Nordea Bank Abp · OMXHEX:NDA_FI
Nordea Bank Abp — Nordea — FY2009 Earnings Presentation
35 slides from Nordea Bank Abp's earnings presentation, Feb 10, 2010
Slide 1: Year-end Report 2009 Telephone Conference
Year-end Report 2009 Telephone Conference 10 February 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: Highlights from 2009
Highlights from 2009 Strong year with consistent delivery on growth strategy – income up 11% and Risk-adjusted profit up 22% for full year 2009 Strong development in customer areas – income in Nordic Banking and Institutional and International Banking up 5% in fourth quarter Moderate loan loss
Slide 4: CFO Presentation
CFO Presentation
Slide 5: Result highlights
Result highlights EURm Q4/09 Q3/09 Chg % Q4/08 Chg % FY 09 FY 08 Chg % Net interest income 1,299 1,321 -2 1,386 -6 5,281 5,093 4 Net fee and commission 463 437 6 390 19 1,693 1,883 -10 Net gains/losses 351 486 -28 325 8 1,946 1,028 89 Other income 45 33 36 150 153 196 -22 Total income 2,158 2,277 -5
Slide 6: Net interest income – down 2% from high levels
Net interest income – down 2% from high levels EURm Unchanged lending volumes 1,386 1,356 Increased Household market shares 1,305 1,321 1,299 Broadly unchanged corporate volumes – decrease levelled out towards the end of the quarter Continued pressure on deposit margins and slightly lower ho
Slide 7: Underlying volume trends
Underlying volume trends % change in local currency Q4oQ3 Q4oQ4 Total Lending, excl. reversed repurchase agreements 0.7% 0.4% – Nordic household mortgages 2.2% 8.5% – Nordic consumer lending 2.2% 4.4% – Nordic corporates -1.2% -6.5% – New European Markets 1.5% -0.8% – FID and Shipping -2.2% -14.8% T
Slide 8: Change in net interest income
Change in net interest income Q4oQ3 YoY Volume driven Nordic markets local currencies 6 176 Corporate lending volumes -5 57 Household lending volumes 10 97 Corporate deposit volumes 1 15 Household deposit volumes 0 7 Margin driven Nordic markets local currencies -20 -228 Corporate lending margins 4
Slide 9: Strong positive trend in Net fee and commission income – up 6%
Strong positive trend in Net fee and commission income – up 6% Savings commission continued the positive EURm 463 trend – up 11% 437 Asset management commissions up 21% - 412 390 381 increased AuM, increased margins due to change in asset mix and performance fees Lending commission down 9% com
Slide 10: Strong net inflow continues - proves customer satisfaction
Strong net inflow continues - proves customer satisfaction Net flows AuM, EURbn 3.5 2.8 2.9 Net inflows of EUR 3.5bn in Q4 – 9% annualised 0.9 Improved position within savings market – -2.3 inflow from households during 2009 EUR 6.2bn Asset under Management up EUR Q4/08 Q1/09 Q2/09 Q3/09 Q4/09
Slide 11: Net gains/losses remains high in customers areas
Net gains/losses remains high in customers areas Net gains/losses, EURm Customer-driven capital markets 594 activities continues to perform strongly 515 486 Life & Pensions released a strong result also in the fourth quarter 351 325 Negative contribution from Group 284 Treasury in Q4 – mainly
Slide 12: Income growth in Nordea YoY, EURm
Income growth in Nordea YoY, EURm -5.2% 3.5% 3.4% 9.1% 284 430 10.6% 1.0% 743 1.5% 0.2% 1 0% -0.7% 1.4% 13 82 124 57 114 9,073 8,200 Income Ytd Nordic IIB excl. New IPB&F Life Markets GCC Other & FX Income Ytd 08 Banking NEM European Other 09 Markets 12 10 February 2010 Telephone conference Year-end
Slide 13: Expense growth well in line with expectations
Expense growth well in line with expectations EURm Up 6% - when excluding restructuring 1 219 costs of EUR 64m 1 150 1 116 1 090 1 087 Total expenses up 12% compared to 471 previous quarter 461 394 392 382 Underlying cost growth in local 702 currencies 3% compared to same 665 687 670 655 quart
Slide 14: Expense growth in Nordea (EURm)
Expense growth in Nordea (EURm) 1.3% 0.9% 1.0% -4.4% 1.2% 2.6% 40 45 4.0% 1.5% 55 51 192 111 64 4,512 4,338 Expenses Restruc- Pension Profit Performance IT Other FX- Expenses FY 2008 turing expenses sharing related expenses effects FY 2009 expenses salaries* 2009 14 10 February 2010 Telephone confer
Slide 15: Result effects from initiatives and investments
Result effects from initiatives and investments 2010-2012 EUR 64m restructuring charge in Q42009 2010 impact One-off investments of EUR ~240m of which EUR ~140m accounted for as expenses in Restructuring income statement 16 CSO/tellers and Fionia Impact on running cost neutral – including Bank e
Slide 16: Proposed dividend in line with policy
Proposed dividend in line with policy Net profit, EURm Net profit down 29% due to lower net gains/losses and restructuring costs and higher net loan losses 637 626 Proposed 2009 dividend to be paid in 447 2010 of EUR 0.25 per share, corresponding to a payout ratio of 43% of net profit – in line
Slide 17: Capital ratios on expected levels
Capital ratios on expected levels Core Tier 1 capital ratio (excl. Hybrids) Capital ratios slightly down in Q4 Increased RWA due to model 10.7 10.3 changes and increased market risk 9.4 9.3 8.5 Tier 1 ratio 11.4% - well above target in Nordea's capital policy 6.7 Call of hybrid capital as we
Slide 18: Controlled growth in Risk Weighted Assets
