AGM 2013

Mar 18, 2013

Slides

Summary

FY 2012 net profit reached DKK 4.7bn and impairments declined, but return on equity remained 3.7%. New Standards focused on customer satisfaction, efficiency, and stronger earnings; no dividend was proposed, with resumption dependent on performance and conditions.

Generalforsamlingen. The Generalforsamlingen is the supreme authority of the bank, and this is where the shareholders can exert their influence. This is also where the board is able to account for the commercial development of the group, and more specifically, the profit for the past year to the bank's owners. There are approximately 327,000 owners of Danske Bank, giving Danske Bank one of the broadest shareholder communities in Denmark. We have every reason to be proud of that as Chairman of the Board. I am also pleased that so many of you have decided to come here today, and also that not all of the owners decide to come here, because with that many owners, it would be difficult to find a place with room enough. It is the third time that we hold our Generalforsamlingen in Tivoli Congress Center, so I hope you like it. In many ways, 2012 has been a special year for Danske Bank. It has been a busy and tough year, but also a turning point for Danske Bank. It has been an exceptionally busy year with a very high level of activities, much change, a new organization, and a new strategy. All of this is necessary for us to be able to adapt the bank to the changes taking place in the surrounding world, and delivering strong financial results for the benefit of our customers and shareholders. The world is no longer as it once was and it never will be. Therefore, Danske Bank also have to change if we are to realize the company's full potential. We owe that to our customers, our employees, and not least you, our shareholders. 2012 was also a tough year with difficult macroeconomic conditions, lower rating from the international rating agencies, new regulation, and a lot of debate and a lot of criticism. The financial sector plays a crucial role to the societal economy, and it is both good and natural for the surrounding world to take an interest in how we manage to ensure a healthy sector and address how we run our business. As the biggest bank in Denmark, it is natural that we, with the big changes that we go through, become a central hub for all your interest. We do not think that all the things put forward have been equally pertinent or correct for that matter, but we are happy to take part in the debate and listen to the views being presented, and we are also happy to present our own views. We do not have any ambition to make everybody happy. There are too many different attitudes and too many expectations on us, and they seem to contradict each other. But we do have an ambition to meet our obligation to run a healthy, customer-oriented, and competitive bank for the benefit of our customers, shareholders, and not least society as a whole. Finally, 2012 was also a turning point for the bank. There are indications that the macroeconomic conditions are brightening up and hopefully we can soon put the financial crisis behind us. Even though we have a long way to go still, and we will have bumps on the road, there is every reason to be happy that Danske Bank in 2012 delivered the best results since the start of the financial crisis in 2008. We have increased our earnings and at the same time managed to get our impairments under control. Our results are still far from satisfactory, but 2012 was a step in the right direction, and with the implementation of the New Standards strategy, I have no doubt that we are on the right track. Later, I will account in detail for the background for the New Standards strategy, which has been adopted by the board and executive board, and implemented in 2012. I will also explain why it is the right choice for both our customers and our shareholders. But before I do that, I will first take a look back at our financial results for 2012. There is no doubt that we are still far from delivering the results that you could rightfully expect as a shareholder in Danske Bank. There is also no doubt that even if we do a lot, both on the earnings and on the cost side, our results are also a reflection of the prevalent financial conditions in society, both in Denmark and abroad. 2012 was a difficult year. European growth is dragging its feet, and many countries are forced into austerity measures and financial reforms that dominate the economy in the countries where we operate. In Denmark, which remains our biggest market, we saw a total decline in the economy of 0.6% in 2012. Consumers are generally reluctant to spend money due to low consumer confidence, and companies are also reluctant to make investments. Both of these things help keep the growth at a very low level. At the same time, we saw in the summer of 2012 how a number of countries in Southern Europe saw sky-high interest rates on their sovereign debts. This put a downward pressure on the interest levels in Northern Europe because the investors sought a safe haven, including the Scandinavian countries. Even though it is positive that there is a lot of trust in the economies in our parts of the world, we have to face the fact that the very low interest does not help the bank get rid of the crisis. Because when the interest rates are so low and the difference between the deposit and lending margins narrow, the banks find it more difficult to maintain a reasonable level of income. During the second half of the year, the trust