, reaching a new all time high and amid turbulent markets supported by healthy net inflows.

Meanwhile, our credit quality remains solid. We booked reversals in Q2 while slightly increasing our post model adjustments and reducing our state free exposures. Lastly, our capital position improved further in the quarter following a very strong capital build leaving significant excess capital versus our capital targets. With that let me hand over to you Bjorn for a walkthrough of our financial results.

Bjorn Nielsen, CFO, Juske Bank: Thank you Lars and I would like just to start off with a little a kind of a busy slide but nevertheless an overall solid footprint in Q2 with good momentum in the group. Looking at the ratios, return on tangible equity 11.511.3% for the first half. Cost income slightly above fifty-fifty 1% here in Q2, but 49% for the first half. And looking at cost of risk, we saw reversals in the second quarter of two basis points. Earnings per share, steady going at DKK 20 in the quarter and the CET1 ratio stood at 16.3% here in Q2, up from 15.7% in Q1 underpinned by a lower risk.

Looking at the left hand side at the bottom you can see that the earnings per share 20 kroner return in Q2 is very much similar to what we’ve seen in the last five quarters, so six consecutive quarters with a steady earnings per share return. Looking at the P and L at a glance, the NII was as expected due to lower policy rates. We still see solid fee income in the second quarter. Financial markets were positive due to spread tightening. And looking at core expenses, they were on track exclusive of one offs due to the location shift here in Copenhagen.

And finally, small reverses on impairments underpinning solid quality in the credit book and finally net profit up 2% in the quarter to 1,300,000,000.0. At the right hand side you can see that volumes as Lars said AUM up in the second quarter after the turbulence and volatility we saw back in March in Q1. Mortgage the mortgage book is up driven by both personal and corporate customers by one percent in the quarter, whereas bank lending is more steady going. Then moving on to the outlook, we have updated outlook for 2025 given the performance we saw here in the first two quarters. And now we expect net profit to reach the upper or very upper end of 3,800,000,000.0 to $4,600,000,000 And of course, that also applies to the earnings per share expectations, which now is in the upper end of the 60 to 73 kroner interval.

Handing over to Lars and a few remarks on customer satisfaction. Yes. And when

Lars Merk, CEO, Juske Bank: we look at the corporate clients and business clients in Juske Bank, we’ve seen quite a development during the last couple of years. We came from a fairly solid number three in the Danish market. During the integration process when we integrated Hansbanken into our operation, we saw a decline in customer satisfaction, which you normally do, during those kind of processes due to the time consuming nature. Now

Bjorn Nielsen, CFO, Juske Bank: time

Lars Merk, CEO, Juske Bank: is back to fully concentrate on the daily run of the mill. And on top of that a big number of different initiatives have straightened the development so that we are now in a much stronger position than we were prior to the integration of Hansbanken. For companies with 20 employees or more, we are now according to Boxmeida number one in Denmark. Moving to the personal customer satisfaction, more or less the same picture. Our starting point was a little bit weaker back in 2023, and we saw the same impact during the years that followed.

And again here time freed up to the run of the mill and on top of that a number of targeted initiatives, boot camps and a reorganization means that we are now back and we are actually back in a stronger position than we would have anticipated already now. Moving to private banking, we’ve been in terms of customer satisfaction ranked number one for ten consecutive years. For now we have the largest gap that we have ever had to number two in the market. Obviously this is important when it comes to retaining clients, but it’s also important in terms of building momentum with the clients that we have. And turning to the momentum we can see that the development in asset under management as Biyo alluded to has been strong for quite a long time.

We’ve seen that investments results are generally positive after a little bit more turbulent first half of the year. We’ve seen strong inflow during also the second quarter here predominantly from private banking customers and from personal banking customers, a little bit more mixed on the institutional clients, but generally speaking a strong inflow here again. On the lending to personal clients, mortgage lending, we’ve had 17 consecutive quarters with no growth and now we’ve had five quarters with growth. And as you’ve seen as you can see here on the right hand side momentum momentum has been building during the last couple of quarters. We connect this to a large extent to the higher customer satisfaction.

