Danske Bank A/S (CPH:DANSKE)

CMD 2012

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Nov 8, 2012

Summary

New Standards targets ROE above 12% by 2015 through pricing, efficiency, lower impairments and selective growth. Personal and business banking face major operating changes, while C&I protects its franchise and reallocates capital.

Well, some of you might think this is a quite unusual way to start a Capital Markets Day, and I guess it is. But we wanted to share this movie with you. This is how we introduced the New Standards strategy for the 20,000 employees of Danske Bank. So when we launched the strategy last Tuesday, we have arranged town hall meetings all over the organization, showing the direction we are setting and so on, but starting with the movie just to set the tone. So you might say, personally, I'm coming from shipping, making the transfer into banking. I promise you I will not take this about acting any further. Also, if you should ask, I have more than this one tie. Anyway, let me just go a bit to what we're going to talk about, then coming back to the new normal. We have an agenda where we have the opportunity to invite everyone from the executive board to the stage, talking about each of the business units. We will have coverage. Hopefully by this, when you leave, you will have a very clear understanding of not only the direction that we are taking, the targets that we have, but we'll also try to convince you that we have credible plans to get there. I will introduce for the first 20 minutes or so, giving more about the context of the strategy, the overall direction. My presentation will not be as factual as you might like, but I can promise you, as we go through the other presentations, there will be a lot of facts and figures that you'll be asking for. If we do not cover it, we have a lot of opportunities to have a dialogue, Q&A sessions within. So before I start, let me then on behalf of the entire executive board, welcome you, all of you, to this Capital Markets Day. We are quite happy to see that so many wanted to attend this conference. We think we have some strong messages that we would like to share with you, and hopefully you will feel this is a very good use of your time. But let me go back to the context of our strategy, that we are operating in a new normal. What are the things that we are focusing on? What do we really talk about when we talk about a new normal? Let me highlight a few of the important aspects. One thing is that we see that banks, financial institutions, don't have the trust of their stakeholders anymore. There are a number of very good reasons for that. Also reasons why Danske Bank has lost the trust from its communities. One thing is that we have losses that are difficult to explain. One thing is that we have not been supporting all our customers when they themselves had hard times during 2009 and since. Also that occasionally the banks look maybe more at their own needs than on their customers' needs. So we need to do something, and we'll come back to that, how we address regaining the trust in banking. When you don't have trust, what you normally face is that you get regulation, and we definitely have got our share in the financial industry. Some of the initiatives taken we think are quite prudent and right. We actually support a lot that banks need to be more solid. We support that we need to have higher capitals. We support that we need to have a stronger liquidity. I think the lesson learned is that even though we, as so many others, have very advanced and sophisticated models for anticipating what is going to happen, none of us, being it the banks, the central banks, governments, rating bureaus, and so on, really saw the financial crisis, how it came, and the size of it. If our models, how sophisticated they are, will not be sufficient to anticipate we need more buffers, so it is right that we have more capital. But of course, in the tail end of this, we get far more regulation that we need and that what we have asked for. Unfortunately, we need to, of course, to comply. That takes focus away from the important stuff, serving our customers. It is costly for the bank. So overall, these things, even the capital requirements, liquidity requirements, but also the other parts, means it has become more costly to run a bank. Another quite clear change that we have seen is a change in customer behavior. Technology gives a lot of opportunities, and we see it particularly in banking, that our customers use the digital channels. They like to take the opportunities provided by the net and so on. So there is a huge development already happening in banking when it comes to digitalization, automation, and so on. Customers expect that they can actually do banking around the clock, flawlessly, seamlessly from one channel to another. And of course, this is something that we need to reflect in our strategy. Also, on another point, we see a change in customer behavior. We see that customers are getting more demanding. They know more about what is happening in the financial world. It is easier to compare services from one bank to the other. So they will put harder requirements on us, and we need to be ready for that. Obviously, as you all know, we are living in a time of economic uncertainty. Hopefully, this is not a new normal, but the plan that we have, the strategy we have is a three-year plan. And as we see it, at least for the next three years, we will definitely have uncertainty. There is uncertainty about the euro. We are facing very low growth in our core markets, and also we believe we will have to live with very low interest levels at least for the next two to three years. All these factors are negative and push pressure on the banks. That also lead us to say that we will face tougher competition. Some will say competition is not new in banking, but when we look at ourselves, not only in Danske Bank, but also in Danske Bank, we see that we have not been focusing on customers. We have become too bureaucratic. We have too complex processes and so on. And all this, at least tells me that it means that we have not been under the kind of pressures that other industries have. That has changed now. Every financial institution has to react to the new environment, meaning competition will be tougher. However, one thing has not changed, and that is the core and crucial role that we play in society. There's no doubt that the banking model is superior when it comes to taking deposits, financial assets from customers, keep them safe, and recirculate it into the society, to the businesses that need it for investments or to cover needs for private customers alike. So that crucial role in society is still the responsibility of the banks. We have other core things that we need to do. We take care a lot of the financial transactions in society. People don't think about it, but it is important. Who really reflects on what happens when you swipe a credit card, all the things that moves in order to fulfill that transaction you started with swiping your card. Of course, we need to take care of investments. We need to take care and help our customers with their financial risks, be it through hedging and other instruments. There is a core role still for banking to play, a very important role, and that's why I think that, at least personally, I'm very proud to be a banker, that we have this great responsibility, but obviously we need to deal with it in a prudent and responsible manner. That we need to have a proven model for having income and cost to meet, that we made a satisfactory return. Otherwise, we will not gain the trust that we need, and we cannot fulfill our duties. Where do we want to be in 2015? Well, I've already talked about trust, and I like this slide. Trust is actually more important than love. This is why we have put up as our vision to be recognized as the most trusted financial partner. This is where we want to be in 2015. As our umbrella for our entire strategy and for the business unit strategies is that we need to regain the trust to work. In order to avoid this does not become too fluffy and putting on our position that we actually can gauge whether we meet our targets or not, we have set some overall targets for our strategies in two important areas. We want to be number 1 or 2 when it comes to customer satisfaction in our prioritized segments, and we need to bring ourselves in terms of financial performance to the top half of the Nordic League. As many of you know, when we compare ourselves, we see our primary peer group as the four Swedish banks and a DNB in Norway. We will do that measured on ROE. The strength about these two targets is actually that we can cascade it throughout the organization, so every employee will know exactly what he or her has to do in order to contribute for us to meet those targets by 2015. Then we have our mission, setting New Standards in financial services, and we will do that in a number of areas. New Standards is, for us, really the response to the new normal that we see. What are the key focus points that we see? Where is it really that we can make a difference or should make a difference? First of all, we talk about customer focus. This is about where we really want to design our products for the needs of our customers. That it's not one size fits all. Customers have different needs, and we need to reflect on that in what we offer to the customers in a way, obviously, where income and cost meet. Some customers have more simple needs, others have more complex. We see Danske Bank as a universal bank that needs to have a fair offer to everyone, but we see us particularly well-suited for customers with more complex needs. This is where we will focus the strategy, and you will get some more tangible actions on that when you hear the business unit strategies. This is a common theme throughout the strategies. We will focus a lot on our advisory services. It is where we feel that we have a good starting point, but there is no doubt that we can achieve even more by lifting the competency level throughout, across everything that we do in Danske Bank, making sure that our customers always have the most relevant, professional, proactive advice when they need it. As a third item, that is the digitalization. I think also here that we have a good starting point. As we reflect on our strategy, it is not so much to find out where are we weak and need to put it to an average level. It is more to find where the areas we feel that we are strong, and where we can really take a leading position and keep that lead for a long time. When it comes to digital banking, I think we really have something that sets us apart already today when it comes to mobile banking, when it comes to doing banking over the net. Also offering solutions to businesses in transaction banking and trade finance, all these things that actually our customers should not spend much time upon. Our business customers, if we can handle that flawlessly, they can free up their time, their resources, to spend time with their customers and create value that way around. As a fourth element is about our role in society. We feel it is extremely important as a bank, as we are such a crucial element in making the wheels turn, that we do that in a prudent fashion, that we make sure that we take care of all stakeholders, and where we have a particular responsibility as a financial institution, that we live up to that we are transparent about our plans, our targets, and how we actually operate in Danske Bank, that we do not take undue risk and so on and so forth. These are, you could say, the four sort of key elements that will go through all our strategies and where you will get more details as we go. One clear and important element when you make a strategy is, of course, to take care of your portfolio. Where do we want to do our business? And some of this we actually did decide upon already before the summer about our geographical footprint when it comes to the core banking. We see ourselves as a Nordic universal bank, meaning, yes, the entire Nordic area is our home market, a universal bank that we need to have a fair proposition for everyone. But we also said, well, we have businesses in Ireland and Northern Ireland. And part of that is not our core anymore. The commercial real estate we will carve out. We will divest that as soon as we see that we can get a reasonable price for it. We do not need to conduct a fire sale, but this is definitely a portfolio that needs to go. But the rest of the activities that we have in these countries are actually value-creating over time. So we will keep that, and we still believe that the Scandinavian banking model is quite superior, and we can offer a lot to our customers in those markets. A lot of focus has also been for you and others on Danica, does that belong in the group or not? And we have analyzed that quite carefully. To start with, we know that the customers, they actually regard Danica as a natural part of our portfolio. They like to talk about insurance, life insurance and pension, when they talk about other financial aspects of their business. So from a customer perspective, it makes sense. We also have synergies. Danica provides a lot of business to Danske Markets or Danske Capital, and we can, through our banking network, provide a huge and formidable sales chance for Danica. So there are good reasons to have it there, and I guess that is why it was there in the first place. Nevertheless, we did carefully analyze and test, is there another way? Would there be a relevant solution where Danica was not fully or partly owned by the bank? And it was quite clear there is not such an attractive other way. So we are satisfied ourselves that Danica belongs as a core part of the group and will do so going forward. Let me highlight some of the priorities for me in the coming three years. Well, first of all, we need to execute New Standards. That is critically important. The business units will work on that, but also the CEO, our support function will focus on that. So that is priority number one. You will get a lot more stuff on each of these items as we go through this afternoon. So doing this, actually, we have already started. Some would say we did a big reorganization before the summer, disbanding the geographical setup that we had going into a separate business unit focusing on customer elements. We did clarify our future in Ireland and so on. So we are already in execution mode, but obviously, we have to do far more to reach our targets in 2015. Another item that is, for me, extremely important is our lean project, Think Simple, Think Lean. And that will be something that flows through everything that we do in the bank, in the business unit, and in the support function. There is a huge potential when and if we get this right. We can take out a lot of time and resources of our processes. We can take administration as the target is 50% of administrative tasks away from the front line. Imagine that our customer-oriented staff, key account managers, and so on, can spend far more time with the customers going forward. That will mean that we will take out a lot of cost, but it will also mean that we will leave more interesting tasks for the staff in general, because not so many are actually thriving with doing administrative tasks, rekeying things, and so on. We have already had a few test cases with Lean in the bank. We have seen that we, for instance, can take the process time for a car loan from 2 hours or more down to 10 minutes in the self-serve solution that actually suits the customers quite well, and there are many more examples. We will also, when we do that, make sure that we share the best practices across our geographical platform. One example could be issuing credit cards, which seems like a standard simple process. When we analyze it, we do it in so many different ways today in the bank. In Norway, the process time is around 20 minutes. In Northern Ireland, it is 1 and a half hour, and everybody can improve on that. We can really streamline things, make the one and best model throughout the bank. A lot of power in this. Finally, let me talk about our financial targets. I will just give you the overall targets as they have been communicated here. Henrik Dahl now will, towards the end, go into and elaborate on each of the elements. Overall, we have a target of ROE targets for 2015 above 12%. Not 12%, it is above 12%. We feel actually it is quite ambitious to get there. In order to get there, we need an improvement of our pre-tax result of DKK 15 billion-DKK 20 billion. It is quite a huge task we have ahead of us. In terms of rating, we need to get minimum one notch up. It is important for us. That is the background for why we had to make an equity increase last week, simply to accelerate that development. There is a very good story. There is a very fast payback on that. Henrik Dahl now will explain that later. It is so important that we get there. Fortunately, we have already gotten response from S&P that they have now put us on a positive outlook. We already see our spreads narrowing. We already see that we attract deposits, more deposits and longer-term deposits than we did before. The medicine is already working. You will get the details later on. In terms of capital ratio, for us it is important that we base ourselves on the regulatory requirement, and on top of that, we need a buffer. A buffer sufficient that even in the most severe stress scenario, that we will never come to the position where we are in danger of losing our license. We are not so much taking a peer view on this, but we are taking our own bottom-up view, and that means that as we expect the regulation to be, that we will need a Core Tier 1 capital of 13% and an overall solvency capital ratio of 17%. We have 2 more overall targets that we communicate. One is about cost. We will actually see our cost decline slightly over the period in actual terms. To get there, the biggest cost driver by far in a bank, that's human resources, that's staff costs, so we need to continue being more efficient. What we have announced is that on top of the program we already have to reduce by 2,000, we will reduce by another 1,000 before we reach 2015. That's on a base of approximately 20,000 employees. So it's quite an offensive target. We even came from 23,000 a few years back, so it's not that we are inefficient to start with. That would lead us to a cost-income ratio of