Slide 1: Investor Presentation 19 July 2006
Investor Presentation 19 July 2006
Slide 2: CEO Presentation
CEO Presentation
Slide 3: Strong results reflecting robust and diversified business mix – RoE up to 21.2%
Strong results reflecting robust and diversified business mix – RoE up to 21.2% Net profit up 17% to EUR 1,405m (EUR 1,200m in H1 2005) Operating profit up 14% to EUR 1,790m (EUR 1,572m) Operating profit in Q2 up 5% to EUR 932m (EUR 884m Q2/05) Income up 8% to EUR 3,544m (EUR 3,276m) – Net i
Slide 4: Profitable growth in all Business Areas
Profitable growth in all Business Areas – continued strong performance in key growth areas No. of core customers increased by 6% Consumer lending up 10%; No. of credit cards up 30% Strong growth in business volumes with small and medium sized enterprises (SMEs) Assets under Management up 11%
Slide 5: Changing market environment – interest rates
Changing market environment – interest rates ECB as well as Central banks in % Sweden and Norway increased 5.0 interest rates in H1 2006 4.5 Trend with increasing long term 4.0 interest rates continued 3.5 3.0 Interest rates still at historical low level 2.5 2.0 Effects on Nordea 1.5 Improve
Slide 6: Changing market environment – equity markets
Changing market environment – equity markets % International equity market turmoil 120 in Q2/06 Equity indexes down approx. 10% 115 since mid May 110 Increased uncertainty and risk premium 105 100 Effects on Nordea Impact on savings related 95 commissions – limited in Q2 90 Switch from equ
Slide 7: Operating profit
Operating profit YoY Up 14% EURm Profitable growth in all BAs – in total 1,000 operating profit up 20% 900 932 Business model and growth strategy 800 884 858 continues to pay off 700 748 Robust and diversified business mix 728 688 limited impact from volatile markets 600 Decision to incr
Slide 8: Continued growth in operating income
Continued growth in operating income YoY EURm 2,000 Up 8% 1,800 Increased focus on top line growth 1,759 1,785 1,600 1,582 1,694 1,601 1,696 Steady increase in net interest income 1,400 Volume growth more than 1,200 compensates for margin pressure 1,000 Commission income up 10% 800 Savin
Slide 9: Continuous increase in earnings per share
Continuous increase in earnings per share - rolling 12 months EUR 1.0 0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0.0 Q1/03 Q2/03 Q3/03 Q4/03 Q1/04 Q2/04 Q3/04 Q4/04 Q1/05 Q2/05 Q3/05 Q4/05 Q1/06 Q2/06 9
Slide 10: Revenue growth in Nordea
Revenue growth in Nordea EURm + 81 3,544 + 79 + 132 - 121 + 97 3,276 Income Lending Lending Savings: AM, Markets Other* Income H1/05 growth in margin Life, brokerage H1/06 Retail/CIB pressure and savings accounts * Including current accounts 10
Slide 11: Unchanged cost focus
Unchanged cost focus EURm 2,000 1,878 Reported costs up 3% 1,816 1,800 Costs excl. Life up 2% 1,600 In line with increased growth focus 1,400 EUR 30m of cost increase related 1,200 to investments in growth areas 1,000 800 600 400 200 0 H1/05 H1/06 11
Slide 12: Cost management culture firmly established
Cost management culture firmly established EURm 4,000 3,903 Since 2002 total costs in nominal 3,835 3,655 3,668 terms have decreased by 6% and 3,500 in real terms around 15% 3,000 Nordea accepts a moderate 2,500 increase in costs in the present 2,000 1,878 strong market environment to capture
Slide 13: Cost/income ratio continues downwards
Cost/income ratio continues downwards % 80 Down to 53% in H1 70 income up 8% 60 costs up 3% 60 56 53 Continuous efficiency 50 improvements 40 Delivery in line with financial targets 30 20 10 0 2004 2005 H1/06 13
Slide 14: Gap between income and cost development
Gap between income and cost development Percentage points Gap of 5% 10 Capture profitable revenue 9 opportunities 8 7 7 Top line increasingly contributing 7 6 Maintaining a gap secures delivery 6 5 of net profit and RoE 5 high value creation 4 Business model in Life focusing on 3 long te
Slide 15: Key growth areas – progress already visible
Key growth areas – progress already visible Accelerate market position within consumer credits incl. cards Continue to leverage on strong position within long-term savings, eg Private Banking and Life Strengthen the position in Sweden – focus on advisory services Harness Nordea’s leading pos
Slide 16: Increased number of core customers and volumes
Increased number of core customers and volumes Key elements in the programmes offered to Strong growth in core segment the customers: H1/05 to H1/06 more favourable prices the more business 14.3% customers do - for core customers a named 7.4% personal banking adviser at their service 6.4% 154
Slide 17: Accelerate market position within consumer credits and cards
Accelerate market position within consumer credits and cards YoY EURbn Consumer finance lending Consumer lending up 10% 16 645,000 new cards issued 14 14.2 14.9 In total 5.3 million cards issued 13.8 13.9 13.2 13.5 of which approx. 25% credit cards 12.9 12 no. of credit cards up 30% 10 Q2o
