Nordea Bank Abp · OMXHEX:NDA_FI
Nordea Bank Abp — MeritaNordbanken — Q3 1999 Earnings Presentation
56 slides from Nordea Bank Abp's earnings presentation, Oct 26, 1999
Slide 1: MeritaNordbanken January - September 1999
26.10.1999 13:06 MeritaNordbanken January - September 1999 1
Slide 2: Sustained strong performance with reduced costs and high return on equity
26.10.1999 13:06 Sustained strong performance with reduced costs and high return on equity – Operating profit EUR 1 051 million (SEK 9.3 billion), – Adjusted for items affecting comparability the operating profit increased 4 % to EUR 937 million – ROE 20.0 %; excluding items affecting comparability
Slide 3: The Nordic Vision - two new initiatives
26.10.1999 13:06 The Nordic Vision - two new initiatives ● Cash offer of NOK 24.3 bn supported by the Board of Christiania Bank ● Simplification of the group structure facilitates creation of a ”one share - one bank group”. Proposal for the merger of Nordbanken Holding AB and Merita Plc. A Nordic pl
Slide 4: A leading banking group in the Nordic and Baltic region
26.10.1999 13:06 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 30 % - 55 % Sweden 15 % - 25 % ● Distribution network 735 branch offices 1000 Swedish post off
Slide 5: The largest banking group in the Nordic region
26.10.1999 13:06 The largest banking group in the Nordic region 0DUNHWFDSLWDOLVDWLRQRIVHOHFWHG1RUGLFEDQNLQJJURXSV 2FWREHU EQ(85 MeritaNordbanken Handelsbanken FöreningsSparbanken Den Danske Bank SEB Unidanmark Christiania Kapital Holding Den Norske Bank 0 2 4 6 8 10 12 5
Slide 6: Combined ownership structure
26.10.1999 13:06 Combined ownership structure -XQH Finnish Swedish institutions institutions 9% 15 % Finnish government 3% Foreign ownership * 32 % Swedish government 26 % Finnish public Swedish public 11 % 3% * Incl. possible nominee registered Swedish ownership in Merita Plc. 6
Slide 7: Share price development
26.10.1999 13:06 Share price development 500 400 300 200 100 0 Nov. Nov. Oct. Oct. Oct 1995 1996 1997 1998 1999 Merita Nordbanken Holding DJ Euro Stoxx Bank 7
Slide 8: Total yield of Nordic banking shares
26.10.1999 13:06 Total yield of Nordic banking shares 1996 - September 1999 1997 - September 1999 % 250 % 140 120 200 100 150 80 100 60 40 50 20 0 0 Merita NB SHB SEB FSB DnB ChrB DDB UNI Merita NB SHB SEB FSB DnB ChrB DDB UNI Hold Hold 1998 - September 1999 70 Jan - September 1999 % 50 % 60 40 50 3
Slide 9: Income statement
26.10.1999 13:06 Income statement 1999 1998 Jan.-Sept./1999 mEUR Jan.-Sept. Jan.-Sept. Change, % mSEK Net interest income 1 341 1 363 -2 11 915 Net commission income 565 533 6 5 017 Net result from financial operations 88 290 -70 781 Other operating income 243 288 -16 2 160 Total operating income 2
Slide 10: Income statement excluding items affecting comparability
26.10.1999 13:06 Income statement ([FOXGLQJLWHPVDIIHFWLQJFRPSDUDELOLW\ 1999 1998 Jan.-Sept./1999 mEUR Jan.-Sept. Jan.-Sept. Change, % mSEK Net interest income 1 341 1 376 -3 11 915 Net commission income 565 533 6 5 017 Net result from financial operations -26 120 -228 Other operating income 243 213
Slide 11: Items affecting comparability
26.10.1999 13:06 Items affecting comparability January-September mEUR 1999 1998 Operating profit excl. items affecting comparability 937 904 Net result from financial operations 114 170 Other operating income - 62 Personnel expenses - -23 Other expenses - -67 7RWDO Operating profit incl. items affec
Slide 12: Income statement, quarterly
26.10.1999 13:06 Income statement, quarterly ([FOXGLQJLWHPVDIIHFWLQJFRPSDUDELOLW\ 1999 1998 mEUR Q3 Q2 Q1 Q4 Q3 Q2 Q1 Net interest income 439 454 448 459 448 473 455 Net commission income 190 194 181 189 174 190 169 Net result from financial operations -7 -53 34 18 10 50 60 Other operating income 60
Slide 13: Net interest and commission income
26.10.1999 13:06 Net interest and commission income mEUR 500 Net interest income Net commission 400 income 300 200 100 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q3 Q1 Q2 Q3 1997 1998 1999 13
Slide 14: Net result from financial operations
