Nordea Bank Abp · OMXHEX:NDA_FI
Nordea Bank Abp — Q3 2010 Earnings Presentation
40 slides from Nordea Bank Abp's earnings presentation, Oct 27, 2010
Slide 1: Third Quarter Report 2010 Telephone conference
Third Quarter Report 2010 Telephone conference 27 October 2010
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: Key messages
Key messages 9 Strong quarter 9 High customer activity 9 Strong customer inflow 9 Successful execution of Group initiatives 3 27 October 2010 Telephone conference
Slide 4: Solid trends in customer business
Solid trends in customer business Net interest income Total income Operating profit Q3 2009 Q2 2010 Q3 2010 Q3 2009 Q2 2010 Q3 2010 Q3 2009 Q2 2010 Q3 2010 Number of Gold Lending volumes Net loan losses customers Q3 2009 Q2 2010 Q3 2010 Q3 2009 Q2 2010 Q3 2010 Q3 2009 Q2 2010 Q3 2010 4 27 October 20
Slide 5: Outlook 2010
Outlook 2010 Nordea expects macroeconomic recovery to continue in 2010 Global development is still fragile and hence uncertainty remains; the outlook for the Nordic markets has improved during the year Excluding currency effects in 2010, Nordea expects cost growth to be broadly in line with 20
Slide 6: Third Quarter Results
Third Quarter Results 6 27 October 2010 Telephone conference
Slide 7: Result highlights
Result highlights EURm Q3/10 Q2/10 Chg % Q3/09 Chg % Net interest income 1,310 1,249 5 1,321 -1 Net fee and commission income 525 538 -2 437 20 Net result from items at fair value 446 339 32 486 -8 Other income 82 35 33 Total income New record level 2,363 2,161 9 2,277 4 Staff costs -721 -701 3 -670
Slide 8: Underlying business trends
Underlying business trends Q3 2010 with Q3 2010 with unchanged unchanged translation translation Reported EURm Q3 2010 Q2 2010 Chg % Chg % Chg % currencies currencies change% (compared with (compared Q2 2010) with Q3 2009) Total operating income 2,363 2,161 9 2,344 8 2,285 0 4 Total operating -1,196
Slide 9: Net interest income up 5%
Net interest income up 5% Net interest income, EURm Strong trend in customer operations continues 1,321 1,299 1,310 1,235 1,249 Lending and deposit volumes up Increased deposit margins Negative effect from higher average funding cost Q3/09 Q4/09 Q1/10 Q2/10 Q3/10 9 27 October 2010 Telephone
Slide 10: Underlying volume trends
Underlying volume trends % change in unchanged currency Q3oQ2 Q3oQ3 Total Lending, excl. reversed repurchase agreements 1 6 – Nordic household mortgages 2 9 – Nordic consumer lending 2 7 – Nordic corporates 0 3 – New European Markets 4 6 – FID -7 -3 – Shipping -1 4 Total Deposits, excl. repurchase a
Slide 11: Change in net interest income
Change in net interest income Q3oQ2 YoY Volume-driven Nordic markets local currencies 9 56 Corporate lending volumes 1 -40 Household lending volumes 8 86 Corporate deposit volumes 0 3 Household deposit volumes 0 6 Margin-driven Nordic markets local currencies 19 -112 Corporate lending margins 3 141
Slide 12: Interest rate sensitivity
Interest rate sensitivity - 3 components Structural interest income risk (SIIR) Increased market rates, 100bps Q3/10 Reflecting the effect on NII from re- EURm pricing gaps¹ Net Interest Income, rolling 12 450 Dynamic effects on net interest months annualised approx income Changes in deposit
Slide 13: Net fee and commission remains at a high level
Net fee and commission remains at a high level Net fee and commission income, EURm Continued strong performance within asset management 538 525 High activity within corporate advice 463 475 437 Seasonal effects Q3/09 Q4/09 Q1/10 Q2/10 Q3/10 13 27 October 2010 Telephone conference
Slide 14: Asset under Management at all-time high
Asset under Management at all-time high Assets under Management (AuM), EURbn 180 Up 6% or EUR 10.4bn in Q3 157 158 126 Continued net inflows in most areas - EUR 3.3bn or 8% annualised 2007 2008 2009 End Q3 2010 Positive trend in the institutional Net flows AuM, EURbn asset management business
Slide 15: Fair value result up 32%