began to return to the financial market, which invited new hope about a recovery to more normalized market conditions. But things are going up and down, even though we have generally become a bit more optimistic, we have to say that also 2013 looks like a year with a continued low growth in the markets where we are operating. If we look at the headlines in our financial statement for 2012, we should note four aspects in particular. The bottom line has been improved by DKK 3 billion compared to the previous year, and the net profit for the year totaled DKK 4.7 billion. Impairment charges are at their lowest level since the start of the financial crisis, and they have been declining throughout the year. Despite the improved net earnings, the return on equity remains too low at just 3.7%. Finally, let me emphasize the bank's capital structure and liquidity situation, which have been improved considerably. If we delve deeper into the accounts, I would like to emphasize the many earnings-promoting initiatives that we have launched and which are now really beginning to take an effect. Thus, our earnings increased by 10%, and this improvement was mainly the result of increasing net interest and fee income and net trading income. The net interest income increased due to the price regulations that we have made, even though part of it was neutralized by the lower interest from central banks and declining deposit margins. The net trading income increased by 22% due especially to a high level of activities at the start of the year, and despite more difficult conditions after the downgrading of the bank's credit rating in the second quarter. Also, the earnings from business activities in Danica have also been increased due to a fine investment result and due to the fact that we were able to recognize deferred risk allowances from previous years. Especially two areas have shown progress. Danske Markets have done excellently with a profit close to DKK 4.5 billion. The customer-driven activity was at a very high level and was very satisfactory, especially within interest and currency products and capital market activities. Danske Capital also had a satisfactory year with a progress in the profit of 20%. The return-dependent earnings came to more than DKK 400 million, a doubling compared to 2011. The total portfolio under management totals DKK 687 billion, an increase of DKK 81 billion since 2011. New sales total DKK 29 billion. Costs are a bit higher in 2011 but are affected by a number of one-off costs. If you adjust for these, the underlying cost development is declining. As I will tell you later, we have reduced the number of branches, just as we have reduced the number of employees due to efficiency enhancements in our workflows. It is important for us to maintain the tight cost control as it is a significant condition for us to attain our long-term targets. One area where we can clearly measure the temperature of how the economy is faring is the loan impairment charges in the year under review. They were 5% lower than in 2011. In the fourth quarter, we were able to report decline in impairment charges for the first quarter running. Hopefully, we are coming to an end of the very high unfortunate charges that have inhibited our earnings over the last five years. If you look at loan impairment charges, it is worth noting then regards Ireland, we said clearly that we are coming to an end of the strong losses that we have had. Impairment charges in Ireland, we have said, were between DKK 5 billion and DKK 7 billion in the period April 2012 till the end of 2014. We maintain this expectation. The period April 2012 to the end of 2012, impairment charges were DKK 4.1 billion. We expect an additional DKK 2.5 billion in terms of impairment charges in 2013 to 2014. All in all, we see handsome progress in our profits, about DKK 3 billion. The return on equity is 3.7%, as mentioned. Obviously, that is not satisfactory and quite far away from our objective, our goal for 2015. However, it is a step in the right direction. This year, we are taking yet another step. We expect a total net profit of between DKK 7.5 billion and DKK 10 billion. That's a return on equity of between 5.5% and 7%. In terms of cash liquidity and solvency, we've made a lot of progress. We have a Core Tier 1 capital percentage of 14.5% and a solvency ratio of 21.3%. The excess cover compared with the minimum requirement is DKK 84 billion. That's just as much almost as the requirement in itself, which is DKK 90 billion. We've increased our 12-month liquidity by over DKK 100 billion over the last year. That's a strong performance. All in all, Danske Bank has a better cash position, better solvency position than we had a year ago. As mentioned, 2012 was a very busy year, not least because Eivind Kolding, the CEO, had only been the CEO for a short time when he and the other members of the executive board started off a strategy process. Quite an extensive piece of work that they have carried out. We have covered everything. No stone has been left unturned. The process was carried out in close collaboration with the board of directors, and at the end of October, we launched our new strategy called New Standards. This is based on the fact that conditions for running a bank have changed fundamentally. If we are to realize the full potential of Danske Bank, which we must, we must adapt to new conditions on the market. It would be completely irresponsible if we were not in tune with macroeconomic conditions, more unpredictable financial markets, technological