Slide 18: Long-term savings – Private Banking
Continue to leverage on strong position within long- term savings – Private Banking EURbn Strong asset growth in Nordic Private 50 Banking 45 driven by 10% increase in customer base 9 9 strong performance despite turbulent market 40 9 8 conditions in Q2 35 8 8 net inflow in Q2 18% annualised
Slide 19: Long-term savings – premiums in Life
Continue to leverage on strong position within long term savings – stepwise increase in premiums in Life EURm Net written premiums up 35% H1oH1 1,200 up 49% Q2oQ2 1,100 1,000 474 Unit linked share of premiums 41% H1 390 404 900 Increased penetration in the customer 800 198 base – successful
Slide 20: Strengthen the position in Sweden – focus on advisory services
Strengthen the position in Sweden – focus on advisory services Capturing untapped potential in Sweden proceeding according plan More than 150 additional Personal banking advisors and specialists within private Banking and corporate pension recruited equals around 60% of the intended inflow of
Slide 21: Harness leading position in capital markets – SMEs
Harness Nordea’s leading position in capital markets – untapped potential among SMEs EURm Nordea Markets Leveraging Nordea’s customer base 700 Customer driven growth 600 Focus on customer solutions rather 500 than product push 400 strong concepts in risk management and asset-liability manage
Slide 22: Customer business drives increase in net gains/losses
Customer business drives increase in net/gains losses YoY EURm 200 Net gains/losses in BAs increased by 41% 180 190 210 to EUR 374m 160 164 Strong success in selling Markets products 159 140 in Retail and CIB 120 131 134 Strong growth in customer driven business 100 80 structured products 80
Slide 23: Mortgage product as customer acquisition vehicle – case Norway
Use the mortgage product as a potential customer acquisition vehicle – case Norway Gradual increase in market share in Norwegian household market for a number of years Mortgages close to 12% Consumer lending close to 11% Decision to offer more competitive client proposition in Norway Norde
Slide 24: Position in the Baltics, Poland and Russia
Further position Nordea successfully in the Baltics, Poland and Russia Russia Nordea’s strategy is to build its own presence in the Russian banking market to capture the growth opportunities seen in the large market in the Baltic Sea region Establish a fully controlled operation, either by obtai
Slide 25: Fundamentals in the Nordic economies remain strong
Fundamentals in the Nordic economies remain strong GDP growth in Den, Fin, Nor, Swe expected to be in the 2.9-3.9% range for 2006 and 2.1-2.9% in 2007 Rising inflation, however well in line with central bank’s targets (approx. 2% in 2006-2007) Robust increase in private consumption Moderate,
Slide 26: Outlook
Outlook Nordea’s growth strategy is paying off and progress increasingly visible in key growth areas No. of core clients continued to increase Nordea will continue the successful execution of its organic growth strategy Despite rising interest rates and a somewhat uncertain outlook for equit
Slide 27: CFO Presentation
CFO Presentation
Slide 28: Income statement summary H1
Income statement summary EURm H1/06 H1/05 Chg % Net interest income 1,884 1,810 4 Net fee and commission income 1,028 937 10 Net gains/losses on items at fair value 421 329 28 Equity method 55 35 57 Other income 156 165 -5 Total operating income 3,544 3,276 8 Staff costs -1,095 -1,030 6 Other expens
Slide 29: Income statement summary Q2
Income statement summary EURm Q2/06 Q1/06 Chg % Q2/05 Net interest income 957 927 3 913 Net fee and commission income 521 507 3 484 Net gains/losses on items at fair value 179 242 -26 214 Equity method 30 25 20 22 Other income 98 58 69 61 Total operating income 1,785 1,759 1 1,694 Staff costs -552 -
Slide 30: Net interest income
Net interest income YoY Up 4% EURm Up 6% in Business Areas 1,000 Increased contribution from deposits on back 900 920 933 927 957 of higher interest rate level and volume growth 897 913 800 Total lending up 14% mortgage lending up 14% 700 SME lending up 13% 600 Continued pressure on le
Slide 31: Change in net interest income
Change in net interest income YoY Q2oQ1 Volume driven 160 24 -Lending volumes 132 21 -Deposit volumes 28 3 Margin driven -87 -11 -Lending margins -121 -19 -Deposit margins 34 8 Treasury -10 7 Other, net (incl. day count effect) 11 10 Total 74 30 31
Slide 32: Net commission income
Net commission income YoY EURm Up 10% 600 Savings commissions up 12% Asset Mgmt commissions up 13% 500 529 521 507 Brokerage up 15% 484 453 469 Custody services up 8% 400 Payment related commissions up 5% Cards up 10% 300 200 Q2oQ1 Up 3% 100 Driven by a strong growth in payment 0 c