Bjorn Nielsen, CFO, Juske Bank: Yes and then looking at the deposit margin you can see a slide here which demonstrates that we saw this uplift in the three months CAGR rate from ’22 until end twenty three and then the reversal from a peak around 400 basis points down to now close to 200. And in the meantime, of course, as you look, you can see the light green is showing the implied deposit margin. We have done our utmost of course take advantage of situation in the market. We have lifted the margin in the period until end twenty twenty three and then afterwards we have tried to mitigate the negative implications from lower policy rates on our margin. And just to demonstrate, we took off the interest rates on transaction account for private individuals back in April.

So now it’s a 0% account. Savings account for private individuals were reduced to both a quarter for amounts below half a million and half a percentage for amounts above half a million. On the corporate businesses, we also reduced margins or interface and deposits transaction accounts to zero in April. So we have done and on top of that we have reduced the preferential rates. So we have done a lot of things in order to mitigate the implications from lower policy rates.

And that of course brings us into a position where the ability to withstand further cuts will gradually become more limited as especially savings rates are close to zero as you understand from my words here. Turning then to the competitive landscape, we have shown this before and I will not spend much time on it, but just rephrase what we have said before that after the agreement now of 15% tariff for European exports to The US, we still expect after this investigation done by the Danish National Bank back some months ago that the short term effect would be fully manageable and the longer term effects will be small, very small, since trade patterns gradually will shift and so they would have very limited impact on the economy and therefore also on our customer base. Then turning to the credit quality, it’s the same message that we have told you several quarters now. We have a solid credit book. We have seen small reverse in Q2 where impaired customers have migrated to slightly better grades and that has been the main trigger for the reversal here in Q2.

And secondly, looking at post model adjustments, they are steady from Q1 to Q2, but up shy of 100,000,000 since the end of last year. And if I look at the right also as you can see on the graph, they were very low here in the first half, one basis points. So as we see it now, there are no left over from former non performing loans in the book. And finally, if I look at the stage three exposures, those which are mostly impaired in our book, they are now down to one percent of total exposures from 1.2 a year ago and 1.1 a quarter ago. So all in all a very solid performance so far and also a solid outlook for the rest of the year.

Turning to capital, The EBA stress test during the summer demonstrate our solid capital position, but on top of that, we have relatively high risk weights in our books. And looking at the Q2 numbers, they also underpin the same conclusion with a level of 16.3% CET1 ratio up from fifteen point seven percent in Q1. And also as you can see on the graph slightly lower risk in the second quarter of this year. And after the implementation of CR3 by January 1 year and given the current risk weights, we see no further significant impact from upcoming regulations going forward. So we expect the target for the CET1 level to be at the lower end of ’15 to ’17.

And that’s the reason why we, as we speak, pursue buybacks. We have a 2,240,000,000.00 program up and running. We have bought back, as we speak, 1,000,000,000 of those. And on top of this, we will add another approximately 30% in dividend. Yes, over to you, Simon.

Simon Harbard, Investor Relations, Juske Bank: Thank you, Lars. Thank you, Peor. We’ll now open up for questions. First question in line comes from the line of Matthias Nielsen from Nordea. Please go ahead.

Matthias Nielsen, Analyst, Nordea: Thank you very much. I hope you can hear me now. So I have three questions, one on guides, one on capital and one on lending growth. But if you take them one by one, I think it’s going to be easier for you. So the first one on guidance, like looking at the guidance and comparing that to where consensus were ahead of the Q2 numbers, it actually seems like you imply that consensus should come down for the second half of 25%.

Is that also how you see it? And related to this, we also hear a couple of peers being slightly more bearish about the Q on Q development on NII for Q3 compared to what we saw in Q2. Is that also how we should think about it for you? Or how should we think about that for you?

Bjorn Nielsen, CFO, Juske Bank: We’re looking at the updated outlook for 2025. I think we stand on, as we said, strong credit quality, decent fee development, mitigated lower policy rates and positive financial market as I mentioned. So those elements are all in good shape and we have demonstrated that in Q1 and Q2. Moving into Q3 and Q4, as you said, yes, it’s clear that there is more pressure now on NII than if we go back a few quarters since we lowered the internal rates, the deposit margins, etcetera. The deposit rates to a degree where we have used a lot of the tools that we have at hand.

