Nordea Bank Abp · OMXHEX:NDA_FI
Nordea Bank Abp — MeritaNordbanken — H1 1999 Earnings Presentation
55 slides from Nordea Bank Abp's earnings presentation, August 1999
Slide 1: MeritaNordbanken January - June 1999
MeritaNordbanken January - June 1999
Slide 2: January-June 1999
January-June 1999 ● Stable performance sustained – Operating profit EUR 769 million (FIM 4.6 billion, SEK 6.9 billion), adjusted for items affecting comparability EUR 655 million – ROE 22.3 %; excluding items affecting comparability 19.3 % – Continued downward trend in expenses – Net loan losses his
Slide 3: A leading banking group in the Nordic and Baltic region
A leading banking group in the Nordic and Baltic region ● Customer base 6.5 million private individuals 400 000 small and midmarket companies 400 corporates ● Average market shares Finland 35 % - 55 % Sweden 15 % - 25 % ● Distribution network 735 branch offices 1000 Swedish post offices Telephone ba
Slide 4: The largest banking group in the Nordic region
The largest banking group in the Nordic region Market capitalisation of selected Nordic banking groups, August 1999 (bnEUR) MeritaNordbanken Handelsbanken Swedbank SEB Den Danske Bank Unidanmark Den Norske Bank Christiania Kapital Holding 0 2 4 6 8 10 12
Slide 5: Combined ownership structure
Combined ownership structure, June 30, 1999 Finnish Swedish institutions institutions 9% 15 % Finnish government 3% Foreign ownership * 32 % Swedish government 26 % Finnish Swedish public * Incl. possible nominee registered public 3% Swedish ownership in Merita Plc. 11 %
Slide 6: Share price development
Share price development 500 400 300 200 100 0 Nov. 1995 Nov. 1996 Oct. 1997 Oct. 1998 Aug. 1999 Merita Nordbanken Holding DJ Euro Stoxx Bank
Slide 7: Total yield of Nordic banking shares
Total yield of Nordic banking shares % 250 1996 - June 1999 % 160 1997 - June 1999 140 200 120 150 100 80 100 60 40 50 20 0 0 Merita NB SHB FSB ChrB UNI Merita NB SHB FSB ChrB UNI Hold SEB DnB DDB Hold SEB DnB DDB % 25 1998 - June 1999 % 25 Jan - June 1999 20 20 15 15 10 10 5 5 0 0 -5 -5 -10 -10 -15
Slide 8: Income statement
Income statement H1/1999 mEUR Change, % mFIM mSEK Net interest income 902 -2 5,361 8,078 Net commission income 375 4 2,227 3,356 Net result from financial operations 95 -67 562 847 Other operating income 183 -21 1,095 1,649 Total operating income 1,555 -13 9,245 13,930 Personnel expenses - 392 -6 -2
Slide 9: Income statement
Income statement Excluding items affecting comparability H1/1999 mEUR H1/1999 H1/1998 Change, % mFIM mSEK Net interest income 902 928 -3 5,361 8,078 Net commission income 375 359 4 2,227 3,356 Net result from financial operations -19 110 -113 -170 Other operating income 183 156 17 1,095 1,649 Total
Slide 10: Items affecting comparability
Items affecting comparability 1999 1998 mEUR Q2 Q1 Q4 Q3 Q2 Q1 Net interest income - - -4 -4 -9 - Net result from financial operations - 114 137 -7 -17 194 Other operating income - - - - 6 69 Personnel expenses - - -40 -8 -7 -8 Other expenses - - 1 -11 -24 -32 Profit from companies accounted for und
Slide 11: Income statement, quarterly
Income statement, quarterly Excluding items affecting comparability 1999 1998 mEUR Q2 Q1 Q4 Q3 Q2 Q1 Net interest income 454 448 459 448 473 455 Net commission income 194 181 189 174 190 169 Net result from financial operations -53 34 18 10 50 60 Other operating income 91 92 78 57 93 63 Total operat
Slide 12: Net interest and commission income
Net interest and commission income mEUR 500 400 300 Net interest income 200 Net commission income 100 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q3 Q1 Q2 1997 1998 1999
Slide 13: Net result from financial operations
Net result from financial operations mEUR 300 250 200 150 100 Equity-related 50 Currency-related Interest-rate-related 0 -50 -100 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q3 Q1 Q2 1997 1998 1999
Slide 14: Expenses
Expenses mEUR 600 500 400 Restructuring 300 expenses Other expenses * 200 Personnel expenses * 100 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 1997 1998 1999 * Excluding restructuring expenses.