Slide 33: Breakdown of commission income - gross
Breakdown of commission income - gross EURm 400 360 320 338 335 319 325 280 306 281 240 200 160 175 177 177 183 162 171 120 80 90 98 88 82 87 86 40 51 59 48 41 45 32 0 Q1/05 Q2/05 Q3/05 Q4/05 Q1/06 Q2/06 Savings related Payments related Lending related Other Of which Asset Mgmt Of which Cards 33
Slide 34: Customer business drives increase in net gains/losses
Customer business drives increase in net/gains losses YoY EURm 200 Net gains/losses in BAs increased by 41% 180 190 210 to EUR 374m 160 164 Strong success in selling Markets products 159 140 in Retail and CIB 120 131 134 Strong growth in customer driven business 100 80 structured products 80
Slide 35: Strong trend in net gains/losses within Business Areas
Strong trend in net/gains losses within Business Areas Net/gains losses, EURm Q2/06 Q1/06 Q4/05 Q3/Q5 Q2/05 Q1/05 Retail 75 83 64 47 57 48 CIB 68 87 83 74 51 76 Asset Mgmt 4 8 10 6 3 4 Life 17 32 33 32 23 3 BAs 164 210 190 159 134 131 Group Treasury 7 40 -31 -21 68 -15 Eliminations 8 -8 -12 1 12 -1
Slide 36: Group Treasury
Group Treasury Good result in volatile market conditions annualised investment return in Q2 3.97% compared with funding cost of 3.25% positioned for increased interest rates lower result 2006 mainly explained by exceptionally strong Q2/05 Group Investment Group Funding EURm H1/06 H1/05 H1/06
Slide 37: Total operating income
Total operating income YoY Up 8% EURm Increased focus on top line growth 1,800 1,759 1,785 Steady increase in net interest income – 1,694 1,696 1,600 volume growth more than compensating 1,582 1,601 1,400 for margin pressure Commission income up 10% 1,200 Savings related commissions up 12%
Slide 38: Expenses
Expenses YoY Up 3% - ambition to capture opportunities EURm in growth markets 1,000 956 excl. Life total expenses up 2% 902 914 933 945 896 31 21 900 34 35 31 23 Approx. EUR 30m related to investments 800 within growth areas 393 367 372 Growth Plan Sweden, Life, Poland & Baltics 700 353 364
Slide 39: Expense distribution
Expense distribution EURm +16 1,878 +30 +16 1,816 Expenses Increase in Investments in Cost increases Expenses H1/05 variable growth areas* adj. for changed H1/06 salaries variable salaries and investments in growth areas 39 *Such as investments in Growth Plan Sweden, Cards, Life, Private Banking
Slide 40: Staff costs
Staff costs No. of recruited FTEs: approx. EURm 1300 +18 1,095 +16 1,077 + 31 No. of FTEs that has left: approx. 1,030 900 Staff costs Wage Increased Subtotal Increase in Staff costs H1/05 increases variable Staff costs FTEs, net H1/06 salaries 40
Slide 41: Number of FTEs
Number of FTEs 32,000 Shift towards increasing advisors and 28,824 28,730 28,925 29,052 29,201 sales related FTEs in BAs and falling no. 28,000 of FTEs in processing and staff units 24,000 FTEs Q2/06 Q2/05 Chg YoY 2005 20,000 Retail 17,563 17,278 +285 17,373 CIB 3,412 3,232 +180 3,326 16,000 AM &
Slide 42: Cost/income ratio continues downwards
Cost/income ratio continues downwards % 70 Continued down to 53% in H1/06 60 income up 8% 60 56 53 costs up 3% 50 Continuous efficiency improvements 40 Delivery in line with financial targets 30 20 10 0 2004 2005 H1/06 42
Slide 43: Loan losses
Loan losses YoY EURm Positive loan losses reflecting record 20 low new provisions coupled with recoveries maintained at a high level 0 A handful of larger recoveries -6 -7 -20 -23 -31 Q2oQ1 -40 Continued flow of recoveries and low -60 new provisions Country risk provisions decreased by -80 -
Slide 44: Impaired loans
Impaired loans Net impaired loans as per cent of total lending: 20bp EURm. End of period Q2/06 Q1/06 Q4/05 Q3/05 Q2/05 Impaired loans, gross 1,677 1,712 1,820 1,994 2,006 Reserves -1,272 -1,371 -1,481 -1,545 -1,581 Impaired loans, net 405 341 339 449 425 Provisions/impaired loans, gross,% 76% 80 8
Slide 45: Net profit
Net profit YoY EURm 800 Up 17% 700 740 Operating profit up 14% 705 665 Tax rate 22% (24% H1/05) following 600 revaluation of tax asset in Finland 563 500 506 Q2oQ1 400 Up 11% 300 Operating profit up 9% 200 Lower tax rate in Q2 - 21% compared 100 with 23% 0 Q2/05 Q3/05 Q4/05 Q1/06 Q2/06 4
Slide 46: Continuous increase in earnings per share
Continuous increase in earnings per share - rolling 12 months EUR 1.0 0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0.0 Q1/03 Q2/03 Q3/03 Q4/03 Q1/04 Q2/04 Q3/04 Q4/04 Q1/05 Q2/05 Q3/05 Q4/05 Q1/06 Q2/06 46
Slide 47: Return on equity
Return on equity % 25 RoE well above 2007 target of >17% At top level among Nordic peers 20 21.2 19.4 Active capital management 18.0 15 10 5 0 2005 H1/05 H1/06 47
Slide 48: Capital position
Capital position % 8 Tier 1 ratio 6.8% 7 Profitable volume growth 7.0 7.0 6.8 6.8 6.8 6.8 Total capital ratio at 9.3% 6 5 4 3 2 1 0 Q1/05 Q2/05 Q3/05 Q4/05 Q1/06 Q2/06 48
Slide 49: Risk-weighted assets (RWA)