And so if you look at transaction accounts now at zero and savings accounts up to a half a percentage point, of course there is limited room to mitigate further movements on the policy rates if that were to happen in the second half of this year. And of course you still have geopolitical uncertainty and we still need to be confirmed in a strong activity. Also in the second half of this year, we’ve seen a very decent development both on the investment side, but also on mortgages in Q1 and Q2. But of course, we need to see that also be replicated in the third and fourth quarter.

Lars Merk, CEO, Juske Bank: And if I could just add, Matthias, I think our guidance is now higher than it was yesterday And we are confident with the new guidance, which is in the very upper end of the interval that we had yesterday. So I see no reason for you to look that differently at this. And then secondly, I think the things that we know now and the things that we can control ourselves when it comes to asset quality and initiatives, we’re also confident on having those in place.

Matthias Nielsen, Analyst, Nordea: Great. Thanks for that. On the capital side then, like you say that the target is still the low end of the 15% to 17%, and that eventually mean that you need to pay out quite a lot over the coming period. So how should we think about that? Is it possible to go above 100% payout ratio?

Or would you rather do it gradually where you reduce the capital over a number of years? Or how should we think about that? But what is your preferences from a strategic point of view?

Lars Merk, CEO, Juske Bank: What we’ve communicated thus far is that we have a policy of paying out in cash dividend of 30% of the result of the previous year and on top of that we pay out by buying back shares so that we stay within the capital limits that we also have communicated of 15%. We have not communicated anything in relation to if that potentially could be above 100%. We would have to communicate on that a little bit later. It stands clear and firm that a 30% cash dividend on top of that we do share buybacks to the extent possible and within capital ambitions.

Matthias Nielsen, Analyst, Nordea: Okay. Then the last question on lending growth, on bank lending. It looks a tad soft this quarter also in the light of that your customer satisfaction is actually coming up. So is it because customers are more price conscious? Or how should we

Namita Samtani, Analyst, Barclays: think about the development on lending growth, if you just go put

Lars Merk, CEO, Juske Bank: You should decompose it. So if you look at our lending across the bank and mortgage lending, we have a positive development. It’s the mortgage lending that is driving the development during the last year. And if you look at the reasons, there are different reasons. Looking at the personal client customer base, when we acquired Hennesbank, most of their lending was basically bank funded lending, and as they get new loans they tend to migrate towards most loans traditional Danish most loans instead.

So there’s a natural tendency of moving out of bank funded products into mortgage the price of the mortgage institution. So that’s what happens within the personal customer space. Within the business customer space, we are not concerned with the development here in terms of volumes. What we see is we have a high customer satisfaction and improving. We see that the mid sized customers they stay with us with the churn rate that we have had the last year up between forty and fifty years.

That’s obviously a theoretical view, but basically that’s the low level of churn that we have. Then what we’ve seen is a couple of industries, utility and financial institutions, we’ve not basically been losing customers, but a limited number of the largest ones is using our balance sheet a little bit less than they did a year ago and or they did two quarters ago and if you include also public institutions that more than explains small decrease that we have had in the bank lending part. So it’s not a loss of clients or a loss of future potential here. It’s merely a couple of industries that is cyclical and is a little bit down at the moment in terms of the usage of our balance sheet and on the personal customer base it’s a migration towards the mortgage lending instead.

Matthias Nielsen, Analyst, Nordea: Great. Thanks a lot.

Simon Harbard, Investor Relations, Juske Bank: Thank you, Matthias. Next question comes from the line of Esperan Malk from Danske Bank. Please go ahead.

Esbjorn Malk, Analyst, Danske Bank: Yes, good afternoon. Thanks for taking my questions. And sorry for coming back to net interest income. I just didn’t really get the answer that you gave to Matthias earlier. Just looking at the sort of sequential move and the actual NII for Q2, if I look at your sort of lending deposit split on the banking side, it’s the highest since Q4 twenty twenty three.

