Nordea Bank Abp · OMXHEX:NDA_FI
Nordea Bank Abp — Q1 2010 Earnings Presentation
33 slides from Nordea Bank Abp's earnings presentation, Apr 28, 2010
Slide 1: First Quarter Result 2010 Telephone conference
First Quarter Result 2010 Telephone conference 28 April 2010
Slide 2: Disclaimer
Disclaimer This presentation contains forward-looking statements that reflect management’s current views with respect to certain future events and potential financial performance. Although Nordea believes that the expectations reflected in such forward looking statements are reasonable, no assurance
Slide 3: Strong first quarter results
Strong first quarter results Total income up 7% Total expenses down 5%* Loan losses 37bps Q1 2009 Q4 2009 Q1 2010 Q1 2009 Q4 2009 Q1 2010 Q1 2009 Q4 2009 Q1 2010 Operating profit up 48% Risk-adjusted profit up 27% Return on Equity 11.3% Q1 2009 Q4 2009 Q1 2010 Q1 2009 Q4 2009 Q1 2010 Q1 2009 Q4 2009
Slide 4: Operating profit high and stable
Operating profit high and stable Operating profit, EURm 978 1.078 932 895 885 883 878 847 833 832 818 781 592 Q1/07 Q2/07 Q3/07 Q4/07 Q1/08 Q2/08 Q3/08 Q4/08 Q1/09 Q2/09 Q3/09 Q4/09 Q1/10 Operating profit Loan losses Write backs 4 28 April 2010 Telephone conference
Slide 5: Continued delivery on long-term targets
Continued delivery on long-term targets Risk-adjusted profit TSR 2007 - Q1 2010 - on track to reach 2013 target 20 2% 0 38.9% 38.0% -20 -40 Top quartile -60 -80 -100 Allied Irish Banks Bank of Ireland Intesa Sanpaolo DnBNOR Unicredit Santander Lloyds Barclays Commerzbank Swedbank Nordea Bank Societe
Slide 6: Outlook 2010
Outlook 2010 Nordea expects the macro economic recovery to continue in 2010, but the development is still fragile and hence uncertainty remains Excluding currency effects in 2010, cost growth is expected to be broadly in line with 2009 – including the effects from growth and efficiency initiativ
Slide 7: First Quarter Results
First Quarter Results 7 28 April 2010 Telephone conference
Slide 8: Result highlights
Result highlights EURm Q1/10 Q4/09 Chg % Q1/09 Chg % Net interest income 1,235 1,299 -5 1,356 -9 Net fee and commission income 475 463 3 381 25 Net result from items at fair value 548 351 56 515 6 Other income 45 45 0 27 67 Total income 2,303 2,158 7 2,279 1 Staff costs -687 -702 -2 -665 3 Total exp
Slide 9: Underlying business trends
Underlying business trends Q1 2010 with Q1 2010 with unchanged unchanged translation translation Reported EURm Q1 2010 Q4 2009 Chg % Chg % Chg % currencies currencies change% (compared with (compared Q4 2009) with Q1 2009) Total operating income 2,303 2,158 7 2,252 4 2,239 -2 1 Total operating -1,16
Slide 10: Net interest income – down 5% from high levels
Net interest income – down 5% from high levels EURm Remains subdued by the low interest 1,356 1,321 rate levels 1,305 1,299 1,235 Underlying increase in customer operations – volumes and margins Decrease in Group Treasury Negative impact from day count Total lending up 4% Continued incre
Slide 11: Underlying volume trends
Underlying volume trends % change in local currency Q1oQ4 Q1oQ1 Total Lending, excl. reversed repurchase agreements 2% 2% – Nordic household mortgages 2% 9% – Nordic consumer lending 3% 8% – Nordic corporates 2% -5% – New European Markets -3% -4% – FID and Shipping 4% -7% Total Deposits, excl. repur
Slide 12: Change in net interest income
Change in net interest income Q1oQ4 YoY Volume driven Nordic markets local currencies 12 10 Corporate lending volumes 2 -22 Household lending volumes 9 29 Corporate deposit volumes 0 0 Household deposit volumes 0 2 Margin driven Nordic markets local currencies 10 -86 Corporate lending margins 14 58
Slide 13: Interest rate sensitivity
Interest rate sensitivity - 3 components Increased market rates, 100bps Q1/10 Q1/09 Structural interest income risk (SIIR) EURm Reflecting the effect on NII from re- pricing gaps* Net Interest Income, approx 450 400 Net result from items at fair value, Dynamic effects on net interest income ap
Slide 14: Positive trend continues - Net fee and commission income up 3%
Positive trend continues - Net fee and commission income up 3% Strong performance in savings area EURm 463 475 412 437 Asset management commissions 381 up 6% from a strong Q4 Lending commissions up 8% Payment commissions up 7% Commission expenses for state schemes largely unchanged at EUR
Slide 15: Asset under Management at record level
Asset under Management at record level Asset under Management (AuM), EURbn AuM EUR 169bn 169 157 158 126 Up 7% or EUR 11.2bn in Q1 Net inflow EUR 3.1bn – 8% 2007 2008 2009 Q1 2010 annualised Net flows AuM, EURbn Increased market shares 3.5 3.1 2.9 2.8 0.9 Q1/09 Q2/09 Q3/09 Q4/09 Q1/10 Nordic
Slide 16: Strong demand for risk management products
Strong demand for risk management products Net result from items at fair value, Capital markets activities in EURm 594 customer areas continues to 515 548 perform 486 Underlying corporate demand for fixed income and FX products stabilising 351 325 284 High demand for credit bonds from 221 inst
Slide 17: Total expenses according to plan
