Nordea Bank Abp · OMXHEX:NDA_FI
Nordea Bank Abp — Debt Investor Presentation (2021)
51 slides from Nordea Bank Abp's debt investor presentation, 2021
Slide 1: Debt investor presentation Q2 2021
Debt investor presentation Q2 2021
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: Table of contents
Table of contents 1. Nordea second quarter 2021 update 4 2. Credit quality 14 3. Capital, AML and sustainability 23 4. Funding 28 5. Macroeconomy 41 6. Business areas – update 46 3
Slide 4: 1. Nordea second quarter 2021 update
1. Nordea second quarter 2021 update 4
Slide 5: The largest financial services group in the Nordics
The largest financial services group in the Nordics Household * Small and medium- Large corporates Asset and wealth sized companies** and institutions management Business position - Universal bank with leading market position in all four Nordic countries #1 #1 #1 #1 - Strong position in household, c
Slide 6: Executive summary
Executive summary • Strong result, driven by high income growth, firm cost control and low loan losses ➢ Net interest income up 13%, net fee and commission income up 30% and solid net fair value result ➢ Net loan loss reversals of EUR 51m • High levels of business activity and strong growth across N
Slide 7: Group quarterly results Q2 2021
Group quarterly results Q2 2021 Income statement and key ratios Q221 Q220 Q2/Q2 Q121 Q2/Q1 EURm Net interest income 1,232 1,091 13 % 1,212 2% Net fee and commission income 878 673 30 % 827 6% Net fair value result 278 316 -12 % 370 -25 % Other income 30 10 11 Total operating income 2,418 2,090 16 %
Slide 8: Net interest income – highest growth rate in ten years
Net interest income – highest growth rate in ten years Year-over-year bridge, EURm Comments +13% • Net interest income up 13% (up 10% excl. Nordea 0 1,232 Finance Equipment) 57 13 • High levels of business activity and market share 75 1,091 gains across Nordics 22 • Mortgage volumes up 6% and lendin
Slide 9: Net fee and commission income – significant growth in savings and advisory fee income
Net fee and commission income – significant growth in savings and advisory fee income Year-over-year bridge, EURm Comments +30% • Net fee and commission up 30%, highest level ever 878 20 8 19 • Savings fee income up 27%, driven by continued 8 52 AuM growth 673 98 • Solid net inflow: EUR 2.6bn • High
Slide 10: Net fair value result – continued high activity in customer areas
Net fair value result – continued high activity in customer areas Net fair value result, EURm Comments • Solid net fair value result, at more normalised level • Continued high activity in customer areas, mainly -12% 370 driven by FX and equity trading 20 316 • Weaker markets drove lower trading resu
Slide 11: Costs – underlying cost development in line with plan
Costs – underlying cost development in line with plan Year-over-year bridge, EURm Comments +4% • Underlying costs unchanged 1,131 • Staff costs lower, adjusted for inclusion of NFE, 42 1,088 variable pay provisions and exchange rate effects 1 38 49 13 Q220 Underlying Resolution fee NFE Variable pay
Slide 12: Good progress in developing our digital omnichannel banking model
Good progress in developing our digital omnichannel banking model Mobile bank 71% y/y 44% of ranked no 1 growth in online loan digital savings promise in Nordics with advisory applications* 4.5-4.6 app sessions with approved store rating robotic adviser within minutes Active mobile 65% of 71 self- u
Slide 13: We are committed to delivering on our 2022 financial targets