And if I look at your administration margin in the mortgage business, it’s a record high. So I guess it’s really the other NII that is causing sort of the decline, which obviously makes sense considering the money market rates movement. But I guess if we look at the money market rate movement in Q3, obviously, quite flat, but obviously went down quite a lot during Q2. So just trying to understand what is sort of the impact going into Q3 Q over Q from this move all else equal, assuming that money market rates stay sort of where they are right now? Just trying to understand the bridge into Q3 and how we should look at that versus also Q4 would be very helpful.

Thank you.

Simon Harbard, Investor Relations, Juske Bank: Yes. You’re fully correct, Esbjorn. So what we saw basically, what we tried to allude to was the fact that we have been able to retain our deposit margin in the first half of the year to a very large extent. So what’s been driving the negative development in NII has been other NII. And that’s likely to persist.

And what we we were basically just saying that now we have not emptied our toolbox, but we have less tools going forward if rates continue to decline. So in terms of the deposit margin, that we would expect a larger pressure in Q3 than we saw in Q2 and in Q1, given that we can’t or we don’t expect to lower the transaction accounts, for example, to below zero. So we basically have increased risk flow risk on our deposit margin. In terms of the sequential move, we saw a negative development of DKK 30,000,000 in Q1. That was partly we saw a positive effect from CRE repricing on the mortgage side in that quarter.

And then in Q2, we saw a negative of DKK34 million, so slightly more. But back then, we were, yes, pricing transaction accounts down and also savings accounts, and we were reducing preferential deposit rates. So we would expect, if rates continue to decline in Q3 versus Q2, we would expect a larger sequential drawdown than the DKK34 million.

Bjorn Nielsen, CFO, Juske Bank: Yes. Simon, just to sorry, just to to clarify. Also, as you as I mentioned, we did change the the accounts for transactions both for private and corporates in in April. So of course, there is also a full quarter effect in q three from lowering these rates for person and corporate clients.

Esbjorn Malk, Analyst, Danske Bank: But is that assuming an incremental rate cut from the ECB or is it just assuming flat rates, policy rates from here?

Bjorn Nielsen, CFO, Juske Bank: Well, this was merely just to state the fact that we did make some changes in that had its impact from April. And so we’ll have a full quarter effect on in our margin book in Q3 of both for both private and base as well as corporates.

Esbjorn Malk, Analyst, Danske Bank: No, but just one more on the floor risk. So the more than EUR 34,000,000 drop in Q3, was that assuming a red cut or not?

Simon Harbard, Investor Relations, Juske Bank: That’s assuming the way forward rates are currently, I see a small decline in the three month kyber rate. But it’s also taking into account the fact that we have seen half a year where rates have been continuing to decline in the first half of the year. And our bond portfolio, part of that is semiannual interest rate resetting. So that part of the portfolio should have a of course, then you could always whether it actually has an impact on bonds specifically, that depends whether we lend it out as bank loans or we place it in bonds. But like for like, the rate on our bond portfolio should go down in July given the half year of semiannual interest rate resetting.

Esbjorn Malk, Analyst, Danske Bank: But is it then fair to assume if we I mean, the money market is pricing 94% likelihood that the ECB will not cut rates in September. So if we assume that they are right and we don’t get a cut, is it fair to assume that NII will pick up in Q4?

Simon Harbard, Investor Relations, Juske Bank: I think it’s difficult to I mean, if you it depends how the short but if rates just were flat from Q2, I can’t see why we shouldn’t be able if we saw some growth on the balance sheet at least and that’s not outweighed by margin pressure, then I agree that, that should be the case. But I would maintain that we still expect NII to bottom out at the 2026.

Esbjorn Malk, Analyst, Danske Bank: Okay. Fair enough. Then on your on the AUM, you mentioned that you see quite nice growth from retail and private banking and less from the institutional side. Could you comment on how your margin is developing within the asset management business? So growing AUM 7%, what should we how should we think about the asset management income base?

Simon Harbard, Investor Relations, Juske Bank: Yeah. Sorry. The income base of asset management?

Esbjorn Malk, Analyst, Danske Bank: Exactly. So you’re the margin, the the nominal margin that you made from from the AUM.