Total expenses according to plan EURm Underlying expenses down 2% - 1 219 1 090 1 116 1 164 adjusting for restructuring expenses 1 087 in Q4 and changes in exchange 394 392 382 471 438 rates Up 3% compared Q1 2009 687 702 687 665 670 Underlying staff costs up 1% in Q1 Number of employees inc
Slide 18: Risk Weighted Assets
Risk Weighted Assets Risk Weighted Assets (RWA), EURbn RWA excluding transition rules up 4.5% during Q1 192 198 Corporate lending growth 188 179 171 172 Market and operational risk FX-effects Significant slowdown in rating migration Minor changes in average risk weights during Q1 Q1/09 Q
Slide 19: Capital ratios at expected levels
Capital ratios at expected levels Core Tier 1 capital ratio (excl. Hybrids) Capital ratios slightly down in Q1 10.0* 10.3 10.1 Increase in net profit not fully 9.3 9.2 compensating for increase in RWA 7.8 Core Tier 1 ratio 10.1% Tier 1 ratio 11.2% - well above Q1/09 Q4/09 Q1/10 target in Nor
Slide 20: Strong funding and liquidity position
Strong funding and liquidity position Continued strong demand for Nordea long-term Total long-term funding issued (EURbn) debt issuance EUR 3.7bn in Swedish and international covered bonds 31 EUR 1.9bn net issuance covered bonds in 22 23 Denmark EUR 1.5bn 7-year senior bond 10.4 USD 1.25bn
Slide 21: Credit quality
Credit quality 21 28 April 2010 Telephone conference
Slide 22: Stable and well diversified lending portfolio
Stable and well diversified lending portfolio Total lending up 4% Total lending to public, EURbn 2% adjusted for reversed repos and 292 274 282 currency effects 27 24 27 55% corporate lending - no sector 101 87 97 accounting for more than 13% of total lending Limited changes between sectors
Slide 23: Solid credit situation
Solid credit situation EURm Net loan loss ratio 37bps (52bps) 516 481 407 425 440 26bps individual (40bps) 356 358 346 358 261 11bps collective (12bps) 97 166bps in the Baltic countries (338bps) -51 -91 -82 Lower loan losses mainly found in -135 Q1/09 Q2/09 Q3/09 Q4/09 Q1/10 Denmark, Swede
Slide 24: Growth in impaired loans continues to level out
Growth in impaired loans continues to level out Impaired loans, EURm Impaired loans gross up 5% to EUR 1 868 2 076 4,453m or 140 bps of total lending – 4% 1 116 in local currencies 1 849 2 372 2 377 7% in Q4, 9% in Q3 and 19% in Q2 Q1 2009 Q4 2009 Q1 2010 53% impaired loans are still performin
Slide 25: Baltic countries - proactive risk management remains in focus
Baltic countries - proactive risk management remains in focus Q1 2010 Lending Impaired Impaired EURbn loans Q1 loans Q4 Net loan losses 166bps (338bps) State & Municipalities 0.4 0% 0% Current recession continue to affect Nordic & International 0.9 0.4% 0.3% credit quality and not least collater
Slide 26: Rating migration
Rating migration Corporate rating migration Q110 / Q409 88% 30% Down-rated Up-rated 25% 20% 8% 5% 15% 10% 5% 5% 3% 2% 1% 0% 0% 1% 1% 0% 0% 0% > -4 -4 -3 -2 -1 0 1 2 3 4 >4 Number of notches up- and down-rated 26 28 April 2010 Telephone conference
Slide 27: Successful start of the Prudent growth strategy
Successful start of the Prudent growth strategy 27 28 April 2010 Telephone conference
Slide 28: Moving from “profitable organic growth” via “middle of the road” to “prudent growth”
Moving from “profitable organic growth” via “middle of the road” to “prudent growth” Middle of the Profitable organic growth Prudent growth road Great 07 08 09 10 11 12 Nordea Next level strategy based Organic growth strategy on stronger position 9 Keep income growth momentum Group initiatives 9 Cos
Slide 29: Next generation of Group initiatives support “prudent growth”
Next generation of Group initiatives support “prudent growth” Increase business with Exploit global Supplement Nordic existing Nordic customers and European growth through and attract new customers business lines investments in New European Markets 1. Future distribution 6. Growth plan Poland 2. New
Slide 30: Group initiatives to support long-term target of doubling Risk-adjusted profit
Group initiatives to support long-term target of doubling Risk-adjusted profit in seven years Future distribution Risk adjusted profit, EURm New customer acquisition 3,914 10% CAGR Growth plan Finland required CMB Sweden 2,786 Customer driven Markets business 2,239 2,279 1,957 Growth plan Poland Top
Slide 31: Activities related to the initiatives are well on track
Activities related to the initiatives are well on track and have started in all areas Future distribution 10 branches transformed to new branch format Number of 360-degree advisory meetings up 60% in new format Time spent on direct customer interaction up 6% Growth in number of customers Ste
Slide 32: Activities related to the initiatives are well on track
Activities related to the initiatives are well on track and have started in all areas Growth Plan Corporate Merchant Banking (CMB) Sweden Increased share of wallet – cash management mandates won Growth Plan Poland Preparatory work develops according to plan for new branch openings in the latter
Slide 33: Key messages
Key messages Strong result Income up 7% Underlying expenses down 2% Loan losses 37bps (52bps) Operating profit up 48% Risk-adjusted profit up 27% - on track toward long-term target Increased inflow of new customers – confirms the positive trend 12.500 new Gold and Private Banking cus