Controlled growth in Risk Weighted Assets Risk Weighted Assets (RWA), EURbn RWA is relatively stable during 2009 – 213 192 192 up 1.9% excluding transition 169 169 172 Minor changes in average risk weights in Q4 Average risk weight slightly increased to 61% Q4/08 Q3/09 Q4/09 (60% Q3) for the C
Slide 19: Strong funding and liquidity position
Strong funding and liquidity position Total long-term funding issued¹ (EURbn) Continued strong demand for Nordea long-term debt issuances One of the lowest cost of funding in 27 Europe – give relative strength in customer business 19 18 Liquidity buffer EUR 56.5bn end of year High uncertaint
Slide 20: CRO Presentation
Nordea ” CRO Presentation
Slide 21: Stable and well diversified lending portfolio…
Stable and well diversified lending portfolio… Total lending to public year end 2009, EUR 282bn Solid credit situation – half of the portfolio is low risk Commercial real estate Mortgage lending Construction Residential real estate 54% corporate lending with Container ships Fin Institutions no s
Slide 22: …with stabilising Net loan losses…
…with stabilising Net loan losses… EURm Net loan losses in line with FY year 516 476 425 440 480 outlook 407 356 358 347 320 Net loan loss provisions in Q4 EUR 347 of which EUR 82m collective Loan losses correspond to 52bps -51 -82 -91 -157 -133 40bps individual (37bps) Q4/08 Q1/09 Q2/09 Q3/
Slide 23: Impaired loans increases at a lower pace
Impaired loans increases at a lower pace Impaired loans, EURm Impaired loans gross – up 7% to EUR 4,102m or 135bps of total lending, up 9% in Q3 and 1 639 1 868 19% in Q2 835 EUR 535m or 732bps in the Baltic countries 2 212 2 234 1 389 54% impaired loans are performing Q4 2008 Q3 2009 Q4 2009
Slide 24: Baltic countries - proactive risk management remains in focus
Baltic countries - proactive risk management remains in focus Severe recession continue to affect End 2009 Lending Impaired EURbn loans credit quality and not least collateral State & Municipalities 0.3 0% values Nordic & International 0.9 0.3% Additional provisions made Large local corporates 1
Slide 25: Rating migration
Rating migration Corporate rating migration Q409 / Q309 The credit quality in Q4 show a larger variance of up- and 80% down-rated compared with 30% Down-rated Up-rated Q3 25% 13% of the corporate customers have migrated downwards in Q4 20% 7% of the corporate customers 15% have been up-rated i
Slide 26: CEO Presentation
CEO Presentation
Slide 27: Great Nordea vision launched in 2007
Great Nordea vision launched in 2007 Prudent risk management Profit orientation Efficient capital management Ambitious vision & Leading Nordic bank targets Double risk adjusted profit in 7 years “Profitable organic growth” strategy Clear growth strategy supported by Group initiatives Stron
Slide 28: Journey towards Great - from Profitable organic growth to Prudent growth
Journey towards Great - 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 Group initiativ
Slide 29: We confirm our organic growth strategy
We confirm our organic growth strategy Increase business with Exploit global Supplement Nordic existing Nordic customers and and European growth through attract new customers business lines investments in New European Markets Proactively elevate relationship customers to higher segments, attract new
Slide 30: Next generation of initiatives (1/2)
Next generation of initiatives (1/2) Group initiative Objective • Branch network optimization, including alignment of capacity Future distribution to customer potential, new formats with increased advisory Growth capacity and reduced share of other branch staff initiatives • Upgrade online offering
Slide 31: Next generation of initiatives (2/2)
Next generation of initiatives (2/2) Group initiative Objective • Comprehensive program to reduce IT cost and improve Top league IT performance efficiency, incl. IT sourcing, lean IT Efficiency / • Offshore center in Poland foundation initiatives Product platforms • More efficient cards and payments
Slide 32: Initiatives support long term target of doubling RAP in seven years…
Initiatives support long term target of doubling RAP in seven years… Future distribution Risk adjusted profit EUR m New customer acquisition Growth plan Finland 4500 4000 10% CAGR CMB Sweden required 3500 Customer driven Markets 3000 business 2500 2000 Growth plan Poland 1500 1000 Top league IT perf
Slide 33: … and secure our strategic ambitions
… and secure our strategic ambitions …to secure sufficient income Growth strategy generation to create great customer experiences and long term value …in markets where we operate – Best relationship retaining existing and attracting bank new customers …for everything we do in order One operating mod
Slide 34: Outlook 2010
Outlook 2010 Nordea expects the macroeconomic recovery to continue in 2010 – development is still fragile and hence uncertainty remains Nordea will pursue a prudent growth strategy, balancing opportunities and risks, and will invest in the future through several growth and efficiency initiatives
Slide 35: Key messages
Key messages Strong year – risk-adjusted profit up 22% Solid business development in all areas – cost growth well in line with expectations Continued execution of efficiency programmes Continued stabilisation of credit quality and loan losses at expected levels Group initiatives to support