Risk-weighted assets (RWA) YoY EURbn 200 RWA up 13% 180 174 180 Total lending up 14% 160 169 159 162 140 153 Off-balance commitments up 26% 120 100 80 Q2oQ1 60 RWA up 3% 40 20 Lending up 4% 0 Q1/05 Q2/05 Q3/05 Q4/05 Q1/06 Q2/06 RWA credit risk 49
Slide 50: Return on risk weighted assets, annualised
Return on risk weighted assets, annualised EURbn % 200 2.0 180 1.77 1.8 180 174 1.64 160 169 1.6 159 162 1.53 140 153 1.4 1.39 1.29 120 1.20 1.2 100 1.0 80 0.8 60 0.6 40 0.4 20 0.2 0 0.0 Q1/05 Q2/05 Q3/05 Q4/05 Q1/06 Q2/06 RWA Return on RWA (net profit, annualised) 50
Slide 51: Business trends
Business trends
Slide 52: Volume growth compensates margin pressure
Volume growth compensates margin pressure YoY Q2oQ1 Lending, total +14% +4% – Mortgage lending +14% +4% – Consumer lending* +10% +5% – SME lending +13% +3% – CIB lending excl. Markets +12% +4% Deposits, total +13% +5% – Household deposits +8% +5% – SME deposits +16% +7% – CIB deposits excl. Markets
Slide 53: Total lending
Total lending EURbn 200 199 189 191 182 180 175 170 161 160 156 155 147 147 149 146 148 140 120 100 80 60 40 20 0 Q1/03 Q2/03 Q3/03 Q4/03 Q1/04 Q2/04 Q3/04 Q4/04 Q1/05 Q2/05 Q3/05 Q4/05 Q1/06 Q2/06 Corporate Housing loans Other loans Public sector 53
Slide 54: Household mortgages, volumes and margins
Household mortgages, volumes and margins EURbn % 75 1.6 70 1.5 65 68.5 1.4 64.5 65.8 60 62.6 1.3 60.4 55 57.7 1.2 54.5 56.3 50 52.6 50.0 1.1 45 48.2 48.9 45.7 1.0 40 44.3 0.9 35 0.8 30 0.7 25 20 0.6 15 0.5 10 0.4 5 0.3 0 0.2 Q1/03 Q2/03 Q3/03 Q4/03 Q1/04 Q2/04 Q3/04 Q4/04 Q1/05 Q2/05 Q3/05 Q4/05 Q1/
Slide 55: Nordic mortgage market
Nordic mortgage market A highly competitive market Nordic mortgage market still heterogonous – convergence expected Margin trends diverge margins stable in Denmark at approx. 50bp signs of stabilising margins on new lending in Finland and Sweden - slightly lower compared to back book of 70
Slide 56: Retail consumer lending, volumes and margins
Retail consumer lending, volumes and margins EURbn % 16 4.8 14 14.9 4.2 13.9 14.2 13.5 13.8 12.9 13.2 12 12.4 12.4 12.5 12.7 3.6 12.1 12.2 12.2 10 3.0 8 2.4 6 1.8 4 1.2 2 0.6 0 0.0 Q1/03 Q2/03 Q3/03 Q4/03 Q1/04 Q2/04 Q3/04 Q4/04 Q1/05 Q2/05 Q3/05 Q4/05 Q1/06 Q2/06 Retail consumer lending Retail cons
Slide 57: Lending to corporates (SME), volumes and margins
Lending to corporates (SME), volumes and margins EURbn % 80 1.4 70 73.2 1.3 70.0 70.9 67.9 64.0 65.3 60 1.2 61.0 57.3 57.3 57.4 58.1 58.5 56.7 56.3 50 1.1 40 1.0 30 0.9 20 0.8 10 0.7 0 0.6 Q1/03 Q2/03 Q3/03 Q4/03 Q1/04 Q2/04 Q3/04 Q4/04 Q1/05 Q2/05 Q3/05 Q4/05 Q1/06 Q2/06 57
Slide 58: CIB lending, volumes and margins
CIB lending, volumes and margins* EURbn % 30 1.5 28 1.4 26 1.3 24 1.2 22 23.3 1.1 22.6 22.6 20 21.7 21.4 21.4 21.7 21.2 1.0 20.3 20.8 18 19.0 0.9 18.4 18.1 18.0 16 0.8 14 0.7 12 0.6 10 0.5 8 0.4 6 0.3 4 0.2 2 0.1 0 0.0 Q1/03 Q2/03 Q3/03 Q4/03 Q1/04 Q2/04 Q3/04 Q4/04 Q1/05 Q2/05 Q3/05 Q4/05 Q1/06 Q2/
Slide 59: Total deposits
Total deposits EURbn 120 119 116 113 110 105 105 106 108 100 95 96 98 97 91 93 92 90 80 70 60 50 40 30 20 10 0 Q1/03 Q2/03 Q3/03 Q4/03 Q1/04 Q2/04 Q3/04 Q4/04 Q1/05 Q2/05 Q3/05 Q4/05 Q1/06 Q2/06 Of which household deposits 59
Slide 60: Retail deposits, households, volumes and margins
Retail deposits, households, volumes and margins EURbn % 50 49.6 2.4 45 46.9 47.0 47.1 2.2 45.7 43.8 44.1 40 42.3 42.9 2.0 40.7 41.7 41.3 40.2 40.4 35 1.8 1.6 30 1.4 25 1.2 20 1.0 15 0.8 0.6 10 0.4 5 0.2 0 0.0 Q1/03 Q2/03 Q3/03 Q4/03 Q1/04 Q2/04 Q3/04 Q4/04 Q1/05 Q2/05 Q3/05 Q4/05 Q1/06 Q2/06 60
Slide 61: Structural Interest Income Risk (SIIR)
Structural Interest Income Risk (SIIR) EURm, annualised effect on NII* Q2/06 Q1/06 Q2/05 Increasing market rates, 100bp 175 162 132 Decreasing market rates, 100bp -189 -167 -175 Increased SIIR following increased volumes Nordea mainly effected by changes in short term interest rates *Approx. end
Slide 62: Retail deposits, SME, volumes and margins
Retail deposits, SME, volumes and margins EURbn % 40 1.6 35 1.4 34.8 33.4 32.6 30 31.5 1.2 30.5 30.1 28.9 28.8 29.4 28.3 28.4 25 26.2 26.3 26.7 1.0 20 0.8 15 0.6 10 0.4 5 0.2 0 0.0 Q1/03 Q2/03 Q3/03 Q4/03 Q1/04 Q2/04 Q3/04 Q4/04 Q1/05 Q2/05 Q3/05 Q4/05 Q1/06 Q2/06 62
Slide 63: CIB, deposits, volumes and margins
CIB, deposits, volumes and margins* EURbn % 24 0.60 22 23.2 0.55 22.1 22.3 20 21.0 21.2 0.50 20.4 18 0.45 18.0 18.5 17.9 16 0.40 14 15.4 15.2 14.9 0.35 14.4 12 13.3 0.30 10 0.25 8 0.20 6 0.15 4 0.10 2 0.05 0 0.00 Q1/03 Q2/03 Q3/03 Q4/03 Q1/04 Q2/04 Q3/04 Q4/04 Q1/05 Q2/05 Q3/05 Q4/05 Q1/06 Q2/06 * E
Slide 64: Assets under management
Assets under management YoY EURbn Up 11% 160 154 153 137 144 148 Continued growth in Retail 140 35 33 34 35 funds, up 15% 120 32 100 21 22 23 23 Strong asset growth in Private 21 80 8 7 7 9 7 9 6 9 Banking, up 20% 8 8 36 10% increase in customer base 60 34 37 31 33 new common advisory conc