Slide 15: Loan losses, net
Loan losses, net Loan loss level, % mEUR 1,2 180 1,0 150 0,8 120 Loan losses 0,6 90 Provision for Asia Loan loss level, % 0,4 60 0,2 30 0 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 1997 1998 1999
Slide 16: Non-performing loans, net/lending
Non-performing loans, net/lending % 2.5 2 1.5 1 0.5 0 Q1 Q2 Q3 Q4 Q1 Q2 1998 1999
Slide 17: Operating profit by business area, January-June 1999
Operating profit by business area, January-June 1999 mEUR 400 350 300 250 200 150 100 50 0 -50 Regional Corporate Markets Real Estate Treasury Other banks
Slide 18: Operating profit by business area, quarterly
Operating profit by business area, quarterly mEUR 200 150 100 50 0 -50 Regional Corporate Markets Real Estate Treasury Other * banks Q1/1999 Q2/1999 * Q1/1999 incl. EUR 114 million sales profit.
Slide 19: Asset management
Asset management Assets under management Product earnings bnEUR mEUR 30 140 25 120 100 20 80 15 60 10 40 5 20 0 0 Q1 Q2 Q3 Q4 Q1 Q2 1998 1999 Administrative expenses Mutual funds (excl. unit-linked) Portfolio management Sales and distribution expenses Insurance (excl. unit-linked) Unit-linked life i
Slide 20: Household savings
Household savings bnEUR Finland Sweden 30 Share-index- 25 linked bonds Retail bonds 20 Insurance 15 Mutual funds, excl. unit-linked 10 National public savings 5 Deposits 0 1995 1996 1997 1998 H1 1995 1996 1997 1998 * H1 1999 1999 * Excluding the exchange rate effect (EUR/SEK), the volume increased b
Slide 21: Net savings in mutual funds
Net savings in mutual funds * Finland Sweden mFIM mSEK 2000 4000 1800 3500 1600 3000 1400 1200 2500 1000 2000 800 1500 600 1000 400 200 500 0 0 Q1 Q2 Q3 Q4 Q1 Q2 Q1 Q2 Q3 Q4 Q1 Q2 1998 1999 1998 1999 * Including unit-linked.
Slide 22: Life insurance, premiums paid
Life insurance, premiums paid Finland Sweden mFIM mSEK 1200 1400 1000 1200 800 1000 800 600 600 400 400 200 200 0 0 Q1 Q2 Q3 Q4 Q1 Q2 Q1 Q2 Q3 Q4 Q1 Q2 1998 1999 1998 1999 Traditional Unit-linked
Slide 23: Market shares, households
Market shares, households Finland Sweden Insurance (-0,7) Insurance (+3,2) Mutual funds (+1,6) Mutual funds (-0,3) Deposits (-1,2) Deposits (-0,3) Housing loans (-2,2) Housing loans (+1,1) Total (-1,7) Total (+0,7) lending lending 0 10 20 30 40 50 % 0 10 20 30 % (± XX) = compared with H1/1998.
Slide 24: Market shares, corporate
Market shares, corporate Deposits (+0,3) Finland Deposits (-1,5) Sweden Lending Finland (+0,9) Lending Sweden (+1,3) 0 10 20 30 40 50 60 % (± XX) = compared with H1/1998.
