Slide 1: Nordea full year result 2006 Press Conference
Nordea full year result 2006 Press Conference Lars G Nordström President and Group CEO
Slide 2: Record results following reinforced organic growth strategy – RoE at all time high 22.9%
Record results following reinforced organic growth strategy – RoE at all time high 22.9% Operating profit up 25% to EUR 3,820m (EUR 3,048m) Net profit up 39% to EUR 3,153m (EUR 2,269m) Earnings per share EUR 1.21 (EUR 0.86) up 41% Total dividend per share EUR 0.49, up 40% corresponding to to
Slide 3: Strong momentum in all business areas
Strong momentum in all business areas Total lending up 14% Mortgage lending up 15% SME lending up 12% Consumer lending up 12% - non collateralised up 17% Number of credit cards increased by 25% Strong growth in Private Banking Increased cross-selling of Markets’ products to SMEs Stro
Slide 4: Continued growth in operating income
Continued growth in operating income YoY EURm Up 12% 7,500 7,377 Up 9% excl. sale of IMB shares 7,000 6,573 Steady increase in net interest income 6,500 6,127 Volume growth more than compensating for lending 6,000 margin pressure. 5,500 Improved deposit margins 5,000 4,500 Higher commiss
Slide 5: Higher share of income being non-interest income
Higher share of income being non-interest income EURm 7,000 Increased proportion of non- interest income 48% 6,000 Excl. IMB sale 46% 48% 5,000 43% 44% Individual client focused advice 4,000 and product offering increasingly 3,000 important 57% 56% 52% 2,000 A more capital efficient way to f
Slide 6: Revenue growth in Nordea
Revenue growth in Nordea EURm +175 7,377 +199 +168 +804 +224 6,573 + 38 Income Volumes, Savings: AM, Markets Gain from Other Income 2005 margins Life and savings sale of 2006 lending accounts IMB shares 6
Slide 7: Robust volume growth continues
Robust volume growth continues YoY Q4oQ3 Lending, total 14% 6% – Mortgage lending 15% 5% – Consumer lending* 12% 2% – of which non collateralised lending 17% 4% – SME lending 12% 7% – CIB lending excl. Markets 15% 16% Deposits, total 9% 6% – Household deposits 8% 1% – SME deposits 12% 8% – CIB depos
Slide 8: Reduced cost base since 2002 – despite strong increase in business volumes
Reduced cost base since 2002* – despite strong increase in business volumes EURm EURbn 4000 3,903 3,835 3,822 Cost unchanged despite 3,675 225.0 3,655 214 lending growth of 50% 3500 and accumulated 3000 188 200.0 inflation of 13% in the 2500 period 175.0 161 2000 European average is 146 146 1500
Slide 9: Cost/income ratio continues downwards
Cost/income ratio continues downwards % Continued down to 52% in 2006 70 64 Income up 12% 63 60 Costs up 4% 60 56 Excl. gain from sale of IMB shares C/I 53% 52 50 Strong growth in revenues combined with continuous focus on 40 firm cost management 30 Profitable organic growth in focus 20
Slide 10: Gap between income and cost development
Gap between income and cost development Percentage points Reported gap of 8.0 percentage 10 points, excl. full impact from sale 9 8.0 of IMB 5.4 percentage points 8 Revenues up 12.2% 6.9 7 6.6 Expenses up 4.2% 6 5.4 Three years track record of 5 managing attractive gap between 4 revenue and
Slide 11: Operating profit
Operating profit YoY EURm Up 25% 4,000 3,820 Up 19% excl. gain from sale of IMB 3,500 shares 3,048 Increased focus on profitable organic 3,000 2,745 growth and cross-selling 2,500 Operating profit in Business Areas up 17% excl. gain from sale of IMB 2,000 shares 1,500 Strong performance in
Slide 12: Continuous increase in earnings per share - rolling 12 months
Continuous increase in earnings per share - rolling 12 months EUR 1.2 1.1 1.0 0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0.0 Q1/03 Q2/03 Q3/03 Q4/03 Q1/04 Q2/04 Q3/04 Q4/04 Q1/05 Q2/05 Q3/05 Q4/05 Q1/06 Q2/06 Q3/06 Q4/06 Reported Excl. gain from sale of IMB 12
Slide 13: Dividend up 40%
Dividend up 40% EURm EUR 1400 1.0 1,271 0.9 1200 0.8 1000 0.7 908 766 0.6 800 0.49 0.5 600 0.35 0.4 0.28 400 0.3 0.2 200 0.1 0 0.0 2004 2005 2006 Total amount EURm Dividend per share EUR 13
Slide 14: Key growth areas – organic growth strategy continues to pay off
Key growth areas – organic growth strategy continues to pay off Continue to leverage on strong position within long-term savings, eg Nordic Private Banking and Life insurance Increase in AuM - total net inflow 2006 EUR 4.1bn Recruitment of personal bank advisors, private bank advisors and fina
Slide 15: Gold and Private Banking customers are the engine for profitable growth