Slide 65: Net inflows
Net inflows Net inflow EUR 8.2bn last 12 EURbn months 5 3.4 Net inflow EUR 3.3bn in Q2 4 3.3 second quarter in a row with net 3 inflow above EUR 3bn 1.0 2 0.9 0.6 Strong inflow in Nordic Private 1 Banking and Institutional clients 0 Inflow of EUR 0.7bn in Retail -1 funds marked asset shi
Slide 66: Retail operating profit before loan losses
Retail operating profit before loan losses YoY EURm Double digit volume growth 700 650 Increased no. of core customers 600 550 577 600 Lending margins still under pressure – 556 500 544 particularly on mortgages in Norway 505 450 400 Capturing untapped potential in Sweden 350 proceeding well
Slide 67: CIB operating profit before loan losses
CIB operating profit before loan losses EURm YoY 180 Strong result in all divisions 160 169 160 High level of activity in M&A market 140 144 Very good result in Markets 120 125 increased market uncertainty have led to 122 good demand for hedging products 100 Strong volume growth in Poland
Slide 68: Asset Management product result
Asset Management product result YoY EURm 100 Up 35% 90 96 93 Higher AuM 80 85 Double digit income growth 70 77 limited impact from volatile markets in Q2 60 65 Improved income and result margin 50 somewhat reduced in Q2 40 30 20 10 Key ratios H1/06 H1/05 0 Q2/05 Q3/05 Q4/05 Q1/06 Q2/06 C
Slide 69: Life insurance, product result
Life insurance, product result YoY EURm Net written premiums up 35% 70 Unit link premiums up 106% 65 now accounting for 41% of total premiums 60 56 56 Negative investment return following 50 52 52 increased interest rates and falling equity indexes 40 Buffers decreased in Q2 but 30 substan
Slide 70: Life – financial buffers
Life – financial buffers EURm % of total provisions Q2/06 Q1/06 Q2/06 Q1/06 Denmark 1,352 1,354 12.4 12.4 Finland 222 296 4.2 5.5 Norway 146 217 4.1 6.4 Sweden 189 132 12.0 8.1 Total 1,909 1,999 8.9 9.4 70
Slide 71: Life – buffers in different scenarios
Life – buffers in different scenarios End of Q2/06 EURm Denmark Finland Norway Sweden Financial buffers, actual 1,352 222 146 189 Equities drop 12% 1,172 95 77 177 Interest rates down 50bp 1,319 302 151 130 Interest rates up 50bp 1,404 148 141 239 71
Slide 72: Summary
Summary Strong result reflecting robust and diversified business mix – RoE 21.2% Nordea’s growth strategy is paying off increasing no. of core clients strong performance in long term savings – AuM up 11% supported by strong net inflow increased penetration among SME clients with Markets re
Slide 73: Facts & figures
Facts & figures
Slide 74: Facts & Figures, content
Facts & Figures, content Credit quality Page 75 Economic capital Page 84 Business areas Page 87 Balance sheet Page 114 Market shares Page 117 Appendix Page 125 74
Slide 75: Credit quality
Credit quality
Slide 76: Loan portfolio by customer category
Loan portfolio by customer category* EURbn 110 100 105 100 101 90 97 91 93 80 85 84 83 84 82 80 78 79 70 66 68 60 63 65 58 60 50 55 56 53 48 49 50 40 44 46 30 20 19 19 20 20 21 16 16 17 17 17 18 10 14 15 15 0 Q1/03 Q2/03 Q3/03 Q4/03 Q1/04 Q2/04 Q3/04 Q4/04 Q1/05 Q2/05 Q3/05 Q4/05 Q1/06 Q2/06 Corpora
Slide 77: Loan portfolio by customer group
Loan portfolio by customer group End Q2/06, EUR 198.8bn End Q2/05, EUR 175.1bn Public Public sector sector 2.1% 2.1% Household customers 45.0% Household Companies 52.9% customers Companies 45.1% 52.8% 77
Slide 78: Lending to household customers
Lending to household customers End of Q2/06 EUR 89.4bn Other loans comprise Other loans 23.4% consumer credits investment credits car financing overdraft facilities credit cards home equity credits Housing loans 76.6% 78
Slide 79: Lending to companies by industry
Lending to companies by industry End of Q2/06 EUR 105.2bn Shipping & Offshore Construction 5% 3% Agriculture & Fishing 5% Real estate 27% Transport and communication 6% Finance 9% Commerce and Manufactoring services 14% 10% Other companies Renting, consulting 10% and other services 11% 79
Slide 80: Loan portfolio in figures
Loan portfolio in figures EURbn Q2/06 Q1/06 Q4/05 Q3/05 Q2/05 Household customers 89.4 86.0 84.6 81.7 78.9 Real estate 28.0 26.8 26.2 25.6 25.1 Construction 3.6 2.9 2.9 3.1 2.6 Transport, communication 5.8 5.8 5.6 5.1 5.6 Trade and services 10.4 9.9 9.9 9.9 9.8 Manufacturing 14.5 14.0 13.4 12.6 12.9
Slide 81: Lending by geographical area
Lending by geographical area End of Q2/06 EUR 198.8bn Asia 1.1% Latin America USA 0.6% Nordic countries 1.1% and P&B Other non OECD 93.2% 0.5% Other 6.8% Other OECD 0.3% Other EU countries Nordic countries and P&B, EURbn 3.2% Sweden 55.4 Denmark 53.6 Finland 40.8 Norway 31.8 P&B 3.7 81
Slide 82: Impaired loans
Impaired loans EURm. End of Q2/06 Gross Provisions Net Household customers 397 217 180 Manufacturing 362 304 58 Trade and services 190 147 43 Other companies 189 153 36 Real estate 117 95 22 Renting, Consulting and other services 136 118 18 Agriculture & Fishing 146 131 15 Construction 47 34 13 Tran
