Nordea Bank Abp · OMXHEX:NDA_FI
Nordea Bank Abp — Q4 2011 Earnings Presentation
31 slides from Nordea Bank Abp's earnings presentation, Dec 31, 2011
Slide 1: Fourth Quarter and Year-end report 2011
Fourth Quarter and Year-end report 2011 Press and analyst conference Christian Clausen, President and Group CEO
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: Key messages
Key messages • Nordea delivers on its New Normal plan • Focused relationship strategy has delivered • Increased efficiency in cost, capital, liquidity and funding • Good business momentum • Solid profit development • Strengthened capital position to 11.2% • All-time high customer activity • Number o
Slide 4: Financial highlights, Business areas, New Normal update
• Financial highlights • Business areas • New Normal update
Slide 5: All-time high total income, despite lower central bank rates
All-time high total income, despite lower central bank rates Total income 2007-2011, EURm • Total income up 37% since 2007 2 558 • Strengthened customer 1 873 relationships • Household relationship customers increased by ca 30% • Clear #1 Nordic corporate bank in Prospera Large Corporates and Q1 200
Slide 6: Financial result – Q4 2011
Financial result – Q4 2011 EURm Q4/11 Q3/11 Change % FY 2011 FY 2010 Change % Net interest income 1 427 1 379 3 5 456 5 159 6 Net fee and commission income 588 582 1 2 395 2 156 11 Net fair value result 506 111 357 1 517 1 837 -17 Other income 37 19 95 133 182 -27 Total income 2 558 2 091 22 9 501 9
Slide 7: Record-level net interest income
Record-level net interest income Total net interest income, EURm 1 427 1 365 1 379 • NII increased 3% q-o-q 1 299 1 310 1 324 1 326 1 235 1 249 • Lending volumes are up by 2% • Lending spreads are up • Deposit spreads are down • Largely unchanged level at Treasury Q4/09 Q1/10 Q2/10 Q3/10 Q4/10 Q1/11
Slide 8: Stable net fee and commission income
Stable net fee and commission income Net fee and commission income, EURm 618 623 602 582 588 • Net fee and commission income 538 525 largely unchanged 463 475 • Assets under Management increased by 5% q-o-q (EUR 187.4bn) • Lending commission up 4% versus Q3/11 • Higher state guarantee fees Q4/09 Q1/
Slide 9: Strong recovery for net fair value
Strong recovery for net fair value Net result from items at fair value, EURm • Fair value improved by EUR 395m, 197 after a difficult Q3/11 311 255 102 • Continued good customer demand 307 254 243 251 • Markets unallocated up EUR 221m 233 reflecting improved trading conditions • Fee recognition and
Slide 10: Expenses under strict control
Expenses under strict control Total expenses, EURm 171 • Flat cost development 1 270 1 265 1 275 1 242 1 266 • Underlying expenses up 3% q-o-q due to seasonal effects • Underlying staff expenses down 3% q-o-q • FTE’s down 776 on prior quarter (-2.3%) • Improved C/I ratio to 49% (55% in Q4/10 Q1/11 Q
Slide 11: Credit quality
Credit quality Total net loan losses, EURm 347 • Loan losses 33bp – slightly higher than expected level over the cycle 261 263 • Increase in Denmark and Shipping 245 242 207 • Problem areas well identified 166 • We know how to deal with these 118 112 • Overall credit quality solid Q4/09 Q1/10 Q2/10
Slide 12: General solid credit situation
General solid credit situation Loan loss ratios, 2002-2011 Bps 20 10 • Stable situation H2/H1 0 • Loan losses are well in line with -10 Nordea’s risk appetite over the -20 Credit risk appetite 25bps cycle -30 -40 -50 -60 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 2002 2003 2004 2005
Slide 13: Strong capital generation
Strong capital generation Core Tier 1 capital, EURm 20 673 • Growth of 9.2% annually since 19 103 2006 17 766 • Adjusted for rights issue and 14 313 after dividend 12 821 11 689 • Will enable us to increase our Core Tier 1 2006 2007 2008 2009 2010 2011 Dividend payout Dividend proposed for 2011 13 •
Slide 14: Strengthened capital position
Strengthened capital position Risk-weighted assets (RWA), EURbn • Core Tier 1 ratio has increased by 215 220 224 90 bps over the last year 185 183 185 • Stable level of RWA despite adoption to Basel 2.5 and growth Q4/10 Q3/11 Q4/11 • Continued positive rating migration Transistion rules Fully implem
Slide 15: Strong access to funding
Strong access to funding Funding, EURbn 33 32 • EUR 32bn has been issued of long term funding in 2011 27 • Of which EUR 4bn in Q4/11 • Good access to all funding instruments • One of the lowest funding costs among European banks 2009 2010 2011 15 •
Slide 16: High focus on Return on Equity
