Nordea Bank Abp · OMXHEX:NDA_FI
Nordea Bank Abp — Q1 2012 Earnings Presentation
39 slides from Nordea Bank Abp's earnings presentation, Mar 31, 2012
Slide 1: First Quarter Report 2012 International telephone conference
First 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 business momentum continues • High earnings power… • Highest ever Q1 income and profit • Revenue growth of 1% • Close to 22,000 new relationship customers • Stable costs • RoE of 11.7% • Strengthened Core Tier 1 ratio to 11.6% • … and further progress in change agenda • Buildin
Slide 4: Financial highlights; Building the future bank business model
• Financial highlights • Building the future bank business model
Slide 5: Improved relationships the key revenue driver
Improved relationships the key revenue driver Total operating income and relationship customers 4,0 • Total income up 35% since 2007 2 500 3,5 • Relationship customers up 42% 2 000 3,0 since 2007… 2,5 1 500 2,0 • …and reinforced position as 1 000 1,5 market leader in corporate 1,0 merchant banking 5
Slide 6: Financial result – Q1/12
Financial result – Q1/12 EURm Q1/12 Q4/11 Change % Q1/11 Change % Net interest income 1,420 1,427 -1 1,324 7 Net fee and commission income 596 588 1 602 -1 Net fair value result 469 506 -7 544 -14 Other income 46 37 24 40 15 Total income 2,531 2,558 -1 2,510 1 Staff costs -771 -714 8 -768 0 Total ex
Slide 7: Stable Net Interest Income
Stable Net Interest Income Total Net Interest Income, EURm 1 427 1 420 • Net Interest Margin largely 1 365 1 379 1 310 1 324 1 326 unchanged 1 235 1 249 • Low demand for lending • Slightly higher funding costs • One interest day less Q1/10 Q2/10 Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 7•
Slide 8: Change in net interest income
Change in net interest income Change, EURm Q-o-Q Y-o-Y Volume-driven NII 9 60 Lending 6 50 Deposits 3 10 Spread-driven NII 9 109 Lending 78 123 Deposits -69 -14 Spread costs -14 -37 GCC, including Treasury 7 21 Other -18 -57 Total -7 96 8•
Slide 9: Net Interest Margin largely unchanged at 107bps
Net Interest Margin largely unchanged at 107bps Net interest margins (excl. liquidity buffer and repo rates) 1,20% • Higher lending margins 1,05% • Lower deposit margins • Lower interest rates • Fierce competition on deposits 0,90% 0,75% 0,60% Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 9•
Slide 10: Stable lending volumes
Stable lending volumes Total lending, EURbn 341 • Average lending volumes are up 332 337 322 322 325 approx. 0.5% in fixed currencies 314 303 293 • Low demand from both households and corporates • Lending volumes are up 5% YTD Q1/10 Q2/10 Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 10 •
Slide 11: Net commission income maintained at a high level
Net commission income maintained at a high level Net fee and commission income, EURm 618 602 623 • Net fee and commission income 582 588 596 largely unchanged 538 525 475 • Strong trend in savings commissions, following good performance • Inflow of EUR 1.2bn • Value appreciation of EUR 8.6bn • Lower
Slide 12: Net fair value at continued good levels
Net fair value at continued good levels Net result from items at fair value, EURm • Continued good customer demand 311 • Good trading environment 255 215 102 • Reported revenues lower in Life, 254 254 but underlying are stable 243 251 233 -132 Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Capital Markets income in
Slide 13: Expenses under strict control
Expenses under strict control Total expenses, EURm 171 • Flat cost development 1 265 1 275 1 266 1 276 1 242 • FX effect on costs is approx. 1% Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 One-off restructuring charge 13 •
Slide 14: Strong capital generation
Strong capital generation Core Tier 1 capital, EURm • Generated capital of EUR 1.7bn in 20 677 21 080 one year, or approx. 9% 19 103 17 766 • In addition distributed EUR 1bn to shareholders 14 313 11 689 12 821 • Strong capital generation gives good flexibility 2006 2007 2008 2009 2010 2011 Q1/12 Di
Slide 15: Reduced RWA by 2%
Reduced RWA by 2% Risk-weighted assets (RWA), EURbn Basel II excluding transition rules • IRB approval in International 185 branches reduces RWA by EUR 182 182 3.1bn • Stable credit quality • Lower derivative exposures Q1/11 Q4/11 Q1/12 15 •
Slide 16: We have strengthened our balance sheet
We have strengthened our balance sheet Core Tier 1 capital ratio, % (excl. Hybrids) Basel II excluding transition rules 11,6 • Improved ratio by 40bps since 11,2 Q4/11 due to; 11,0 • Strong profit generation • Controlled RWA development Q3/11 Q4/11 Q1/12 16 •
Slide 17: Strong access to funding
Strong access to funding Long-term funding, EURbn • Market based funding strategy • No participation in LTRO 33 32 • One of the lowest funding costs 27 among European banks • EUR 11.5bn have been issued of long-term funding in Q1/12 • Redemptions of EUR1.9bn in Q1/12 12 • Strong access to all fundin
Slide 18: Liquidity premia: purpose, principles, status
Liquidity premia: purpose, principles, status Purpose • Align internal pricing with true cost / value of funding and liquidity • Ensure pricing to customer reflects the true economics of the contract • Enhance understanding of product and customer profitability Principles • Calculated at contract le
