Nordea Bank Abp · OMXHEX:NDA_FI
Nordea Bank Abp — Q2 2019 Earnings Presentation
30 slides from Nordea Bank Abp's earnings presentation, Jul 18, 2019
Slide 1: Second quarter results 2019
Nordea Second quarter results 2019
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: Executive summary
Executive summary Improved business momentum despite tough environment • Regaining market share in mortgages • Strong inflow in Asset & Wealth Management • Improved customer satisfaction Volumes not offsetting for margin pressure Costs increased 3% in the quarter due to depreciations and seasonality
Slide 4: Group financial highlights second quarter 2019
Group financial highlights second quarter 2019 Income statement, EURm Q2 2019 Q1 2019 Q2/Q1 change Q2 2018 Q2/Q2 change local currencies local currencies Net interest income 1,071 1,056 2% 1,110 -1% Net fee and commission income 743 737 1% 800 -6% Net fair value result 283 264 7% 260 8% Other Income
Slide 5: Revenues
Revenues ° Nordea
Slide 6: Underlying income development
Underlying income development Total operating income*, EURm 2 407 2 373 2 228 2 243 2 229 2 141 2 097 2 115 2 033 Q217 Q317 Q417 Q118 Q218 Q318 Q418 Q119 Q219 6 * Excl Items affecting comparability in Q418: EUR 50m gain from revaluation of Euroclear, EUR 38m after tax, EUR 36m gain related to sale o
Slide 7: Underlying income down 2% and costs up 3% YoY
Underlying income down 2% and costs up 3% YoY Income Q219 vs Q218, EURm Costs Q219 vs Q218, EURm 3% 2,578 365 1,193 1,180 13 36 -2% 2,213 46 2,167 2,141 1,154 3 26 Q218 Structural* Q218 Underlying Q219 FX Q219 Q218 Underlying D&A Q219 FX Q219 adj. adj. adj. 7 * Gains related to Nordea Liv & Pension
Slide 8: Revenues up 2% and costs up 3% QoQ
Revenues up 2% and costs up 3% QoQ Income Q219 vs Q119, EURm Costs Q219 vs Q119, EURm 2% 2,152 1,452 14 11 2,141 302 3% 18 1,184 1,178 2,115 4 1,150 12 10 6 12 Q119 Underlying Gjensidige NII Day-count Q219 FX Q219 Q119 Resolution Q119 Underlying Gjensidige D&A Q219 FX Q219 adj. Fee & adj adj Prov. 8
Slide 9: Net interest income
Net interest income Quarterly bridge, EURm Comments +2% 1,077 6 1,071 • Impact from volume growth accelerating 1,056 18 24 8 4 14 • Good momentum in mortgages • Highest monthly market share growth since 2016 in Sweden • Similar lending margin trend as in Q1 Q119 Lending Volumes Other NII Day- Gjensi
Slide 10: Continued improvement in lending volumes
Continued improvement in lending volumes Lending volumes (Jan 18 = Index 100) Comments 106.4 • Strong growth in the corporate segment • Household lending volumes accelerating 104.6 102.9 100.0 Mar Sep Mar Jun 18 18 19 19 Corporate Household Household including Gjensidige 10
Slide 11: Net fee and commission income
Net fee and commission income Quarterly bridge, EURm Comments +1% • Higher Asset Management volumes support 14 28 4 9 23 fees 747 743 737 16 4 • A few larger deals increased brokerage and corporate finance fees Q119 AM Brok. & Pay. & Lending Custody Other Q119 FX Q219 • Custody higher due to semi-an
Slide 12: Assets under Management
Assets under Management Flow, EURbn Comments 3.8 1.0 • Highest inflow since Q316, all areas -0.6 -0.4 contributing -2.8 -1.9 • EUR 1.4bn Private Banking inflow in the -3.5 quarter -5.3 Q218 Q318 Q418 Q119 Q219 • Increased sales activity and new products in Reported Excl. PBI, PB / PeB moves* Institu
Slide 13: Net fair value
Net fair value NFV development, EURm Comments • Stable customer business 264 283 • Underlying customer activity remains strong 260 47 43 205 182 42 110 • Strong result in Treasury 12 26 39 16 • Market making income continued weak due to 223 217 lower rates, low volatility and lower margins 199 203 1
Slide 14: Business areas
Business areas “ Nordea
Slide 15: Personal Banking 1(2)
Personal Banking 1(2) Key ratios Total income, EURm Comments +2% 753 • Good trend in customer-driven activity 738 731 • Increased market share of new mortgage lending in all 718 706 countries, increase in total market share in Sweden • Growth in lending volume in all four countries • Adverse trend f
Slide 16: Personal Banking 2(2)
Personal Banking 2(2) Leading indicators Lending volume, EURbn Customer satisfaction (Customer Engagement Index) +4% 152.6 152.2 Q218 Q318 Q418 Q119 Q219 Trend 5.2 147.2 146.2 146.5 71 70 69 67 69 147.0 70 72 72 71 73 Q218 Q318 Q418 Q119 Q219 71 73 74 72 71 Effect from Gjensidige 62 65 63 66 69 Shar
