Hi, everyone. Thank you for joining us on Jyske Bank's conference call for the financial results for the first quarter of 2026. This is Simon Hagbart Falk from Investor Relations speaking. With me I have Jyske Bank CEO, Lars Rohde, and CFO, Birger Krøgh Nielsen. Lars and Birger will walk you through our prepared remarks. Afterwards, we'll open up for questions. I'll now hand over to Lars.
Thank you, Simon, I would also like to welcome you to our conference call for the first quarter of 2026. We made a solid start to 2026, delivering earnings per share of DKK 17. Results were impacted by challenging financial markets, but our underlying performance continued to show good progress, supported by high activity, disciplined cost management, and strong credit quality, while we maintained a clear focus on customers, customer relationships, and strategy execution. Credit quality remained very solid in the quarter. Loan impairment charges were at a low level, while we prudently built significant post-model adjustment buffers in response to elevated geopolitical uncertainty. The Danish economy remains fundamentally sound, and our customers' financial situation is generally robust, although geopolitical uncertainty is elevated. Our capital position also remains robust.
At the end of the quarter, our CET1 ratio stood at 15.9%, adjusted for expected payouts. This is well above our target level of 15%. We continue to make progress on our strategic priorities, including AI. Over the recent years, we've established a solid foundation. In 2026, our focus is on scaling solutions that have already demonstrated value across advisory services, customer interaction, and internal processes. We've ended 2026 in a healthy position, well-equipped to navigate the current environment while continuing to build long-term value. With that, I'll let you, Birger, walk through our financial results.
Thank you, Lars. The footprint in Q1 is solid, a very solid underlying performance. As we heard, business volumes are up, activity levels are good. We see strong credit quality, and we have had a disciplined cost management. We are fully on track with the development in the group. If you look at the left-hand side, you can see our earnings per share is at DKK 17. Exclusive of value adjustments in the investment portfolio, there was a growth of earnings per share of 4% over the year, so steady going. Looking in the middle, net profit of DKK 1,049 million in the quarter. Looking at the NII, it is flattish quarter-over-quarter from the lending and deposit activities, and as fully expected, we see a drop due to the tax-related one-offs in Q4.
Net fee and commission income, on a steadily upward trend, driven by asset management activities and especially pension and insurance activities. The core expenses are flattish year-over-year, so we've been able to offset the inflation trend via our cost initiatives. If we look at employee costs, they are only up 1% despite salary increases of around 2.5%, driven by lower FTEs, around 1% over the year. On the right-hand side, assets under management dropped 1% or DKK 3 billion in the quarter, but that still includes net inflow of new customers, even in the latest quarter, in Q1 of 2026. Deposits has shown an upward trend and has been lifted by 5% over the last 2 quarters. We've seen inflow of money market deposits but also from personal customers.
Finally, the lending is trending upwards steadily quarter by quarter. The mortgage book is up 1%. Bank loans are down 1%, primarily driven by lower exposures from volatile public entities, but also due to transfer of bank loans to the mortgage balance. Looking at our outlook for 2026, it's unchanged. We still believe to deliver within the range of DKK 71-85, as we announced after the release of the annual reports for 2025.
Thank you, Birger. If we take a look at the personal customer momentum, we still have a strong and improved momentum on the mortgage loans. We see again a quarter where we are growing and with even higher growth than the preceding quarters. We have a good momentum here. We have a solid product portfolio, good pricing, and an organization that is strong in handling personal customers. We're happy that we've seen this turnaround, and we're happy to see it stick. Also, we are happy about the momentum that we have in the pension and insurance commissions. You see the green light line on your right-hand side here. That is the growth that we've seen in the pension and insurance commission since 2021.
We see that it now is 13% of the net fee and commission income in the first quarter of 2026. You see the combined growth here in net fee and commission income on, in the black line. A strong development in general in net fee and commission income and in particular in pension and insurance commissions. Simon?
Yeah. On value adjustments, which were at a quite low level in the first quarter of 2026. This was primarily driven by spread widening of callable Danish mortgage bonds as well as negative returns on bank shares, partly reversing the strong development we saw in 2025. We saw a limited negative contribution from asset and liability management in Q1. However, this impact was significantly lower than historically given the level of rate movements in the quarter, reflecting the fact that we have reduced interest rate sensitivity of value adjustments. It is also worth noting that bank shares can still lead to some volatility from time to time, but they have historically generated attractive returns, particularly given their relatively low capital consumption. Additionally, we might add that we have seen some degree of reversal so far in Q2.