Simon Harbard, Investor Relations, Juske Bank: Yes, in Q2 versus

Esbjorn Malk, Analyst, Danske Bank: Yes, or just going forward, but let’s start with Q2. If this continues, how we should model it?

Simon Harbard, Investor Relations, Juske Bank: Yes. So I think overall, some margin pressure is likely to remain. I think that’s been the case for several years, and that’s likely to continue to some extent. The quarter movements are usually a bit I mean, Q2, you have some yearly fees that are paid in Q2 and Q4. So there will be some swings from quarter to quarter.

But I think the overall trend is likely to be some margin pressure.

Esbjorn Malk, Analyst, Danske Bank: Okay. Fair enough. And

Lars Merk, CEO, Juske Bank: then On finally the other side, Simon, I think the development that we’re seeing now, which is, as Aspirin correctly states, predominantly from our private banking customers and private, personal individuals, that helps, and where we see mixed development is on the institutional where you normally have a lower income per AUM. So that helps us, the mix.

Esbjorn Malk, Analyst, Danske Bank: Okay. That makes sense. Just final question a little bit back to the first question from Matthias on the guidance. I get your point on NII coming down in Q3. But if I look at your the beat that you’ve made today versus consensus, it’s almost SEK 200,000,000.

It’s including SEK 60,000,000 of one off costs. I’m just trying to struggle I’m just struggling to see how you can sort of maintain guidance, why you’re not lifting the upper end. Is there something you’re seeing or you’re just being conservative?

Lars Merk, CEO, Juske Bank: What I tried to state before was that with what we can see and what we can control when it comes to asset quality and what we see so far, we don’t see any negatives that’s going to impact the second quarter apart from what you just discussed in terms of interest rate levels. So it is an uncertainty and you can call it conservative or how you would look at this, but I think we are confident with what we are saying today, which is very close to the 4.6.

Esbjorn Malk, Analyst, Danske Bank: All right. That’s very helpful. Thanks a lot.

Simon Harbard, Investor Relations, Juske Bank: Thank you, Esbjorn. And next question in line comes from Jakob Peslovik from SEB. Please go ahead.

Jakob Peslovik, Analyst, SEB: Yes. Good afternoon, everyone. So the first question is also on fees and asset under management. It developed quite nicely until June. But given the poor performance from Novo Nordisk, Urstadt, to name a few of the blue chip names in the Danish market, How is the sentiment for Danish retail investors right now?

And could we potentially see in a backlash in the AUM development already in Q3?

Lars Merk, CEO, Juske Bank: Retail clients are buying no Northeast shares to an extent that we’ve not seen before. But but I think, underlying to your question, obviously, these are two of the household names for Danish investors and that could impact the sentiment and the willingness to invest. So far we’ve not seen that. We are seeing that our private banking customers and personal client customers they’ve not dramatically changed their view and they basically behave as they did before and they are buying up some of them the normal shares as is in general the case across Denmark.

Bjorn Nielsen, CFO, Juske Bank: And if I look at the split between what is market driven and what is net inflow of new funds from customers in the first and especially the second quarter of this year, we are still on a very strong momentum in gaining new customers and funds. So I think that could be a very strong defense against what you alluded to here.

Lars Merk, CEO, Juske Bank: We could see that more clients ought to have the bank playing a bigger role in helping them doing the investments because the clients that have had advice from the bank would tend to have less of senior shares and they would tend to come through this turmoil better. So there’s also a business opportunity from our side.

Jakob Peslovik, Analyst, SEB: So you see this as an opportunity to maybe get back some clients or move to Nordnet for example by giving advice etc?

Lars Merk, CEO, Juske Bank: Yes. And some of our own clients that have decided to a large extent to invest themselves, that’s also an opportunity here.

Jakob Peslovik, Analyst, SEB: Interesting. Then also, could you help me understand what drove the increase in the post model adjustments this quarter? In my world, interest rates are coming down, GDP growth for 2026 looks strong and unemployment is low in Denmark. So the increase can’t be macro driven, in my view at least. So what caused it?

And I find it a bit silly when you had reversals in this quarter as well to increase your buffers.