We are committed to delivering on our 2022 financial targets Cost-to-income ratio Capital policy 50% 150-200bp management buffer above regulatory CET1 requirement Return on equity Dividend policy 60-70% payout of distributable >10% profits to shareholders Excess capital intended to be distributed to
Slide 14: 2. Credit quality
2. Credit quality 14
Slide 15: Loan book – well diversified with strong credit quality
Loan book – well diversified with strong credit quality Portfolio well diversified Five segments with 4% of Updated analysis of COVID-19 across countries and total exposures significantly impact by segment segments affected 0.1% Air transportation EUR 13bn, 4% Significantly affected 0.1% Mining & su
Slide 16: Net loan losses and similar net result – credit quality remains strong
Net loan losses and similar net result – credit quality remains strong Net loan losses and similar net result Q221, EURm Comments • Strong credit performance – net reversals of EUR 51m 50 -50 • New provisions still at low levels; stage 3 loans down to 1.41% from 1.53% in Q1 -30 • EUR 80m release of
Slide 17: Strong and stable credit quality
Strong and stable credit quality Stage 2 and 3 loans at amortised cost, EURm Comments • Decrease in stage 2 loans (11% q/q), partly related to enhanced data and model methodology 12,512 13,576 13,840 14,383 12,843 • Stage 3 loans at low levels; decrease due to active credit risk management • Coverag
Slide 18: Instalment-free periods expiring – almost all customers resuming normal servicing
Instalment-free periods expiring – almost all customers resuming normal servicing Customers granted instalment-free periods, 1000s Comments 43 • Approximately 104,000 customers, including 9,000 corporates, granted COVID-19 instalment-free period during past 15 months • Corresponds to loan amount of
Slide 19: IFRS 9 model update – macroeconomic assumptions behind scenarios used
IFRS 9 model update – macroeconomic assumptions behind scenarios used Baseline annual GDP growth, % Comments 6 • Economic forecasts from Nordic central banks and 4 the ECB used as basis for baseline scenarios 2 • Scenarios more positive in Q2 than in Q1 0 2019 2020 2021 2022 2023 • Baseline scenario
Slide 20: Credit quality – portfolio significantly de-risked over past ten years
Credit quality – portfolio significantly de-risked over past ten years Historic loan loss ratios, bp Comments 56 • Track record of strong credit quality • Risk profile improved by divestments and reductions 31 in high-risk exposures 23 26 21 26 • Significant management judgement buffer built up in 1
Slide 21: Coverage ratios – well provisioned for potential losses
Coverage ratios – well provisioned for potential losses Coverage ratios Significantly Partially affected Non-significantly affected segments segments affected segments 77 Avg. 52% Avg. 46% Avg. 34% 68 66 63 62 61 60 58 55 55 52 53 50 51 51 49 48 47 46 47 46 46 45 43 44 44 41 41 41 41 42 38 38 38 15
Slide 22: Lending split with low concentration in each sector and segment
Lending split with low concentration in each sector and segment Lending volumes per sector and segment (EURbn) and shares of total lending portfolio (%), 30/06/21 (excl. reverse repos and securities borrowing) Financial institutions 10.8 3.4% Maritime, shipping (total): 6.5 2.0% Crops, plantations a
Slide 23: 3. Capital, AML and sustainability
3. Capital, AML and sustainability 23
Slide 24: Capital – very strong capital position to support customers and pay dividends
Capital – very strong capital position to support customers and pay dividends CET1 capital ratio development, % Comments 1.9 • CET1 capital ratio 18.0%, 7.8 percentage points -0.5 0.7 0.2 -0.1 0.2 above regulatory requirement* • CET1 capital up EUR 0.5bn, mainly driven by profit net of 17.5 18.0 <2.