developments, changes in the way that customers use us, tighter competition, more government regulation. All of these are features, are facts, and they also lead to an increase in costs. There would be less attention and less discussion if we did not carry out the changes that we are carrying out. But certainly we would not have a better bank, more in tune with the times and with better results. That's what we must do. We must ensure the bank becomes better, stronger, more competitive, creating long-term added value for customers and shareholders alike. As most of you probably noticed, the bank, in connection with the New Standards strategy, launched a major marketing campaign. A lot has been said and written about it, so I'm only going to give you a few comments today about the campaign. The purpose of it was very simple. The conditions for running a bank have changed, basically. We need to change, too. That message is correct. We stand by it because that is a fact. But we've had to ascertain that the campaign, at least in Denmark, was misunderstood. People thought we had motives and messages that we didn't. We would have liked to do without those misunderstandings, but we can't do anything to change that now. What we need to do now is to pull up our socks, carry through our strategy. It's the correct one. It's the necessary one to create a better, stronger, more competitive bank, while at the same time we must explain to customers the specific changes involved. The strategy has a clear purpose. We want to be the most trusted financial partner for our customers. Specifically, we want to be in the top two in terms of customer satisfaction among our primary customer groups. As far as the financial results are concerned, measured on the return on equity, we want to be among the three best of the six big Nordic banks. Obviously, those two targets are interlinked. Competent, committed employees and satisfied customers, they are required if you want sensible results. We have ambitious goals, but the strategy is clear and strong, and I really believe that we are going to make it. Our strategy says Danske Bank will continue to be a universal bank in our Nordic home market. In addition, we maintain our other important strategic business units, Danica and Danske Capital. However, in our strategy, we will not carry out more acquisitions and when it becomes possible, we will divest what we call non-core activities in Ireland. As I said last year, there's no doubt that some of the acquisitions we made before the crisis were not sensible. Well, the wonderfully clear light of hindsight allows us to see that, right? So these acquisitions have cost the company and our shareholders a lot. Well, we can talk a lot about that, but we can't change it, can we? What we can do is make sure that we go forward. We focus on the business that we have. We must make that business better and stronger rather than adding new businesses. That's what we're going to do. Our mission is to set New Standards in all business units. Each business unit has a comprehensive detail strategy for what that means to their particular field. I don't have time to go through all the details here, but a number of headings are actually shared by them all. Customers are different and have different needs. That's one heading, and our services must reflect that much better. The world is complex. That's the second heading. Our customer needs the best advice. We must be even better equipped to provide that advice. Thirdly, we must be the best company when it comes to utilizing new technological opportunities and when it comes to developing new digital services. Fourthly, we must strengthen the competencies of our employees and have a more result-oriented structure and culture. We must simplify our processes and decision-making processes, that's the fifth point. Be more efficient and effective, that's good for our customers and for our costs. Sixthly, we must be even more open, more transparent in regard to the terms and conditions we offer customers and the way we operate businesses. We are known to be a very open company in regard to information to our shareholders and to investors. There, too, we must continue to do that. We must be in tune with the times, and we must set New Standards. New Standards, all in all, must contribute to making us a more competitive bank in tune with the times, with strong competencies and close relations with customers, providing precisely the advice that customers need and providing it as efficiently and effectively as possible. There are many expectations, many attitudes when it comes to how Danske Bank is to be operated. However, often these attitudes are contrasting. There are politicians and people, opinion makers, who think it's not fair if we make too much money. They say we should reduce prices, give products away for free. However, the same politicians and authorities are very demanding when it comes to the buffers we must have to offset possible coming crisis. If we are to have buffers like that, we must make good earnings. I'm also certain that shareholders, at some point, would like to see a return on their investment, right? Making ends meet is only possible if we make sure we have a sensible price for our services and we keep our costs down. Actually, it's a misunderstanding that you can get anything for free. You can't. If customers don't pay what a product costs, the other customers will have to foot the bill. For the truth is that we, just like any other bank, have to make money. That is the precondition