Fair value result up 32% Net result from items at fair value, Capital markets business in customer EURm areas¹ continues to perform well Continued strong Life & Pensions results 334 326 Higher contribution from Group 292 295 283 Treasury and Capital Markets unallocated Q3/09 Q4/09 Q1/10 Q2/10
Slide 16: Firm cost management
Firm cost management Total expenses, EURm Underlying¹ expenses down 2% 1 219 1 196 1 186 1 087 1 164 Cost/income ratio improved to 51% (55%) 471 445 436 438 382 702 701 721 670 687 Q3/09 Q4/09 Q1/10 Q2/10 Q3/10 Staff costs Other expenses 16 27 October 2010 Telephone conference ¹Adjusted for Grou
Slide 17: Strong capital position maintained
Strong capital position maintained Risk-Weighted Assets (RWA), EURbn RWA up 8% YoY 206 207 Increase due to corporate and retail 192 185 182 volume growth (11%) 169 Core tier 1 ratio 10.4% Largely unchanged YoY Q3 2009 Q2 2010 Q3 2010 Solid profit generation enables high Transition rules Fu
Slide 18: Prudent liquidity management
Prudent liquidity management EURbn AA rating maintained +33 +4 56 High long-term funding issuance 42 38 Increased liquidity buffer 23 Increased average maturity Short term funding Liquidity buffer End 2007 Q3/10 Average bond maturities 3.7 years 2.3 years End 2007 Q3 2010 18 27 October 2010
Slide 19: Strong funding position
Strong funding position Total long-term funding issued, EURbn Very good reception of the Nordea name in all funding markets 31 30.2 Record EUR 30bn long-term funding issued with an average maturity of 22 23 5.6 years Norwegian and Finnish covered bond platforms launched 2007 2008 2009 Jan - Se
Slide 20: Credit quality is improving
Credit quality is improving 20 27 October 2010 Telephone conference
Slide 21: Macroeconomic recovery in the Nordic countries
Macroeconomic recovery in the Nordic countries GDP growth, %, y/y 7.5 7.5 % y/y GDP % y/y Solid growth rates 5.0 5.0 2.5 2.5 Modest inflation 0.0 0.0 -2.5 -2.5 Relatively strong public finances -5.0 Sweden -5.0 -7.5 Denmark Norway -7.5 Improvements in labour markets Finland -10.0 -10.0 Q1 Q2
Slide 22: Stable and well diversified lending portfolio
Stable and well diversified lending portfolio Total lending to public, EURbn Total lending up 4% in Q3 and 283 303 314 11% YoY 29 28 27 57% corporate lending – no sector 107 94 104 accounting for more than 13% Limited changes between sectors – no new areas of concern 163 171 178 Q3 2009 Q2 201
Slide 23: Focus on stronger corporate customers
Focus on stronger corporate customers Rating distribution 18% 16% Increased Decreased 14% 12% EAD (%) 10% 8% 6% 4% 2% 0% 6+ 6 6- 5+ 5 5- 4+ 4 4- 3+ 3 3- 2+ 2 2- 1+ 1 1- Rating 12.2009 09.2010 23 27 October 2010 Telephone conference
Slide 24: Credit quality improving
Credit quality improving Net loan losses, EURm Net loan losses down to 29bps (35bps) 54bps Excluding guarantee scheme 50bps 331 provisions¹ net loan loss ratio 35bps 29bps down to 22bps (26bps) 26bps 187 Two-year Danish guarantee 157 22bps scheme expired in September Q3 2009 Q2 2010 Q3 2010 Da
Slide 25: Decreased net loan losses in most areas
Decreased net loan losses in most areas Loan losses, EURm 27 58 Loan losses remain close to zero 50 413 in Norway and Sweden 358 316 321 245 207 -82 -128 -164 Q3/09 Q2/10 Q3/10 Gross loan losses Danish guarantee scheme Reversals Net loan losses Net loan losses per area¹, EURm SOSI: 31bps NEM: 36bp
Slide 26: Impaired loans continue to stabilise
Impaired loans continue to stabilise Impaired loans, EURm Impaired loans gross up 6% - mainly 2 094 2 081 performing loans in FI and DK 1 639 EUR 4,651m or 139bps (135bps) 2 212 2 313 2 570 55% of impaired loans performing Q3 2009 Q2 2010 Q3 2010 Performing Non-performing Net decrease in col
Slide 27: Business development
Business development 27 27 October 2010 Telephone conference
Slide 28: Diversified and fast-growing customer business