below 48% towards the 55% that we have today. Last, in terms of dividend, we expect that we can have a payout ratio long term of 40% of results. But short term, it's important that we get our capital ratio targets in place and that we get the rating where we need it to be. So until that is in order, dividends might be lower. As you know, we have announced that we do not expect to pay dividend for 2012. But longer term, there will be huge opportunities for dividends and actually also for share buybacks should we need that. I think it's important to mention, it's not on the slide, that we do not see our three-year strategy here as a growth strategy. We believe that we will more or less keep the risk-weighted assets that we have. So for us, it's more a focus on return than on growth, at least for the next three years. So let me end my part of the presentation, the more direction setting and concept setting one. The way I would like to end it is actually to show you the commercial that we will run in TVs from November 15. November 15 is chosen as the date because this is where we will go to one brand throughout our geographical platform. So where we are not Danske Bank today, in Norway, in Finland, in Northern Ireland and so on, the name will change. We will support that, the name change, but also the identity of the bank and the direction that we are taking. So some of these pictures, the pictures you are seeing here is actually taken for that commercial. Again, hopefully, that will give you an impression on how we see the new normal. It will not provide a lot of response how we react to it. But I think the first step for us in order to regain confidence amongst our stakeholders is that they see us as someone who understand how the world is, and obviously also that we will respond to that. The response is our strategy, New Standards. So let's take a look at it. It's 15 seconds. All right. To help us having a smooth Capital Markets Day, we have asked Ronnie Strong, which I'll invite on the scene, to make sure that we make things in time and that we listen to you and get the questions that you have in mind asked. So welcome, Ronnie, on stage. Thank you very much indeed. It is quite a different start for Capital Markets Day, and I think that's part of the message, isn't it? It is indeed. It is a new normal out there. It is. Okay, things have got to change. Intentionally, you didn't give them a lot of detail. It was really quite interesting looking at the audience when you did give them a few figures. People started writing things down, and the computers came out. The promise is, what's your ambition? What are they going to go away with at the end of today? Well, for me, the most important objective when you leave here is that you have a good understanding of the strategy that we have, and hopefully also that we have conveyed the nature that we have credible plans that will bring us to the targets that we have set. So we will see more details of that, and you will have opportunities, obviously, to test us on some of our assumptions. Okay. Now, I bet quite a part of these people out there now are actually quite eager to ask you questions. But when we talked about this, you can partly blame me because I said, "Look, we've fantastic turnout, but we've got a lot of people from quite a lot of different backgrounds here, and if we start firing questions at him straight off, we'll never get to the end of this." So I'm going to take the liberty of saying, we promise you that we'll get to all of the questions. In fact, you see on your tables there are some question cards. That's one way, but equally, I will at various stages be opening out to ask you some questions. We're going to come back to you later with the CFO, who's got more figures than you could shake a stick at. I think we'll get into all of that. But before I introduce the sort of business leaders, yeah, you can start writing down questions for him for when we grill him when he comes back. Note down your questions and we'll pick them up after each session, because we're now going to hear from the three business unit managers. It would be great if you put your name, and equally, if you want your question to go to a particular individual, put that on as well. Okay? Right. Eivind, thank you. We've set the context. You've got us going. But now we need to hear from the three business leaders so that you get a real sort of understanding, and again, some of the direction, before we start going into some details. So please welcome Tonny Andersen to stage, who runs the personal banking bit. Half the Brits in this audience are probably sort of looking up there like I did the first time I met you and thought this was a typing error in your name. I am? He is actually Tonny to the Danes, but does answer to Tony to the rest of it. It's not a typo, is it? No, it's not. All right. Over to you to talk about personal banking. Thank you very much. I reckon that most of you are quite eager to get some more data and information you can put into your model and forecast, and you will get that. I promise you that. But before, I want you to do something quite different. I want you to imagine that this is a Capital Markets Day of a newly established bank that deals with personal customers. The bank has no products, no people, no legacy processes, and no value propositions to the customers that we serve. Now ask yourself the following question: How should that bank look like that can clearly out-compete Danske Bank as we know it today? That has exactly been the perspective with which the management team in Personal Banking has been working with the strategy for the last six months. And in doing so, we catered around four key questions. The first question was, who should be our customers? The second question was, what should we offer them? What would be a compelling value proposition, and what would be the unique selling points? The third question was, where should we serve them and in which channels? And how? The last question was, how should we spend our time in the bank? Today, I have 20 minutes, and that will be what I call a pixie book version of more than 6 months of deep analysis of customer behavior, customer profitability, competitive dynamics, and trends. Obviously, this will be a condensed version you will get. From my presentation, I hope you have three key takeaways to bring back home. The first one is that we recognize there is a need for profound turnaround in Personal Banking, and that that turnaround is important for the turnaround of the group. The second key takeaway for you is that we have identified, and we're going to show that in detail, six key enablers that will set New Standards within Personal Banking. Six key enablers. The third and last key takeaway I want to show you some credentials to is that we are already, as Eivind alluded to, in full execution mode. Let's take a look at what is Personal Banking for our species. Well, you could say that in many aspects, it's the biggest unit, the biggest in the group. Biggest in terms of FTE, biggest in terms of volume, biggest in terms of revenue, and with some justification, also say it's the biggest one, but the one with the biggest challenges, both on the profitability and on the customer satisfaction side. Our market position ranges in the different markets from being the incumbent to being a challenger. Why do we call this a turnaround? Well, these are the two KPIs we'll be measuring, looking at profitability and customer satisfaction. Let me give you some bullet points on each of those that gives you a picture of some of the good things that we see today, but also some of the challenges that we have. If you look at the profitability side, the financial results, where we are today, then clearly we are punching below our capacity in terms of profitability. We also have a large part of our customers that are unprofitable. You will also see that we have already done something on the pricing, and in terms of efficiency, the benchmark analysis we've done show that we are on average with global peers. So both positive and negative things here. When you look at customer satisfaction side, then we, in certain markets, are above peers, and in other markets, we are clearly below. We also have strong foundation, you could say, on private banking as one of the other example, analytics platform. So this is our point of departure. If you take that into deeper conversation on looking at the customers, we have 4 million customers in Personal Banking. I think this chart shows it all, given the colors and given the size of the different subsegments, where the challenges are and also where the opportunities are. Now we have 40% of our customers that are unprofitable. Let me emphasize, this is not the customer's fault. This is the industry and our own fault because the way we for decades have set up how to run the bank, how we give the services to different customers. That is the reason why there is not that balance in many customer relationships. When we look into deeper detail on the customer satisfaction, as alluded to, you can see that in Sweden we have a really strong position, whereas in Norway above peers and also Northern Ireland, whereas in incumbent places like Denmark and Finland, we do really have big challenges. One of the cornerstones in the New Standards strategy is to make sure that we regain a position as being a highly recommended choice by the customers that we particularly prioritize. Now, note my word, the ones that we prioritize. That does not mean that we do not focus on satisfaction for all customers. But it is fair to say that we will probably have better skill set for customers with a little bit more complex advisory needs, like the ones buying a house, the ones who think about their retirement and pension. That is where we see we can rule a distinct advantage. So our response to this is six key enablers that I will try to go into detail with. The first one is a much clearer customer segmentation. The second one is the launch of a customer program. The third one is a revamp of our distribution channel. The fourth one is in efficiency side. The fifth one is on the lean side, and the final one is on the pricing action. These are the six enablers where we want to set New Standards within Personal Banking. Now, if you take the first one on the customer segmentation. Customers are different. They have different needs. They have different potential. They want us as a bank to serve them in a different way. But what are the customers in reality saying to us as a bank that they want out of us as a bank? Well, we have done a lot of analysis on that, on customer forums and bilateral customer analytics. If you take the first segment, which is the private banking customer, they are the ones with the free wealth assets of more than DKK 5 million. What they are saying to us is they want expertise within wealth management, tax planning, pension investment. They say to us, "We want exclusivity in terms of credit cards, events, and we want you as a bank to be proactive." So the position we want to own in that subsegment is to be the trusted advisor. Already today, we have unique selling points standing out in the market, our wealth bank. Whereas if you look at the mass affluent, this is a family having a house. They own a rented apartment, having pension, having a car loan. What they are telling us is that quick for pro, they think it is fine, and they actually like that the more business they place with us, the better conditions they get. They also want to make sure and feel that they are confident, feel financially confident when they buy the first house, that they can afford it. They choose the right mortgage loan, or they think about retirement. They also want proactivity from our side. We look at the last example is the mass market. Customers with typical low volume and maybe many transactions. What they are saying to us they want is they want transparency, that they are paying as little as possible to use the bank. They also want simplicity in how they deal with the bank. The position we want to own in that market is to have superior self-service solution, which we already have today. So three different segments. What is important of the strategy is that we need to create, at the same time, both a sense of belongings. So you are a private banker, you feel you are part of the private banking segment. But also a clear sense of differentiation in the marketplace, so we stand out to these different customers because they have different needs. So how are we going to go around this in real life? That is the second enabler I want to talk to you about. That is the customer program. We will launch a new customer program in Q1 next year in the Danish market as the first step. It is not a new product. It is a totally new way of running the bank. Let me put some flesh on that. Depending on which segment you belong to and sub-segment, the prices will differ. Your accessibility, whether you have advice or not, will differ. The group benefits you get will differ. The way we allocate our resources will differ. By doing so, we think we can give something to the customer, the value, and we can be more proactive and be more distinct in the way we serve the different customer segments. This customer program will significantly reduce the number of unprofitable customers that we have. It entice customers to do more business with us. It is a program that are setting New Standards because it is better than our peers. It is more comprehensible, yet more simple, and it is more fair than the competitors' offering today. Some of you, and presumably the journalists, are quite eager to get more information on this right now. I have to say, you have to keep your composure until Q1 because we will launch at that time. But this gives you an idea as to how we want to do it in the future. The third New Standard is a revamp of our distribution channels. Customer behavior is changing. During the last four years, we have seen a 50% drop in teller transactions. More than 2/3 of customers' transactions are now done on digital platforms. We also see in all markets an increase in urbanization. That prompts for a change of our distribution channels. By 2015, we will reduce the number of branches by 40%. But at the very same time, and this is important, we will launch 80 new state-of-the-art advisory centers in the remaining branches that embodies New Standards within advisory, knowledge, and competence. By 2015, we will reduce number of tellers by 60%. But at the very same time, we will launch mobile payment as a solution for customers otherwise to think about cash. We will continue to invest in our market-leading platforms on the iPad, iPhones, and our call center. What is important with this one, given the changing customer behavior, is we want to provide the customer with an integrated and seamless experience anywhere, anyhow, and any time they choose to use the bank. Here we have an outstanding position to build upon. The fourth New Standard is efficiency. We believe with the efforts we're doing on the customer segmentation, on the lean, and the other stuff I'm going to mention, we can reduce staff by additional 15%. We will do in a way where we will take into account different customer segments. On this side here, you can see what we're aiming for is best practice. Again, you can see the customer program will be the catalyst for how we spend our resources. So if you are advisory customers, the advisors will have around 350 customer advisor. Whereas if you are in the other segment, it's more. And you can see with the benchmark we've done with Bain, that will put us at best practice or in the service centers above best practice. The reason why we think that is doable is because the markets where we operate, that is where the customer in a European perspective are most technologically literate. And our digital platform is also very advanced. The sixth and final standard, sorry, this standard here is on the loan application that we do believe that to a much higher degree than we see today, that we can have automated credit decisions. It's faster, it's better, and it gives more homogeneous credit decision throughout the group. We call it a triple win because it's good for the customer. They get fast decisions. It's good for the advisor because they don't have to spend time shuffling paper around. And it's good for the bank because it's cost-efficient and it enables much more preemptive credit management. Now, 90% is what you would call a big, hairy, audacious goal. We already have some of the markets where we are around 60% and some of the markets like Denmark, where there's a long way to go, but where we can see by changing culture that we can actually elevate this level here. The sixth and final New Standard is pricing. During the last two years, we have demonstrated Danske Bank ability and execution power to raise lending margin, reflecting custom risk New regulatory regime. We've done significant repricing in Denmark, and here I believe we are closer to the end than the beginning, whereas in the other markets, I see much bigger scope for potential for raising lending margins. The toolbox to do so will be the new customer program. It will also be stricter monitoring of leakage, and it will also Sorry. It will also be the way that we entice customers to place more business with us. It is probably a slight understatement to say that the Danish media and some of the other media have had a lot of attention on this topic. But if banks on the one side claim they want to get to 12% return on equity or even boasting about 15%, there is no way. There is no way the math adds up to get to that number unless you work diligently on pricing. Think about the avalanche of regulations going to hit the bank for the next two to four years. And I think the numbers you've seen in Q3 for most Nordic banks on NII, some of them even coming back, is the first time that this is a really relevant topic to focus at. We are committed in Danske Bank to be absolutely competitive to the customer that we particular prioritize. Any price portal in Denmark show that is indeed the case. To summarize, the six enablers I've talked about will be applicable to all of the markets, but to a various degree. So customer program will be rolled out to all of the markets. The revamp of the distribution channel is going to be very different because in some of the markets we are already almost