Slide 17: Commercial and Business Banking 1(2)
Commercial and Business Banking 1(2) Key ratios Total income, EURm Comments +2% 537 • Underlying income momentum continues 520 510 • High customer activity in the Norwegian and Swedish market 487 483 • Increased lending margin pressure • Continuous focus on improving customer intensity Q218 Q318 Q41
Slide 18: Commercial and Business Banking 2(2)
Commercial and Business Banking 2(2) Leading indicators Lending volume, EURbn Customer satisfaction (Customer Engagement Index) +2% 82.5 82.1 81.9 81.4 Relationship Customers (BB) 2017 2018 80.8 70 71 79 80 70 74 67 71 Q218 Q318 Q418 Q119 Q219 18
Slide 19: Wholesale Banking 1(2)
Wholesale Banking 1(2) Key ratios Total income, EURm Comments -20% • Strong customer activity and high satisfaction 494 438 • Lending volumes +3% YoY but slightly lower margins 395 393 • Leading bond franchise in active primary market 364 • Challenged market making activities • Net loan losses Q219
Slide 20: Wholesale Banking 2(2)
Wholesale Banking 2(2) Leading indicators Lending volume, EURbn Nordic corporate bonds, % of market share Source: Dealogic +3% 45.9 45.8 19.3 19.7 18.4 44.6 44.5 15.0 43.7 12.7 Q218 Q318 Q418 Q119 Q219 Q218 Q318 Q418 Q119 Q219 Nordic syndicated loans, ranking Source: Dealogic Nordic ECM and M&A, ran
Slide 21: Asset & Wealth Management 1(2)
Asset & Wealth Management 1(2) Key ratios Total income, EURm Comments -8% • AuM back at same level as Q2 last year with flow of EUR 4bn 426 • 96% of composites outperforming their benchmarks 405 404 400 • Strong flows in Private Banking continues, all countries 393 contributing • Private Banking has
Slide 22: Asset & Wealth Management 2(2)
Asset & Wealth Management 2(2) Leading indicators Assets under Management, EURbn Customer satisfaction (Customer Engagement Index) 0% Q218 Q318 Q418 Q219 312 307 307 300 76 77 76 80 283 73 78 76 78 73 77 77 81 77 81 83 84 Q218 Q318 Q418 Q119 Q219 Total net flows, EURbn Investment performance Investm
Slide 23: Nordea
% Nordea
Slide 24: Costs
Costs Quarterly bridge, EURm Comments 1,452 +3% 302 • Higher costs due to depreciations and seasonal 1,150 1,184 1,178 12 12 10 6 Other effect Staff • Adjusted** cost to income ratio up from 57 to 58% D&A Q119 Resolution Q119 Underlying Gjensidige D&A Q219 FX Q219 Fee & adj. adj Prov. Yearly bridge,
Slide 25: Further reduction in cash cost
Further reduction in cash cost* Yearly, EURm** Comments • Cash cost down 2% YoY due to less capitalisations 1,427 -2% 198 1,222 1,204 142 131 1,228 1,080 1,072 Outlook Q217 Q218 Q219 • Cash cost** to be lower in 2019 vs 2018 • Cash cost** to be down by up to 10% 2021 vs 2018 Capitalisations • Financ
Slide 26: Strong asset quality
Strong asset quality Total net loan losses*, EURm Comments • Net loan losses EUR 61m in Q2 vs EUR 42m in Q1 106 • Q2 loan loss ratio 10 bps vs 7 bps in Q1 79 71 59 61 44 42 40 30 Outlook • We expect largely unchanged credit quality in the coming quarters Q217 Q317 Q417 Q118 Q218 Q318 Q418 Q119 Q219
Slide 27: Common Equity Tier 1 ratio development
Common Equity Tier 1 ratio development Q219 vs Q119 Comments • Common Equity Tier 1 ratio increased by 20 bps to 120 bps 130 bps 14.6 0.2 14.8 14.8% 0.1 0.1 • Risk Exposure Amount EUR 160bn in Q2 vs 13.6 13.3 EUR 163bn in Q1 • Management buffer 120 bps EUR EUR 21.7 bn 21.7 bn Q119 Q119 Volumes Conso
Slide 28: Key initiatives to drive cost efficiency
Key initiatives to drive cost efficiency Key priorities Priorities Drive cost efficiency Increased usage of AI and robotics 18 more processes robotised Workforce shift 300 FTE’s added in Poland & Baltics, +7.2% QoQ Simplification of products and services 64 out of 370 products in DK and NO discontin
Slide 29: Key initiatives to increase business momentum
Key initiatives to increase business momentum Key priorities Priorities Increase business momentum Investments in Private Banking EUR 1.4bn net inflow in Private Banking Stable return strategy to be distributed in the US retail New distribution channels market through John Hancock Regain momentum on
Slide 30: Thank you
Nordea Thank you