for ensuring that the customers, the investors, the shareholders, and everybody else trusts us and our business. No one can trust a bank which is not healthy and solid. If there's anything that we learned from the financial crisis, it is what happens when the trust in banks go away. It makes the entire financial system freeze over to the detriment of the whole society. As you know, the truth is that Danske Bank, through the latest five years, has made too little money, which our shareholders have paid to a higher price for. So it's important also to the shareholders that we improve our earnings. We can only do that by having first-class products, fair prices, competent and motivated employees, and not least, satisfied customers. That is precisely what the strategy is all about. The strategy demands a lot from our competencies and skills and the way we work. That is why in 2012, we implemented a comprehensive organizational change. We've gone from having country organizations to having now business units going across national borders. This ensures that we get closer to our customers and make business decisions in a closer dialogue. At the same time, towards the end of the year, we implemented a comprehensive rebranding in seven countries, which has ensured that we are now called Danske Bank in all markets. That was the first step in our New Standards strategy. We're also busy with a comprehensive efficiency enhancement process to ensure that we utilize our resources to the best and also utilize the technological possibilities to facilitate, simplify the workflows, and ensure speedier decisions and processes. As a result, as I said before, we will gradually reduce the number of employees by about 2,000 jobs. A great number of these can be affected through natural attrition, but unfortunately, we haven't been able to avoid redundancies. It's always regrettable when companies have to say goodbye to good and loyal employees, but it is necessary that we, like any other company, make sure that the number of employees matches the jobs at hand. Also here, we must insist that the only responsible option is to make sure that we run our company as efficiently as possible, because only that will allow us to offer our customers the competitive prices which will make them satisfied and will make them stay with us. This is also the key to creating the business results required to make the surrounding world trust us as a healthy and solid company, also in the longer term. It's like that for all companies, including Danske Bank. Through major investments in the upgrading of our employees, we've also embarked on a significant adjustment of our competencies to equip us to deliver the competent advice that our customers need. The more than 20,000 employees in the Danske Bank Group are working hard every day to ensure that the strategy is put to real use. Their efforts, competencies, experience, and contact with the customers are essential elements in making sure that we'll succeed. Especially the changes brought about within the personal customer business in Denmark has been given quite a lot of attention in the past months. Let me tell you that Danske Bank remains a bank for everyone, but it doesn't mean that everybody should be treated the same way because all customers have different needs. It's no exaggeration to tell you that our new customer programme in Denmark has had a bit of a rough start in the media. The customers, on the other hand, have been fairly positive about it when we have been given the chance to explain what things mean in more than just the headline level. The customer programme is a very important part of the New Standards strategy. The purposes are to ensure that the customers are given the right advice and the services that fit their situation and their identity. In the old days, all customers were treated the same and they were all offered the same thing. But it's old-fashioned and gives the customers a bad experience. Another purpose is to reward those customers who gather their business with us. That's the same thing in most companies. The more goods you buy at your local Coop, the more points you'll get. It's the same thing in Danske Bank. We reward the most loyal customers by giving them more benefits and better prices. With the new customer programme, everyone can see who gets access to which benefits and what it takes to obtain the same. We find that reasonable and a big progress. Finally, it's been a purpose to make bigger coherence and closer link between what it costs us to deliver the individual services and what is actually paid by the customers. We have been completely honest, saying that for far too many years, we have been giving away too many products for free. The customers are not to be blamed for that. It's our responsibility alone. It's untenable at length, and I said before, there are only the other customers to pay for what somebody else doesn't pay for. That's not fair for anyone. We are honest in saying about the new customer programme that all customers will basically have to pay for the services that they use. At the same time, we make it increasingly more simple to use our self-service solutions and digital opportunities and possibilities so you don't have to pay too much. With the customer programme, we have a clear business model which is transparent to the customer. You can clearly see what you're paying and what you get for your money in Danske Bank. The more business you gather with us, the more benefits can we offer. This is fair to our customers, and