Gold and Private Banking customers are the engine for profitable growth Share of Retail Household income in 2006 64% Approx. EUR 3.0bn of Retail Banking’s income is generated from household customers 16% 9% 11% Gold customers generate two/thirds of the income Private Banking Gold Silver Bronze I
Slide 16: Strong success to date
Strong success to date Strong growth in business with Strong growth in Gold segment Gold customers generated by Dec 2005 to Dec 2006 14.8% Increase in number of customers 8.6% Increase in volume per customer 5.7% 161 Growth in number of customers 72 140 66 is a combined effect of 2.1 2.2 E
Slide 17: Strong revenue growth in all Retail corporate segments
Strong revenue growth in all Retail corporate segments Share of Retail Corporate income in 2006 55% Approx. EUR 2.0bn of Retail Banking income is derived from corporate 27% customers 18% The customers in segment Large account for half of the revenue Small Medium Large In total revenues from co
Slide 18: Continue to leverage on strong position within long-term savings – Private Banking
Continue to leverage on strong position within long- term savings – Private Banking EURbn 50 45 9 Strong asset growth in Nordic Private 9 40 9 9 9 Banking 8 35 8 Net inflow in Q4 13% annualised 8 30 Result of roll-out of new common advisory 25 concepts, particularly in Norway and 20 39 42 Swed
Slide 19: Continue to leverage on strong position within long term savings – Life premiums
Continue to leverage on strong position within long term savings – stepwise increase of premiums in Life EURm Net written premiums up 22% 1,200 Unit linked share of premiums 42% 1,100 511 1,000 474 Increased penetration in the customer 900 390 404 base – successful cooperation between 800 198
Slide 20: Accelerated market position within consumer lending and cards
Accelerated market position within consumer lending and cards YoY Consumer lending up 12% EURbn Retail consumer lending Non collateralised up 17% 16 15.4 15.6 Approx. 500,000 new cards issued 14.9 14 13.2 13.5 13.8 13.9 14.2 In total 5.6 million cards issued 12 Of which approx. 11% credit
Slide 21: Increased cross-selling of Markets related products to SMEs
Increased cross-selling of Markets related products to SMEs Markets total revenue from Retail customers Successful penetration EURm 400 Leveraging Nordea’s customer base 373 SME segment still under penetrated 350 Focus on customer solutions rather 300 than product push 250 270 Strong conce
Slide 22: Increased investments to capture growth opportunities in fast growing markets
Increased investments to capture growth opportunities in fast growing markets Accelerated growth plan in Nordic markets, in particular Sweden In line with Nordeas’ profitable organic growth strategy Recruitment of personal bank advisors Investments in Private Banking Private bank advisors
Slide 23: Outlook
Outlook Based on solid macroeconomic forecasts for the Nordic area, double digit growth in business volumes is expected Despite the current pressure on lending margins Nordea expects the strong revenue growth to continue in 2007 Focus on risk-adjusted pricing combined with expected higher mark
Slide 24: Summary
Summary Record result following reinforced organic growth strategy Net profit up 39% Gap between revenue and cost growth 5.4 percentage points when excluding the full impact of IMB sale Reported Return on equity 22.9% Excl. gain from sale of IMB 21.5% Record dividend – EUR 0.49 per share
Slide 25: Income statement summary
Income statement summary EURm 2006 2005 Chg % RFF Net interest income 3,869 3,663 6 1 Net fee and commission income 2,074 1,935 7 4 Net gains/losses on items at fair value 1,036 765 35 82 Equity method 80 67 19 3 Other income 318 143 122 -3 Total operating income 7,377 6,573 12 87 Staff costs -2,251
Slide 26: Income statement summary
Income statement summary EURm Q4/06 Q3/06 Chg % Q4/05 Net interest income 1,006 979 3 933 Net fee and commission income 549 497 10 529 Net gains/losses on items at fair value 310 224 38 184 Equity method 8 17 -53 21 Other income 26 217 -88 29 Total operating income 1,899 1,934 -2 1,696 Staff costs -
Slide 27: Disclaimer
Disclaimer Certain statements made in this presentation are forward looking statements. Such statements are based on current expectations and are subject to a number of risks and uncertainties that could cause actual results and performance to differ materially from any expected future results or