Most importantly, the underlying contribution driven by customer activity remains strong and stable in Q1.
Thank you, Simon. As mentioned by Birger, we have had a strong development also in our credit quality, and we see the general quality has not weakened, quite the contrary if we look at our own numbers. On the other hand, we've also seen an increased risk of inflation and oil price increases that could come into the economy. Even though we basically see a strengthened book, we feel it's prudent to put aside another DKK 160 million for post-model adjustments to cover the potential risks.
Looking at the geopolitical uncertainty and the Iranian war that has led to higher oil prices and potentially higher inflation, we now see that the market expects higher policy rates around 2 to 3 rate hikes during the next quarters, and it has also lifted the forward curve, as you can see in the graph, slightly below 1% in 2026, but also higher levels in 2026 and 2027 and in 2028. In the market's perception now, there is some permanent effect expected long term on inflation. Talking about the interest rates and sensitivity, we have based this graph on our reflections and experiences over the last several years.
Year one is now expected to deliver DKK 700 million of uplift due to a 100 basis points parallel shift of interest rate interest rates. The long-term effect is another DKK 200 million due to the lagged effect from higher returns from the fixed rate hedging instruments.
We thought it was relevant to give you a view of where we are in terms of implementing benefits from AI. Today, we are at the stage of pilots and proof of concepts where we're already seeing tangible use cases, including handling of customer requests, AI-generated company profiles, and automated task trades. The next step is scaling what works, deploying these solutions more broadly to support productivity, efficiency, more consistent customer interactions across the bank. By 2028, our ambition is to move beyond individual tasks with AI embedded across the end-to-end workflows and enabling more proactive data-driven customer advice.
Thank you, Lars, and thank you, Birger. We'll now open up for questions. If you would like to ask a question, please raise your hand and unmute your device. The first question in line comes from Martin Birk from SEB. Please go ahead. I think your line should be able to be unmuted now, Martin.
Yes, I think so. I hope you can hear me.
Yeah
First question goes on your guidance. What kind of interest rates do you have in there? What would it take for you to include rate hikes in your guidance?
I think it's fair to assume that we haven't changed dramatically on our overall guidance from the start of the year. It is fair to say that interest rate expectations have gone up, and there are also expectations for some policy rate hikes in Denmark if things pan out as the market currently assumes. Consensus is currently at DKK 8.8 billion for the year, and I think if you were to include the upcoming rate hikes, you would probably end up somewhere above that.
Okay. What are your expectations for the first 25 bips? Because they're gonna generate you significantly more NII than-
I think the updated interest rate sensitivity, it reflects the current level of interest rates. I mean, that is a full percentage point. I get your point that the first 25 basis points could potentially have a slightly larger effect.
Okay. You basically need to see the guidance upgrades, or sorry, the rate hikes before you're willing to include it?
It could be that it didn't change, or it is possible for us to have that in the current interval of DKK 4.3 billion-DKK 5.1 billion. It's not necessarily something that is going to lead to a guidance upgrade.
Okay. All right. Next question comes back to loan losses. I there was another big Nordic bank out reversing Its management judgment in entirety in connection with this Q1 reporting season. Lars, you mentioned that credit quality has never been stronger, still you add to your management judgment. Any thoughts on that?
Yes. Thank you, Martin. Not to the first part, regarding another bank, but regarding our own figures, what I said was, our credit quality is strong on individual customers. We have reversals, this quarter, and we see in our numbers that generally speaking, our book is a little bit stronger by the end of Q1 than it was by the end of last year. That's 100% correct understood. On the other hand, we also see potential risks, oil price increases, transportation cost increases, interest rate level, changes that could impact part of our book. It's not that we've seen any particular customer, or any industries, at the moment being hit by this.
Simple calculations on the impact on economy means that it is likely that that can lead to some level of increased losses in the banks. You're right. We're standing here with, on the 1 hand, a strong credit quality on our current customer base, and by the end of the first quarter, on the other hand, there are some uncertainties, and we've decided to take provisions for that.
Okay. Lars, do you think it's a fair observation to say that every time you see new risks, you add to this buffer? When you see risk off, you don't really bring it down either?
Yeah, not 100% fair maybe. If you look at the level of the buffer, it has been more or less the same for several years, but you've seen ups and downs. We have been reversing also from this one.