it's also fair to the bank. As I said before, most of the customers appreciate the new opportunities once they are given a good explanation of them. In fact, we are actually close to having 450,000 customers registered for the new customer programme. It has taken less time than we expected, and it confirms that we are on the right track. Of course, there are other customers who leave us. Most of them already have another bank as their primary bank, which means that they have simply closed down old inactive accounts with us. Of course, we are always sad to see customers leaving us, but it is also an expression of the effectiveness of the competition in the banking sector. We can also see, however, that the customer programme attracts new business. Over recent years, we have seen major changes in the way customers use our bank. Still fewer customers visit the branches physically, most of them only in connection with advice meetings. The number of cash transactions in Denmark have dropped dramatically in the past four years, whereas the use of our market-leading digital services has gone up significantly. It would be untenable and completely irresponsible if we did not take the consequence of that development and make sure that we adapt ourselves to the new reality. No one but the customer to pay for the costs related to running the branches, and that is why we have merged a number of branches and removed cash functions in other branches. We know that that will give a bit of extra waiting time at the cash registers. We have done a lot to help our customers begin to use the new digital solutions. We have had training meetings for elderly people in using the Netbank services, and we are also developing a very user-friendly version of the Netbank service called Easybank. We have also recently prolonged our collaboration with Post Danmark, making it possible for our customers to make banking transactions at the postal offices. We are also making a number of new and innovative advice centers where we will focus on the demands and requirements that the customers have of a modern bank. Some have felt that we should keep all branches open and have cash functions in all of them, but the same argument holds here. We have to adapt to the new reality and be so efficient that we can be competitive. Not only in the bank's personal business do we see major change. We also want to be the preferred banking connection for small and medium-sized businesses. In order to get that position, we developed a number of advice concepts which are tailored to different types of company. Our purpose and aim is for customers to see us have an offering which fits their needs and which help them utilize the potential of their business. Our size means that far more than previously, we can provide our many specialists for the benefit of the Business customers who need special products or specialized advice. The skills and products which were previously used by the very biggest customers are now being offered in an adapted form to medium-sized companies. As an example, over the coming year, we will help a number of mid-sized Danish companies with the new financing opportunities in the form of corporate bonds to ensure that they have more strings to play in financial terms. The biggest corporate customers and institutions will also feel that they are met by strategic holistic advice and sparring in international class rather than being presented to single products. We must ensure that we deliver solutions with a strategic aim and not just products. A condition for success among the biggest customers is to get their trust. This is possible only if we can deliver financial products of the very highest quality. In the end, it's about ensuring that the customers see that we create value for them. It's about establishing and maintaining long-term relationships. We do that when we help a company with our strong cash management setup, help the company optimize its cash flow. We deliver value when we make sure that the company gets direct access to capital markets by issuing corporate bonds which ensure cheap and predictable financing, or when our stockbrokers help a pension fund ensure that it can meet its future obligations. Fortunately, many feel that in many areas we are quite competent. We have been named the best bank in Denmark for the biggest companies and institutional investors. We are very proud of that, but we must be even better. Our increased focus on strategic advice and holistic solutions must contribute to retaining our top placement in the Danish market, but it must also make us even more competitive in Nordic struggle for the biggest customers. In short, we are busy creating a more contemporary, efficient, and competitive bank, which will give the customers the opportunity to get just the services that match them at a fair and transparent price. This development will continue in the coming years and is a major part of the New Standards strategy. One major reason why we have launched an ambitious strategy that requires change is that this is simply necessary, also because of constantly increasing demands and requirements from Danske Bank. It doesn't matter if we're talking about the Basel Committee, the European Union, the Danish FSA, or the rating agencies, they're all talking about stricter requirements as regards to the banks. We have to have a bigger capital buffer. We need to be stronger in terms of liquidity. We can't disagree with the overall goal. We must have stronger banks so we can avoid repetition of the