Nordea Bank Abp · OMXHEX:NDA_FI
Nordea Bank Abp — Debt Investor Presentation (January 2021)
53 slides from Nordea Bank Abp's debt investor presentation, January 2021
Slide 1: Debt investor presentation Q4 and full-year 2020
Debt investor presentation Q4 and full-year 2020
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: Table of contents
Table of contents 1. Nordea Q4 and full-year 2020 update 4 2. Credit quality 14 3. Capital, AML and Sustainability 23 4. Funding 30 5. Macro 43 6. Business areas – update 48 3
Slide 4: 1. Nordea Q4 and full-year 2020 update
1. Nordea Q4 and full-year 2020 update 4
Slide 5: The largest financial services group in the Nordics
The largest financial services group in the Nordics Household Small and medium-sized Large corporates and market position* companies institutions Business position - Leading market position in all four Nordic countries #1 #1 #1 - Universal bank with strong position in household, corporate and instit
Slide 6: Executive summary
Executive summary • Continued strong growth in customer business volumes in all countries ➢ Mortgage lending volumes up 6% y/y and assets under management up 9% y/y to record high of EUR 354bn ➢ SME lending up 8% y/y, supported by acquisition of SG Finans, now Nordea Finance Equipment (NFE) • Operat
Slide 7: Group quarterly results Q4 2020
Group quarterly results Q4 2020 Income statement and key ratios Q420 Q419 Q4/Q4 Q320 Q4/Q3 EURm, excluding items affecting comparability* Net interest income 1,169 1,108 6% 1,146 2% Net fee and commission income 792 775 2% 729 9% Net fair value result 217 250 -13% 257 -16% Other income 41 7 23 78% T
Slide 8: Group full-year results 2020
Group full-year results 2020 Income statement and key ratios FY20 FY19 FY/FY EURm, excluding items affecting comparability* Net interest income 4,515 4,318 5% Net fee and commission income 2,959 3,011 -2% Net fair value result 900 1,012 -11% Other income 92 144 -36% Total operating income 8,466 8,48
Slide 9: Net interest income – increase driven by growth in mortgage and SME lending
Net interest income – increase driven by growth in mortgage and SME lending Year-over-year bridge, EURm Comments +6% • Net interest income up 6%, highest growth rate 21 1,179 since 2008 54 10 1,169 • Volume growth and higher market shares in mortgages in all countries. Positive SME lending 39 1,108
Slide 10: Net fee and commission income – good customer activity and asset management inflows
Net fee and commission income – good customer activity and asset management inflows Year-over-year bridge, EURm Comments +2% • Net fee and commission income up 2%, mainly 10 driven by higher advisory income 30 4 7 792 792 0 • Savings income up 8% due to higher asset 775 8 management fee income and h
Slide 11: Net fair value result – underlying positive development in Markets
Net fair value result – underlying positive development in Markets Net fair value result, EURm Comments • Net fair value result down 13% -13% • Net fair value result excluding valuation adjustments 316 14 0 up 4%, driven by strong income from market-making 250 91 257 217 operations 110 10 23 36 26 9
Slide 12: Costs – underlying costs down according to plan; additional items in Q4
Costs – underlying costs down according to plan; additional items in Q4 Year-over-year bridge, EURm Comments +3% • Costs up 3% y/y; underlying costs down 3%, 1,218 29 1 excluding FX 1,179 35 39 1,140 15 • Costs higher in quarter due to integration of Nordea Finance Equipment (NFE), one-off IT impair
Slide 13: Nordea is committed to delivering on financial targets
Nordea is committed to delivering on financial targets Cost-to-income ratio in FY22 Return on equity in FY22 50% >10% Capital policy Dividend policy 60-70% payout of distributable 150-200 bp profits to shareholders management buffer Excess capital intended to be distributed above the regulatory CET1
Slide 14: 2. Credit quality
2. Credit quality 14
Slide 15: Loan book – well diversified with strong credit quality during 2020
Loan book – well diversified with strong credit quality during 2020 Portfolio well diversified Five segments with 4% of Updated analysis of COVID-19 across countries and total exposures significantly impact by segment segments affected 0.1% Air transportation EUR 12bn, 4% Significantly affected 0.1%