Slide 25: Capital – significant buffer to capital requirements
Capital – significant buffer to capital requirements Capital position and requirements Comments 6.8% • CET1 capital ratio 18.0%, 7.8 percentage points above regulatory requirement** 7.8% • Capital policy of 150-200bp above regulatory requirement (MDA level) • CET1 buffer of 7.8 percentage points cor
Slide 26: Significant investments in financial crime prevention
Significant investments in financial crime prevention Actions against money laundering Financial crime prevention spending, annual Employees EURm • We collaborate closely with all relevant authorities, including law 1,600 1,500 >1,500 >1,500 >1,500 >1,500 300 enforcement and regulators, and encourag
Slide 27: Sustainability at the core of our strategy
Sustainability at the core of our strategy Our actions Our targets Strategy and climate targets launched in February 2021 – clear progress in implementation CO2 across Group Net-zero emissions by 2050 at latest Engagement with customers to facilitate and enable their transition Assessment of climate
Slide 28: 4. Funding
4. Funding 28
Slide 29: Liquidity – solid position
Liquidity – solid position Liquidity buffer development, EURbn Comments 112 • Robust liquidity position 107 105 106 106 104 103 104 100 102 101 • Liquidity buffer over EUR 106bn 95 88 • Liquidity coverage ratio (LCR) 159% • EU net stable funding ratio (NSFR) 114% • Deposits up 3% in local currencies
Slide 30: Solid funding operations
Solid funding operations Long-term issuance 2021*, EURm Q2 issuance comments EURm AT1 T2 Senior non-preferred Senior preferred*** Covered 4,000 • EUR 6.5bn in long-term debt issued during Q2 3,500 • Of which EUR 2.1bn covered bonds and EUR 4.4bn senior format 3,000 2,500 • In addition, EUR 1.4bn Tie
Slide 31: Short-term funding – prudent and active management
Short-term funding – prudent and active management Comments Short-term issuance* EURbn • Nordea has continued to be an active issuer in the short- 70 dated debt market and has been able to maintain its pricing 60 level in both the US and European markets 50 40 • Nordea has been actively issuing long
Slide 32: Long-term funding – Nordea’s global issuance platform
Long-term funding – Nordea’s global issuance platform 1% 2% 19% 8% 1% 79% NOK (EUR 12bn eq.) 89% 100% SEK DKK (EUR 36bn eq.) (EUR 54bn eq.) 3% 6% 35% 5% 20% 29% 15% 21% 39% 59% 53% 21% 100% JPY 5% 64% (EUR 1bn eq.) CHF 7% GBP (EUR 1bn eq.) 17% USD (EUR 2bn eq.) (EUR 15bn eq.) EUR (EUR 35bn) Covered
Slide 33: Green bonds
Green bonds Enhanced focus on green bonds Green bond asset portfolio • 2017: Green Bond Framework established and inaugural EUR 500m 5-year senior preferred green bond issued 0.1% 4.0% • 2019: EUR 750m 7-year senior preferred green bond issued 14.3% 23.7% • 2019: Danish green covered bond launched •
Slide 34: Nordea covered bond operations
Nordea covered bond operations Q2 2021 Nordea Eiendomskreditt Nordea Hypotek Nordea Kredit Nordea Mortgage Bank Four aligned covered bond issuers with complementary roles Legislation Norwegian Swedish Danish Finnish Cover pool assets Norwegian residential mortgages Swedish residential mortgages prim
Slide 35: Nordea recent benchmark transactions
Nordea recent benchmark transactions Issue Maturity Issuer Type Currency Amount (m) FRN / Fixed Callable date date Nordea Bank Senior preferred USD 1,000 Fixed May-21 May-24 Nordea Bank Tier 2 SEK 3,000/1,000 FRN/Fixed May-21 Aug-26 10.25NC5.25 Nordea Bank Tier 2 EUR 1,000 Fixed May-21 Aug-26 10.25N
Slide 36: Diversified balance sheet
Diversified balance sheet Total assets EUR 587bn at end of Q2 2021 Deposits by credit Cash and balances with institutions central banks Loans to credit institutions Deposits and borrowings from the public Credit S&P Moody’s Fitch ratings Loans to the public Long-term issuer AA- Aa3 AA- CDs and CPs*
Slide 37: Well positioned to meet MREL requirements
Well positioned to meet MREL requirements MREL requirements and positions at Q221 Comments • Nordea subordinated MREL ratio 3.1 percentage points above +5.8 requirement and total MREL ratio 5.8 percentage points above 33.2% • MREL and subordination requirements binding from 1 Jan 2022 (full requirem
Slide 38: Senior non-preferred issuance target remains unchanged