financial breakdown that hit the world in 2008. But these stricter requirements are being introduced at a time of low growth in Europe and in Denmark. So it's difficult for the banks to maneuver, to both live up to stricter requirements from authorities and at the same time trying to comply with the politicians. They want banks to get things going by increasing lending. Anyway, Danske Bank has a good starting point. A number of tests from the European Banking Authority have confirmed that we are the strongest banks in Europe in terms of capital. Cash flow, we've had much more excess cover throughout the crisis compared with statutory requirements. In our strategy, we have a clear plan for how to comply with the requirements that are expected from the European Union concerning bank capital and cash flow liquidity. Actually, we are already in compliance with capital and liquidity requirements that are expected from 2015 from the European Union. Sometimes it is not even enough to live up to authority requirements. We saw that in the summer of 2012. Within an interval of just a few days, Danske Bank saw that its rating was lowered by two out of three rating agencies. In one situation, the credit rating agency carried out a major revision, so more than 100 European banks had a reduction of their rating marks. It is just like in school, getting lower marks is never a barrel of laughs. In this case, it was even at a time of uncertainty about developments in Southern Europe. To Danske Bank, what the downgrading meant was that in the second quarter we saw a reduction of our deposits. Fortunately, that reduction was much lower than expected, but the downgrade was a clear reminder we have to stay on course, precisely on course, and increase our earnings gradually up to 2015. All other things being equal, a lower rating leads to higher funding costs. This then reduces the effect of income-promoting initiatives. That is why we have launched initiatives to hopefully improve our rating as soon as possible. In order to accelerate this process, the board of directors decided in October to carry out a capital increase of a good DKK 7 billion. It goes without saying that shareholders are not too keen when new shares are being issued at a time when they have not received a satisfactory return for a number of years. I would like to take the opportunity here to thank shareholders for the strong backing they gave us by buying some of the new shares. That has helped provide the necessary basis for the bank to come back to the rating levels where we believe that we belong. Just after the capital increase, we got a first positive feedback from Standard & Poor's, because they changed their view on the bank from stable to positive in terms of rating. As you can see from the letter convening today's AGM, the board is proposing again this year to pay no dividend. Seen in the light of a capital increase and the work of reestablishing our rating, I do believe that most shareholders will understand this. That being said, obviously, it is not satisfactory. As a listed company, we have not been able to pay a dividend to our shareholders for five years. Last year, I said there must be no doubt that our goal is to quickly return to a situation in which we can pay a dividend. That remains our goal. That too depends on results. We must deliver results much stronger than our 2012 performance. It is part of the picture also that the price of our share has developed positively in 2012, actually end of the year, 30% higher than at the beginning of 2012. The board of directors finds that with the earning plans we have made, hopefully we can soon start paying dividend, hopefully for 2013. Obviously, that also depends on the developments in the macroeconomy. It also depends on the final versions of the authority requirements. 2012 was a busy year for the board of directors. Since the AGM last year, we have held 19 meetings to which must be added the work in the different board committees. I would like to take the opportunity to thank all members of the board of directors for their cooperation over the past year. Special word of thanks to the three members of the board who are not presenting themselves for re-election. You have all contributed insight, experience, and commitment for the duration of your membership of the board of directors. Later on today, we will elect new board members. I will come back to this later on. We have carried out a thorough piece of work to find the nominated candidates. They have been selected through a serious assessment carried out by the board of directors to ensure we have the right competences and composition of the board so as to take Danske Bank forward. The composition of the board is subject for discussion. It has been recently. It was the same at the last AGM, and we also dealt with it at the latest board meeting. Let me say it clearly. The board of directors believes in diversity across genders, nationalities, and competences. As regards internationalization and professional competences, I think I dare to say that even at this point, we have the most diversified boards of directors among the Nordic financial groups. But the number of women members of the board of directors is not high enough. We recognize that. The board of directors has decided to make an extra effort to have more well-qualified women join the top echelons of management and board work. We cannot do that overnight. On the other hand, the number of top female executives and professional board members is growing. So we have set