Slide 16: Net loan losses and similar net result – full-year losses in line with guidance
Net loan losses and similar net result – full-year losses in line with guidance Net loan losses and similar net result Q420, EURm Comments • Net loan losses and similar net result EUR 28m* -35 58 -30 • Total net losses for 2020 in line with guidance of 0 below EUR 1bn 93 28 • Projected impact of COV
Slide 17: First instalment-free periods expiring – almost all customers resuming normal servicing
First instalment-free periods expiring – almost all customers resuming normal servicing Customers granted instalment-free periods, 1000s Comments 43 • Approximately 95,000 customers, including 9,000 corporates, granted COVID-19 instalment-free period during 2020 • Corresponds to loan amount of aroun
Slide 18: Strong and stable credit quality – continued reduction in impaired loans
Strong and stable credit quality – continued reduction in impaired loans Stage 2 and 3 loans at amortised cost, EURm Comments • Decrease in stage 3 impaired loans ratio, from 1.69% to 1.51% q/q, due to write-offs of non-performing loans 12,512 13,576 13,840 10,748 11,181 • Stage 2 loans up 2% q/q du
Slide 19: IFRS 9 model update – macro-economic assumptions behind scenarios used
IFRS 9 model update – macro-economic assumptions behind scenarios used Baseline annual GDP growth, % Comments 6 • Scenarios are conservative and in line with 4 Nordic central banks and ECB forecasts 2 • Scenarios largely unchanged in the fourth quarter 0 2019 2020 2021 2022 • Base scenario, 50% weig
Slide 20: Credit quality – portfolio significantly de-risked over past 10 years
Credit quality – portfolio significantly de-risked over past 10 years Historic loan loss ratios, bps Comments 56 • Track record of strong credit quality • Risk profile improved by divestments and reductions 31 in high-risk exposures 23 26 21 26* • Significant management judgement buffer built up in
Slide 21: Coverage ratios – well provisioned for potential losses
Coverage ratios – well provisioned for potential losses Coverage ratios Significantly Partially affected Non-significantly affected segments segments affected segments 73 70 Avg. 46% Avg. 48% Avg. 34% 67 67 66 62 60 56 53 51 50 51 50 49 48 47 47 44 44 43 42 42 41 40 38 39 38 38 38 36 36 37 33 30 10
Slide 22: Lending split with low concentration to each sector and segment
Lending split with low concentration to each sector and segment Lending volumes per sector and segment (EURbn) and portions of the total lending portfolio (%), 2020-12-31 (excluding reverse repos) Financial institutions 15.7 5.0% Maritime, shipping (total): 6.4 2.0% Crops, plantations and hunting (a
Slide 23: 3. Capital, AML and Sustainability
3. Capital, AML and Sustainability 23
Slide 24: Capital – very strong capital position to support customers and pay dividends
Capital – very strong capital position to support customers and pay dividends CET1 capital ratio development, % Comments 0.2 -0.1 0.2 0.1 -0.3 0.8 1.9 • CET1 capital ratio 17.1%, 6.9 percentage points 6.9* above regulatory requirement* 16.4 17.1 • Risk exposure amount up EUR 5bn to EUR 155bn, 10.2 d
Slide 25: Capital – significant buffer to capital requirements
Capital – significant buffer to capital requirements Capital position and requirements Comments • CET1 capital ratio 17.1%, 6.9 percentage points 6.0% above regulatory requirement** • Capital policy of 150-200bps above the regulatory 6.9% requirement (MDA level) 14.5% • CET1 buffer of 6.9 percentage
Slide 26: Significant investments into anti-financial crime
Significant investments into anti-financial crime Actions against money laundering Significant build-up Employees EURm • We collaborate closely with all relevant authorities including law 1,600 300 1,500 >1,500 >1,500 >1,500 enforcement and regulators and encourage to even closer collaboration on mu
Slide 27: Next step in our sustainability journey: elevated ambition level and enhanced customer support
Next step in our sustainability journey: elevated ambition level and enhanced customer support Our purpose is the starting point As a leading bank we are well positioned to drive change Together, we lead the way, enabling dreams and everyday aspirations for a greater good Sustainability integrated i