Senior non-preferred issuance target remains unchanged Own funds and bail-in-able debt, EURbn Comments • Senior non-preferred (SNP) target of approximately Point of non-viability Resolution EUR 10bn in total by end of 2023, taking into account: • Future capital buffer requirements • Management buffe
Slide 39: Maturity profile
Maturity profile Maturity profile, EURbn Comments EURbn 300 • Over past couple of years balance sheet maturity profile has become more balanced due to: 200 • Lengthening of issuance through balance sheet management 100 • Resulting in well-balanced structure in assets and liabilities in general, 0 an
Slide 40: Liquidity coverage ratio
Liquidity coverage ratio Liquidity coverage ratio, % Comments 350% • EBA Delegated Act on LCR in force starting from October 2016 300% 250% • LCR of 159% 200% • LCR compliant in USD and EUR 150% • Compliance reached through high-quality liquidity buffer and 100% management of short-term cash flows 5
Slide 41: 5. Macroeconomy
5. Macroeconomy Ti Cl tly Nordea
Slide 42: Nordic economies – resilient economies back on track
Nordic economies – resilient economies back on track GDP development Unemployment rate Comments GDP, forecasts from Economic Outlook May 2021 • After the dramatic setback in 2020 due to the coronavirus, the Nordic economies have almost fully recovered Country (%, y/y) 2020 2021E 2022E • Vaccines hav
Slide 43: Nordic rates – Nordics well-equipped to handle long-term consequences of COVID
Nordic rates – Nordics well-equipped to handle long-term consequences of COVID Policy rates Public balance/debt, % of GDP, 2021E Comments • Norges Bank now expects to start hiking rates in September this year, with a second hike likely in December. Policy rates in the euro area, Denmark and Sweden a
Slide 44: Households remain resilient
Households remain resilient Household debt Household savings Comments • Household savings have increased dramatically during the crisis, mainly due to a decline in spending. Despite high debt levels, Nordic households’ strong finances are expected to support economic growth as restrictions are lifte
Slide 45: Nordic housing markets heat up
Nordic housing markets heat up House prices Households’ credit growth Comments • Contrary to expectations, house prices have increased to record-high levels in all the Nordic countries during the crisis. This is not least due to unprecedented expansionary fiscal and monetary policy in support of hou
Slide 46: 6. Business areas – update
6. Business areas — update Habe fo le: tly Nordea
Slide 47: Personal Banking – high levels of business activity and volume growth
Personal Banking – high levels of business activity and volume growth Total income, EURm Comments +14% • Total income up 14% 929 877 818 838 847 • Continued strong mortgage activity: volumes up 6% 569 • Further increases in mortgage market shares across Nordics 501 543 535 562 • Improved mortgage an
Slide 48: Business Banking – high levels of business activity
Business Banking – high levels of business activity Total income, EURm Comments +20% • Strong quarter – high levels of business activity 641 648 617 542 543 • Lending volumes up 8% (4% excl. Nordea Finance Equipment) – strong growth in Norway and Sweden 395 406 339 351 383 • High investment banking
Slide 49: Large Corporates & Institutions – clear progress on strategic repositioning plan
Large Corporates & Institutions – clear progress on strategic repositioning plan Total income, EURm Comments +9% • Total income up 9%, driven by strong commission income 622 • Highest level of net fee and commission income in 17 quarters 505 476 465 445 240 • Very high customer activity in capital m
Slide 50: Asset & Wealth Management – very high customer activity, especially in internal channels
Asset & Wealth Management – very high customer activity, especially in internal channels Total income, EURm Comments +28% • Total income up 28%, mainly driven by increase in AuM 263 292 19 292 19 • AuM up 24% to all-time high of EUR 387bn 247 228 16 17 16 • Net inflow of EUR 2.6bn (annualised 3%), s
Slide 51: Contacts
Contacts Investor Relations Matti Ahokas Andreas Larsson Maria Caneman Carolina Brikho Head of Investor Relations Head of Debt Investor Relations Senior Debt IR Officer IR Officer Mobile: +358 40 575 91 78 Mobile: +46 709 707 555 Mobile: +46 768 24 92 18 Mobile: +46 761 34 75 30 Tel: +46 10 156 29 6