26.10.1999 13:06 Net result from financial operations mEUR 300 Equity-related Currency-related 250 Interest-rate-related 200 150 100 50 0 -50 -100 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q3 Q1 Q2 Q3 1997 1998 1999 14
Slide 15: Expenses
26.10.1999 13:06 Expenses mEUR 600 Restructuring expenses 500 Other expenses * Personnel 400 expenses * 300 200 100 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 1997 1998 1999 * Excluding restructuring expenses. 15
Slide 16: Loan loss level, %
26.10.1999 13:06 Loan loss level, % 0.9 Loan loss level, quarterly 0.8 Loan loss level, accumulated 0.7 0.6 0.5 0,4 0.3 0.2 0.1 0 Q1 Q2 Q3 Q4 * Q1 Q2 Q3 Q4 Q1 Q2 Q3 1997 1997 1997 1997 1998 1998 1998 1998 1999 1999 1999 * Incl. reservations for Asia 16
Slide 17: Non-performing loans, net/lending
26.10.1999 13:06 Non-performing loans, net/lending % 2.5 2 1.5 1 0.5 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 1998 1999 17
Slide 18: Operating profit by business area, quarterly
26.10.1999 13:06 Operating profit by business area, quarterly mEUR 250 Q1/1999 Q2/1999 Q3/1999 200 150 100 50 0 -50 Regional Corporate Markets Real Estate Treasury banks 18
Slide 19: Results by business area, Jan.-Sept. 1999
26.10.1999 13:06 Results by business area, Jan.-Sept. 1999 Asset Regional Cor- manage- Real mEUR banks porate Markets ment estate Treasury Other Total 2SHUDWLQJSURILW Income 1 465 318 99 189 83 77 6 2 237 Expenses -839 -111 -75 -34 -120 -13 -41 -1 233 Loan losses -6 -7 - - - - -7 -20 Profit from com
Slide 20: Asset management: assets under management
26.10.1999 13:06 Asset management $VVHWVXQGHUPDQDJHPHQW bnEUR 30 Unit-linked life insurance 25 Insurance (excl. unit-linked) 20 Portfolio management 15 Mutual funds (excl. unit-linked) 10 5 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 1998 1999 20
Slide 21: Asset management: product earnings
26.10.1999 13:06 Asset management 3URGXFWHDUQLQJV mEUR 80 Administrative expenses 70 Sales and distribution expenses 60 Product earnings 50 40 30 20 10 0 Q1 Q2 Q3 1999 1999 1999 21
Slide 22: Household savings
26.10.1999 13:06 Household savings bnEUR Finland Sweden 30 Share-index- linked bonds 25 Retail bonds 20 Insurance Mutual funds 15 excl. unit-linked 10 National public savings 5 Deposits 0 1995 1996 1997 1998 Sept. 1995 1996 1997 1998 * Sept. 1999 1999 * Excluding the exchange rate effect (EUR/SEK),
Slide 23: Net savings in mutual funds
26.10.1999 13:06 Net savings in mutual funds * mEUR Finland Sweden % 500 50 450 45 400 40 350 35 300 30 250 25 200 20 150 15 100 10 50 5 0 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q1 Q2 Q3 Q4 Q1 Q2 Q3 1998 1999 1998 1999 Net savings Acc. market share * Including unit-linked. 23
Slide 24: Life insurance, premiums paid
26.10.1999 13:06 Life insurance, premiums paid mEUR Finland Sweden 200 150 100 50 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q1 Q2 Q3 Q4 Q1 Q2 Q3 1998 1999 1998 1999 Traditional Unit-linked 24
Slide 25: Market shares, households
26.10.1999 13:06 Market shares, households Finland Sweden Insurance * Insurance * Mutual funds Mutual funds * Deposits Deposits Housing loans Housing loans Total Total lending lending 0 10 20 30 40 50 % 0 10 20 30 % (± XX) = compared with Q3/1998. * As per June 1999. 25
Slide 26: Market shares, corporate
26.10.1999 13:06 Market shares, corporate Deposits Finland Deposits Sweden Lending Finland Lending Sweden 0 10 20 30 40 50 60 % (± XX) = compared with Q3/1998. 26
Slide 27: Customer structure of loan portfolio
26.10.1999 13:06 Customer structure of loan portfolio (85EQ Public sector 3% Households Companies 38 % 59 % 27
Slide 28: Lending to companies by industry
26.10.1999 13:06 Lending to companies by industry (85EQ Real estate Other companies management 22 % 27 % Renting, consulting and other company services Construction 9% 6% Financial operations Transport 7% 4% Manufacturing Trade & services 15 % 10 % 28
Slide 29: Lending by customer groups, development
26.10.1999 13:06 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 -0.5 0 0.5 1 1.5 2 2.5 3 bnEUR * Compared with Q3/1998.