Slide 83: Loan losses
Loan losses YoY EURm Positive loan losses reflecting record 200 192 low new provisions coupled with 157 156 recoveries maintained at a high level 150 100 92 A handful of larger recoveries 58 50 0 Q2oQ1 -7 -23 -50 -31 Continued flow of recoveries and low -100 -101 -89 new provisions -150 -123 -
Slide 84: Economic capital
Economic capital
Slide 85: Economic capital (EC)
Economic capital (EC) EURbn 10 9 9.2 EC per business area 8.8 8.9 9.0 9.0 8 (EURm) Q2/06 7 Retail Banking 5,609 6 CIB 1,899 5 Asset Mgmt 165 4 Life 986 3 Treasury 365 2 GPT 132 1 Other 7 0 Q2/05 Q3/05 Q4/05 Q1/06 Q2/06 Total 9,163 85
Slide 86: Economic capital – distribution
Economic capital – distribution End of Q2/06 Asset Mgmt Treasury Other Operational Life risk & Life 4% 2% 1% Business risk 12% 9% risk 12% CIB Market risk 21% Retail Credit risk 15% 61% 63% 86
Slide 87: Retail Banking
Retail Banking
Slide 88: Retail Banking lending and deposit volumes
Retail Banking lending and deposit volumes Lending, EURbn Q2/06 Q1/06 Q4/05 Q3/05 Q2/05 Q1/05 Q4/04 Q3/04 Denmark 47.5 45.5 45.1 43.2 41.3 38.5 37.4 36.0 Finland 37.7 36.4 35.6 34.8 33.8 33.0 31.6 30.4 Norway 26.8 26.0 25.2 24.3 23.3 21.8 20.4 19.9 Sweden 49.1 46.5 46.1 45.2 43.3 44.0 42.6 40.9 Depo
Slide 89: Retail Banking breakdown of lending
Retail Banking breakdown of lending Denmark, EURbn Q2/06 Q1/06 Q4/05 Q3/05 Q2/05 Q1/05 Q4/04 Q3/04 Corporate 18.2 18.2 18.1 17.0 16.1 14.7 14.3 13.7 Household mortgages 20.8 20.3 19.6 18.8 17.9 17.2 16.8 16.4 Consumer lending 6.0 5.8 5.8 5.8 5.7 5.5 5.3 5.2 Finland, EURbn Q2/06 Q1/06 Q4/05 Q3/05 Q2/
Slide 90: Retail Banking breakdown of lending
Retail Banking breakdown of lending Norway*, EURbn Q2/06 Q1/06 Q4/05 Q3/05 Q2/05 Q1/05 Q4/04 Q3/04 Corporate 12.7 12.3 12.0 11.5 11.1 10.6 10.4 10.3 Household mortgages 13.3 12.8 12.4 11.9 11.4 10.5 10.1 9.6 Consumer lending 1.0 0.9 0.9 0.8 0.8 0.7 0.6 0.6 Sweden, EURbn Q2/06 Q1/06 Q4/05 Q3/05 Q2/05
Slide 91: Retail Banking breakdown of deposits
Retail Banking breakdown of deposits Denmark, EURbn Q2/06 Q1/06 Q4/05 Q3/05 Q2/05 Q1/05 Q4/04 Q3/04 Corporate 8.0 7.8 7.8 8.0 7.2 6.8 7.2 7.1 Households, current 3.4 3.1 3.2 3.1 3.1 2.9 2.9 2.9 accounts Households, savings 9.9 9.5 9.4 9.5 9.0 8.4 8.1 7.8 accounts Finland, EURbn Q2/06 Q1/06 Q4/05 Q3/
Slide 92: Retail Banking breakdown of deposits
Retail Banking breakdown of deposits Norway, EURbn Q2/06 Q1/06 Q4/05 Q3/05 Q2/05 Q1/05 Q4/04 Q3/04 Corporate 8.3 7.7 7.4 6.9 6.3 6.2 5.7 5.6 Households, current 2.2 2.0 1.8 1.7 1.7 1.4 1.4 1.4 accounts Households, savings 3.7 3.7 3.7 3.9 3.8 3.6 3.5 3.5 accounts Sweden, EURbn Q2/06 Q1/06 Q4/05 Q3/05
Slide 93: Retail Banking margins
Retail Banking margins % Q2/06 Q1/06 Q4/05 Q3/05 Q2/05 Q1/05 Q4/04 Q3/04 Lending to SME’s 0.98 1.00 1.04 1.06 1.09 1.13 1.13 1.13 Mortgages, households 0.70 0.75 0.76 0.81 0.85 0.92 0.93 0.85 Consumer loans, 3.61 3.66 3.74 3.81 4.04 4.07 4.18 4.05 households Deposits, SME’s 0.91 0.88 0.85 0.83 0.89
Slide 94: Payments & transactions
Payments & transactions
Slide 95: E-banking customers and payments
95 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 Mill. Feb-00 June- Oct-00 Feb-01 June- Oct-01 Feb-02 June-02 Oct-02 Feb-03 Jun-03 Oct-03 Feb-04 Jun-04 E-banking customers Oct-04 Feb-05 Jun-05 Oct-06 Feb-06 Jun-06 0 5 10 15 20 25 30 35 40 45 50 55 Mill. Q1/00 Q3/00 Q1/01 Q3/01 E-banking customers, all
Slide 96: Issued cards and card payments
96 0.0 1.0 2.0 3.0 4.0 5.0 Mill. Jan-01 May-01 Sept-01 Jan-02 May-02 Sept-02 Jan-03 May-03 Debit cards Sep-03 Jan-04 May-04 Sep-04 Jan-05 Cards, all customers Issued debit and credit cards May-05 Credit cards Sep-05 Jan-06 May-06 0 20 40 60 80 100 120 140 160 180 Mill. Q1/01 Q3/01 Q1/02 Q3/02 Q1/03
Slide 97: Payment transactions, households
Payment transactions, households Mill. 180 160 140 120 100 80 60 40 20 0 Q1/03 Q2/03 Q3/03 Q4/03 Q1/04 Q2/04 Q3/04 Q4/04 Q1/05 Q2/05 Q3/05 Q4/05 Q1/06 Q2/06 Manual transactions Payments ATM Card payments Cash withdrawal ATMs Direct debit E-banking payments 97
Slide 98: Payment transactions, households
Payment transactions, households Mill. H1/06 H1/05 2005 2004 2003 2002 2001 Manual transactions 56.5 64.5 100.1 103.9 112.5 125.3 141.0 Payterminals 8.6 10.3 19.7 23.6 27.1 31.7 34.3 Card payments 336.3 280.1 603.6 527.8 459.9 395.5 333.5 Cash withdrawal ATM 82.5 90.2 181.7 190.4 197.4 204.4 207.2 D
Slide 99: Corporate and Institutional Banking
Corporate and Institutional Banking
Slide 100: CIB lending and deposit volumes and margins
CIB lending and deposit volumes and margins Lending, EURbn Q2/06 Q1/06 Q4/05 Q3/05 Q2/05 Q1/05 Q4/04 Q3/04 Corporate Banking Division 12.7 12.0 11.1 10.9 12.0 12.8 10.8 11.3 Financial Institutions Division 1.5 2.0 1.7 1.8 2.0 2.0 1.4 1.6 International and Shipping Division 9.1 8.6 8.5 8.1 7.7 6.5 5.