Bjorn Nielsen, CFO, Juske Bank: Yes, well, that’s a good question. If you look at the first half, we saw an increase in our postmoder adjustment of shy of SEK100 million, as I mentioned, due to the fact that we, in Q1 of this year, lifted our macroeconomic buffer because of uncertainty due to geopolitical uncertainty. In the second quarter of this year, there’s been a shift in I think six or 7,000,000. So we are moving around the 1,900,000,000.0 mark in the second half. What has driven the change and reversing of impairments in the second half has been individual impairments.

So the post model adjustment was very steady going in the second quarter this year.

Jakob Peslovik, Analyst, SEB: Okay. No,

Lars Merk, CEO, Juske Bank: that makes I fully understand the reason for asking the question In terms of how we have to deal with this, it’s two different methodologies. So on where we do the reversals here is basically on single clients and where we put aside money for potential future losses and where we see that the clients come out better than anticipated, the post model adjustments is to a large extent, Matt, on the entire portfolio.

Jakob Peslovik, Analyst, SEB: Yeah. That’s clear. But could you also give me any guidance on when we should expect these overlays to be released? Is it over the next eighteen months or is it closer to the next thirty six months?

Bjorn Nielsen, CFO, Juske Bank: If you look at it in a historic context, we have we built up the post model adjustments post COVID back in 2020 from 600,000,000 to 1,600,000,000 and then up to well close to two billion. And then you have seen a few swings afterwards. And I have mentioned before and I still think it fully applies that we can see some dynamics in these numbers. And you’re right that if we put on a specific PMA charge or buffer, we need to see it move in one or another direction within typically twelve months. So yes, there will be some swings buffers, which also has been the case because if you go back and look at our quarterly and the annual reporting, you can see that the buffers have shifted from different macro elements to process elements, etc.

And of course that still applies. If you ask me if we could see a much lower level of PMAs, yes, we

Lars Merk, CEO, Juske Bank: can see a lower level, but much lower back to the level pre COVID is not what we expect within the coming few years. And I think this is maybe a little bit Denmark specific here. So I think with the way that those cost model adjustment rules are implemented and dealt within the banks, you would tend to see that the bank hold a little bit more on on that line than in some other countries.

Jakob Peslovik, Analyst, SEB: Thank you. That’s very clear.

Simon Harbard, Investor Relations, Juske Bank: Thank you, Jakob. Next question comes from Namita Samtani from Barclays. Please go ahead.

Namita Samtani, Analyst, Barclays: Hi, and thanks for taking my questions. My first question, I just wanted your thoughts on and Spanord. It’s just that Nycredit had results last week, and they talked about gaining mortgage market share, and they’re yet to offer all the discounts to Spanord customers. I just wondered if that worried you, and how does your proposition compare, and are you able to compete?

Lars Merk, CEO, Juske Bank: Yeah. Good question. I’m confident that we can compete in this. Basically, nothing has changed apart from them having a task of integrating two banks on top of running the banks here, and obviously they will be successful in doing that. But the discounts that they have on their mortgages Spanor has had in the past also.

So that’s probably not gonna change, and we we are confident that we can compete with the with this, and we’re doing it to a large extent already today.

Namita Samtani, Analyst, Barclays: Thanks. And then just on Novo Nordesk, can I ask the question in a different way? Just from a perspective of the company actually impacts Denmark’s GDP quite a lot, and I guess jobs as well. So from a top down perspective, do you see that as like a potential headwind more for like lending, etcetera?

Lars Merk, CEO, Juske Bank: Not really. Obviously, if there’s a meltdown, no notice, it will have an impact on the GDP, it will have an impact on certain geographies in Denmark. And one of the geographies where they have the headquarters, one of the geographies where usually is strong, So that could potentially have an impact. But what we’re looking at is a company that still earns quite a lot of money, that still have new products released just yesterday again, which was a significant promise for the future. So we’ve seen a growth in the company during the last couple of years, and we saw a projected growth.