Okay. You don't think a fair question is why isn't this half of what you have right now?
Yeah, I think it's a fair question.
Absolutely. I understand the, the question and you could have long discussions about what would be the right level of post-model adjustments. Let me say it this way. We, we have felt that there were increased risk related to oil price and interest rate. We, we think that we are at a very comfortable level now.
Okay. Maybe a last question from my side. What do you make of the smoke coming out of the peace pipe from Finance Denmark last night?
Yeah. I was just pleased with the message and think that Finance Denmark is doing a very good job. Just happy to see that there was a joint statement on these matters here.
Why do you think this has become such a big topic in local media?
I don't know.
Okay. Okay. All right. Thanks.
Thank you, Martin. The next question in line comes from Mathias Nielsen from Nordea. Please go ahead.
Thanks a lot, thanks for taking my questions. The first one, like, now you put a slide on AI. I would say, like, if I were to be a bit critical, like, there's not much numbers on that slide. How much is the potential? Is there any structural reasons why Jyske Bank shouldn't be able to get the same out of it in relative terms as some of the other Nordic banks that has been out putting numbers on this? Do you see any structural things there? That would be my first question.
I think combined we probably have the same possibilities. They have some strengths in some areas, and we have strengths in other areas, I believe. I think some of their strengths is probably the sheer size of the company, which probably makes it a little bit easier to get started in terms of the resources that you can pour into it. On the other hand, I think fast follower on this one in a much smaller and simpler organization, we should be able to keep up.
We're doing quite a lot in this area and has actually been working for 2 years on building teams testing out making sure we have technology, making sure that we have guardrails also in place. I think that we're keeping up quite well at the moment. I think in terms of implementation, I don't see why we should be long behind.
Okay. Just to clarify, you see yourself as a fast follower. Was that the wording that you put on it, on AI?
Yeah.
Good. That was the question on AI.
Mathias-
If-
Mathias, maybe to put a couple of more words on this, there will probably be banks that get this right roughly, and there will be banks who are very late to the party. We think that our best opportunity is to be well-equipped in terms of competencies, technology, and so on, and follow our own test cases and understand what is going on around the globe in terms of utilizing AI. I think no bank can be first at everything, but you could be first or one of the first ones to really prove that it works. That's basically how we see it.
There are some test cases that we've chosen not to take and that is because we think that, you know, this might actually be difficult or annoy the customers too much for the very small gains. Let's see when some get it right. Let's get it in here also without the cost of developing stuff that doesn't work and reinventing it, and so on. We actually think that we'll be part of the first half here, which is the banks that will succeed in this.
Sure. That was a great clarification on that one. My next question is a bit on this was another quarter with beats on the costs, but also another quarter where, like, bank lending growth was on the unimpressive side. How do you see the risk of you, like, cutting too much on the cost side and that actually leading to subdued growth? Like, I guess, like, if when I look out of the window, like, at least two of your peers, and also relatively large peers, are undergoing mergers at the moment, which should normally, like, leave some business up for grasp a bit more than normally maybe. I was a bit surprised to see that the bank lending growth is still subdued.
Do you have any comments around, like, cost versus growth and growth in general?
Yeah. I think Jyske Bank needs to be in great shape now, midterm, long term. We cannot afford to have too high a cost base in doing this. Also, the competition aided by AI, you need to be able to have a lean and mean organization. I think within the cost targets so far, we've been able to do also a lot of improvements internally, getting strong profiles in. It's not just going down underlying with cost a couple of percentage a year. It's actually the change process is larger. I feel that we are well equipped within the organization to fight with the resources that we have.
In terms of the subdued lending development here, I think that was what you called it. I think combined we have growth between bank and mortgage lending. We tilt towards the mortgage lending side in our growth. If you then look at the bank side, which I believe is the one that you're pointing at here, there are a couple of factors at play here. One of them is that when we acquired Handelsbanken, we got a lot of bank lending loans in for mortgages, these are gradually moving to mortgage lending. In Q1, we've seen a subdued development when it came to public institutions, public sector customers, which we have a large share of.
It's not that we've been losing the customers. They've just been utilizing the credit facilities to a lesser extent. I think there's maybe one last thing, we've probably been on the conservative side in terms of our credit processes and our lending here. Time will tell if that was a good move or we've been slightly too conservative. We still have to wait and see. We feel that we're very competitive in the market, and we feel that we're increasingly competitive. We are standing strong in personal banking at the moment, in private banking, where we're also growing in C&I, whereas the SME business is a little bit at a standstill. Not losing customers, not really winning customers at the same time.
