Nordea Bank Abp · OMXHEX:NDA_FI
Nordea Bank Abp — Q3 2005 Earnings Presentation
22 slides from Nordea Bank Abp's earnings presentation, Oct 26, 2005
Slide 1: Interim Report Third Quarter 2005 Press conference
Interim Report Third Quarter 2005 Press conference 26 October 2005 Lars G Nordström President and Group CEO
Slide 2: Operating profit up 30% in the first nine months of 2005
Operating profit up 30% in the first nine months of 2005 z Operating profit EUR 2,300m (EUR 2,068m in the first nine months of 2004), up 30% when excluding real estate gain of EUR 300m last year z Total income increased by 9% to EUR 4,877m (EUR 4,481m) – Net interest income up 6% z Total expenses la
Slide 3: Net interest income up by 6% year on year
Net interest income up by 6% year on year EURm YoY: 3,000 z Up 6% 2,730 2,500 2,575 z Volume growth more than offset margin pressure 2,000 z Strong growth in lending, up 18% 1,500 z Growth in focus areas – mortgage 1,000 – SME – consumer finance 500 – Poland and Baltics – Long term savings 0 z Margi
Slide 4: Expenses
Expenses EURm 979 YoY: 1,000 43 914 896 865 413 902 35 z Expenses largely unchanged 34 31 39 800 353 364 345 z Efficiency gains compensating 334 – increased business volumes – inflation 600 z Costs in 2005 more evenly 523 515 515 520 distributed 492 400 z Staff costs up 3% – reduction of FTEs – gene
Slide 5: Cost/income ratio continues down
Cost/income ratio continues down % 70 z Target: Continuous improvement 60 64 62 60 z Flat costs while business volumes 50 56 continue to grow 40 – productivity gains 30 z Income up 9% 20 10 0 2002 2003 2004 Jan-Sep 2005 5
Slide 6: Net loan losses continues to be positive
Net loan losses continues to be positive EURm YoY: 60 40 z Positive result from loan losses 42 at EUR 130m 20 0 z Sale of shares in Pan-Fish, -3 -2 -10 -6 -23 recovery of EUR 98m -20 QoQ: -40 z Overall strong credit portfolio -60 -80 z Reversals exceeded new -101 provisions by EUR 23m -100 -120 Q1/0
Slide 7: Strong development in the third quarter
Strong development in the third quarter z Volume growth continued in the quarter z Operating profit at EUR 728m (EUR 884m in Q2 2005) – continued growth but lower loan loss reversals and lower investment result compared to strong second quarter z Total income EUR 1,601m (EUR 1,694m) z Total expenses
Slide 8: Stable growth of net interest income
Stable growth of net interest income EURm QoQ: 1,000 z Up 1% 920 913 920 z Total lending up 4% 875 897 800 – mortgage lending 5% – SME 3% – successful launch of home equity 600 products z Continued pressure on 400 corporate margins 200 z Margin pressure on new mortgage sales seems to be 0 Q3/04 Q4/0
Slide 9: Continued strong growth in business volumes
Continued strong growth in business volumes z Consumer lending up 15% year-on-year z Lending to small and medium-sized corporates increased by 15% z Mortgage lending to personal customers up 13% z Assets under management increased by 17% to EUR 147bn z Net written premiums in Life increased by 15% z
Slide 10: Double digit growth in most areas
Double digit growth in most areas YoY QoQ z Lending, total – Mortgage lending 13% 4% – Consumer lending 15% 3% – SME lending 15% 4% – CIB lending 33% -1% z Deposits, total – Household deposits 8% 3% – SME deposits 5% 3% – CIB deposits 10% -6% 10
Slide 11: Successful launch of home equity concept
Successful launch of home equity concept 11
Slide 12: Customer programmes - Increasing business rewards both customers & Nordea
Customer programmes - Increasing business rewards both customers & Nordea Strong growth in core segment Sep 04 to Sep 05 z Key elements in the progamme offered to the customers: 15.8% – More favourable conditions the more business 6.6% you do with Nordea - and for the core 8.7% 139 customers a named
Slide 13: Total lending on the rise
Total lending on the rise EURbn 200 175.1 182.1 180 170.1 154.5 161.3 160 140 120 100 80 60 40 20 0 04 04 05 05 05 3/ 4/ 1/ 2/ 3/ Q Q Q Q Q Corporate Housing loans Consumer loans Public sector 13
Slide 14: Stable growth in deposits
Stable growth in deposits EURbn 120 110 108.0 104.7 105.2 105.7 100 97.1 90 80 70 60 50 40 43.8 44.1 45.5 46.7 42.9 30 20 10 0 04 04 05 05 05 3/ 4/ 1/ 2/ 3/ Q Q Q Q Q Of which household deposits 14
Slide 15: Assets under Management at all time high
Assets under Management at all time high EURbn 160 146.7 z Up 17% year on year to EUR 135.8 141.7 140 130.6 147bn 125.7 120 100 80 60 40 20 0 Q3/04 Q4/04 Q1/05 Q2/05 Q3/05 Nordic retail funds Nordic private banking International wealth mgmt European fund distribution Institutional clients Life & pen
Slide 16: Return on equity ahead of target
Return on equity ahead of target % 20 z Above target of 18 18.6 > 15% in 2005 16 17.5 16.9 14 14.5 14.5 12 10 8 6 4 2 0 2004 Jan-Sep 2004 Jan-Sep 2005 Reported Excl. real estate gains 2004 16
Slide 17: Capital position
Capital position Tier 1 ratio % 8 z Tier 1 ratio stable at 7.0% despite 7 7.6 7.3 strong volume growth 6.8 7.0 6.8 7.0 7.0 6 5 z Total capital ratio at 9.9% from 4 9.4% in Q2 3 – issuance of subordinated debt to meet coming redemptions 2 1 z Buy-back of 50m shares will 0 reduce Tier 1 ratio by appro
Slide 18: Repurchase of own shares
Repurchase of own shares z AGM authorisation to repurchase 10% of outstanding shares z Board decision to buy-back up to a maximum of 50 million (2%) of outstanding shares until next AGM z Cancellation of approx. 140m shares in Q3 z 62m shares still to be cancelled 18
Slide 19: Delivering ahead of targets
Delivering ahead of targets Key performance indicator Jan-Sep 2004 Target 2005 Total shareholder return (TSR), % #9 #3 In the top quartile of European peer group RoE, % 18.6 14.5* > 15% in 2005 and > 17% or in line with level of top Nordic peers from 2007 Costs**, EURm 2,591 3,502 Same cost level th
Slide 20: In summary
In summary z Strong performance continues z Continued growth in business volumes – Double digit growth in most areas z Costs kept largely unchanged despite significantly increased activity level z Sixth consecutive quarter with positive net loan losses z Delivering ahead of targets z Going forward –
Slide 21: Income statement summary
Income statement summary EURm Jan-Sep Jan-Sep Chg % 2005 2004 Net interest income 2,730 2,575 6 Net fee and commission income 1,406 1,327 6 Net gains/losses on items at fair value 468 356 31 Equity method 46 40 15 Other income 227 183 24 Total operating income 4,877 4,481 9 Staff costs -1,550 -1,498
Slide 22: Income statement summary
Income statement summary EURm Q3/05 Q2/05 Chg % Net interest income 920 913 1 Net fee and commission income 469 484 -3 Net gains/losses on items at fair value 139 214 -35 Equity method 11 22 -50 Other income 62 61 2 Total operating income 1,601 1,694 -5 Staff costs -520 -515 1 Other expenses -345 -3