Slide 101: Nordea operations in Poland and the Baltic countries
Nordea operations in Poland and the Baltic countries End of Q2/06 Estonia Latvia Lithuania Poland Total Customers 48,500 35,400 31,200 342,400 1,186,500* Branches/salespoints 10 15 10 37 72 Number of FTEs 284 289 182 835 1,600 Total assets, EURm 1,145 1,082 742 1,798 4,767 Commitments***, EURm 1,045
Slide 102: Asset Management & Life Insurance
Asset Management & Life Insurance
Slide 103: Breakdown of AuM by market and channels
Breakdown of AuM by market and channels Retail funds* Fund sales Q2/06 (sold through through Private Institutional Life & Total by EURbn own distribution) third-parties Banking customers Pensions market Denmark 17.1 - 15.5 9.7 17.5** 59.8 Finland 6.7 - 14.3 4.0 8.4** 33.4 Norway 1.8 - 1.7 3.8 4.8**
Slide 104: Asset Management - margins
Asset Management - margins Q2oQ1 Bps 70 66 65 Income margin up 4bp 58 61 57 60 Operating expenses margin in line 50 with last year 40 35 33 28 30 Result margin up 5bp 30 25 20 10 0 -10 -20 -20 -19 -20 -20 -20 -30 Q2/05 Q3/05 Q4/05 Q1/06 Q2/06 Income margin Operating expenses margin Result marg
Slide 105: Asset structure
Asset structure* Q2/06 Q1/06 Int'l. fixed Int'l. fixed income income 13% 13% Nordic Nordic Nordic Nordic equities fixed fixed equities 14% income income 15% 43% 46% Int'l. Int'l. equities equities 27% 29% *Average AuM for Asset Management activities excl. Nordic Private Banking activities, in Q2 thi
Slide 106: European fund distribution
European fund distribution EURbn 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 -1,000 Q3/00 Q1/01 Q3/01 Q1/02 Q3/02 Q1/03 Q3/03 Q1/04 Q3/04 Q1/05 Q3/05 Q1/06 Inflow AuM 106
Slide 107: Life - breaking out profit drivers
Life - breaking out profit drivers Fee based on size of life provisions in “with profit” companies – DK, FI Fee contribution Profit-sharing from the Norwegian business (existing model, change pending) Contribution from cost 25% of surplus/deficit from cost result in DK, 100% from FI and SE res
Slide 108: Life - profit drivers
Life - profit drivers EURm Q2/06 Q1/06 Q4/05 Q3/05 Q2/05 Traditional insurance Fee contribution/profit sharing 35 36 33 43 35 Contribution from cost result -4 -1 -1 0 0 Contribution from risk result 6 7 10 7 2 Inv. return on Shareholders Equity 1 0 1 3 4 Other profits 5 5 6 7 5 Total Profit Traditio
Slide 109: Life – net written premiums by market
Life – net written premiums by market EURm Q2/06 Q1/06 Q4/05 Q3/05 Q2/05 Denmark 262 237 296 222 210 Norway 205 236 147 90 104 Finland 221 241 273 164 212 Sweden 153 151 254 68 49 Other 124 107 111 33 70 Total 964 972 1,081 577 645 109
Slide 110: Life, investments
Life, investments EURbn Equities 35 30.5 30.3 predominantly listed equities 30 29.0 29.9 28.4 1/3 Nordic, 2/3 international 25 Bonds 20 ¾ Nordic issuers primarily govmn’t & mortgage inst. 15 10 5 0 Q2/05 Q3/05 Q4/05 Q1/06 Q2/06 Equities Bonds Real Estate Unit linked Alternative investmen
Slide 111: Life - asset allocation
Life - asset allocation Total, EURbn Equities, % Q2/06 Q1/06 Q2/06 Q1/06 Denmark 13.6 13.6 25 26 Finland 8.1 8.2 19 21 Norway 4.5 4.4 16 17 Sweden 3.2 3.3 6 4 Total 30.3 29.5 19 20 111
Slide 112: Life - solvency situation
Life - solvency situation End of Q2/06 Required Actual Solvency Solvency in % of EURm solvency solvency buffer requirement Denmark 488 597 109 122 Finland 228 653 425 287 Norway* 149 313 163 209 Sweden** 69 138 70 202 * Excluding unit linked company ** Nordea Life Sweden I 112
Slide 113: Life – solvency sensitivity
Life – solvency sensitivity End of Q2/06 Denmark Finland Norway Sweden Solvency in % of requirement 122 287 209 202 Equities drop 12% 118 232 209 189 Interest rates down 50bp 121 322 209 244 Interest rates up 50bp 123 255 209 157 113
Slide 114: Balance sheet
Balance sheet
Slide 115: Balance sheet
Balance sheet 30 June 31 Dec 30 June EURm 2006 2005 2005 Treasury bills and other eligible bills 7,961 7,280 12,456 Loans and receivables to credit institutions 27,301 31,578 21,891 Loans and receivables to the public 198,842 188,460 175,144 Derivatives 24,747 28,876 35,080 Other assets 66,599 69,35
Slide 116: Capital base
Capital base EURm Q2/06 Q1/06 Q4/05 Q3/05 Q2/05 Core equity 13,479 13,572 12,918 12,946 12,344 Hybrid capital loans 1,458 1,462 1,472 1,395 1,387 Deferred tax assets -304 -308 -327 -460 -449 Goodwill -1,800 -1,795 -1,794 -1,804 -1,799 Other items net -634 -1,210 -831 -696 -431 Tier 1 capital 12,199