I think that is where we've also been a bit conservative. We're sticking to our strong customers, basically not losing any a lot of customers. Getting in a little bit of new customers, but not with large growth. We're very comfortable with the quality that we have now. I also think in terms of pipeline, without promising you, I think it looks a little bit better than it has looked for some time now. I think we have the machine that we could turn a little bit up here.
Sure. Thanks. Thanks a lot for that. My last question, it's on the current environment. Like, when you talk to your clients in the different segments, what is the appetite for new lending and investments given the geopolitical uncertainty that we face at the moment? Is there any reflections from those meetings that you could share with us?
Customer meetings?
Yeah, customer meetings.
Yeah. Yeah. I think in general, hopes and optimism is not too bad around the corporate customers. Looking at the personal customers, you see they buy new houses and flats to a large extent. I think there's a, I think and maybe also hope a little bit that there are an increased number of customers who would take a new look at their growth and development plans and investment plans altogether, because they cannot sit and wait for five years.
Basically they would have to find some of the most attractive plans. Probably we'll see some lending on the back of this. I think we have more or less only good customer meetings at the moment. We hope, and I saw one of the Nordic banks was also saying that they also think that there's a little bit of increased need for investments.
Thanks a lot. That was all from my end.
Thank you, Mathias. Next question comes from Alexander Vilstrup-Jørgensen from DNB Carnegie. Please go ahead.
Yes. Thank you for taking my questions as well. If we just continue with the discussion of ordinary bank loans, when do you expect the offloading of mortgage-like bank loans to stop?
It depends. What we have still is approximately DKK 20 billion of the Handelsbanken loans that are migrating still to mortgage loans. On the other hand, we also have a bank-funded product that is growing a bit. I don't see a massive change here going forward, and I don't see that that would stick as a theme that we would discuss at great length in a year or two.
Okay. What about your new mortgage loan, Jyske Frihed? How much do you expect it to add to future growth?
Yeah. I was just in one of our branches this morning when we announced our results internally and had a 10 minutes chat to the people in the branch. They have their hands over their head because basically what they're saying is this is by far the best product in the market. It combines some of the positives of a bank-funded loan with the flexibility and so on. On the other hand, it has the strength and the model of a mortgage company loan. It's a really, really strong offering, our team is extremely motivated. I would like to see one or two months of data and customers flowing in to see how much it changes. It's certainly a positive.
Okay. I was wondering, could you comment a bit more on your fixed rate hedging instruments? I would just like to understand how you expect your hedge to impact net int-
net interest income going forward.
What kind of assumptions do you pencil in?
Well, if you look at the portfolio of fixed rate instruments, we hedge the interest rate risk in the banking book, the maturity is approximately three years. There's a lag effect both when interest rates go up and when interest rates fall, before you can take advantage of a normal interest rate curve, where you can add to the portfolio assets that give higher returns than your funding cost. I think that's the reason why you see a lag effect from this on top of the year one effect immediately of DKK 700 million.
Okay. If we just turn back to AI, how do you see AI automation allowing for further cost reductions?
Well, we think that by 2028, we will have it implemented in a number of our most important and most time and cost-consuming workflows across the bank. We felt it's a little bit too early to give you figures because we wanna be fairly firm on the figures that we give you. It's a little bit too early to give you a figure. I would rather say that I think we have the foundation for doing a job among the banks that is doing the best jobs on this. I think we have enough resources to handle this. I think on the other hand, we don't have a complexity that makes it too difficult for us.
We also working on our data quality. That should enable this. We are working on our organization and set up to make it easier to benefit from the technology. There will be a time where these things need to be tested before we put them in large scale production. I think it's a little bit too early to say what exact figure that we'll get out of this. For certain things we'll be more competitive, we'll be faster in responding to customers, and certainly we'll be able to take out cost also.
Okay. That's all from me. Thank you.
Thank you, Alexander Vilstrup-Jørgensen. It seems as if there are no further questions in line. We would like to thank you for participating in today's conference call. A recording of the call will be made available on our IR website in the coming days. Please do not hesitate to contact us if you have further questions. We appreciate your interest in Jyske Bank and wish you a nice day.