there, but the others we have a large way to go, and likewise on some of the others here. Now when taking all this into account and try to give some numbers and do it into the pricing and the cost side, the plan that we have in Personal Banking is to improve pricing efforts by DKK 1.3 billion, sales cross-sell 0.4 and 1.6. I know you're all burning now to say how much of that is completed, and luckily, we've done that math for you to say we have already done quite a lot on the pricing in 2012, that will have full year impact in 2013 and onwards. There's some way still to go on the cross-sell and also on the cost side. But in total, more than DKK 3 billion is needed for the turnaround in the Personal Banking. So in real life, you would say the strategy is actually pretty straightforward. You'll pick a general direction, and then you just execute like hell. Now, the strategy in Personal Banking is a profound turnaround. This is not a desktop analysis. What I want to give you now is some examples that we are in full execution mode. So during 2012, we will amalgamate 100 branches in total. The same number is identified and planned for 2013. By Q1 next year, Sweden and Norway will be cashless. Two weeks ago, we announced 300 people lay off in Denmark. Over the last two years, we have repriced lending by more than DKK 3.5 billion in Personal Banking. In Q1 next year, we will launch a customer program in Denmark that we grow out subsequent. I hope that it gives you some comfort and some confidence that even though this is a significant turnaround, that we are already moving, and we are actually speeding up the pace in many of these aspects, and I have an organization that are ready to deliver. Thank you for attention. Right. We get to dance now with some music. Yeah. No. Okay, and we are going to come back. We're going to bring you back and the other guys, so that we can have some of those detailed questions a little bit later. But as let's go with the flow. It's important that we understand the direction that we're aiming at in the middle of all this. But just before you go, I had spoken to a couple of analysts, and there are some questions coming in already. Please do start to sort of fill in your cards. If you've got some questions you want me to come back to him on later, fill them in and we'll come and pick them up in a minute. A lot of what you said seemed to hinge around the customer segmentation. And one question that I've seen a number that have cropped up which said, "How are you going to turn value-destroying customers into profitable customers? It's a good question, and I think the 40% I mentioned, I don't think that's particularly specific for Danske. I think it's an industry phenomenon. But one of the ways to do it is to entice customers to do more business with us. The other one is we got to help each other to use the bank in a different way because we have the platform, we have the technology to do so. So I think there will be specific actions that will help customers, also motivate customers, so it's fair for the customer and it's fair for the bank. But you seem to be teasing these good people in a sense. You're not going to tell them what your customer program is that's launching in Q1. Presumably, that's going to answer that sort of question in some detail, huh? Yeah. No worry. Exactly. The other question that follows on logically when I looked at some that have come in is that, "How many customers do you expect to lose over the next 2 years? We have not said any numbers on any loss of customers. What is important for us is that the customers that we prioritize, they have a high satisfaction with us. And if that part of the journey offering what I just described means that we will lose a little customers, we will accept that. But I do believe that we have a strong proposition for the majority of the customers. Right. Okay. You are satisfied that this will be a go-forward positive position. Okay. I am going to keep the rest of these questions for when you come back and we are picking up some more. Anybody else got some more questions for Tonny that I need to collect? Right. Okay, that is fine. We will come back to those a little bit later. Can I just clarify, all of your slides, and in fact, all of the slides you are going to see here, I think are going to be available on the IR site afterwards? Yes. Folks, any of the slides and any of the information that is up there throughout, you are going to get. Okay. All right. That is Personal Banking. Thank you very much. No problem. Let's move to painting the picture and the direction from a business banking perspective. Please welcome Lars Mørch. Okay, thank you. Right. Thank you. Thank you, Ronnie. I've been looking forward to come here and present to you probably the least known of our three business units. We unbundled business banking from personal banking earlier this year, 1st of June. It's a pretty sizable business. It's smaller than the one Tonny is running, but it's a pretty sizable business. It's also a business with more potential. I'm going to run through the strategy that we will work with in business banking during the next couple of years. The strategy that we are launching is a strategy that will improve customer service, that will de-risk the bank, and both things are important. Looking a bit at the numbers and comparing it to personal banking, it's a bit smaller entity. It's approximately 40% of the lending of the group, a bit more than one-third of the deposits. It's, in terms of FTEs, a much smaller business. In terms of locations where we operate, it's also a smaller business. We put together our business banking entities into a lower number of locations to make sure that we have the competencies that we need to serve the customers where we are present. This means that we do not have a business bank offering everywhere where we have a personal bank offering. But, which is the important part, we have a personal banking offering for the entrepreneurs who are business customers in the bank everywhere we have a business bank. We have 3,800 employees. The vast majority of those employees are in customer-facing positions, direct customer-facing positions. I'm going to share with you three key observations from the comprehensive strategy process that we've been through. These will underpin the strategy that I'll go through afterwards. The first one, when we analyze business banking, we see that we have hundreds of products, hundreds of people meeting thousands of customers in a fashion where they come with the same bag with products to a small retail customer in the morning, an agriculture customer in the afternoon, and potentially an international company later in the day. We have this a bit unfocused, one-size-fits-all approach. The only good thing is that most of the competition has that approach also. But it is not the right way to handle the different kind of customers that we have. This means that it is pretty much down to the dialogue that the individual advisor, the individual customer has for kind of products that they buy from us. The second observation, which is a bit more positive, we definitely have the capability to compete. On a number of different product areas, we are number 1, 2, or 3 in the Nordic space. Thomas will get into more detail about that. Looking at capital markets products, we are number 1 in a lot of areas. Looking at transaction banking, being it cash management, trade finance, number 1 in most of the Nordic countries. Looking on a lot of the parts that we have, we actually have a good point of departure. The problem is, though, when you add up these good products, good solutions, good IT platform, the customer satisfaction is not very high. The parts score higher when we look at Prospera scores and other surveys than the totality. And that brings me back to the first point. That is because we have a far too unstructured way of meeting the customers. The sums work, but the totality are not built in a fashion that is good enough. For that reason, we have, as is the case with personal banking, already now set in motion quite a big change program for the next couple of years. Some very fast facts. The Nordic markets are some interesting markets. Robust economies, many strong customer groups, many opportunities to sell our products. However, we need to improve. Here are 3 important reasons why we need to improve. Almost two-thirds of our income come from net interest income on lending. And in the regulatory space that we are in, with the funding cost, this is basically not where we want to be. Customer satisfaction has been dropping during the crisis. We need to get that up again. And then last, but definitely not least, our impairments have been far too high since 2008 and until now. The primary strength that we can build upon is a market-leading position in a number of different products and solution areas. It is also that we have a very attractive channel platform. And thirdly, the footprint that we have, mainly in the Nordic market, is extremely interesting. We are in all the major cities. And in the biggest cities, we have finance centers, which is state-of-the-art in terms of competencies, in terms of facilities. The ambition that we are working with is to be the reliable, preferred bank for business customers with advanced needs. That is our sweet spot. That is where we do the best. The business customers with advanced needs are the business customers that are most happy with us. They have a generally high customer satisfaction. They buy more products, and they benefit to a large extent on the platform that we can deliver to them. This is our sweet spot today. We want to protect that. We want to develop that. 5 strategic actions will allow us to do just that. First of all, we will have a unique and very clear segmentation of our customers. We will do that in a way that no other Scandinavian bank are doing at the moment. I will get back to that in more detail. Secondly, we need to be able to leverage our product platform a lot better than we do today. Thirdly, our infrastructure, our distribution, we can also leverage that better. Fourthly, and very importantly, we need to ensure the credit quality, and do that in a fashion that allow us to have good dialogues with the customers, be predictable towards the customers. And fifth, we need to operate the organization, both in terms of competencies, but also in terms of training and different kinds of performance management measures, like putting in P&Ls and responsibility for results. So turning to each of them. First one, the segmentation part. We will be working with 15 different customer segments. Those we will work with in 5 strategic stances. On the one hand, we have the core customer groups. Those are customers that we are confident that we can serve better than no other bank. Those are also the customers where we are confident with the risk, both from a portfolio point of view and obviously from an individual customer point of view. On the other hand side, restrictive. These are the customer segments where we are not confident in terms of credit, in terms of our ability to serve those customers better than other banks. If one looks at our total income today, you see that more than 70% of our income come from core and selective. These are the places where we will invest. We will invest in people, we will invest in facilities, we will invest in products. So gradually, more and more of our resources will move in that direction. And it is important to say it is gradually. That will not be done overnight. Lending and credit, the same goes for that. Gradually move from the right-hand side to the left-hand side on this slide. That will increase the capital efficiency, and that will reduce the risk. Turning to the second, and that is leverage better on our superior products. Today, I said, when you meet a customer, you get out with your bag full of products. They are not organized in a fashion that is suitable for the customer that you are going to meet. We need to create some consistency, and we need to do it in a way where we do not only talk individual products, but where we have a discussion with our customers. Especially as we mainly focus on the customers with advanced needs that take the starting point from the customer's needs. We have a tool now. We have developed that. We have tested it in some of the markets during the last couple of months. It is a very elegant tool. It allows us to put in data from the customer, allow us to have data in from other companies, other businesses in the same market compare the performance, but also put in elements of the strategy, put in elements of the macroeconomic that they are operating in. In that way, we get a good picture on what is important for that customer. If it's an international customer operating across borders, maybe fluctuations in interest rate is a risk for that company. It might be currency that's a risk to this company. But given what is important to discuss for that customer, we will arrange for what we'll do together with the customer for the remaining part of the year. No other banks are doing this in the small and medium-sized business. This will be tailored to each of the 15 different customer segments that we work with. I can tell you that from using it so far, we have very good experience. That will allow us to cross-sell. Secondly, it's not only about getting the value proposition right, it's also the delivery model. We need to make sure that those 15 segments get tailored delivery models so that the value packs, but also the organization, the IT, the credit policy supports what we promise. That is where it starts getting a bit difficult, but that is also where it gets valuable for the customers. That was the product side. Then turning to the distribution. We have a business direct entity that needs to grow over the next couple of years. More and more customers, especially small businesses, want to do the advisory part also on the internet, on the phone. Very efficient for us, very efficient for the customers. On the other hand, proportionally, we have less resources on the branches or the advisory centers. We then move more to the finance centers, which are the centers that are supporting the most complex of our customers, which are the centers where we do the best business already today. Which are the centers where we have the specialists that handle the fee-generating products. We'll be working with the skills across all of these channels, and we will increase the skills in each of those. We'll also be working with certification on each level of advisors. So in order to be able to serve a segment of customers, you need to have your certification in place. To make this happen, this shift towards direct and finance centers, we need to invest, obviously, in IT and self-service. The fourth element is the credit part, and there I have to admit, we have started working. We need to improve the quality of our credit book, but we also need to improve the customers' satisfaction with the bank at the same time. We have had plenty of opportunities, and I believe a lot of other banks also have had that to get learnings during the last couple of years. Those learnings we are building into our credit policies, a credit policy per segment that we are tailoring our offerings to. In those policies, we get all the important learning that we've got from the last year into those policies. In some segments, we were not good enough at considering the cash flow of the customers. In other segments and markets due to collateral. But we will make sure that we learn from that and build it into the policies. We're also in a process, and we have started on that also, even the IT development of getting more lean credit processes, making sure that the data are right, making sure that we get the updates into the systems that we need to track the customers to track the customer development. We have also done some differences, done some changes in our credit organization. We have now, for instance, a team specializing in handling distressed customers, but also customers that run the risk of becoming a distressed case within a not-too-far distant future. So this team is working with these customers for the benefit of the customers, for the benefit of the bank. We also have a team fast-tracking the best customers with simple credit cases. We want to get down to a 48-hour response time for the best customers. That's important to protect the best customers. That's important to protect the best business. We'll be rebuilding credit competencies but also accountability. They will be responsible in the frontline for the business that they're writing. This will be a step-by-step change. This is something that you do not want to get wrong. The credit side needs to get right. The fifth is upgrading the organization. That's on competencies. That's on culture. A key parameter in that is to make sure that we get a certification program on getting the basic right, AML, MiFID, but also on the credit and risk side and definitely on the products and offerings. So before you as an advisor can meet a customer, we need to make sure you have the competencies, both on the formal stuff like AML, but also on the products. We do a lot to push responsibility out to the front line. One of the things is that we will reintroduce the P&L and the responsibility for losses. Obviously, we'll also follow up each manager on the strategy execution. So these are the five things that we'll do. We have tested this segment approach, and that we've done with very good results. This is some customers that we moved into a small group that has been working with one specific segment, one of the key segments that we'll be working on in the future. And what happens is that the ROIC gets remarkably up. On the other hand side, the allocated capital gets down. That's a picture that we've seen in the couple of pilot studies that we've been doing on this. Looking into the future, by starting looking at 2012, the allocated capital today is spread among where we want to be restrictive, where we want to optimize, and our core segments. If one looks at the ROIC on those segments, it's clear that the ROIC is a lot better on the core and selective. By gradually moving our allocated capital in a good fashion, good dialogue with the customers towards the segments that we are better at servicing, we'll have significant results. Some of the products, and Thomas will get more into