Slide 30: Real estate divestment strategy in Finland
26.10.1999 13:06 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 re
Slide 31: Real estate divestment process in Finland
26.10.1999 13:06 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 Al
Slide 32: Personnel
26.10.1999 13:06 Personnel Thousand 22 20 18 16 14 12 0 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 1997 1998 1999 Employees Positions 32
Slide 33: Profitability
26.10.1999 13:06 Profitability Return on equity Cost-to-income ratio * % % 25 58 57 20 56 55 15 54 53 10 52 5 51 50 0 0 Jan.-Sept. Jan.-Sept. Jan.-Sept. Jan.-Sept. 1999 1998 1999 1998 Including items affecting comparability Excluding items affecting comparability * Before loan losses. 33
Slide 34: Overall interest spread and return on assets
26.10.1999 13:06 Overall interest spread Return on assets % % 2 2 1.5 1.5 1 1 0.5 0.5 0 0 Jan.-Sept. Jan.-Sept. Jan.-Sept. Jan.-Sept. 1999 1998 1999 1998 Excluding items affecting comparability Including items affecting comparability 34
Slide 35: Regional banks
26.10.1999 13:06 Regional banks 6HSWHPEHU Customer Northern Sweden savings Central Sweden Lending & guarantees Stockholm Western Sweden Southern Sweden Eastern & Northern Finland Central & Western Finland Helsinki & Uusimaa 0 2 4 6 8 10 bnEUR 35
Slide 36: Number of branches
26.10.1999 13:06 Number of branches -XQH Northern Sweden Central Sweden Stockholm Western Sweden Southern Sweden Eastern & Northern Finland Central & Western Finland Helsinki & Uusimaa 0 50 100 150 200 250 36
Slide 37: Balance sheet
26.10.1999 13:06 Balance sheet Sept. 30 Dec. 31 Sept. 30, 1999 bnEUR 1999 1998 Change, % bnSEK Loans to the public 67.1 59.8 12 585 Loans to financial institutions and central banks 8.5 11.8 -28 74 Interest-bearing securities Financial current assets 7.2 10.0 -28 63 Financial fixed assets 5.1 3.7 38
Slide 38: Balance sheet
26.10.1999 13:06 Balance sheet bnEUR 100 90 80 70 60 50 40 30 20 10 0 Total assets Loans to the public Deposits from the public Sept. 30, 1997 Sept. 30, 1998 Sept. 30, 1999 38
Slide 39: Capital adequacy
26.10.1999 13:06 Capital adequacy % Tier 1 ratio % Total capital ratio 12 12 10 10 8 8 6 6 4 4 2 2 0 0 MNB-Group MeritaBank Nord- MNB-Group MeritaBank Nord- banken banken Sept. 30, 1999 Dec. 31, 1998 39
Slide 40: Earnings per share
26.10.1999 13:06 Earnings per share EUR Merita SEK Nordbanken Holding 0.4 3.5 3 0.3 2.5 2 0.2 1.5 1 0.1 0.5 0 0 Jan.-Sept. Jan.-Sept. Jan.-Sept. Jan.-Sept. 1999 1998 1999 1998 Incl. items affecting comparability Excl. items affecting comparability 40
Slide 41: Equity per share
26.10.1999 13:06 Equity per share EUR Merita SEK Nordbanken Holding 3 30 2.5 25 2 20 1.5 15 1 10 0.5 5 0 0 Jan.-Sept. Jan.-Sept. Jan.-Sept. Jan.-Sept. 1999 1998 1999 1998 41
Slide 42: Merger synergies
26.10.1999 13:06 Merger synergies ● Plan – Income and cost synergies of almost EUR 120 million by the year 2000 ● Implementation – Synergies materialize as planned – Staff reductions continue – 1 300 gross since December 1997, expansion in key strategic areas, appr. 360 employees 42
Slide 43: New products every month
26.10.1999 13:06 New products every month WAP telephone banking Joint IT Fund Solo-concept to be launched throughout the region Medica Life Science Fund Customer concept for retail customers to Finland Internet services to Sweden Private Banking concept to Sweden Joint Euroland Fund Customer concept
Slide 44: New business generated
