Nordea Bank Abp · OMXHEX:NDA_FI
Nordea Bank Abp — Nordea — Debt Investor Presentation (September 2012)
30 slides from Nordea Bank Abp's debt investor presentation, September 2012
Slide 1: Nordea Debt Investor Presentation Q2 2012
Nordea Debt Investor Presentation Q2 2012
Slide 2: Disclaimer – Important Notice
DISCLAIMER – IMPORTANT NOTICE This presentation and any information contained in this presentation or supplied in connection therewith, whether in writing or not, are provided for information purposes only. Nordea is not acting as your financial adviser or in any other fiduciary capacity and this pr
Slide 3: Nordea in brief
Nordea in brief (Aa3/AA-/AA-) Q2 2012 Nordea’s home markets Nordea is the largest financial service group in the Nordic and Baltic Sea region. 11 million customers - 9 home markets - Approx. 10.5 million personal customers - 500,000 corporate customers, incl. Nordic Top 500 Distribution power - Ap
Slide 4: Nordea's focused and prudent business model
Nordea’s focused and prudent business model Resources efficiently used on Relationship banking is key core business Well diversified and balanced Fully integrated model across model countries and business units The Nordics and its structure as Very risk focused the home market 4•
Slide 5: Risk focus and diversification
Risk focus and diversification An integrated and centralised risk and capital management function as well as credit portfolio composition Integrated and centralised risk management framework • Nordeas credit portfolio is well diversified both in terms of industry sector and geography Industry Geogra
Slide 6: Inherent diversification strength: credit portfolio by sector and geography
With it’s inherent diversification strength Q2 2012 56% corporate lending and 44% household 85% of the portfolio in the Nordic countries EUR 350bn Credit portfolio by sector EUR 350bn Public Sector Asia Other OECD 1% Other Latin America 1% 0% 13% 1% Other non OECD USA 2% Household Other 1% Retai
Slide 7: Low credit losses over a business cycle
…. generates low credit losses over a business cycle Bps 20 10 0 • Since 2002, Nordea’s loan losses has averaged 16 bps of -10 total lending -20 • Historically low credit losses is the result of a well diversified Credit risk appetite 25bps -30 credit portfolio, a rigid risk -40 management process a
Slide 8: Customer driven business model
Customer driven business model 96% customer-related, only 4% from Risk Management Total income per area, % Capital Markets risk management Treasury Treasury result of risk in Treasury Treasury customer transaction Wealth Management Wealth Management Wealth Management Wealth Management Wholesale Whol
Slide 9: Business model has proven highly effective
Nordea’s business model has proven highly effective… Total operating income, EURm Total operating income 2001 - 2011 (EURm) 10 000 • Low volatility in earnings due to 9 000 diversification in terms of 8 000 geography, industry sectors and 7 000 6 000 products 5 000 4 000 • Main focus on traditional
Slide 10: One of the most stable profit developments among European banks
… with one of the most stable profit development among banks in Europe Profit before tax development through the financial crisis (Indexed) Index = 100 120 Nordea 100 80 Nordic peers* 60 40 European 20 peers** 0 Q1 2007 Q2 2007 Q3 2007 Q4 2007 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009
Slide 11: Strong capital generation
…which gives strong capital generation… Core tier 1 capital, EURm • Continued strong profit generation • Generated capital of EUR 6.9bn since 2006* • In addition distributed EUR 6.3bn to shareholders • Strong capital generation gives good flexibility *Adjusted for rights issue 11 •
Slide 12: Clear increase in Core tier 1 ratio
… as well as a clear increase in Core tier 1 ratio Core tier 1 capital ratio, % (excl. hybrids)* • Increase despite continued business growth • Lending growth of 16% • RWA reduction of 2% • Focus on capital efficiency gives result • Improved ratio by 180 bps since Q2/10 * Basel II excluding transiti
Slide 13: RWA initiatives and The New Normal plan
The New Normal plan continues to deliver in terms of efficiency Funding / liquidity Capital efficiency Cost efficiency efficiency RWA development, EUR billion Liquidity premia – status update Group FTE development Purpose 34 169 33 844 3,9 • Align internal pricing with true cost/value of 33 068 32 5
Slide 14: Financial result – Q2/12
Financial result – Q2/12 EURm Q2/12 Q1/12 Change % H1/12 H1/11 Change % Net interest income 1,462 1,420 3 2,882 2,650 9 Net fee and commission income 611 596 3 1,207 1,225 -1 Net fair value result 494 469 5 963 900 7 Other income 39 46 -15 85 77 10 Total income 2,606 2,531 3 5,137 4,852 6 Staff cost
Slide 15: Positive trend in NII continues