that, where we have superior capabilities. We also have the biggest potential in the core and selective groups. These are the transaction banking products, the capital markets products, but also investment products. We have less opportunities in the segments that we will have less focus on going forward. Looking at the financials, the same picture as Tonny Andersen had on, and to answer the same question, how much have you done? Quite a lot on the pricing. DKK 500 million will get in with the first full year effect from next year. That has either been done or is in the process of being carried out. Then the gradual move from segments or from restrictive to core will add extra sales. Then we will be working with fees. We have a number of areas where we know that our fees are too low compared to the competition, and we have pretty high fee leakage also. So that we will work with on a selective basis. Then cost reductions due to FTE reductions, amongst others. So some key takeaways. By doing this, we will protect and develop our core business. We protect the areas where we are doing good today, where we have good results, and we will develop it further. We will de-risk the bank. We will become more capital efficient. We will benefit from the price increases that we have done already. And we will be a more profitable, more attractive business bank for our customers. Thanks, Lars Mørch. Right. Okay. Thank you. All right. Two down, one more to go. There was a stage when early on, and he does not know what I am going to say, when I did think you were sort of rather painting a picture of we are not very good at doing quite a lot. But then you did get to the point where, in a sense, the upside is enormous in the middle of this, and is not that really part of your message here? I think if you look at the Personal Banking business, we have been structuring that for years. A lot can be done. Yes in terms of taking cost out. But the business customers, we have not been structuring to the same extent, and I think that goes actually for most banks. There is a lot that we can do better. The good thing is we are actually earning money today. Far from enough, but it is not a turnaround case to the same extent as the Personal Banking. Right. Okay. We will come again, as I promise, we come to some more of the figures and the detail a little bit later when you come back. In a sense, what Tonny said was the train has already left the station. A lot of what he is talking about is already happening. Is it true in your area? You talked about some things which have started. You talked about some new models. You talked about some new tools. Are they well on the way, or is this still out there in the future? Some of it is on the way. Some of it we have done. I have to say, we have done most in the credit area, which I would say is probably also the most important thing to get right. Right. Okay. I suspect some people may come back. You talked about the issue about this being sort of capital light. We come back to that in the detail questions. But just one other question because of this customer segmentation thing. Will increased price differentiation between customer groups continue? Because there seems to be a theme coming here. Sure. Sure. Where we are able to drive good business, where we are confident with the risk, and where we do more business with the customers, the price would be lower. Where we are not as comfortable with the risk, we would also see the price going up. Right. Okay. We have just got to get real about all of this and recognize that there is going to be more focus. Okay for the moment. He will be back a little bit later. Still, if you have got any more questions, keep writing them, and I will make sure that we get to them in a few minutes. All right. Thank you very much indeed. Thank you. Now let us go to C&I. So let us please welcome Thomas Borgen, please, who is coming from that part of the business. Sir Thank you. Good to see you all. I will talk about C&I, Corporates & Institutions, who is our wholesale operation, or some will call it investment bank. Doing wholesale banking in the Nordics is actually a good area to do wholesale banking. It is a large, sizable income pool, and it is growing. If you take and put lending aside, the largest pool is probably within fixed income, fixed income derivatives, transaction banking, then it comes foreign exchange and equity. Danske has, for the last three, four, five years, really built an excellent position in many of these key areas. And we have today high recognition from the clients, we have high market share, and we have a good return on the allocated capital. I will, throughout this presentation, hopefully give you some more insight into what is actually now the C&I or the wholesale bank, how do we make our money, what is the risk we are taking, and not at least how we are going to build the New Standards based on the new normal. The title is Protect and Selectively Grow. And that is not by coincidence, because we have a very good franchise within the wholesale bank we will and need to protect. And I think some of you around this are trying to penetrate that profit pool, actually. But trust me, I will keep you guys away. But at the same time, we can see that regulation and changes behavior gives us a good chance to grow it also and take and seize the opportunity. But what is actually then the C&I today? It's the old, let's call it, the old corporate institutional banking, which some of you know. It's the old Danske Markets. It's the old foreign units where we do not do retail banking and where we now have taken transaction banking from a back office point of view to the front line. Transaction banking with us is not a profit area by itself, it's a competence area, but it's a strategic area. That's why we moved it into C&I. C&I deal with the most complex clients, the largest clients. We say that we approximately, due to the division, around EUR 300 million turnover, and we deal with all their institutional clients. So it's only about 1,500 clients, but approximately 25,000, 30,000 individual counterparties, because as you know, a lot of institutional clients have a lot of funds they deal with, et cetera. We're about 1,500 people, and it's highly competent people. We also, and I think both Tonny and Lars alluded to that, we also service the person on business banking with the products, which is traditional within a wholesale bank. So lending-wise, the C&I now accounts for approximately 9% and about 70% of the deposit base. The loan to deposit ratio now is about 0.8. So it's not that bad actually, but it's something we constantly are working on to get the loan to deposit even more balanced. FTE, around 1,500 people, so it's a small unit, around 7% of the bank. If you look at the income, and that's on the old accounting principles. In 2012, so far this year, approximately 70% or more than two-thirds of C&I's income is coming from our trading activities. Then approximately one-third from the remaining. That's a very high number, and the main reason for being such a high number this year, maybe it may continue, but it was very good trading environment, as you may all recall in the first and to the same extent in second quarter due to the LTRO. It's very difficult to say when we're going to normalize, or how do you normalize a wholesale bank or investment bank income. But 2011 is maybe more normalized. At least the trading environment wasn't that benign. It's more like 60/40. I think that's probably what we're going to see going forward. Also, that's the kind of the business mix we are aiming to achieve. If we then look at the client side, here we have in a very broad indication giving you the four different types we have. Typical institutional clients, insurance company, asset managers, and that sort. Then we have international clients. That's the non-Nordic doing Nordic business with us. Then we have the whole corporate client sphere, speaks by itself, and then shipping. Why have we split that shipping? Basically, because I know a lot of you are interested in shipping. We've been in shipping for many, many years. It's a quite sizable part of our book, approximately DKK 35 billion in lending, slightly bigger proportional when we do allocated capital. But as you see also that all our sectors are actually well above cost of capital. But as Eivind alluded to, we will not increase the capital usage within C&I for the next couple of years. So to be able to reallocate capital to the more profit area, we will take some of the right-hand corner and move it up to the left. So we will not expand the shipping book as an example. We'll probably decrease it slightly. We'll also look into the corporate book where we can see the return and move it more to the left. We have, and I will show you later, a good value proposition to particular the institutional clients, asset managers, and internationals. If we then move to the income stream. Here we have shown you how we have made the money in trading in 2010, 2011, and so far in 2012. As you hopefully will see, it's a very stable income who accumulates day on day or quarter on quarter, and the volatility is very low. You can see the dark blue one is well above 2011 and 2012 due to reasons I just mentioned. If we break it down on weeks, how much volatility do we have? 2012 so far has been actually no weeks with any negative income. Again, the same story goes, except for maybe 2008, it was slightly more volatile. We think we run a good, low volatile business with a stable flow from customers. If you then break it down quarter by quarter and look it into the ROE. The ROE are enormous, ranging from 600, before I take the two quarters where it read, down to about 48%. So it's a very good return on the capital we allocate. We have to say this is based on Basel I, the old capital allocation, so the numbers will be adjusted down as we go forward, but we have some mitigating actions we will look at. It's only two quarters where we are below capital, and the one which maybe sticks out is the third quarter 2011. You may all recall the height of the financial crisis in Europe, and that also hit our book slightly. But it was quick to return back to very normal and impressive numbers, if I may say so myself. If you look at the risk side, here just showing the stress VaR. That's a 10 days VaR at 95% confidence interval. That's what we're using the most stress period we can find, together with the FSA. It's running now at 185 million. So it's actually not very high. If you look on the VaR by itself, it's of course much lower. The balance between income and market making ranges between about 46 on both of them. In very benign trading environment, it may run up to six on market making and in more normalized, if whatever we can call a normalized trading, it's more balanced, about maybe even 60 on the customer side. So again, we don't do prop trading. The prop trading desk was closed down in 2009, so now we only do market making within our markets operation. We have a sizable bond portfolio, as you know, basically due to liquidity reasons and also to service the clients. It's now approximately DKK 450 billion, but it's a very high quality book. Those of you who spew through the risk book will see that in detail. Just to show you here, it's a lot of Danish mortgage bonds or covered bonds, which is one of the largest markets in the world, the Danish market and Sweden, so on. And that's why also we're a big player there, and it's very good quality. The immediate question could be, do we have any exposure to governments in the PIIGS country? Basically nothing, and we can liquidate it tomorrow. So it's so tiny it doesn't even count. I think it's a very good one. However, we're going to move into new normal. I think we all in this room are wondering what's going to happen to wholesale banking. We actually see more opportunities than threats because the Nordic market is to some extent protected by its own currency and by the local incumbents. But regulation will make it more expensive via wholesale banking, but we also have some mitigating actions I will talk to you about. Competition, I think the Nordics are competing good against each other, but we all are kind of finding not a harmony. But some of us have certain strengths which we need to play further on. One thing we need to work further on is the funding side. And within wholesale banking, we will be hit somewhat harder on NSFR or the liquidity requirements and the net funding needs. So we're working hard to try to get the funding up and going there. And economy, I wish I could have a strong view on where the economy is going. What we're planning within C&I is going to be volatile and probably low growth. So that's why we also, because we have such a limited number of clients, concentration risk is important thing. So get that right is also important for us. But I think we are in good shape going forward. And I'm sure I'm going to have a question about shipping, and we can take that if you have it later. So we will, as Eivind alluded to, also set New Standards in wholesale banking. For us, it's not a turnaround, it's not a revolution, it's more an evolution. So protect and selectively grow. Here we have certain words we're using internally. It's too soft for you because you guys still not going to write them down anyway. But for us, it's very important because we're bringing together different units, and if we get this really working, we have an excellent opportunity to really get cross-selling going, and we're starting from a strength, and we can just go one way, and that's being excellent. So what I will focus more concrete on is some on capital, some on clients, and some of the products initiatives we are doing. First of all, let's do on the capital. Today, these numbers are known for some of you who really deep dive into our risk book. We are taking about DKK 102 billion on the present Basel 2.5. That will increase by about 85 by incremental risk charge and the CVA charge. But we already have and very comfortable that we'll mitigate most of it, if not all of it already in 2013 by central clearing. It's not only good for us, it's also good for clients, and internal risk model. We are, as some of you know, on a standardised method today, and we'll move on to advance. And that will actually mitigate most of that increase. So net-net, if we are very good, it will be no increase, but I show here a cautious picture that at least we'll get most of it taken away. If we look at the business clients we work on, we think due to the product services, the competence and experience we have, we will move even more towards clients with complex needs. Not complex in the sense of complex products, but combining simple products. Because we run pretty much simple product lines. That is also why we will not be very hard hit by the new regulation. So it is a transparent business model. It is a flow model. But we will combine it in a unique way to our clients. That is why also C&I was established as it is. We will, of course, also service our, let us call it non-Nordic clients, which are more simple, one product liners, when it comes to the Nordics. Probably you have seen, at least by some of your colleagues, that the Nordics is actually in the flavor for a lot of the asset products we are providing in the Nordics. For example, the Danish market was very popular in the height of the financial crisis. Then we have the other Nordics, which will come back I am sure. Then we will continue to do what we call international footprint. We will continue to follow our Nordic clients internationally, where we have a competitive edge. But of course, certain Nordic clients are so big we will not service them in China. But we follow, for example, the SMEs to China if we need to. Maybe more importantly, we will continue to service globally our investment banking products. We can see, as I alluded to, that more and more asset managers, insurance companies, hedge funds, are looking to Nordics for the products. We have those products and solutions ready for them. It is basically cash products or short-term derivatives. Lastly, we will move up the value chain. We will move more to the asset manager. Some will say we are probably moving more to an investment bank light. So moving more from the liability side to the asset side. That is again for optimizing the usage of capital. If you look at the product offering, this is Prospera's ranking of Danske and all the peers who are trading in the Nordics. All of you probably know Prospera. Actually, we are basically ranked one, two, or three in all the major product areas in all the geographies, except two. Take care of me, because I know you sit there. It is in equities in Norway and Sweden, we are not one, two, or three. Otherwise, we have a very good starting position. But we are also saying if we are not one, two, or three, we either get in or we get out. So it is about prioritization. But the starting point is very good. Just take DCM, and I will speak more like DCM is going to explode. You look at the figures. 