High focus on Return on Equity Quarterly ROE, % • Strong focus on ROE 12,8 12,2 12,0 12,3 11,3 11,5 • 15% ROE target remains under normalised conditions and a Core 9,5 Tier 1 ratio of 11% 8,5 8,1 Q4/09 Q1/10 Q2/10 Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 16 •
Slide 17: Dividend in line with policy
Dividend in line with policy EUR 2007 2008 2009 2010 2011 Dividends per share 0.50 0.20 0.25 0.29 0.26* Earnings per share 0.93 0.79 0.60 0.66 0.65 Payout ratio 54% 25% 42% 44% 40%* * as proposed by the Board of Directors 17 •
Slide 18: Financial highlights, Business areas, New Normal update
• Financial highlights • Business areas • New Normal update
Slide 19: Retail Banking – continued solid business momentum
Retail Banking – continued solid business momentum EURm Q4/11 Q3/11 Chg % FY 2011 FY 2010 Chg % Total income 1 446 1 409 3 5 550 4 879 14 Total expenses -811 -769 5 3 237 3 140 3 Net loan losses -185 -99 87 -588 -683 -14 Operating profit 450 541 -17 1 725 1 056 63 • Gold and Private Banking • Quadru
Slide 20: Wholesale Banking – solid corporate customer activity
Wholesale Banking – solid corporate customer activity EURm Q4/11 Q3/11 Chg % FY 2011 FY 2010 Chg % Total income 745 520 43 2 680 2 758 -3 Total expenses -223 -202 10 -873 -854 2 Net loan losses -75 -16 n.a -173 -220 -21 Operating profit 447 302 48 1 634 1 685 -3 • Focus on operational efficiency • S
Slide 21: Wealth Management – strong growth during Q4
Wealth Management – strong growth during Q4 EURm Q4/11 Q3/11 Chg % FY 2011 FY 2010 Chg % Total income 357 286 33 1 277 1 326 -4 Total expenses -187 -182 3 -741 -706 5 Net loan losses -2 0 0 -10 -1 n.a Operating profit 168 86 95 526 619 -15 • Assets under Management up 5% • Income growth driven by Li
Slide 22: Financial highlights, Business areas, New Normal update
• Financial highlights • Business areas • New Normal update
Slide 23: New Normal is execution of a “Focused relationship strategy”
New Normal is execution of a “Focused relationship strategy” Christian Clausen President and Group CEO Themes Units Michael Rasmussen Retail Banking Casper von Koskull Wholesale Banking Peter Nyegaard (COO) Gunn Wærsted Wealth Management Torsten H. Jørgensen Group Operations & Other Lines of Busines
Slide 24: Positive spiral for customers, investors and society
Positive spiral for customers, investors and society Great Customer Experiences Return on Equity > Secure customers can Cost of Equity finance their plans Build capital Ability to lend Low funding cost 24
Slide 25: New Normal has delivered on cost efficiency
New Normal has delivered on cost efficiency Total Group FTE’s • Number of staff down by ca 1,100 since Q2/11 34 162 33 844 • Total reduction of ca 2,000 by 2012 – we are ahead of plan 33 068 • Staff cost down by ca EUR 80m annualised • In addition, IT costs are down by ca EUR 20m • Flat costs for a
Slide 26: New Normal has improved our productivity
New Normal has improved our productivity Total income / FTE (EURt) Business volumes / FTE (EURm) 21,6 69,9 20,6 20,6 67,6 20,2 20,4 65,1 19,6 64,0 63,3 62,7 62,4 18,9 18,6 58,3 3% +2% 7% Q1/10 Q2/10 Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 Q1/10 Q2/10 Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 # customers per F
Slide 27: New Normal has delivered on capital efficiency
New Normal has delivered on capital efficiency RWA development during 2011 • Review of asset class and product 1,7 3,9 5,4 segmentation leading to improved data quality 7,7 7,7 • Collateral agreements 185 185,2 • Registration • Data sourcing Q4 2010 Credit Growth FX effects & Basel 2.5 RWA Q4 2011 q
Slide 28: What we do for households
What we do for households • Providing a total of EUR 145 bn of lending (up 6%) • Provided financing to home buyers by granting 300,000 new mortgage loans • Issued 900,000 new credit and debit cards • Executed close to 400 million payment transactions and 1.2 billion card transactions • Quadrupled nu
Slide 29: What we do for corporates and institutions
What we do for corporates and institutions • Providing a total of EUR 154bn of lending (up 6%) whereof: • EUR 45bn to Corporate Merchant and Institutional customers (up 4%) • EUR 56bn to Large Nordic corporates (up 6%) • EUR 33bn to Medium, Small and Baltic customers (up 4%) • Participated in raisin
Slide 30: Key messages
Key messages • Nordea delivers on its New Normal plan • Focused relationship strategy has delivered • Increased efficiency in cost, capital, liquidity and funding • Good business momentum • Solid profit development • Strengthened capital position to 11.2% • All-time high customer activity • Number o
Slide 31: Fourth Quarter and Year-end report 2011
Fourth Quarter and Year-end report 2011 Press and analyst conference Christian Clausen, President and Group CEO