Slide 117: Market shares
Market shares
Slide 118: Market position in Nordic markets
Market position in Nordic markets Market shares Denmark Finland Norway Sweden Personal customers - mortgage lending 17.6% 31.3% 11.9% 15.7% - consumer lending 14.7% 30.9% 11.0% 9.4% - deposits 21.9% 33.3% 8.3% 17.9% Corporate customers - lending 18.7% 34.8% 16.2% 13.8% - deposits 21.0% 38.5% 16.8% 2
Slide 119: Personal customer deposits - market volume & share
119 A M pr 0 100 200 300 400 500 600 ay 0 100 200 300 400 500 - J u -05 DKKbn J u 03 A n-0 NOKbn l-0 ug 5 Se 3 p O - 05 N -03 c ov D t- 0 ec 5 J a -03 n Fe -0 5 M -0 4 ar b A - 05 M -04 pr ay J u -05 - J u 04 A n-0 l ug 5 Se -04 p- O - 05 N 04 c ov D t- 0 ec 5 J a -04 n Fe -0 5 M -0 5 b ar A - 05 pr
Slide 120: Corporate deposits - market volume & share
120 M A ay pr - 0 100 200 300 400 0 100 200 300 400 500 Ju - 03 DKKbn Ju 03 NOKbn S l-0 A n-0 ep 3 ug 3 N - 03 O - 03 o c Ja v-0 D t- 03 n 3 e M -0 Fec-0 a 4 b 3 M r- 0 A - 04 ay 4 pr Ju -04 Ju - 04 S l-0 A n-0 ep 4 ug 4 N - 04 O - 04 o c Ja v-0 De t- 04 n 4 M -0 Fec-0 a 5 b 4 M r- 0 Norway Denmark
Slide 121: Personal customer lending - market volume & share
121 M Ap ay r- 0 100 200 300 400 0 200 400 600 800 1000 Ju 03 n DKKbn NOKbn Ju -03 S l-0 Au -0 3 ep 3 g- N -0 O 03 ov 3 ct Ja -0 3 D -03 ec M n-0 Fe -03 a 4 b- M r- 0 Ap 04 ay 4 r- Ju -04 Ju 04 S l-0 n ep 4 Au -0 4 N - 04 g- o O 04 Ja v-0 ct 4 D -04 M n-0 ec a 5 Fe -04 M r- 0 Norway Denmark ay 5 b-
Slide 122: Mortgage lending households - market volume & share
122 M M ay ar 0 200 400 600 800 1000 0 200 400 600 800 1000 -0 DKKbn NOKbn Ju -03 S l-0 Ju 3 ep 3 n- 0 N - 03 S 3 o ep Ja v-0 - 3 D 03 M n-0 ec a 4 -0 M r- 0 ay 4 M 3 - ar Ju 04 -0 S l-0 Ju 4 ep 4 n- N -0 0 o 4 O 4 ct Ja v-0 -0 4 D 4 M n-0 ec a 5 -0 M r- 0 M 4 Norway Denmark ay 5 ar Ju -05 -0 S l-0
Slide 123: Corporate lending - market volume & share
123 M A ay pr 0 100 200 300 400 500 600 - 0 100 200 300 400 500 600 J u - 03 DKKbn Ju 03 NOKbn S l-0 Aun-0 ep 3 g 3 O - 03 N - 03 o c D t- 03 Ja v-0 n 3 e M -0 Fec-0 a 4 b 3 M r- 0 Ap - 04 ay 4 r Ju -04 J u - 04 S l-0 A n-0 ep 4 ug 4 N - 04 o O - 04 c Ja v-0 D t- 04 n 4 e M -0 Fec-0 a 5 b 4 M r- 0 N
Slide 124: Investment funds - market volume & share
124 M M ay ay - 0 100 200 300 400 500 600 700 800 - 0 40 80 120 160 200 240 280 Ju 03 DKKbn Ju 03 NOKbn l S -0 S l-0 ep 3 ep 3 N - 03 N - 03 ov o Ja -0 3 Ja v-0 n 3 M n-0 M -0 a 4 a 4 M r- 0 M r- 0 ay 4 ay 3 - Ju -04 Ju 04 S l-0 S l-0 ep 4 ep 4 N - 04 N - 04 ov o Ja -0 4 Ja v-0 n 4 M n-0 M -0 a 5 a
Slide 125: Appendix
Appendix
Slide 126: Ratings
Ratings Moody’s S&P Fitch Short Long Short Long Short Long Nordea Bank AB P-1 Aa3 A-1+ AA- F1+ AA- Nordea Bank D P-1 Aa3 A-1+ AA- F1+ AA- Nordea Bank F P-1 Aa3 A-1+ AA- F1+ AA- Nordea Bank N P-1 Aa3 A-1+ AA- F1+ AA- Nordea Hypotek* Aaa A-1+ AAA Nordea Kredit Aaa AAA Norgeskreditt P-1 A1 *Covered bon
Slide 127: Total Shareholder Return (TSR), %
Total Shareholder Return (TSR),% Nordea peer group* 1/1-06 – 30/6-06 % 20 15 14 15 14 10 11 11 12 9 10 7 8 8 5 6 3 4 4 0 -3 -3 -1 -5 -5 -10 -10 K K S B O S S K K B D A O K K R B S E AN N BO SH R Y BO AN N SE N E IT BC AN N NO TS BA AL BA AM LA BA A D D K BA RI B H R B EL R E B S nB DS R ED TE N C KE
Slide 128: Largest registered shareholders, end of Q2/2006
Largest registered shareholders, end of Q2/2006 Shareholder Number of shares % Swedish state 515.6 19.9 Nordea Danmark fund 102.5 4.0 Alecta 70.4 2.7 Robur Funds 67.3 2.6 SBH/SPP Funds 63.8 2.5 SEB Funds 47.0 1.8 AMF Pension 43.9 1.7 Nordea Funds 43.6 1.7 Skandia Life Insurance 34.0 1.3 First Swedis
Slide 129: Market development – interest rates
Market development – interest rates Change 31-03-06 30-06-06 % Q2/06 Short, EUR (one week) 2.56 2.76 +0.20 Long, EUR (5 years) 3.62 3.94 +0.32 Short, DK 2.71 2.89 +0.18 Long, DK 3.78 4.08 +0.30 Short, NO 2.44 2.85 +0.41 Long, NO 4.05 4.48 +0.43 Short, SE 2.05 2.21 +0.16 Long, SE 3.54 3.97 +0.43 129
Slide 130: Macro data – Nordic market
Macro data – Nordic market % 2006e 2007e 2008e Gross domestic product DK 2.9 2.2 2.5 FI 3.9 2.8 3.2 NO 2.8 2.1 2.6 SE 3.6 2.9 2.7 Inflation DK 1.9 1.7 1.6 FI 1.3 1.5 1.5 NO 2.4 1.6 2.2 SE 1.1 1.6 2.2 Private consumption DK 2.4 1.8 2.1 FI 3.3 2.2 2.6 NO 2.2 2.2 2.3 SE 3.5 3.0 2.5 Unemployment DK 4.8
Slide 131: Financial calendar 2006
Financial calendar 2006 Q3 report 2006 will be published on 25 October www.nordea.com/ir 131