75% of funding in Europe is done by the banks. In the U.S., it is 25%. You can see how they are exploding. Today, Danske is out with Carlsberg, EUR 1 billion. That is the deals we will do and have been doing and going to do much more of. Transaction banking, et cetera. This is very important for us. We have a very good starting point. But if we're not one, two, or three, get in or get out. So what are we going to do? We have a mission. We have something to protect. Here I've used normalized. And again, what is normalized income in Danske Bank? So far in 2012, we have made about DKK 10 billion. But we think it's difficult to predict that we will have the same benign environment as we had first quarter. So I take it back slightly. But that we need to protect. And how do you protect it? Well, we need to work with e-trading. We are actually behind some of our competitors on e-trading, and we have hired a team to really make the state-of-the-art e-trading platform for our clients, both the professionals and the semi-professional. We are working hard on the CVA. I think we all are. And that's working through quite well. And not least, I think the cross sales where we now have combining those units I talked to you about, is really looking good, how we get multiple sales, particularly when you get the cash management going. But we will do some more. Equities. And I say this with respect with so many equity analysts in this room. The equity model seems to be broken. At least our model is broken because it's too much cash-based. So we need to change that. We need to change it dramatically. So we're saying we need to move on to use it in the way we have a competitive advantage. And we have that where we can see that we are very good on derivatives. We see very good on repos. And it's not that far from doing derivatives on equities to do securities lending, et cetera. And we will look into this. We haven't decided exactly, but all I can tell you, it's not going to work the ways today. So we will change that. And we have some ideas. And those who's interested, we can talk about that later. DCM is exploding. Will go further. We are With a good starting point, we are out there recruiting continuously. We're also building up high yield. One thing is, as we all know, investment grades, but the Nordics, particularly Norway, is very in the forefront of high yield on non-rated investment grades. And we can see the profit pool there are very good, and we can see the demand from investors there is also good because they're seeking yields, as you know. But it's important to get the value chains going, and I think that's one of the strengths of Danske, that we have the clients, we have the research, we have the trading, and we're going through the whole value chains and then the sales with the international investor base throughout the globe. Then we have transaction banking. I think that's maybe one of the most important key strategic focus areas going forward now. We're moving it from back to front. I would say that cash management is the clue and the glue to clients, both because it's the way you get interacted with a client, you can also see the way it will be very compliant when it comes to deposit on the LCR going forward. We are the only bank, as far as we know, with one single platform. We have a unique technology. We're just going to see how we can use that even more going forward towards our client. We're moving basically from cash management, liquidity management, trade finance. We're working from trade finance to working capital. We will look into certain other aspects also with transaction banking. It's a very important area, but we have at least the technology. It's all about getting the really value proposition working. Then, it's a very untapped potential for Danske. It's what we call capital guarantee products. It's a product which Tonny in his personal bank will sell to primary private banking clients. We haven't really played a role in that market for various reasons. This is something we will develop. Best of class, very transparent, cheap, and, as I said, to the benefit of the client and also to the benefit of the bank. Also, we will continue to invest resources into hedge funds because of the interest in the Nordics. We will look at the municipalities. We see we have a very good offering there, which is untapped. We will utilize much more of the resources of the investment bank to largest area. Not the least, we will work further on sponsors of private equity. We can see that we have the whole spectrum of products or private equity firms or sponsor looking for going forward, and particularly when it comes to DCM products, corporate finance, and capital raising. I think when we have that product palette, we can really be value creating going forward and use less of the bank's balance sheet towards that area. In sense, that's kind of track we're going to do. That was the normalized income in 2015. I think it depends on the benign market or difficult market, but it will be higher than we see it now. What we're saying is, we will on non-NII, which accounts for 80% of the CNI income, only 20% is interest income, the rest is non-NII, will increase by at least DKK 2 billion. That's based on the strategies I just referred to and the bullet points there. But we will also invest. We need to invest in technology, we need to invest in people, and we need to invest in the class of e-trading. That will have an expense of somewhere around DKK 600 million. Net about DKK 1.4 billion we will at least contribute as based on the normal. Then we need to see what normal is. Basically, the strategy is to protect a very good franchise we have today, which is a machine, very satisfied clients with good return to shareholders, but at the same time seize the opportunity which the regulation and competition and new customer behavior creates to do this selective growth. Thank you very much. Thank you very much. All right, can you sort of fill in your questions for this gentleman, for Thomas, while I just give you a couple that I've already got, and then we bring back the other two victims as well, really. One question is that investment banks are currently reducing activities and/or the risk profile. You seem to be doing the opposite. Can we be sure it's a profitable strategy? Well, first of all, we're not changing the risk profile. I think that's hopefully very clear. We're not changing that at all. We're using the same capital. If you think about the market, this market risk question, that's very subdued, and we have no interest in increasing that. Why do we invest? We have an excellent platform. We have a market share, let's take fixed income, which is a very profitable area for us, of around 30% in Sweden and more than 20% in Denmark. That's something we build on. I think some of the other investment banks who's scaling down doesn't have the critical size. So for us, it's more continue to build on the strength we have, actually. Right. Combining that in one unit. I don't know whether this is a question that Eivind's actually got to sort of judge on, but it said, Thomas, you make good profit on the capital you've allocated today. Isn't it just a matter of allocating more capital to your business and downsizing in Lars and Tonny's areas? Well, I'll leave that to Eivind. I don't think Lars and Tonny sort of put that question. I'll answer one way, and I agree with Eivind is, we're making good return on the capital today. There's no question about it, even under new regulation. I think we all need to clean up, and I think that's what the agreement is. We're going to clean up and optimize within, let's call it, the capital space. When that's done, I'm sure if we continue that traction, Eivind will allocate more capital, and the investor will be happy that we allocate more capital. Presumably the whole issue of capital and capital allocation really then adds to the other question. If you're talking about looking at capital light initiatives, what are some of those? Can you be more specific and how are they going to be better than your peers? Well, it's a bit my peers, I don't know. That's difficult to answer. But basically, what I alluded to is moving capital from capital of funding intensive industries and moving up the more capital light. Because we can see that the return on capital, as I show, and with the products we have and the product suites, actually fits very well on international asset managers and those sorts. So it's scaling slightly down on, as I said, shipping, but we still be in shipping. Scale slightly down on corporates, which we don't make the return on. Just while you talk about shipping, there was a question on why is shipping one of the low return segments and what's the outlook for 2013 in terms of losses? We have a good portfolio. What we've done is having all shipping within C&I. They're also the small shipping companies, because that was placed out in the region or in the countries previously. The losses on C&I today, which is basically the old CIB, as many of you recall, runs around now about DKK 1.1 billion so far this year. That's too high, but about 75% is shipping, and you can then break it down to about five or six or seven shipping companies. I think that it will be a difficult market also in the 2013 and 2014. Hopefully, then it will at least stabilize and improve. We are prepared for a difficult market, but I think if it's going to be continuous difficult, our impairments subset will actually fall, and be at a lower level, even in a very difficult trading environment. Okay. Well, let me bring back the other two, and I'll deal with some of these questions, and then we'll open it out for about 15 minutes or so, and then we'll have a break so you can get some fresh air and some coffee or some tea or some water or whatever we drink at this hour of the day. Then we'll sort of carry on. Do you want to lean on those tables? Would that be a good idea? Okay. I can lean. I'm not going to stand next to some of these tall Scandinavians. It's just not done really well. Apart from the fact they speak an incomprehensible language, but their English is pretty good. It's sort of coming on. Tonny, somebody wrote down, I think they were slightly cheeky, and they said, "Some of what you said sounds like too good to be true." Making everything that you've said needs to happen, I think is the essence of their question. What are you going to do, make things implement properly? Somebody actually, I think it was Paul Dietch, said, "What incentives and control mechanisms are you introducing to ensure that the group strategy is well executed at the operational level? What type of KPIs, tools, et cetera, will you use to track and present to middle management?" I think it's all getting at the same sort of issue. Yeah. There's no doubt that there's a range of activities that has to be implemented and executed. I think we're already, as I said, in good motion on this, and I think there is a knowledge and understanding within the unit that change is needed. I think that's the first step you need to make sure that your staff understand that you need to change. I actually think the way to go around it is that by defining where we want to go in terms of customer segmentation, in terms of branches, and in terms of how to serve the different customer segment, making that very clear for staff, then you have the highway actually to travel upon. What I would spend a lot of time on is make sure that once we decide on a customer program, on the definition, that is rolled out in all the units. Then it's rather clear for me to see what are the KPIs, number of branches, number of tellers, how many customers have you contacted under the new customer program. What's the customer satisfaction on the customers that have more complex or advanced advisory needs. But the toughest part of this strategy turnaround, that is not the physical side or closing branches. That is the soft part. Let's make sure that our staff understands it and buys in on the heart and in the brain that this is the way you want to travel. That's the toughest part. Lars, you must have some of the same problems because there was a question in here which related to you had a whole pilot about accreditation and upgrading your people. What is your challenge in relation to, in many senses, addressing the same operational issues? Yeah. I agree. We have some of the same issues to address. I think that the majority of our people actually like the changes that we are going to make. I even think that the majority of the people thinks it is a big plus that they will get training, certification, and so on, that will prove that they have the needed competencies to meet the customers, that they get updated every year, and get through the mill again. I think the vast majority of our people like that. Also, I recognize that will mean that we will also have to change some profiles, and that is part of our program that we will do that. Okay. While we are with you, Lars, explain how you will do the lending more front office oriented. Will it still be able for Danske Bank's credit department to veto or turn down a credit demand? We move the decision power closer to the customers, but not by increasing the DLAs significantly in the front line. I do not think that is necessary to get the impact that we would like to have. What we do instead is that we are in the process of writing those more clear policies that we can be feel certain about. That the more easy decisions, the more certain decision can be made fast between the frontline and the credit officer that they work with within 48 hours. I think that would be very good for the customers. That would be better than what our peers are doing. But that would not necessarily mean that the frontline need to make the decisions by themselves. Then I think the rest of the decisions, the bigger, the more complex decisions, normally the customers actually accept that that can take a bit of time. That you would have some discussions, and they normally accept that. There we do not need to have big, high DLAs in the frontline to handle these customers or these cases. But the straightforward, I promise you that would be easier, that would be faster. Right. Okay. Thomas, to you, how much of the 2012 normalized profits come from the bond portfolio? Well, we do not split up by bond portfolio because it is the customer trades with us if it is derivative of bond or whatever it is. Maybe it is the question alludes to a bond carrying. Who said Maybe they wanted to ask the question. Maybe clarify the question. Who asked that question? If it is about if it is income or carrying the bond portfolio, is that a question? I do not know what it is actually. The way we do it, we pay back to the treasury what we call the investment bank fee. The theoretical advantage of carrying a bond portfolio. So it is actually zero if that is the question. But I am not sure what the question then relates to. I think with all of these, if you start getting into some of the nitty-gritty, these guys are going to be around for a pile of time after we are finished. A, both during the break, but also afterwards. So grab them if we are not answering your questions thoroughly. Thomas, just one point. In many senses with these two, there is a heck of a lot of change actually happening in their business. Would it be true to say that in your business, it is the business that in some senses has got less change because of your position and what you are doing? I should always be careful to say less change because then you get complacent. I think, and I say this with all due respect to both my peers, competitors, and my colleagues, we have a very good starting point. Both on the customer satisfaction, how we make the money, where we make the money, and the position. I think we all agree, the world is changing, and we need to adapt, both from a threat point of view, but also opportunity. It's not a turnaround, but let's not get complacent. Let's make sure that we make a good shareholder return by making the clients happy. I think that's the answer. Okay. But in a sense, you're already there with a pretty damn successful business. Tonny, there's lots of questions for you which get into the nitty-gritty, which I think will sort of come up a bit later. One says you mentioned you had four issues that you've addressed. Number 3 was where and how to do business. Please could you tell us what you were discussing regarding the where? Well, on the where is obviously the different channels, but also geographically, you could say. I think looking at the where in terms of the physical, I think customer behavior is quite clear what's going on. In terms of geographic, we have, as Eivind alluded to, decided we are a Nordic universal bank, and we have small units in Sweden and Norway. With the initiatives we are doing now, I believe they will be profitable in a way that means that stand alone, that is worth having the capital deployed. Also what's important, there is a connection between the activities we have in Sweden and Norway and business banking. Some of the customers we have there are actually important business banking customers. But what we need to make sure when we talk where in smaller units is to make sure they align, and they have the scale efficiency by tapping into what we do with the rest of the group. I think looking at those measures, the six key enablers we talked about, that would facilitate that even smaller units will be profitable, and they will have to in order for them to get the capital. In terms of location, Lars Mørch, there was a question for you which says, "What are your plans for increasing market shares in Sweden and Norway? Well, long term, it would be nice to increase market shares in Norway and Sweden, but I do not think it is the right time now for internal reasons and for external reasons. Internal reasons, we need to get the funding closer to on par in local currencies with our peers. Externally, we would like to see the macroeconomic be a bit more certain than it is today. Okay. Thomas, there was a question for you about impairment in Ireland in terms of non-core. What do you expect the impairment drop to be? You made some forecasts apparently some time ago. Okay. That is slightly on the side of it, but I guess you answer me since- Yes I'm responsible for it. We gave a guidance after the Q1 of between DKK 5 billion and DKK 7 billion, and we still stick to that guidance. You can do the maths basically for yourself. You can expect maybe one or two more quarters with elevated impairment charges, and then it should drop off to much lower levels than we've seen during the last couple of years. Okay. A couple more, and then we'll open it up to see if there are any more questions that are coming up. Claire Kane, thank you for your questions. Claire, you've asked a few questions about IT, which I'm probably going to point you in Eivind's direction after the break because we don't have the Mr. IT here for the moment, so I'll deal with those. But you have some other questions, I think primarily for Lars. Lars, who are the key competitors for non-lending business? I put the three questions in a row. Who are the key competitors for non-lending business? Why do you think you can get the ancillary business? Any progress or quantification on cross-selling? Where do you want to start? Who are the main competitors? I think the main competitors are the bigger Scandinavian banks. I think with the segments that we primarily do business with, where we primarily do fee business with, that are the bigger companies and the alternative banks for those are actually the other bigger Nordic banks. In Denmark, Nordea probably. In Sweden, there are more to choose from. But even in that market, we are capable of taking some of the biggest, most interesting mid-size companies on board