Slide 25: Customer structure of loan portfolio
Customer structure of loan portfolio EUR 66.2 bn (June 30, 1999) Public sector 3% Households Companies 37 % 60 %
Slide 26: Lending to companies by industry
Lending to companies by industry EUR 39.5 bn (June 30, 1999) Other companies Real estate 23 % management 27 % Renting, consulting and other company services Construction 11 % 6% Financial operations Transport 2% 7% Manufacturing Trade & services 15 % 9%
Slide 27: Lending by customer groups, development
Lending by customer groups, development * Households Public sector Real estate management Construction Transport Trade & Services Manufacturing Financial operations Renting, consulting and other company services Other companies -1 -0.5 0 0.5 1 1.5 2 2.5 bnEUR * Compared with H1/1998.
Slide 28: Real estate divestment strategy in Finland
Real estate divestment strategy in Finland 100 % Aleksia 50 % Hotel properties Specialized companies to be sold 40 % Shopping malls Real estate holdings Real estate shares Holdings to be sold Other properties e.g. separately – foreign – offices – warehouses Banking premises To be retained
Slide 29: Real estate divestment process in Finland
Real estate divestment process in Finland bnFIM 25 Write-down in 1998 FIM 3.7 billion 20 Equity portfolio * Domestic properties Land and development projects 15 Foreign properties Banking premises 10 5 0 1998 1999 2000 2001 2002 2003 * Incl. Aleksia, hotels and shopping malls and Aleksia debt.
Slide 30: Personnel
Personnel Thousand 22 20 18 16 14 12 0 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 1997 1998 1999 Employees Positions
Slide 31: Profitability
Profitability Return on equity Return on assets % % 30 2 25 1.5 20 15 1 10 0.5 5 0 0 H1/1998 H1/1999 H1/1998 H1/1999 Including items affecting comparability Excluding items affecting comparability
Slide 32: Cost-to-income ratio
Cost-to-income ratio * % 58 57 56 55 54 Excluding items affecting comparability Including items affecting comparability 53 52 51 50 0 H1/1998 H1/1999 * Before loan losses.
Slide 33: Overall interest spread
Overall interest spread % 2 1.5 1 0.5 0 H1/1998 H1/1999
Slide 34: Regional banks
Regional banks June 30, 1999 Northern Sweden Central Sweden Stockholm Western Sweden Southern Sweden Eastern & Northern Finland Central & Western Finland Helsinki & Uusimaa 0 2 4 6 8 10 bnEUR Lending & guarantees Customer savings
Slide 35: Number of branches
Number of branches June 30, 1999 Northern Sweden Central Sweden Stockholm Western Sweden Southern Sweden Eastern & Northern Finland Central & Western Finland Helsinki & Uusimaa 0 50 100 150 200 250
Slide 36: Regional bank Baltics and Poland - strategy
Regional bank Baltics and Poland - strategy ● The leading banking group for Nordic corporates in the Baltic region and Poland - same service and products as in home market ● Important player in the retail banking area - new and modern distribution technology - high accessability at low fixed costs ●
Slide 37: Regional bank Baltics and Poland
Regional bank Baltics and Poland ● ESTONIA Two branches in Tallinn, one leasing company * ● LATVIA One branch in Riga, one leasing company (two more branches under construction) ● LITHUANIA Ambition to open one branch by the end of the year, one leasing company ● POLAND Agreement to acquire 49,9 % o
Slide 38: Balance sheet
Balance sheet June 30 June 30 June 30, 1999 bnEUR 1999 1998 Change, % bnFIM bnSEK Loans to the public 66.2 60.3 10 393 579 Loans to financial institutions and central banks 8.1 10.8 -25 48 71 Interest-bearing securities Financial current assets 9.6 10.1 -5 57 84 Financial fixed assets 3.8 4.6 -17 23
Slide 39: Balance sheet
Balance sheet bnEUR 100 90 80 70 60 50 40 30 20 10 0 Total assets Loans to the public Deposits from the public June 30, 1997 June 30, 1998 June 30, 1999
Slide 40: Capital adequacy
Capital adequacy Tier 1 ratio Total capital ratio % 12 % 12 10 10 8 8 6 6 4 4 2 2 0 0 Nord- Merita MNB Nord- Merita MNB banken Bank Group banken Bank Group June 30, 1999 June 30, 1998
Slide 41: Earnings per share