And the latter, the projected growth is probably not going to happen. If what is the base case now and what the company has communicated is how it’s going to develop, this will still be a large and strong company in Denmark. If they should scale down, there’s a lot of competency within one of the industries where Denmark in general is strongest and we believe that most of the people would be able to find new jobs. So so and then on the new geographies where they’re building new plants is basically not used to bank land to a large extent. So so where the new investments are being done, families are moved to and so on, we we we don’t have a lot of business.

So we have it around Copenhagen where the job market is strong altogether, but we don’t have it in in the outskirts areas where they’re building factories.

Namita Samtani, Analyst, Barclays: That’s helpful. Thank you. And just last question. The lending margins on bank lending, I think they’re quite a lot better than I was expecting or compared to how QIBOR moved. I just wondered why that was the case.

Simon Harbard, Investor Relations, Juske Bank: Yes. We have a bit of a lag effect on some bank lending rates. That was the case on the way up. If you just compare to a short like a Kaibor three month rate, we saw a significant margin pressure bank lending margin pressure. And as the reverse, as rates come down, some of those fixed rate elements help in increasing versus a kind of a three month rate, at least, the lending margin.

Other than that, I think we haven’t been very explicit in terms of what we are doing in terms of lending rates because the but you can see, at least on the private client, it’s a question of yes, there is a bit of a lag effect. And also maybe we didn’t fully pass through on the way up, and that’s why we’re not fully passing through the rate cuts on the way down.

Namita Samtani, Analyst, Barclays: Thank you.

Simon Harbard, Investor Relations, Juske Bank: Thank you, Nemita. Next question comes from Matthias Nielsen from Nordea. Please go ahead.

Matthias Nielsen, Analyst, Nordea: Thank you very much. I have just had one follow-up question on the capital. If I heard you right, you said you were about to apply for the buyback. Given the time that it takes to get those awarded, should we then expect the buyback to be announced prior to the Q4 twenty twenty five results in February? Or how should we think about that?

Bjorn Nielsen, CFO, Juske Bank: Yeah, well a good question. Hopefully you didn’t hear me saying that we were applying because that’s nothing that I can actually talk about. And so I can’t give you any clear answer to whether we are in a process or not. But please bear in mind that we have a program now that’s running until the January next year and we have said formally that we want to be very predictable here to set up a program that is running throughout the normal calendar year more or less. And I think that is what you can expect from us going forward.

Lars Merk, CEO, Juske Bank: For now Matthias, we’ll just be positive about the fact that we believe that it seems as if there’ll be room for buybacks.

Matthias Nielsen, Analyst, Nordea: Sure, sure. But like that, I don’t really I didn’t really get the point on that. So like last year, you were quite clear saying like we should not expect anything more than once annually, and that should be in connection Q4 with results or somewhere around that. Is that still the approach? How should I Yes. Answer

Lars Merk, CEO, Juske Bank: that is the guidance that we’re also getting from the FSA that they would like banks in general to deal with this once a year and have a for our in our position probably fairly substantial program and they would deal with that once a year. So we would stick to what we have communicated on that.

Matthias Nielsen, Analyst, Nordea: Sure. And then a technical one on that maybe. So like if, let’s say, I’m not knowing if you are applying now or when you will apply, but let’s say that you apply in a couple of weeks, would that then be based on what the actual CET1 ratio was at the end of Q2? Or would that be at based on an adjusted CET1 ratio based on your expectations for the remainder of the year? Or how is that in the process of such?

Bjorn Nielsen, CFO, Juske Bank: Yeah, the normal process is rather straightforward because you have to build on your actual numbers whenever you apply anything with the Danish FSA. So if we were to apply, as you say, in a couple of weeks, that would be probably be based on our existing Q2 numbers. And then we will do a stress test as they require, a harsh one, and demonstrate to the extent what is the room for buybacks in a three years stress period.

Matthias Nielsen, Analyst, Nordea: Okay. Thanks a lot. That was all from my side. Thanks a lot.

Simon Harbard, Investor Relations, Juske Bank: Thank you, Matthias. It seems as if there are no further questions in line. We would like to thank you for participating in today’s conference call. Recording of the call will be made available on our IR website in the coming days. Please do not hesitate to contact us if you have further questions.

We appreciate your interest in Juske Bank, and wish you a nice day.

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