also, and offer products and solutions that today are at level with the big ones. So I have to say, we don't need to fear anyone. But the biggest competitors, that would be the bigger banks. Right. Okay. All right. We've time to 5, 10 minutes if there are some questions. I can easily get a microphone to you if you'd like. Any questions for any one of these three wise men. I know we'll come back to the details later. The gentleman here in the front, if you can give him the microphone. It would really help to know who you are sir, and where you're from. That's okay. There you go. Yeah. Thanks. Walter Gotchebank. Two questions. One to Tonny to start with, and also Lars. You talk a lot about using more IT tools to approve lending decisions, various kinds. Could you give two concrete examples on how you increase the accountability in terms of making a credit and then taking responsibility for that? I mean the front office. Then the second question is also to Tonny and Lars on your repricing efforts. Don't you expect some kind of balance sheet shrinkage due to that? I guess it goes back to the previous question on customer loss. But isn't that when you think about this issue, you will be on the forefront for a couple of years in Sweden, Norway, Denmark, and Finland, I guess. Being great. Give a feeling for that. Is it 1% or 2% or don't you expect anything there? Thank you. Tonny, do you want to answer that first? Yeah. I can take on the repricing. What we have seen is there's no doubt that in Denmark we have been the market lead on this. But what is remarkable is that we have not lost market share. The other banks are following suit. They may not declare it as open as we are, but they're following suit. We can see also that in the other markets where we're doing it, that it may be in a short time that we lose a little bit of market share. My point is all banks need to look at repricing, and particularly if you want to address the changes on regulation. We believe we need to do what is right given the risk, the cross-selling, and then with new regulation in mind on this. Yes, the deleveraging you see right now in Denmark is because the economy is deleveraging and not because we are losing market share, per se, on this. And we do believe with the customers we target, we can keep it where it should be. But if it means that we will lose a little bit of market share to have more prudent pricing, then profitability will have first rank in this. Lars, do you want to comment? Yeah. First of all, sorry for giving you the impression that we use IT a lot for granting credits within business banking. That is not the case. We still believe that the best way of making decisions in business banking is that you actually go through the credit application together internally in the organization. And the capacity that we have in the group on making digital decisions, that is probably best spent in personal banking to make sure that Tonny gets closer to his 100%. Because there we can take cost out, there we can definitely make fast decisions on customers. I'm not ruling out that we can do any of this in a couple of years' time. The other one about pricing. There's a lack of investments in a number of countries, and we see that. We see a deleveraging going on, not the least in Denmark. But we also at the same time actually see that our market share is going up a bit. So I don't think that the pricing, if we are to see some shrinking balance sheet, that is not only due to pricing, that is also due to the economy as it is now. And I do not think that we are out of market in our pricings in any of the markets. Okay. And in relation to your IT, I'm assuming. There's a gentleman over there with a hand up, if we can go to him. My understanding is that, Lars, you're actually gaining quite a lot of credit for your IT platform being more joined up in the business banking area than many of your competitors. You are actually blessed with a higher degree of integration and unity on your IT than many of your. You have actually made a step ahead of many of the others in the game. Am I right? Absolutely. Especially when you get to the mid-size customers, that is an advantage. A lot of the new customers that we are getting, we are getting not because of our willingness to lend, but due to our transaction banking capabilities. That actually attracts very interesting customers. That has to do with the integration across borders. Real-time updates and so on. That is what the customers want. Right. Thomas, you have a link obviously into all of that transaction stuff too. Okay. The gentleman over there. Yes. Thank you. It is Chris Rosquist, Chris from Barclays. Just two questions regarding the Danish Personal Banking business versus the Personal Banking business in the rest of Scandinavia. First, it appeared from your statistics that your customers were a lot more satisfied in other Nordic countries. If you could please just comment on what you have been doing differently versus in Denmark or what the competition has been doing differently. The second part of the question is, it appeared also that you had a lot more branches relative to the size of the business in Denmark and more infrastructure in Denmark. Why is that you have been able to run the business with higher satisfaction on less infrastructure in Scandinavia, or I am sorry, in other countries? Will that then be a precedent for the improvements that you have described here across the group? Thank you. Yeah, higher density in Denmark, okay. No, I think it's an excellent couple of questions. Denmark is probably the most over-banked country in the world. We don't have mountains, but we still have more branches than anybody else have and more double up than many of the Nordic peers. This is a trend you've seen for the last 20 years, the branches coming down in numbers in the entire industry. I believe that will continue because it's too costly way to serve, and the customer are changing behavior. They leave the bank. They don't want to spend time in the branch. They want to spend time on digital for their transactions and even maybe also advisory where we introduce this. I think you will see a convergence much more in the countries that are over-branched density into much less branches. Some of the analysts down in this area at least have said that in Denmark you probably only need 100 branches that Danske Bank is saying, 120 branches to cover fully the country for the customer side. Then you have on the question on customer satisfaction. What we can see is that being the incumbent, being the one that make the changes on pricing, being the ones that takes the headlines, that obviously has some major impact on this one here. What's interesting is when we ask the customers that we are in contact with, that we have meetings with, they're happy. But the ones that sort of look at us from a general perspective, their image is less so. I think the way to come around that is to be much clearer in our segmentation, in our value offering to these different segments and put more emphasis and have time on proactive care for customers. That is exactly what the customer program will facilitate. So that will be part of the journey going back to be a highly recommended again in both Denmark and also Finland. We have some good skill sets from Sweden, how they are approaching stuff, which we are taking into rest of the group also. Okay. Now I'm going to take the break, but then we're going to come back and get your spreadsheets ready and your pencil sharpened because we go in all the nitty-gritty with the figures. But I think it's worth allowing each of you almost sort of just one thought, given you've got a bunch of analysts and you've got a bunch of journalists and some other assorted individuals here. What would each of you, if you had one final thought. They're not disappearing because they will be around for questions after the CFO, et cetera. But here's your opportunity. What one thing would you want to leave as a thought, Thomas, with these good people? Buy a lot of shares. Why didn't I guess you were going to say that, right? Lars, what would you say? That was a good spontaneous question from your side. I think first of all, what is important for me to say to you is that we can actually build a bank that is more attractive to the customers, yet at the same time, de-risk the bank. That is what we are doing. In many senses, you're the unknown bit of Danske Bank, which is about to change. Tonny, what would you say? I would say we will do in the management team Personal Banking, whatever it takes to bring Personal Banking back again, and I think we demonstrated that already for the last nine to 10 months. Okay. I'm very conscious of our promise because I know people have got deadlines and things that they have to do, which is why I'm sticking pretty much to sort of the time plan. In fact, I'm trying to pinch five minutes so that we can have a 20-minute break now. Go and enjoy the break, and we'll start again promptly at five minutes to 4:00. But thank you very much for your attention, and we'll get into the nitty-gritty when we get back. Thank you, guys. Okay. And for all of you number crunchers. Let's have the Danske Bank number cruncher extraordinaire. Please welcome the CFO, Henrik Ramlau-Hansen. Thank you, Henrik. You're very welcome, sir. Thank you very much. Thank you. Yes. If you want numbers, I hope that I will not disappoint you. My goal is to try to describe to you how are we in Danske Bank then actually able to go to reach an ROE return on equity of at least 12% in 2015. That will be the main theme of my presentation. Given what you have heard from my three colleagues, I'll try to put some things together and demonstrate how are we then actually going to reach the 12% in 2015. I'll also try to give you some insight into our capital issue we just did, which we appreciate for some of you came as a surprise. I'll try to give you some insight into what has been our reasoning behind that and what are the numbers again behind the capital issue. I would also like to, and I hope that you would have a feeling that we are also gradually setting New Standards in terms of financial transparency, because we are actually trying to guide you quite a bit on our reasoning behind how we will aim at the 12% in 2015. My agenda is simple. First, a very quick recap of our nine-month results, then our roadmap in quite some details, how we're going to reach the 12% in 2015. A little bit about our capital issue, share issue. Then finally, I'll demonstrate some sensitivity around the results. If you don't believe our numbers, I have a lot of other numbers, and then you can make up your own numbers by just changing the assumptions. I have some sensitivity to our assumptions, and you can see how our ROE calculations depend on the underlying assumptions. That is simply the agenda. Let's start with our nine months. The figures, generally speaking, we think that that was one more step in the right direction for the bank. We've had poor results for many quarters, but we are gradually moving in the right direction, and we are really satisfied with the growth in our total income of 14% for the nine months. We are also satisfied with the fact that our expenses have remained flat for the first nine months, although we have written off goodwill related to our Sampo Bank name rights. Of course, it's not so good that the impairments are up by 18%, but that's mainly because the economic climate deteriorated by the end of last year. But again, when we look into 2012, our impairments on a quarterly level are gradually coming down. Finally, we are actually satisfied with this improvement, although from a shareholder perspective, it is of course not satisfactory in any way. But again, it's an improvement compared to last year. Also, if we strip out the non-core Ireland part, we are actually providing a return on equity of more than 7%. Still not enough, but at least it's a major step in the right direction. If we then look at what we have communicated in terms of the remaining part of 2012, it is a continuation of what we communicated in connection with our Q2 result, that we still expect the economic climate of where we are operating, Denmark, Norway, Sweden, et cetera, to remain low. Denmark is challenged, Ireland is a challenged environment, and also things in Finland and Sweden look a little bit challenged. Perhaps the only country where it is doing quite well is in Norway. We will continue to do what we can to improve our income level. Our expenses will remain above the 2011 level, but it will be in accordance with what we communicated with our Q2 results that expenses will be up around 4% for the full year. Finally, we still expect our profit to remain low, but it is a step in the right directions. Impairments will be in line with what they were around for 2011, meaning that will probably be around DKK 13 billion. It is a step in the right direction and we expect things to continue to improve also when we move into 2013. That was a quick recap of the results for the first 9 months, and then let us look at our financial targets. I will not go into the details of them here. They will come down the road during the presentation. Eivind has also commented upon them, that we will try to reach this above 12% ROE in 2015. We are targeting a rating improvement. We are very satisfied with the fact that after we did the capital issue, S&P were out and changed their outlook to positive. We have Core Tier 1 and total capital requirements. We will be pleased to take questions on that. Then we are targeting the full LCR compliance by the end of the year. That, of course, also require us to gradually take on more liquidity in order to fulfill that. Finally, we have provided cost guidance. I will show you detailed figures on that, how the building blocks are on our cost guidance. Then the dividends, we can take questions on that, but that has also been communicated quite clear in connection with our strategy announcement. In our announcement of the strategy and during the press conference on October the 30th, we published this ROE bridge, or however you pronounce it, where we demonstrate or show how we think about the bank, how we plan to reach this above 12% in 2015. The starting point is our 9-month results annualized corresponding to 3.8% return on equity after tax. Then we have three income parts, management actions, declining loan losses, short-term interest rates, and also a fourth box, capital regulation, inflation and so on, which is reducing the result. I will take you through all the details of the one, two, three, four, the building blocks. You should be aware that the blue ones, they are after tax, whereas the green ones to begin with are before tax, and therefore the tax impact and the tax effect is included in the red part, number 4. I will simply take you through all these four building blocks, and we can, in the question section, of course, take your comments to the various points. Let us start with the management actions, which are supposed to contribute altogether DKK 6 billion-DKK 8 billion additional income in 2015 compared with 2012. The first one here simply explained as pricing. It is pricing initiatives that have already taken place but has not filtered into our income stream for 2013 yet, and also additional pricing initiatives which may take place. As Tonny mentioned, most has already happened in Denmark, but we feel that there are room for additional fee or price adjustments in other parts of our businesses, and the total income of additional pricing initiatives also in Business Banking and so on add together to roughly DKK 2 billion. That is one building block. Another one is here mentioned as sales, and that has also, to some degree, already been covered by what Lars Mørch and Tonny mentioned, the wish to do more business with existing customers. It also includes the extension of business lines that Thomas Borgen talked about, the capital markets, equities, guarantees products, et cetera. We also actually have great expectations and wishes about increased revenues and income streams from Danske Capital, and I will come to that also in a minute. Finally, we assume or have built in in our strategy that all other things being equal, we will be able to reduce cost by roughly DKK 1.5 billion, and that is a combination of two things. It is a combination of fewer employees, fewer branches, more lean processes, et cetera. That is all together reducing cost, but we are also increasing cost in certain areas, especially in our Danske Capital unit, but also in the C&I area. There will be investments that require additional costs. So this DKK 1.5 billion is a net effect. When you add these figures together, you get roughly DKK 6 billion-DKK 8 billion, and when you do your spreadsheet, you will find out that we have in 2015, we have an equity of around in Danske, or at least that is our underlying assumption, an equity of around DKK 140 billion-DKK 150 billion. If you divide that with 6 up into 6 to 8 billion, I think you will get 4 to 6 percentage points improvement in our earnings over that three-year period. Then you may ask, how is these figures actually split between the three or four different business units? These figures you see here that Personal Banking will deliver or is supposed to deliver DKK 3 billion-DKK 4 billion, Business Banking roughly DKK 2 billion, C&I DKK 1 billion-DKK 1.5 billion, and Danske Capital DKK 0.4 billion. They correspond to what you have already seen from my colleagues. Simply put, it is in Personal Banking where we expect most to come from, whereas Danske Capital is contributing less. So depending on how you look upon it, Tonny, you won the biggest chunk or it is at least, or one could also phrase it that Tonny has the most easy job to do because there is so many opportunities in that area. Then if we look into Danske Capital, and I will cover briefly both Danske Capital and also Danica, because that is two additional business units that have not been included in the main presentations. That in Danske Capital, we have a very nice business that requires very little capital, which is growing quite nicely, and we have great expectations over the next three-year period that they will be able to grow their total income by roughly DKK 500 million, offset by an increase in cost by roughly only DKK 0.1 billion. That is a very nice development. That will be through additional sales to additional existing