Slide 28: Sustainability focus across the group
Sustainability focus across the group Sustainability business development 2020 Acknowledgements for our sustainability work • Best ESG process (CFI.co) Number of customers Total AuM in ESG • Corporate Knights 2021 Global 100 index of 100 most sustainable that have been advised in products corporatio
Slide 29: Sustainable banking – inspire and enable our customers to make sustainable choices
Sustainable banking – inspire and enable our customers to make sustainable choices Nordea is fully committed to making the financial sector more sustainable Offering Risk management Commitments Financing Investments Advice • Board Operations and • Co-Founders of UNEP FI Sustainability Committee and
Slide 30: 4. Funding
4. Funding 30
Slide 31: Liquidity – solid position and well-functioning funding markets
Liquidity – solid position and well-functioning funding markets Liquidity buffer development, EURbn Comments 107 106 104 103 104 102 101 105 • Robust liquidity position 100 95 • Liquidity buffer over EUR 88bn 88 • Liquidity coverage ratio (LCR) of 158% • EU net stable funding ratio (NSFR) of 110.3%
Slide 32: Solid funding operations
Solid funding operations Long-term issuance volumes 2020* Strong funding position further improved EURm AT1 T2 Senior non-preferred Senior preferred*** Covered 5 000 • Long- and short-term funding outstanding at EUR 181bn 4 500 4 000 • EUR 23.4bn long term debt issued during 2020, of which 3 500 EUR
Slide 33: Short-term funding – prudent and active management
Short-term funding – prudent and active management Comments Short-term issuance* EURbn • Fourth quarter of 2020 was focused on year-end liquidity 70 management 60 50 • Short-term issuance is a useful tool in the funding toolbox for 40 active liquidity management and balance sheet optimisation 30 • D
Slide 34: Long-term funding – Nordea’s global issuance platform
Long-term funding – Nordea’s global issuance platform 1% 1% 18% 9% 81% NOK (EUR 14bn eq.) 90% 100% SEK DKK (EUR 36bn eq.) (EUR 54bn eq.) 3% 6% 11% 16% 35% 34% 36% 14% 59% 44% 22% 64% 86% JPY 51% (EUR 1bn eq.) CHF 4% GBP 6% (EUR 1bn eq.) 9% USD (EUR 1bn eq.) (EUR 19bn eq.) EUR (EUR 35bn) Covered bond
Slide 35: Nordea covered bond operations
Nordea covered bond operations Nordea Eiendomskreditt Nordea Hypotek Nordea Kredit Nordea Mortgage Bank Four aligned covered bond issuers with complementary roles Legislation Norwegian Swedish Danish Finnish Cover pool assets Norwegian residential mortgages Swedish residential mortgages primarily Da
Slide 36: Nordea recent benchmark transactions
Nordea recent benchmark transactions Issue Maturity Issuer Type Currency Amount (m) FRN / Fixed Callable date date Nordea Hypotek* Covered SEK 5,000 Fixed Jan-19 Sep-24 Nordea Eiendomskreditt* Covered NOK 10,000 FRN Feb-19 Jun-24 Nordea Mortgage Bank Covered EUR 1,500 Fixed Mar-19 Mar-26 Nordea Bank
Slide 37: Diversified balance sheet
Diversified balance sheet Total assets Q4 2020 EUR 552bn Cash and balances with Deposits by credit central banks institutions Loans to credit institutions Deposits and borrowings from the public Loans to the public CDs and CPs* Short-term funding Credit S&P Moody’s Fitch ratings Covered bonds Long-t
Slide 38: MREL requirements
MREL requirements Single Resolution Board (SRB) new MREL policy* Nordea total MREL requirement • Current total MREL requirement is 8% of TLOF • Total MREL requirement expected during H1 2021 based on Market SRB new MREL policy confidence CBR- charge CCyB** • Eligible instruments: own funds, senior n
Slide 39: Senior non-preferred issuance plan
Senior non-preferred issuance plan Own funds and bail-in-able debt, EURbn Comments • Total SNP issuance target remains unchanged at approximately EUR 10bn* by end of 2023 Point of Non Viability Resolution • EUR 2.7bn has been issued • SNP issuance plan to be reviewed during H1 2021 in connection wit
Slide 40: Maturity profile
Maturity profile Maturity profile Comments EURbn 300 • The balance sheet maturity profile has during the last couple of years 200 become more balanced by: • Lengthening of issuance through balance sheet management 100 0 • Resulting in a well-balanced structure in assets and liabilities in general, a
