This article first appeared on GuruFocus.
Earnings per Share (EPS): Increased 12% year on year in Q2, reaching DKK22, the highest EPS ever in an ordinary quarter, rebounding from DKK17 in Q1.
Net Interest Income (NII): Up 2% quarter over quarter, nearly on par with last year, driven by higher market rates, volumes, and deposit margins.
Fee Income: Up 6% year over year, reflecting strong activity in the quarter.
Cost Base: Excluding one-offs, costs were at index 99, or 1% down from last year.
Value Adjustments: Strong performance due to significant spread tightening of Danish mortgage bonds.
Loan Impairment Charges: Ended at 0 basis points.
Return on Tangible Equity: Well above the 10% threshold for 2028.
Cost/Income Ratio: At 47%, above the long-term target of below 50%.
Assets Under Management (AUM): Up 9% in Q2, supported by both private individuals and institutional customers.
Deposits: Grew 1% in the quarter.
Bank Lending: Grew 1% in the quarter.
Mortgage Lending: Grew 1% in the quarter.
Leasing: Up 2% in the quarter.
Full-Year EPS Guidance: Unchanged at DKK71 to DKK85 for 2026.
First-Half EPS: DKK39, same level as the first half of last year.
Stage 3 Exposures: At a record low level for the bank.
Release Date: August 19, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Earnings per share increased 12% year on year in Q2, reaching DKK22, the highest ever for an ordinary quarter.
Strong mortgage growth driven by successful new product launches, leading to market share gains in personal banking.
Customer satisfaction improvements, including being rated best in private banking for the 11th consecutive year.
Net interest income (NII) turned a corner with a 2% quarter-over-quarter increase, supported by higher market rates and deposit margins.
Assets under management grew 9% in Q2, with a 12% average annual growth rate since end-2018, driven by inflows from retail, institutional, and private banking clients.
Negative Points
The bank chose not to revise its full-year guidance despite strong first-half performance, citing uncertainty in trading income and potential for lower mortgage bond margins.
Jyske Bank AS (FRA:JYS1) has been losing market share in corporate banking due to intense price competition, which the bank deliberately avoided by not matching low-margin offers.
Costs may rise in the coming quarters as Q2 was a particularly tight cost quarter, and the bank plans to invest in AI and digital initiatives, which could pressure margins.
The NII sensitivity to interest rate hikes is expected to fade over time as deposit betas increase, reducing the benefit from future rate increases.
The bank maintains a management judgment overlay of 34 basis points for loan impairments, indicating potential future credit risks that have not yet materialized.
Q & A Highlights
Q: What is the expected NII sensitivity to rising interest rates, and what deposit beta assumptions are implied?A: CFO Birger Nielsen stated that the NII sensitivity remains around DKK700 million for a 100 basis point move. He noted that in the short term, following the June rate hike, there was no significant market reaction, and this could also be the case for a potential September hike. However, he acknowledged that the sensitivity is expected to fade over the next 100 basis points, with a larger impact from the first 25-50 basis points before deposit rates need to be passed on more.
Q: Given the strong first-half performance, why was the full-year net profit guidance of DKK71-85 billion not revised upwards?A: CFO Birger Nielsen explained that the guidance range remains relevant for projections of the last two quarters. He cited caution due to the strong trading income performance in Q2, which may not be repeatable, and the significant decrease in mortgage bond margins. He indicated the bank will likely end in the upper half of the range but chose to maintain the current guidance.
Q: Is Jyske Bank losing market share in the corporate banking segment, and what is the competitive landscape?A: CEO Lars Morch confirmed it is fair to assume some market share loss, attributing it to a historical decision made over a year ago when competition intensified. The bank chose not to participate aggressively in low-margin C&I lending, prioritizing client quality over volume. He noted that competition has now settled, and the bank is seeing improved momentum in acquiring new business clients, with the front book looking healthy.
Q: Can you provide a walkthrough of the expected NII bridge into Q3, including day effects and rate impacts?A: Head of IR Simon Falk detailed that Q3 will see a day effect of approximately DKK14 million. Assuming a 25 basis point increase in short-term rates, the bank could see an increase of more than DKK50 million quarter-over-quarter from the combined day effect and rate changes. This is based on a historical deposit beta of approximately 50.5%, with additional potential from bond repricing and volume growth.
Q: What is driving the recent improvement in bank lending growth, and is this a new sustainable trend?A: CEO Lars Morch stated that the business side is in good shape and expected to contribute more than last year. While the conversion of some bank-funded loans to mortgage loans will temper bank lending figures, he is slightly positive about the bank’s momentum on the business side compared to the market, suggesting the Q2 growth is part of a broader positive trend.
Q: How does the bank view the potential cost benefits from the Bankdata migration, and what is driving current cost savings?A: CEO Lars Morch explained that the main benefits from the Bankdata migration will be realized from 2028 onwards, with like-for-like costs expected to fall around 17%. CFO Birger Nielsen added that current cost savings are from tight cost management, not AI, and that Q2 was a particularly tight quarter. The bank aims for flattish costs while leaving room for strategic investments, particularly in AI.
Q: What is driving the solid growth in lending and deposits, and how much is from new clients versus existing ones?A: CEO Lars Morch attributed the growth to organizational changes made a couple of years ago that have improved the value chain and boosted employee confidence. He highlighted that the new mortgage product has attracted a significantly higher number of new-to-bank clients than usual, contributing to a net positive inflow of personal clients. The bank is also seeing more and better leads from marketing efforts.
Q: Given the strong performance, is there a plan to update the strategic targets before the end of the strategy period?A: CEO Lars Morch stated that the bank prefers to have “fairly safe ground” before updating targets and currently plans to communicate any changes by the end of the strategy period. However, he acknowledged that the bank is closely following its performance and is preparing key information, such as projected capital levels, for when it does decide to adjust its targets.
Q: How is the credit book performing, and when might the management judgment overlay of 34 basis points be released?A: CEO Lars Morch stated the credit book is in good shape, with no concerns in the agri industry. He noted that the bank is well provisioned and that some provisions were made for potential longer-term international economic issues that have not materialized. He indicated that a decision on these provisions will be made closer to the time, potentially on a yearly basis, depending on how the reservations develop.
Q: How do you view the current consensus NII run rate for the coming years?A: Head of IR Simon Falk agreed with the analyst’s insinuation that there could be upside potential to consensus NII estimates. He doubted that all estimates currently reflect the current forward rates and expressed hope that the bank will also be able to grow volumes over the coming years, suggesting a positive outlook for NII.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.