clients. Also, our mutual funds can be penetrated much broader in Norway, Sweden, Finland, et cetera. Danske Capital has also been able to attract international clients. There is a built-in assumption that Danske Capital would actually be able to contribute DKK 400 million to our strategy plan. Then we have guided on costs. We have guided that we expect our cost in 2015 to be below DKK 26 billion. That is actually quite ambitious. We have in the bank, over a number of years, had gradual reductions in number of employees, and we have been able to roughly keep our cost, excluding extraordinary times, extraordinary items, roughly flat. Here you can see some of the building blocks leading to a cost target of below DKK 26 billion in 2015. First of all, this year, in 2012, we have some one-offs. We wrote off the Sampo Bank name. We are also spending money on rebranding, et cetera. Then we are assuming that we will be able to reduce the underlying cost base by DKK 1.5 billion with cost efficiency, and then we have an inflation assumption of roughly 2%. We asked ourselves that we will be able to keep, or that is a goal, to keep inflation at roughly 2% per year over this three-year period. That is the building blocks leading to a total cost, nominal cost in 2015 at a level of around DKK 26 billion or actually below DKK 26 billion. Then let us move to some of the other parts that were in the first chart where you had the whole bridge leading to the 12% in 2015. The first is that we expect our impairments to come down to an assumed loan loss ratio of around 30 basis points. Of course, given what we have already communicated and Thomas also commented on just before the break, Ireland will be the main contributor to the impact from reduced loan losses. We also expect, broadly speaking, impairments to come down in Denmark by roughly DKK 1 billion-DKK 2 billion compared with where they are now. It will altogether sum up to an improvement in our impairments line of DKK 7 billion-DKK 8 billion over the period. Again, assuming an equity of DKK 140 billion-DKK 150 billion in 2015, you get an overall impact of around 5-6 percentage points. That is the impairment part. Then there was also a part relating to an assumption of improved or higher short-term interest rates, where we are assuming that the short-term rates should increase up to around 2%. In Denmark, they are roughly zero or perhaps even negative. But the underlying assumption is that things gradually, slowly improve up to short-term rates of around 2%. Of course, whether that will be the case or not, we do not know for the time being. If things do not develop as expected, of course, we will gradually down the road, quarter by quarter, gradually adjust the plan. The impact of a 2% short-term interest rate is included with a total impact of DKK 6 billion, roughly split halfway between the effect on our deposits, the floor risk on deposits, and roughly split on additional earnings on the equity we have, and also the gradually higher equity, larger equity we will generate during the period. That adds up to DKK 6 billion, and again, altogether being 4-5 percentage points. That is an opening up or an additional illustration of this building block three, the effect of higher short-term rates. Then we have the big red block that reduced the total earnings. There are a number of building blocks. One is inflation, where we are assuming that there are underlying inflation of 2% on the underlying cost base that will have a negative impact, taken altogether of roughly DKK 1.5 billion over the period. Then we have two other parts that are a little bit complicated that are relating to capital impact and are relating to funding impact. If we take capital, then we are assuming that we need a total capital ratio of 17% in 2015. We also have a desire of repaying the state hybrid. When we repay the state hybrid, and also taking into account we expect existing Tier 1 and Tier 2 capital to run off, there is built in an assumption that we need to take on additional Tier 1 and Tier 2 capital at certain prices, and that is built into the calculation. It is also built in that up to 2015, we will have a lot of covered bond senior funding, et cetera, that run off and has to be substituted at prices that are currently much higher than what the old funding was taken up to. There is also a negative impact from higher funding costs on the new funding, and also the fact that new funding is more expensive than what we had on our books. Also the fact that we are targeting LCR compliance, actually also including a slight buffer. It will all add up to additional capital at funding cost of roughly DKK 2 billion to DKK 3 billion taken over this period. This will be the total impact in 2015. Then we have another DKK 2 billion that is related to, as an example, Danica will earn less in 2015 than they actually supposed to earn in 2012. There is also an impact from the fact that we will have much higher equity in 2015 than we have now. That takes the whole down. There is also built in this normalization, as Thomas Borgen talked about, that his earnings in 2012 were somewhat above normal. That is all included in the other box. Finally, and that is a pity of course, we will have to deduct tax. We will have to deduct a net effect of tax on all the positive impacts you have seen previously. It all adds up to a headwind of around DKK 8 billion to DKK 10 billion, corresponding to six to seven percentage points. The good news is that our tax rate will normalize down towards 25% and not the very high tax rate we currently have due mainly to Ireland. Danica will also get some few comments. Danica is doing quite well. We expect really nice results for Danica this year. We also expect the underlying technical insurance result to improve from 2012 to 2015. Our building blocks includes gradually increasing interest rates, and therefore Danica's investment return in 2015 will be negatively impacted by falling bond prices on certain long-term bonds Danica have. That is why the rule of 10% is probably a little bit depressed in 2015, but will recover when interest rates will remain more normal. And we will also, given that we Given our continued ownership of Danica, we will also in the strategy work look for additional synergies between Danica and the banking part. Then the regulation capital efficiency, as Thomas Borgen also commented a little bit upon. Over the period, we expect all other things being equal, our risk-weighted assets to grow somewhere between 90 and up to some between 120 up to 140 billion DKK. But we have mitigating initiatives for most of it, internal models for counterparty risk, specific risk, and we are also working on getting our Sampo Bank on advanced and foundation IRB. Then a little bit on our share issue, which we appreciate came as a surprise for many of you. We did it because we like to fast track a rating upgrade. We were not satisfied with the level of rating we have. We are at the low end, if not at the very low end, compared with our colleagues in the Nordic area. Therefore, we decided to do it in order to fast track a rating upgrade. And therefore, we are very pleased by the fact that S&P has been out and put us now on a positive outlook. So we are pleased with that. And if you try to do some calculation, try to illustrate what is the theoretical earnings dilutions due to the capital issue, then you can do the type of calculations we are illustrating here to the left, where we are saying, okay, now we have done a capital issue. Then there is no need for doing, let us say, an additional Tier 1 capital issue where the current price for a bank like us is in the range of up to around 9 percentage point, corresponding here on a capital issue of 7 billion DKK of around 600 million DKK. Also, if we get an upgrade, new issues of Tier 1 and Tier 2 will also become cheaper and also actually funding prices, existing funding, the funding we need to do in 2014 will be cheaper. There will be a profit impact of that. And we also expect that we will be able to attract more cheap short-term funding, et cetera. We can do that internally to around 600 million DKK. And there will be activities and business opportunities further in our C&I business if we get an upgrade. So if we have an upgrade in 2014, it is our best estimate that there is a profit impact positively of 1.5 billion DKK. And if you compare that with analyst estimates of our earnings per share of around 14.2 DKK per share in 2014, take the impact of 8% more new shares and the positive impact after tax of the profit of 1.5 billion DKK, then you are roughly equal. So it is our firm convinced that it is very beneficial for the bank. Any earnings dilution is temporary. It is not very high. And of course, at some point when we do not feel that we do not need the capital, it will of course be paid back to shareholders. But for the time being, it has been very important for management and also the board of directors actually to try to fast track the rating improvement because we do not like the scenario where a rate improvement could actually take quite some time before we would be able to do it. That is why we decided to do it. And fortunately, it has already had a significant impact. Our spreads have come down significantly. And since October 29th, we went public October 30th, our five-year senior spreads have actually declined by 21 basis points. And they have declined where our colleagues, the Nordic colleagues have remained roughly flat. And you can also see the sentiments in the market since our Q2 results in September have also impacted our spreads quite nicely. So that is the rationale, and I am sure that you may have one or two additional questions on that, and we will be pleased to answer that. Finally, if you do not believe in my numbers and you want to do your own numbers, here is a format for that. Broadly speaking, our return on equity of 12% will be achieved in an environment where we are targeting a Core Tier 1 of 13% and loan loss ratio around 30 basis points. And you can actually add whatever you want. Here is a lot of other assumptions. And just to illustrate, if we do not assume short-term rates of 2%, but let us say instead of 3.4%, just as an example, if you move downwards to 3.4, then you would actually get a return of equity of 14%. If you do not assume Core Tier 1 of 13%, but let us say 10.7%, you would also get a return on equity of 14%. So it illustrates roughly speaking, and it is roughly speaking, the sensitivity of the results to these various assumptions, and it gives you an indication of if you want to compare our assumptions with some of the assumptions provided by some of our Nordic colleagues, which are targeting, in some cases, higher return on equity targets but then at a lower level of capital. So that is almost my presentation. We are extremely committed in management to actually deliver on this plan. And the first important step is, of course, to deliver proven 2013 results, and including we are well convinced and well determined also to work on a rating upgrade. And down the road there will of course be adjustments, and you shall not take us up 100% on delivering the exact split between the business units. It may vary a little bit between the business units when we go forward, but we are well determined on delivering on the plan, especially for 2013. Thank you. Okay. Thank you, Henrik. Okay, well, we're going to go to some questions. If I could just build on one almost. In your last point, it seemed appropriate. One question was from Paul Dices again, saying, "Do you expect to achieve your ROE target of 12% or top three among the Nordic banks with similar capital ratios? In other words, do you expect harmonization of capital levels across the Nordic region because it seems that your capital objective is lower than most of your peers, allowing to generate additional points of ROE? We do not feel that our capital objectives are lower than our Nordic peers. We are very focused on ensuring that they will get a harmonized capital requirement regime, and that is something we are mentioning quite a number of times both to the Danish authorities and also the Danish FSA. So we did get rules that are common grounds in Europe. Right. Okay. Well now, I'm going to get you and Eivind up here because there's sort of a pile of questions really for both of you, and we'll get some more that are obviously sort of coming through. But I know before you did that, you wanted to introduce one of the new members of your team. Do you want to just explain why Robert Endersby is about to join us? I want you, our new CRO, please. Come up. Robert. Our Chief Risk Officer, and he is a native English speaker. I almost speak English. What do you mean he is a native English speaker? Wait till you hear this. Do not go away. Do not go away just for the minute. Fundamentally- Good afternoon. Presumably you are here, Robert. You have only been around for what, three, four weeks? Five. Five weeks. You must be here presumably to, you hired him to improve the overall risk management capability, huh? Well, that is exactly right. I think if there is one thing you should take away from this meeting, is that each of the business leaders of our bank has spoken very explicitly about what we want to do about risk management. Risk management is absolutely at the forefront of this strategy. We want to set a New Standard in that. These guys, I think, have given you a very clear indication, each of them, that risk management is absolutely at the forefront of what we want to do. And it's more than credit in terms of your remit, isn't it? Well, absolutely. I think the key point is that we want to move away from just a simple approach of being good at credit underwriting, and maybe we weren't that good at it, much more towards a portfolio-based approach to the way in which we do business. Have you found any silver bullets in your month? I'm afraid there aren't any silver bullets to where we could instantly reduce the impairment overnight. I think the picture of how that's going to trend has been very clearly explained by Henrik. But I think what's absolutely important is that we begin to put in place the frameworks and the capability to ensure that we take the volatility out of future impairment. So there's no magic bullet, but we can take out some of the tail risk by putting in place a much better framework for the way in which we do business. What would that look like? What are you concentrating on? Look, may I just address one quick point first before I answer that? I just want to reinforce a point that was made, a question that was made earlier to Lars. To be very clear, and I think Lars covered it well, but just to be crystal clear, when we talk about putting credit risk management closer to the business, that does not for us mean that we're giving the discretions out in the line. What that means is that we have put the credit folks into the businesses so that they can specialize and have a high capability, a center of excellence, if you like, for each one of the businesses. We're not letting go of the reins, we're just actually putting better, more appropriate credit people in each of the businesses. Be crystal clear that we're not letting it all go. To address the three things I want to leave you with, and I only have a couple of minutes, Ronnie. But three things that we're absolutely focusing on. First of all, is setting a very clear risk appetite around what we're going to do in future. Not just for your benefit so that you can understand exactly what our tolerance for risk is, but also so that our frontline people know exactly what we expect of them in terms of improving credit quality and the overall risk profile of the organization. I think the second thing that I want to stress is that we want to manage our books much more on a portfolio basis. Whether that be how we address single name, how we address industry, how we address asset class, how we address geography, we're going to approach it on a much more portfolio-based approach. Lastly, pricing for risk is key. We absolutely have to price the risk, and we have to put capital efficiency at the forefront of our frontline people. We have had a very strong capital efficiency program, which has been based around making the maximum from our models. But we want to put the capital efficiency piece firmly into the front office so that our people think about how they structure transactions and how they make the best use of our capital. That's about all I've got time for, I think, Ronnie. We said a month in was probably wasn't an appropriate time to make a half-hour speech on the topic, but clearly he's going to be around as well for having any detailed discussions about the whole risk area. Presumably, when you signed up and were paid your vast fortune or whatever it is, you bought into the New Standards message, et cetera. Right. Being serious. I am absolutely serious. Is this key in your area? I think two very important things. Firstly is the standard for risk is absolutely embedded in the commitment that Henrik talks about amongst the executive board, and you heard that from each of these gentlemen as they spoke about their businesses. I think that what we're actually trying to do is entirely consistent with setting New Standards about the way in which we manage risk in this region. Okay. Here's the man to talk to if you want any more details about risk. I'll be around. Thank you, Robert Endersby. Thanks. Okay. You would presumably echo, you are glad to have him on board. This is obviously a focus area. Sure it is. Sure it is. We are really happy and although he has just been here for four weeks or five weeks, he has already contributed a lot. We look very much forward to work with Robert. Fantastic. He is even learning Danish, I gather. He is also taking Danish lessons, and he is improving quite fast on that, actually. Okay. It is not so much a language, it is a throat disease. Yes, I might not get paid. All right. Eivind, sir, would you like to move over to the table? I have got a lot of questions. I have to say, Henrik, you must obviously have answered everybody's questions or many of them, because most of the questions are for Eivind, so I can start with him. But gosh, yes, there are quite a few. The number crunchers are at it. Eivind, sir, can I start with just a big macro question first? This comes from Janice Kroger at Wells Fargo. Please comment on Danske Bank's view on the future development of the