Earnings per share Merita Nordbanken Holding EUR SEK 0.4 3 2.5 0.3 2 0.2 1.5 1 0.1 0.5 0 0 Jan-June 1999 Jan-June 1998 Jan-June 1999 Jan-June 1998 Incl. items affecting comparability Excl. items affecting comparability
Slide 42: Equity per share
Equity per share Merita Nordbanken Holding EUR SEK 2.5 25 2 20 1.5 15 1 10 0.5 5 0 0 Jan-June 1999 Jan-June 1998 Jan-June 1999 Jan-June 1998
Slide 43: Merger synergies
Merger synergies ● Plan – Income and cost synergies of almost EUR 120 million by the year 2000 ● Implementation – Synergies materialize as planned – Staff reductions continue – net 1,175 since October 1997 incl. expansion in key strategic areas, appr. 300 employees
Slide 44: New products every month
New products every month Solo-concept to be launched throughout the region Medica Life Science Fund Customer concept for retail customers to Finland Internet services to Sweden 1.1.1999 Private Banking concept to Sweden Joint Euroland Fund Customer concept for large and medium-sized companies Monthl
Slide 45: New business generated
New business generated mEUR 400 350 300 250 200 150 100 50 0 Q1 Q2 Q3 Q4 Q1 Q2 1998 1999 Unit-linked insurance products in Sweden Long-term housing loans in Finland New cross-border mutual funds Monthly savings in mutual funds in Finland
Slide 46: World leader in network banking services
World leader in network banking services ● 770 000 signed up as users of the Groups Internet banking facilities (August 1999) ● 300 000 customers in addition to above using the NB Direkt telephone banking service having codes instantly activatable for Internet use ● 2,1 million log-ins per month in
Slide 47: Changes in the Group Executive Board
Changes in the Group Executive Board as of October 1, 1999 ● Focus on issues of far-reaching and strategic importance - Executive Committee for day-to-day management ● Strengthening in Internet and retail banking expertise ● Members leaving the Sven-Åke Johansson Real Estate on part-time basis Group
Slide 48: MeritaNordbanken's objectives
MeritaNordbanken’s objectives The task of the MeritaNordbanken Group is to create value for its shareholders through share price and dividend development matching that of the leading listed banks in the Nordic region.
Slide 49: MeritaNordbanken's objectives
MeritaNordbanken’s objectives ● Earnings per share - one of the leading listed financial institutions in the Nordic countries ● Return on equity - at least equal to the average risk-free interest rate in Finland and Sweden + 8 percentage points ● Tier 1 capital - a minimum core capital ratio of 6.5
Slide 50: Can be achieved through the following subtargets
Can be achieved through the following subtargets ● Income - net commission income to a level equal to half of net interest income ● Expenses - the cost/income ratio before loan losses, in core operations may not exceed 55 per cent ● Risk exposure - the moving average of loan losses over a five-year
Slide 51: Appendices
Appendices MeritaNordbanken Group
Slide 52: Group structure
Group structure Shareholders Shareholders Cooperation Agreement Merita Plc Nordbanken Holding AB (publ) Listed on the Helsinki Identical Boards Unified Listed on the Stockholm Stock Exchange Stock Exchange Management 20 % of capital 40 % of capital 40 % of capital non-voting ordinar y shares MeritaN
Slide 53: Agency ratings, August 1999
Agency ratings, August 1999 Moody´s S&P Fitch IBCA Thomson Bankwatch Short- Long- Short- Long- Short- Long- Short- Long- term term term term term term term term Merita Bank P-1 A1 A-1 A F1 A+ TBW-1 AA- Nordbanken P-1 A1 A-1 A F1 A+ TBW-1 AA- Nordbanken Aa3 Hypotek
Slide 54: Reporting 1999
Reporting 1999 ● Financial reporting: January - September October 26, 1999
Slide 55: Contact information
Contact information MeritaNordbanken Investor Relations SE-105 71 STOCKHOLM FIN-00020 MERITA Telephone: + 46 8 614 7850 + 358 9 165 43041 Telefax: + 46 8 614 8710 + 358 9 612 1264 E-mail: investor.relations@nb.se merita.investorrelations@merita.mailnet.fi Investor information on the Internet: www.me