ourselves a goal. We want at least 25% of the members of the board of directors elected by the AGM to be women by 2017. They should not be elected because they are women, but because we cannot do without the experience, the knowledge, and the qualities that comes from having a diversified board of directors. The board of directors is proposing an unchanged policy for remuneration in the current financial year. That is a continuation of the line backed strongly by the AGM last year. Remuneration for the board of directors, Executive Board, and employees must ensure that we can maintain and attract skillful, competent people. Also, the pay structure must reflect our ambition for long-term value creation in the group in all parts of the organization. I do believe the present policy for remuneration ensures that. We are very transparent about remuneration. One of the most transparent companies in Denmark, I believe, and we want to continue that because openness is the only way to avoid rumors about pay levels at Danske Bank. So I would like to refer the AGM to note 8 of the 2012 financial statements, where you can read the details about the remuneration of the board of directors and the Executive Board in 2012. But let me give you an outline of the main tendencies. In 2012, the board of directors received the same fee as in 2011. There has been no change to the basic fee that is part of the remuneration policy. The supplements paid to be chairman of the board, vice chairman of the board, member of a committee, and chairman of the committee have not been changed. The board recommends that the current level for remuneration of board members should be continued also in 2013. Last year at the Generalforsamlingen, I explained that the executive board saw an adjustment of the pay level in 2012, so as to more reflect the level that applies in other companies of the size of Danske Bank. The total remuneration of the executive board in the year under review was DKK 58.4 million. The board of directors finds that we now have a suitable pay level for the executive board, so the board of directors has decided not to adjust the remuneration of the executive board in 2013. That applies to the fixed salary and also the bonus framework of the executive board, which is 20% of the fixed salary. No decision has been made by the board of directors on the remuneration of the executive board in 2014. That will happen at the end of 2013. Finally, let me mention some of the topics that the executive board and board of directors will be working on in this year. As mentioned before, our focus is clear. We must ensure to enhance our earnings this year. We must make a targeted effort to ensure that our rating can be increased. We are not the masters of that one because the rating agencies decide which rating marks they will give us. But we are convinced that with the measures we have already launched and those that we will launch, we will increase our earnings to a level that will ensure that within our foreseeable time, we will qualify for higher credit rating marks. As mentioned, satisfied customers are required. That applies not only in Denmark. We are making a targeted effort through improved consulting and better services. There is an area that we will be spending time on going forward, and that is regulation. The new Capital Requirements Directive from the European Union, which has been in the pipeline for a number of years, will be presented later this year, we expect. As mentioned, we expect we are able to live up already now to the new requirements because of our very strong capital situation. There is no doubt that the new rules will put many banks under pressure. On the other hand, there will be a sort of safer, securer, more stable financial system that everybody can trust. And trust is an essential parameter for operating a bank on commercial terms. Trust is also pivotal in regard to the work of the government's special so-called SIFI committee. SIFI is systemically important financial institutions. So there is work going on here. The government committee has just indicated six institutes as systemically important, including Danske Bank. It is not surprising that we are part of that designation because we are the biggest bank in Denmark. But what is more interesting is the financial requirements and statutory requirements in terms of regulation that will be part and parcel of that. Over the coming months, we will discuss the conclusions of the report in the Danish FSA. We expect to be able to live up to the new capital requirements, but we find that the requirements are a bit stricter than what we had expected. We must ensure there is financial stability on the one hand, but on the other hand, you should not make requirements that are so tough that growth in society could suffer. Now, we are also going to spend 2013 making sure that we closely follow up on the execution of the New Standards strategy. It is a detailed strategy, but as with all strategies, there may be a need for minor adjustments. As we go forward, we will address that. Now, as I said, 2012 was a busy year and a tough year, but it was also a turning point. We took great leaps in the direction of becoming a better, stronger, more competitive bank, delivering long-term value to our customers, our shareholders, and to the society where we are a big player. That is what we have to do. There are still challenges going forward. It is a long way to go, but we have set the course and actually we are off to a very good start. Thank you for your attention.