Slide 41: Liquidity Coverage Ratio
Liquidity Coverage Ratio Liquidity Coverage Ratio Comments 350% • EBA Delegated Act LCR in force starting from October 2016 300% 250% • LCR of 158% 200% • LCR compliant in USD and EUR 150% • Compliance is reached by high quality liquidity buffer and management 100% of short-term cash flows 50% 0% •
Slide 42: Green bonds
Green bonds Deepened green bond focus Green bond asset portfolio • Green bond framework and inaugural green senior preferred bond 0.1% issuance in 2017 4.0% • Second green bond issued in May 2019, as a 7-year EUR 750m senior 14.3% 23.7% preferred bond • Danish green covered bond launched in November
Slide 43: 5. Macro
5. Macro 43
Slide 44: Nordic economies – strong rebound in sight
Nordic economies – strong rebound in sight GDP development Unemployment rate Comments GDP, forecasts from Economic Outlook January 2021 • After the dramatic setback in 2020 due to the coronavirus, there appears to be light at the end of the tunnel for 2021 Country (%, y/y) 2020E 2021E 2022E • While
Slide 45: Nordic rates – Nordics well-equipped to handle the long-term consequences of COVID-19
Nordic rates – Nordics well-equipped to handle the long-term consequences of COVID-19 Policy rates Public balance/debt, % of GDP, 2021E Comments • In December, Norges Bank brought forward its first rate hike by more than six months and now expects to start hiking rates in early 2022. However, due to
Slide 46: Households remain resilient
Households remain resilient Household debt Household savings Comments • Household savings have increased dramatically during the crisis, largely because of a decline in spending. Despite high debt levels, Nordic households’ strong finances are expected to support economic growth as soon as restricti
Slide 47: Nordic housing markets heat up
Nordic housing markets heat up House prices Households’ credit growth Comments • Contrary to expectations, house prices have increased to record-high levels in all the Nordic countries during the crisis. This is not least because of unprecedented expansionary fiscal and monetary policy in support of
Slide 48: 6. Business areas – update
6. Business areas — update alee pole: tly Nordea
Slide 49: Personal Banking – strong momentum in mortgages in all countries
Personal Banking – strong momentum in mortgages in all countries Total income, EURm Comments -1% • Strong mortgage volume growth: up 6%* or EUR 8bn 857 825 831 849 814 • Increase in market shares across countries 523 • Total income down 1% due to reduced payments activity 517 501 540 533 • Net inter
Slide 50: Business Banking – increased lending volumes and higher levels of business activity
Business Banking – increased lending volumes and higher levels of business activity Total income, EURm Comments +8% • Total income up 8% due to increased business activity and 621 576 575 545 547 equity capital market transactions • Total income up 2% excluding impact of Nordea Finance 346 346 381 E
Slide 51: Large Corporates & Institutions – strong business activity, lower capital consumption
Large Corporates & Institutions – strong business activity, lower capital consumption Total income, EURm Comments +8% • Total income up 8%, with improvements across all income 465 476 lines 444 413 405 • Increased lending margins and high levels of customer activity 211 224 225 218 217 • Strong resu
Slide 52: Asset & Wealth Management – record volumes and strong net inflow via all channels
Asset & Wealth Management – record volumes and strong net inflow via all channels Total income, EURm Comments -6% • Assets under management (AuM) up 9% to all-time high of 268 258 252 EUR 354bn 13 246 18 226 17 16 16 • Highest quarterly net inflow (EUR 8.2bn) since Q3 2016 and second highest ever 21
Slide 53: Contacts
Contacts Investor Relations Matti Ahokas Andreas Larsson Randie Atto Maria Caneman Head of Investor Relations Head of Debt Investor Relations Debt IR Officer Senior Debt IR Officer Mobile: +358 40 575 91 78 Mobile: +46 709 707 555 Mobile: +46 738 66 17 24 Mobile: +46 768 24 92 18 Tel: +46 10 156 29
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