Positive trend in NII continues Margin pressure on deposits due to low interest rates Improved asset margins Total net interest income, EURm 1 462 1 427 1 420 1 365 1 379 1 310 1 324 1 326 1 249 Q2/10 Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 15 •
Slide 16: Unchanged loan losses
Unchanged loan losses Total net loan losses, EURm 263 245 242 • Continued low loan losses in 218 217 Norway, Sweden and Finland 207 • Elevated levels in Denmark and 166 Shipping 118 112 Q2/10 Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 16 •
Slide 17: Net impaired loans by country – excluding Shipping
Net impaired loans by country – excluding Shipping 2 000 EUR 1,839m • Increase in impaired loans is to a large extent explained 1 500 by clarified and stricter rules in Denmark introduced by 1 000 Danish FSA. EUR 622m 500 • Stable development in the EUR 319m other countries. EUR 212m 0 Q2/09 Q2/10 Q
Slide 18: Shipping loan losses and impaired loans
Shipping loan losses and impaired loans Shipping Net loan losses, EURm Shipping Net impaired loans, EURm 75 700 EUR 630m EUR 64m 600 60 500 45 400 300 30 200 15 100 0 0 Q2/09 Q2/10 Q2/11 Q2/12 Q2/09 Q2/10 Q2/11 Q2/12 • Further deteriorated collateral values • A limited number of new exposures in tan
Slide 19: Funding
Nordea @ ¢ Funding
Slide 20: Securing funding while maintaining a prudent risk level
Securing funding while maintaining a prudent risk level Key principles Balance sheet Access to funding • Appropriate maturity matching • Diversify funding sources • Currency matching Instruments, programs and currency • Appropriate interest rate matching Investor base • Appropriate capital level
Slide 21: Strong access to funding
Strong access to funding Long-term funding, EURbn 33 32 • Total issuance of EUR 17bn (net) YTD in long-term funding 27 • Exceeds full year redemptions • First issuance of Samurai bonds 17 – further broadening of the funding platform • Maintained AA rating 2009 2010 2011 H1/12 21 •
Slide 22: Significantly improved liquidity risk metrics since 2007
Significantly improved Liquidity risk metrics for Nordea since 2007 Funding gap risk Liquidity buffer EURbn EURbn Short-term liquidity risk appetite prevailed Central bank eligible LB has grown from unchanged despite balance sheet growth, with EUR 20bn into 60bn (Nordea definition) recent dynamic ap
Slide 23: Nordea Group is LCR-compliant
Nordea Group is LCR-compliant Liquidity buffer, EURbn 68 • Nordea is LCR compliant on a 64 62 61 58 60 Group level 56 56 49 • LCR of 144% • LCR compliant in all currencies • Nordea has increased cash and balances with central banks by EUR 13bn to be well prepared for turbulent markets Q2/10 Q3/10 Q4
Slide 24: Strong funding base
Strong funding base Q2 Total funding base 452bn euro Wholesale funding 196bn euro Diversified funding base Q2 Deposits from the public Split of wholesale funding 7% Fin Inst deposits ex. CB 2% Central Bank deposits Short 7% Domestic 29% covered bonds 2% 10% 12 % Covered bonds 34% 41 % Other bonds 9%
Slide 25: Long term issuance and maturity profile
Long term issuance June 2012 – EUR 17,9bn(gross) Long term issuance 1H12 – excl. N Kredit 4 500 4 000 3 500 3 000 EURm 2 500 2 000 1 500 1 000 500 0 bnEUR Maturity profile excl. Nordea Kredit Q2 Lengthening of average maturity of bonds 45 30 3.4Y 15 2.3Y - 0-1M 1-3M 3-12M 1-2Y 2-3Y 3-4Y 4-5Y 5-10Y >
Slide 26: Nordic Covered Bond Market – three domestic markets for Nordea
Nordic Covered Bond Market – three domestic markets for Nordea Nordic domestic covered bond market sizes* • The Nordic domestic covered bond markets represent over half of Nordea’s long term funding Norway EUR 47bn Sweden • Three distinct local investor bases in three local Nordea EUR 145bn Eiendom
Slide 27: Nordea Covered Bond Issuers – Good performance and low LTVs
Nordea Covered Bond Issuers – Good performance and Low LTV’s (51-55%*) Nordea Hypotek - Sweden Nordea Eiendomskreditt - Norway Mortgage lending and level of net credit loss Mortgage lending and level of net credit loss 500 000 3,00% 120 000 3,00% 450 000 2,50% 2,50% 100 000 400 000 350 000 2,00% 2,0
Slide 28: Appendices
Nordea @ ¢ Appendices
Slide 29: Rating
Rating End of Q2 2012 Moody's S&P Fitch DRBS Short Long Short Long Short Long Short Long Nordea Bank AB (publ) P-1 Aa3 A-1+ AA- F1+ AA- R-1 (high) AA Nordea Bank Danmark A/S P-1 A1 A-1+ AA- F1+ AA- R-1 (high) AA Nordea Bank Finland Plc P-1 Aa3 A-1+ AA- F1+ AA- R-1 (high) AA Nordea Bank Norge ASA P-1
Slide 30: Contacts
Contacts Investor Relations Rodney Alfvén Andreas Larsson Carolina Brikho Head of Investor Relations Senior IR Officer IR Officer Nordea Bank AB Nordea Bank AB Nordea Bank AB Tel: +46 8 614 78 80 Tel: +46 8 614 97 22 Tel: +46 8 614 92 77 Mobile: +46 722 35 05 15 Mobile: +46 709 70 75 55 Mobile: +46