Diversified and fast-growing customer business… Income split per customer segment, Q310 Income well diversified between Corporate Nordic Household customer segments CMB PB segment segment 60% 40% Solid growth trends in relationship Gold Large segments¹ Fin inst Other NEM Shipping NEM Other Int'l
Slide 29: …with a strict focus on relationship banking
…with a strict focus on relationship banking The 360-degree meeting Pro-active 360-degree meetings to The 3600 meeting Savings and meet customers’ needs investments Strong value proposition attracts Daily Insurance banking customers to premium segments Lending Steady growth of 6% per year or 1
Slide 30: Clear growth strategy
Clear growth strategy Household Corporate New European Markets 9 Migrate existing customers to 9 Increase market share with 9 Continue successful organic relationship segments largest customers growth path in Poland 9 Attract new customers to 9 Proactive advice on relationship segments ancillary pro
Slide 31: Household relationship strategy
Household relationship strategy Growth strategy Rationale Group initiative Higher income and Household growth potential 9 Migrate existing Future distribution customers to relationship segments More loyal 9 Attract new customers New customer to relationship segments acquisition 9 Increase advisory E
Slide 32: Deliveries on household strategy
Deliveries on household strategy HH volumes increase YoY, EURbn Continued strong customer demand in 139.4 household segment Lending up 14% Improved market position 122.3 75.9 39 Nordic branches operating in new Deposits up 9% format 69.9 34.4 Improved Private Netbank 28.2 Nordic Retail Funds
Slide 33: Corporate relationship strategy
Corporate relationship strategy Growth strategy Rationale Group initiative Higher income and Corporate potential 9 Increase market share with largest customers All products Growth plan CMB 9 Proactive advise on ancillary products to Medium customers Close, partnership- Customer-driven based relation
Slide 34: Corporate strategy delivery
Corporate strategy delivery Total income CMB, EURm Strong income growth within CMB 372 378 2% Q/Q and 23% YoY Growth plan CMB Sweden proceeds 308 as planned Strong business momentum with several Q3 2009 Q2 2010 Q3 2010 new mandates won Income growth 2007-YTD, CAGR % Strategy to build house
Slide 35: New European Markets strategy
New European Markets strategy Growth strategy Rationale Group initiative High potential New European Markets 9 Continue successful organic growth path in Poland Proven track record Growth plan Poland Nordic model Low risk Customer benefits: Nordic business model and concepts. Relationships and advic
Slide 36: New European Markets – a growth area
New European Markets – a growth area Total income NEM, EURm Solid income development remains 38% CAGR since 2007 176 163 Firm cost management – C/I down to 39% 141 Focus on low risk segments Growth plan Poland on track – 4 branches opened in Q3 Q3 2009 Q2 2010 Q3 2010 36 27 October 2010 Te
Slide 37: Strong foundation for reaching long-term target
Strong foundation for reaching long-term target Future distribution Risk-adjusted profit, EURm New customer acquisition 10% CAGR Growth plan Finland required CMB Sweden Customer-driven Markets business Growth plan Poland Top league IT performance Product platforms Infrastructure upgrade 2006 2007 20
Slide 38: Financial impact from Group initiatives
Financial impact from Group initiatives Income benefits and efficiency gains well in line with full-year expectations Income generation Jan-Sep, approx. EUR 200m Efficiency gains Jan-Sep, approx. EUR 50m Investment costs lower than planned for 2010 – expected to be higher 2011 Prolonged ex
Slide 39: Key messages
Key messages Strong quarter Record income and one of the highest ever operating profits reported High customer activity Customer business continues to grow Increased income within all corporate segments Strong trend in AuM remains – net inflow 8% annualised Strong customer inflow Mor
Slide 40: Third Quarter Report 2010 Telephone conference
Third Quarter Report 2010 Telephone conference 27 October 2010