Danish financial sector. For example, consolidation, the number of banks, mergers versus cooperations, government support, further bank failures. What is your sense of how the banking market is going to look in the next 5-10 years? Can we have the short answer to that? Otherwise, we could be here all day. Sure. There is no doubt that in Denmark, we have a very high number of banks, and obviously many of those are quite small. We have seen that over the last 2 or 3 years that more than 15 banks have disappeared one way or the other. So there is a great need and drive towards consolidation in Denmark. For many reasons. One thing is that the smaller banks do not have really the scale benefits of the big banks. They are still more or less subject to the same enormous regulation as we are. They have issues on the funding cost and so on. So yes, I certainly expect that we will see fewer banks in the future. But it will be, as been hitherto, quite a slow movement towards that. Simply because, well, it seems that the smaller banks have difficulty in getting together for local patriotism reasons or other reasons. So we will see fewer banks, but it will take a while. On the regulatory environment, I think that Denmark is following what is happening in the E.U. At least we advocate a lot that we should take the E.U. track at the E.U. speed. So far we are encouraged about that. We do have, however, a particular negative issue in Denmark, and that is the view on systemic support from Moody's, where they regard the systemic support to be less in Denmark than in other countries. We disagree with that, but we suffer from that view at this point of time. Of course, we try to address that going forward. Right. Because one of the questions here was do you expect any regulatory impact of your risk weightings, and what are your expectations for a rating upgrade by Moody's, given their current negative view on Denmark and their rolling three-year rating assessment? I can add a small thing regarding Moody's. Of course, we will work with the SIFI regulation in Denmark, systemic support important institution. No doubt Danske Bank is systemically important in Denmark. And we hope that when we get that regulation through, that it will be clear that Danske Bank will not be subject to Bank Package 3, which can close a bank over a weekend. This is simply not feasible in this case anyway. So hopefully that will be the event that can change the views of Moody's. Right. There is one that I think links to that from Sofie Peterzens. If you get a rating upgrade by S&P but not Moody's, will you consider terminating your Moody's rating? Of course, that would be a very drastic measure, and I think before we know how we end up with the SIFI regulation, this will not be relevant. But if long term, we cannot see that Moody's will place us on par with our Nordic peers, of course, we need to consider that as well. Right. Henrik, I do not know whether you want to answer the second part of that question was, could you please give a bit more detail around your planned Tier 1, Tier 2 issuances and how the government hybrid will be replaced? Now when we have done the capital issue of equity of DKK 7 billion, we also did a Tier 2 issue in September of DKK 1 billion. Therefore, for the time being, we do not have any immediate plans of issuing additional capital instruments. But down the road in 2014, 2015, perhaps starting late 2013, we will need to take on additional Tier I and Tier II capital in order to have proven capital ratios when we reach 2015, because we are still determined to repay the government hybrid in 2014. But given what we have already done, we are almost fully prepared for repay the state hybrid in 2014, and that is still our full ambition. Okay. Well, slight change of topic here. Swedbank, Handelsbanken, and SEB all target 13%-15% ROE under current interest rate conditions. How then will you be in the top three in 2015, gentlemen? Well, we certainly take up that challenge. Of course, our target is not 12%, but above 12%. We also have the additional target that we want to be in the best half. I am not so aware about Handelsbanken having specific targets out there. But nevertheless, we think that the strategy we have presented here today are quite strong, that it really builds on our competitive advantages. And structurally, there should be nothing hindering us to get to at least the levels of the Swedish banks. Then one macro element is working a little bit in our disfavor at the moment. We have lower interest levels in Denmark, short term, than we have in Sweden. Normally, it is the opposite. So if that will normalize, then of course, we will be more on a level playing field. This is not necessarily what we rely on. We rely on the actions that we take and the strategy that we have. Henrik, from 4 Capital Partners. Question, for short-term rates to rise to 2% by 2015 implies Europe overcomes its current woes. Are you prepared to officially go on record that this is your central case scenario? I think what is key now is delivering improvements in 2013. You shall not take the 2% as an indication that it's the bank's official guidance that interest rates are going to be 2% in 2015. We will take changes and adjustments down the road as they may happen. I think this is a really interesting question which comes across in terms of what you are prepared to go on the record or not. This is an interesting question. Eivind, which three Nordic banks will, according to Danske's assumptions, not reach above 12% ROE? Well. Are we taking notes? We will take that in the bar afterwards, I think. Okay. All right. From an earnings perspective, which of the three divisions is most reliant on the bank increasing its credit rating and executing its strategy, and why? Well, I think when it comes to the credit rating, all business units will benefit because it relates very much to our funding and the way we distribute it. It is something that we will benefit from across the board, basically. When it comes to some of the other effects, like we have talked a lot about the short-term interest rate. When it comes up, and it will, whether it is going to be in 2015, 2014, and 2016 might be difficult to predict. But when it happens, the upsides will be biggest in Personal Banking. That is also why even though it is today a lower returning business unit, and challenged by a lot of things that we have to do and Tonny Andersen has to lead, then the upside is bigger there when interest levels normalize. Do you want to add anything to that, Henrik? It's personal banking and also to some degree business banking, but also rating means a lot for our C&I business. Okay. A couple more, and then I'll open it out. Again from 4 Capital. In Q2 and Q3, especially in Q2, you reported declining money market deposits. Has the capital increase helped to reverse this, Henrik? It's right that we had in Q2, Q3, we had some outflow of deposits. That was a rating issue. We hope gradually when our rating will come up, that they will flow backwards again. That's also part of the reason that we target a rating upgrade and want to work hard on that. Right. Yeah. If you'll immediately add, it's a bit more than a hope. We already today see the impact that we are attracting deposits. Deposits are coming back and on longer terms. Of course, we'll only get the full benefit when we get the real upgrade, but the signal is already pretty strong in the market, and we are benefited from it as of today. Henrik, are falling loan losses assuming improving macro conditions or simply constant credit quality, but that you now are sufficiently covered? We feel that we are sufficiently covered now, and the decline in loan loss impairments, as I mentioned, is very much tied to an assumption that we are close to bottoming out in Ireland. Therefore, we can expect improvement in less impairments in Ireland in the coming quarters. Right. One more before I open it out. From Omar Keenan from Nomura. Eivind, for you, can you give us some insight of how each geography was justified in the strategic review? Are they all logical for shareholder value rather than changing the geographic footprint? Are there divisional ROE targets, for example? Do they have to be in the top three in each geography? Well, we will view our business far less through the geographical aspects than we did before, because we really see the relevant thing is to look at our business segments. A personal customer in Denmark has more in common with a personal customer in Norway than he would have with a big corporate institution in Denmark. We think differently today. For us, it is really a huge benefit now to leverage our platform throughout our Nordic area. I think still the question is relevant when it comes to Ireland, because, as you saw on some of the graphs, we have conveniently put it close to Jutland, because it does not really fit into what you consider Nordic. Still, we made a very careful analysis for what would be optimal for the bank to do, and we made the decision, well, the optimal path would be to carve out the non-core, but then what about the rest? With all the options we had, there was absolutely no doubt that the most value-creating for us and for our shareholders would be to keep that business and drive it, and get the maximum value out of it. This is why we have ended up where we did. Right. Okay, now I have two or three more questions, particularly asking how you are going to make sure all this is going to happen on some of your management. I will leave those. We have time for a few questions from the floor. If anybody is anxious to put a hand up, we will get a microphone to you. There is a gentleman over there. I am sorry, there is a lady here, I think. There we go. We go to the lady first. Hi there. Just keep talking, they'll find you. Hi there. It's Claire Kane from RBC. I have a question on your 2015 equity target. I think at the top of the slide, you said you're assuming substantial dividends and buybacks in 2015. I think if we look at consensus forecasts through to 2014, your equity base seems to be quite a lot higher in 2015. Can I ask, really, do you have a view on a leverage ratio, an absolute leverage ratio? Should we assume that in 2015 you will get the equity base down to 30% Core Tier 1 to achieve that 12% ROE? Thanks. The reason that we have stated that there was actually additional input to you to be aware of that when you try to simulate the similar calculations, then when we assume the improvements I went through, there will be in the calculation, substantial dividends and share buybacks in our internal calculations. Going forward, if we really start earning the amount that is included in the figures in 2015, probably we'll pay dividend according to plan. Also there will be room for share buybacks, because we do, of course, have no intention of building up excessive equity. We will try to, of course, we'll have a range around the 13%, and when that is at a sustainable level, share buybacks will be on the agenda. Okay. We have the question from the gentleman over there. Hi. Thank you. Jacob from Autonomous. Firstly, you keep alluding to alternative or other measures you can take if interest rates are not going up to 2%. Could you just talk about what those things that you leave on the table on the cost side and on the revenue side are, and why you are not targeting them at this point already? If I may, just a quick one. Your net stable funding ratio today, could you just tell us what that is and what the impact on ROE would be for going to 100% if you were needed to? Thank you. If I address the first part of your question, if we see that interest levels are freezing at the very low levels that they have today, I would imagine that we will have an environment where we can see even higher margins than we have today. Because this will be something that will affect any bank, and any bank will have difficulty in meeting their targets. So there will be a market sentiment, should it be a more permanent situation to bring up that. So I think that no doubt the strongest lever would be on the income side. I think what we do on the cost side is actually quite aggressive as it is. It is not as strong a lever as the income side is. So there will be a limited thing to do additionally. But of course, in every business at any time, you would look at cost, and I am sure as we go down the road, we will find new opportunities, as it always is. But it is really the income side we need to look at should we have a permafrost on the low interest levels. I have time for one more before. Yeah, I think we had another part. Sorry. Our rough estimates will be neutral. Rough estimates will be neutral. John, if we can have Henrik's microphone. Thank you. Okay. All right. This, a little over there. Sophie from JP Morgan. I just had a question around your costs. End of last year, you said that you were going to cut costs by DKK 2 billion, inflation-adjusted. I think you had DKK 26 billion of costs end of last year. Are you still targeting for this cost reduction in 2013? I was wondering if you could just give a little bit more detail around your revenue target. How much has actually already been done? My understanding is that you have done a bit already from the revenue increase. Thank you. When it comes to cost, the big driver here is headcount. There our plans are quite clearly spelled out. We expect to reduce the number of positions by 1,000 in 2013, and that is actually a target we've had for a while. It's just being re-confirmed by the strategy. What we have then added that we can reduce by another 1,000 positions after 2013. Hopefully, some will be through natural attrition. This is how we'll operate on cost, basically, because this is the main driver. On the other part, I think we had on the rates, what we have done and not done, I think some of the slides actually specified that, but I don't know if you haven't- Just briefly. One of the slides specified that we included additional pricing that would impact 2013 and onwards by DKK 2 billion, and I think we have already done DKK 4 billion-DKK 5 billion. That was done in 2011 and 2012, and that is part of the P&L for 2012. Of course, much of what we did previously has been offset by the falling interest rates. Okay. Did you have a quick supplementary? Just because you didn't answer the question around the costs for 2013. Should we expect costs to be down DKK 2 billion from 2011 level, which was the previous one? The original, a year or two ago, roughly one year ago, we announced that we'd reduce underlying costs by DKK 2 billion, but that will be full year impact from 2014 and onwards because it was programmed for 2012 and 2013. That also included this reduction by 2,000 people. That has now been revised, and we are running what Eivind and also I have shown, a program that is targeting below DKK 26 billion in 2015, including a reduction of 2,000 people from 2013 and onwards. The new program is, so to say, overriding the old program. Okay. Henrik, you're going for drinks after this. I'm sure you're open to lots of conversations and people grabbing you in the corner. Everything that you've seen on slides is going onto the IR site. Eivind, two great questions from Clive Thorpe from SEB around almost exactly the same question. One is, how frequently will you or the board of directors evaluate the progress on this plan of profit improvement? An element of that was, can you explain how each of the three business managers will be held responsible for reaching the targets of their last slides? Well, that seems like a good question. How are you going to make these guys do it? Yeah. Well, I feel as responsible as they are, so we all have to contribute here. But we will put in place a quite rigid performance structure. So we will have monthly and deeper quarterly discussions on how we're performing on a number of, basically all the relevant drivers, whether we are on track, and if we are not, how we will address that and what additional actions that we need to do. And of course, we will take a concentrate of that and share with the board also on a quarterly basis. When it then comes to strategy execution, at least for the first year, our plan is that I will have biweekly meetings with each of the gentlemen of the business units, where we look at the change management process. Do we have the right plans in place? Are we meeting the milestones? Are they effective? Are there any obstacles that we need to move ahead, remove? What more do we need to get there? So we are quite serious about the strategy. This is also why I see that as my primary and first priority as the CEO is to execute New Standards. Henrik, I think you and I need to leave. The boss needs to take two or three minutes, which is all I ask you to sort of stay for your sort of final comments. And then we're all very welcome to spend a little time outside, have some refreshment to send you home happy now that hopefully you've got all the figures and the answers that you want. So Henrik, should we leave it to Eivind to close this? Okay. Thank you, Ronnie. Well, again, thank you very much all of you for coming here today, taking an interest in Danske Bank. We think we have a very interesting story. We think we have a very strong strategy. And our objective for this session here was to provide you with a better understanding of our targets, but also in particular, how we are going to get there. Obviously, also hope that you find that we have a credible plan, and you, of course, will have a lot of opportunity to hold us to it as we meet over the coming years. We really think that we in Danske Bank are in a position to react to the new normal, that our New Standards in the number of areas that we have discussed is actually a prudent, a strong response to the new normal, and we are all quite excited about what we have to undertake. We know that it is challenging. We personally feel that it's quite ambitious. So we will have busy times, but exciting times as well going forward. I think it's also prudent for me, before I end up, to thank a lot of people who have been working on putting this Capital Markets Day together. There's a lot that goes into that. I think also my colleagues from the executive board have done great in their presentation, as has Ronnie Strong in facilitating this. So before we open the bar for drinks, I think we would like to end, if not on a high note, then on a loud-

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