26.10.1999 13:06 New business generated mEUR 450 400 350 300 250 200 150 100 50 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 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 44
Slide 45: World leader in network banking services
26.10.1999 13:06 World leader in network banking services ● 850 000 signed up as users of the Group’s Internet banking facilities ● 290 000 customers in addition to above using the NB Direkt telephone banking service having codes instantly activatable for Internet use ● 2.5 million log-ins per month
Slide 46: Network banking services increase rapidly
26.10.1999 13:06 Network banking services increase rapidly ● Higher degree of automation will result in further cost savings in the future ● Major growth potential in earnings from new user contracts and services ● Banking facilities accessible by WAP phones in October ● Electronic student loan in F
Slide 47: Offers to Christiania Bank's shareholders
26.10.1999 13:06 Offers to Christiania Bank’s shareholders ● Each shareholder to receive NOK 44 per share ● Premium: 29 per cent to the closing price on 17 September, 1999 ● Christiania Bank’s shareholders to receive priority allocation of 25 % of shares in next expected placing by Swedish governmen
Slide 48: Offers to Christiania Bank's shareholders
26.10.1999 13:06 Offers to Christiania Bank’s shareholders Conditions: ● Minimum 90% acceptances ● Necessary public approvals ● Due Diligence ● Offer period from and including 28 September to 17.00 hours on 29 October 1999 48
Slide 49: Creation of pan Nordic structure
26.10.1999 13:06 Creation of pan Nordic structure ● Nordic holding company with new name domiciled in Sweden ● Nordic parent bank with new name domiciled in Finland ● Nordic holding company to be listed in Helsinki, Oslo and Stockholm ● Nordbanken Holding makes an exchange offer of 102 shares in Nor
Slide 50: Recommendation to accept One Share - One Bank
26.10.1999 13:06 Recommendation to accept One Share - One Bank ● Group tax, dividend and capital vastly simplified ● Pricing difference between the two shares to be removed ● New Group able to issue shares more easily ● Single share more transparent for financial market ● Improved liquidity in tradi
Slide 51: Conditions for the exchange offer
26.10.1999 13:06 Conditions for the exchange offer ● General meetings in Merita Plc and Nordbanken Holding AB (publ.) give the relevant approvals ● Exchange offer accepted by more than 90 per cent of outstanding votes and shares in Merita Plc ● Relevant approvals must be obtained ● Exchange offer to
Slide 52: Appendices
26.10.1999 13:06 Appendices 52
Slide 53: Present group structure Planned group structure
26.10.1999 13:06 Present group structure Planned group structure Shareholders Shareholders Shareholders Cooperation Merita Plc Agreement Nordbanken Holding AB Holding Company Listed on the Identical Boards Listed on the (Nordic Baltic Holding) Helsinki Unified Stockholm Listed on the Stockholm Stock
Slide 54: Agency ratings, October 1999
26.10.1999 13:06 Agency ratings, October 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 P-1 Aa3 A-1 Hypotek 54
Slide 55: Reporting 2000
26.10.1999 13:06 Reporting 2000 ● Financial reporting: Year 1999 February 16, 2000 55
Slide 56: Contact information
26.10.1999 13:06 Contact information 0HULWD1RUGEDQNHQ,QYHVWRU5HODWLRQV 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 taina.makijarvi@merita.mailnet.fi Investor information on the Internet: