Nordea Bank Abp · OMXHEX:NDA_FI
Nordea Bank Abp — Q2 2012 Earnings Presentation
38 slides from Nordea Bank Abp's earnings presentation, July 2012
Slide 1: Second Quarter Report 2012
Second Quarter Report 2012 International telephone conference
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 • Strong income and solid cost control • Revenues are up 6% YTD • Costs are up 1%, unchanged in local currencies • Solid credit quality • Improved RoE to 12.1% (12.5% in Q2/12) • Cost/income ratio at 50% • Core Tier 1 ratio improved 20 bps to 11.8% • Progress in building the future bank
Slide 4: Financial highlights; Building the future bank business model
• Financial highlights • Building the future bank business model
Slide 5: Financial result – Q2/12
Financial result – Q2/12 EURm Q2/12 Q1/12 Change % H1/12 H1/11 Change % Net interest income 1,462 1,420 3 2,882 2,650 9 Net fee and commission income 611 596 3 1,207 1,225 -1 Net fair value result 494 469 5 963 900 7 Other income 39 46 -15 85 77 10 Total income 2,606 2,531 3 5,137 4,852 6 Staff cost
Slide 6: Increased net interest income
Increased net interest income Total net interest income, EURm 1 462 1 427 1 420 1 365 1 379 1 310 1 324 1 326 1 249 Q2/10 Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 6•
Slide 7: Change in net interest income
Change in net interest income Change, EURm Q-o-Q Y-o-Y Volume-driven NII 11 128 Lending 11 108 Deposits 0 20 Spread-driven NII 20 190 Lending 47 310 Deposits -27 -120 Spread costs -13 -81 GCC, including Treasury -1 51 Other 25 -56 Total 42 232 7•
Slide 8: Largely unchanged net interest margin
Largely unchanged net interest margin Net interest margin (excl. liquidity buffer and repo rates) 1,50% • Increased lending margins 1,20% 109bps • Lower deposit margins 0,90% 0,60% 0,30% 0,00% Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 8•
Slide 9: Increased lending volumes
Increased lending volumes Total lending, EURbn 332 337 341 350 • Up 1.5% in local currencies 322 322 325 314 303 • Increase by 5% since H1/11 • Improved demand from Nordic corporates • +6% since H1/11 • Household lending is up 1% • +5% since H1/11 Q2/10 Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/1
Slide 10: Increased deposit volumes
Increased deposit volumes Total deposits, EURbn 201 • +2% q-o-q in local currencies 194 190 181 185 • Up by 6% y-o-y in local 176 173 currencies 166 161 • Growth of 14% y-o-y in Corporate & Institutional Banking • Flight to quality Q2/10 Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 10 •
Slide 11: Net commission income is up despite market headwinds
Net commission income is up despite market headwinds Total net fee and commission income, EURm 623 618 602 582 588 596 611 • Increased lending, cards and 538 525 custody fees • Stable asset management fees • Assets under Management at record level of EUR 199.8bn • Inflow of EUR 2.1bn in asset manage
Slide 12: Net fair value at continued good levels
Net fair value at continued good levels Total net result from items at fair value, EURm 544 504 506 • Continued good demand from 494 469 customers 446 356 339 111 Q2/10 Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 12 •
Slide 13: Expenses under solid control
Expenses under solid control Total expenses, EURm 171 • Largely unchanged costs YTD in 1 275 1 266 1 276 1 290 1 242 local currencies • Adjusted also for variable salaries costs are down 0.4% Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 One-off restructuring charge 13 •
Slide 14: Strong access to funding
Strong access to funding Long-term funding, EURbn 33 32 • Total issuance of EUR 17bn in long-term funding 27 • Exceeds full year redemptions • First issuance of Samurai bonds 17 – further broadening of the funding platform • Maintained AA rating 2009 2010 2011 H1/12 14 •
Slide 15: Nordea Group is LCR-compliant
Nordea Group is LCR-compliant Liquidity buffer, EURbn 64 68 • Nordea is LCR compliant on a 62 61 58 60 Group level 56 56 49 • LCR of 144% • LCR compliant in all currencies • Nordea has increased cash and balances with central banks by EUR 13bn to be well prepared for turbulent markets Q2/10 Q3/10 Q4
Slide 16: Customer driven business model
Customer driven business model 96% customer-related, only 4% from Risk Management Total income per area, % Capital Markets risk management Treasury Treasury result of risk in Treasury Treasury customer transaction Wealth Management Wealth Management Wealth Management Wealth Management Wholesale Whol
Slide 17: Unchanged loan losses
Unchanged loan losses Total net loan losses, EURm 263 245 242 • Continued low loan losses in 218 217 Norway, Sweden and Finland 207 • Elevated levels in Denmark and 166 Shipping 118 112 Q2/10 Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 17 •
Slide 18: Net loan losses quarterly by country – excluding Shipping
Net loan losses quarterly by country – excluding Shipping 250 • Still certain overleveraged 200 Danish household, 150 agriculture and SME customers behind the 100 EUR 98m provisions. 50 EUR 22m • A limited number of EUR 22m 0 EUR -1m individual provisions in the other countries. -50 Q2/09 Q2/10 Q2/1
Slide 19: Net loan losses Denmark – excluding Shipping
Net loan losses Denmark – excluding Shipping 250 DK Corporate, net DK Household 200 150 100 EUR 55m 50 EUR 43m 0 Q2/09 Q2/10 Q2/11 Q2/12 19 •
Slide 20: Shipping loan losses and impaired loans
Shipping loan losses and impaired loans Shipping Net loan losses, EURm Shipping Net impaired loans, EURm 75 700 EUR 630m EUR 64m 600 60 500 45 400 300 30 200 15 100 0 0 Q2/09 Q2/10 Q2/11 Q2/12 Q2/09 Q2/10 Q2/11 Q2/12 • Further deteriorated collateral values • A limited number of new exposures in tan
Slide 21: Impaired loans
Impaired loans Impaired loans, EURm Total allowances, EURm Collective Collective 453 Collective 562 674 6 375 5 668 Individual Individual 4 682 Individual 2 240 2 043 1 782 Q2/11 Q1 /12 Q2/12 Q2/11 Q1/12 Q2/12 • Impaired loans increased to 164bps • Total allowances in relation to (147bps) of loans i
Slide 22: Net impaired loans by country – excluding Shipping
Net impaired loans by country – excluding Shipping 2 000 EUR 1,839m • Increase in impaired loans is to a large extent explained 1 500 by clarified and stricter rules in Denmark introduced by 1 000 Danish FSA. EUR 622m 500 • Stable development in the EUR 319m other countries. EUR 212m 0 Q2/09 Q2/10 Q
Slide 23: High and stable Return on Equity…
High and stable Return on Equity… RoE development*, % 12,8 • Improved RoE due to increased 12,3 12,5 12,2 12,0 11,5 11,7 income and stable costs 9,5 • In line with our ambition to stay 8,5 on par with the strongest banks in Europe Q2/10 Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 * RoE adjusted
Slide 24: …gives strong capital generation
…gives strong capital generation Core Tier 1 capital, EURm 21 298 • Continued strong profit 20 677 19 103 generation 17 766 14 313 12 821 11 689 2006 2007 2008 2009 2010 2011 H1/12 Dividend payout Anticipated dividend 24 •
Slide 25: Largely unchanged RWA
Largely unchanged RWA Risk-weighted assets (RWA), EURbn* • RWA decreases due to: 185 • Improved credit quality 183 182 182 181 • Decrease in market risk 180 • FX increases RWA Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 * Basel II excluding transition rules 25 •
Slide 26: Improved ratio by 1.8% in two years
Improved ratio by 1.8% in two years Core Tier 1 capital ratio, % (excl. Hybrids)* 11,6 11,8 • Increase despite continued 11,2 10,7 11,0 11,0 business growth 10,4 10,3 10,0 • Lending growth of 16% • RWA reduction of 2% • Focus on capital efficiency gives result Q2/10 Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q4/
Slide 27: CRD IV and IAS19 impact offset by RWA efficiency and roll-outs
CRD IV and IAS 19 impact offset by RWA efficiency and roll-outs Core Tier 1 ratio impact • CRD IV impact on RWA by EUR 1.0% 14bn 1.1% • CVA 0.2% • Asset value correlation 11.8% 11.7% • IAS19 calculated at end 2011 • Roll-outs and efficiency effects RWA by EUR 19bn Q2/12 CRD IV IAS19 Roll-outs & Q2/1
Slide 28: Financial highlights; Building the future bank business model
• Financial highlights • Building the future bank business model
Slide 29: Nordea – a leading European bank
Nordea – a leading European bank Nordea’s market cap vs European peer group, EURbn 2007 2008 2009 2010 2011 July 11th 2012 1. Santander 92.5 1. Santander 54,0 1. Santander 95,2 1. Santander 66,0 1. Santander 50,3 1. Santander 46,9 2. Unicredit 75,9 2. BBVA 32,4 2. BNP Paribas 66,2 2. BNP Paribas 57,
Slide 30: Nordea's focused and prudent business model
Nordea’s focused and prudent business model Resources efficiently used on Relationship banking is key core business Well diversified and balanced Fully integrated model across model countries and business units The Nordics and its structure as Very risk focused the home market 30 •
Slide 31: Highlights in the past quarter
Highlights in the past quarter Household customers Corporate customers • Provided a total of EUR 157bn of lending (up 1%) • Provided a total of EUR 193bn of lending (up 4%) • Close to 23,000 new, externally acquired, Gold, • Leading banking relationships with 60% of Nordic Premium, and Private Banki
Slide 32: The New Normal plan continues to deliver in terms of efficiency
The New Normal plan continues to deliver in terms of efficiency Funding / liquidity Capital efficiency Cost efficiency efficiency RWA development, EUR billion Liquidity premia – status update Group FTE development Purpose 34 169 33 844 3,9 • Align internal pricing with true cost/value of 33 068 32 5
Slide 33: Continued focus on improved efficiency
Continued focus on improved efficiency Total income / FTE (EURt) Business volumes / FTE (EURm) 75,0 22,5 23,5 67,5 70,9 69,2 21,6 62,7 62,3 64,4 65,6 64,0 19,6 20,2 20,6 20,4 20,6 18,9 Q2/10 Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q2/10 Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Number
Slide 34: Retail Banking: Execution of New Normal
Retail Banking: Execution of New Normal Retail Banking – Key activities Retail Banking – Key results • Execution of the New Normal plan with EURm H1/12 H1/11 Growth increasing focus on the most profitable customer relationships and segments Total operating income 2,746 2,565 7% Total operating expen
Slide 35: Wholesale Banking: Execution of New Normal
Wholesale Banking: Execution of New Normal Wholesale Banking – Key activities Wholesale Banking – Key results • Increased intensity and relevance in all EURm H1/12 H1/11 Growth interactions with customers Total operating income 1,455 1,379 6% • Focus on core customer relationships, Total operating e
Slide 36: Wealth Management: Execution of New Normal
Wealth Management: Execution of New Normal Wealth Management – Key activities Wealth Management – Key results • On-going business model efficiency EURm H1/12 H1/11 Growth initiatives in Private Banking Total operating income 697 661 5% • Migration of lower net value customers to Retail • Continued f
Slide 37: Key messages
Key messages • Strong income and solid cost control • Revenues are up 6% YTD • Costs are up 1%, unchanged in local currencies • Solid credit quality • Improved RoE to 12.1% (12.5% in Q2/12) • Cost/income ratio at 50% • Core Tier 1 ratio improved 20 bps to 11.8% • Progress in building the future bank
Slide 38: Second Quarter Report 2012
Second Quarter Report 2012 International telephone conference