Slide 19: High quality liquidity buffer
High quality liquidity buffer Liquidity buffer, EURbn 62 64 • Liquidity premia project 61 60 56 56 58 implemented 49 49 • Changed composition of liquidity buffer • Liquidity buffer is LCR compliant in size but maybe not in composition Q1/10 Q2/10 Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 19 •
Slide 20: Return on Equity is vital in ensuring stability and room for manoeuvre
Return on Equity is vital in ensuring stability and room for manoeuvre RoE, adjusted for restructuring costs 2011, percent Avg. = 19.1 Avg. = 15.3 21,5 Avg. = 11.3 Avg. = 11.5 19,1 Avg. = 11.1 18,0 18,1 15,8 16,2 15,0 14,4 13,9 12,0 11,7 12,2 12,8 12,0 12,3 11,7 11,3 11,5 9,5 8,1 8,5 Q1 Q2 Q3 Q4 Q1
Slide 21: Stable credit quality
Stable credit quality Total net loan losses, EURm 261 263 • Loan losses at 26bps – close to 245 242 the expected level over a business 218 cycle 207 • Includes a provision of EUR 8m for 166 the Danish guarantee system 118 112 • Denmark and Shipping are areas of concern but only few new problem loans
Slide 22: Impaired loans
Impaired loans Impaired loans, EURm • Impaired loans increased to 2 195 147bps (131bps) of loans 2 199 2 179 2 946 3 473 • Increase related to a few shipping 2 649 customers and to Danish household, agriculture and SME Q1/11 Q4/11 Q1 /12 customers Performing Non-performing • Performing impaired loan
Slide 23: Net loan losses quarterly by country – excluding Shipping
Net loan losses quarterly by country – excluding Shipping 250 200 150 EUR 118m 100 50 EUR 12m EUR 11m 0 EUR 11m -50 Q1/09 Q1/10 Q1/11 Q1/12 Denmark Finland Norway Sweden 23 •
Slide 24: Net impaired loans by country – excluding Shipping
Net impaired loans by country – excluding Shipping 1 500 EUR 1,460m 1 200 900 1) 2) 600 EUR 564m 300 EUR 299m 3) EUR 197m 0 Q1/09 Q1/10 Q1/11 Q1/12 New definition of impaired loans, restated figures Q1 2011: 1) Finland decrease EUR 479m. 2) Denmark increase EUR 162m. 3) Sweden increase EUR 82m. Norw
Slide 25: Denmark – excluding Shipping
Denmark – excluding Shipping Net loan losses, EURm 250 200 150 100 EUR 60m 50 EUR 58m 0 Q1/09 Q1/10 Q1/11 Q1/12 DK Corporate, net DK Household 25 •
Slide 26: Shipping loan losses and impaired loans
Shipping loan losses and impaired loans Net loan losses, EURm Net impaired loans, EURm 75 600 EUR 549m 500 60 EUR 60m 400 45 300 30 200 15 100 0 0 Q1/09 Q1/10 Q1/11 Q1/12 Q1/09 Q1/10 Q1/11 Q1/12 26 •
Slide 27: Financial highlights; Building the future bank business model
• Financial highlights • Building the future bank business model
Slide 28: New Normal – the way to build the future bank business model
New Normal – the way to build the future bank business model • Ensure continued great customer experiences • Product innovation and enhancements • Further focus on advisory bank concept • Mitigate impact on customers from regulations • Ensure sufficient RoE to secure access to capital and attractive
Slide 29: Further refined relationship strategy in Q1/12
Further refined relationship strategy in Q1/12 • Delivering great customer experiences • Future distribution strategy with more advisory branches and more mobile and internet solutions • Close to 22,000 new Gold and Private Banking customers • Carried out 455,000 household meetings • Issued 76,000 n
Slide 30: The clear number one in DCM and M&A
The clear number one in DCM and M&A #1 Advisor, M&A Nordic region Q1/12 #1 Bookrunner Syndicated Loans Nordic, Q1/12 Deal value Transactions Deal value Transactions Nordea Corporate Finance 2 111 6 Nordea Markets 673 6 Barclays 1 800 1 SEB 563 5 Deutsche Bank AG 1 800 1 Swedbank First Securities 342
Slide 31: Customer behaviour supports our distribution journey
Customer behaviour supports our distribution journey Number of manual transactions, million 19,4 19 16,7 16,6 15,1 14,6 12,8 H1 2009 H2 2009 H1 2010 H2 2010 * H1 2011 H2 2011 Q1/12 Number of netbank log-ins, million 174 180 183 166 144 112 112 H1 2009 H2 2009 H1 2010 H2 2010 * H1 2011 H2 2011 Q1/12
Slide 32: Transforming the branch network
Transforming the branch network Nordic development, manual cash location and share of advisors in branch network staff Nordic branch Nordic branch 800 80% network, end 2009 network 2012 Focused on 78 branches 558 Corporate and 600 70% relationship focused on 7% Advisory branches 49% customers Corpor
Slide 33: Cost efficiency according to plan
Cost efficiency according to plan Total Group full-time equivalents • Flat costs for a prolonged period of 33 844 time • FTE’s are down by approx.1,600 33 068 (4.6%) since mid-2011 32 557 • EUR 120m in cost savings • 6% staff reduction by end 2012 • Shift in Poland to full relationship banking appro
Slide 34: Execution of cost efficiency
Execution of cost efficiency • Streamlining of distribution network – lowering cost to serve • Optimising value chain processes • Reducing FTE’s and cost in the product processes • Optimise supply unit costs – e.g. Premises • Business process improvements – Nordea Operations Centre • Strengthening I
Slide 35: Focus on improved efficiency
Focus on improved efficiency Total income / FTE (EURt) Business volumes / FTE (EURm) 67,5 70,9 69,2 62,7 62,3 64,4 65,6 64,0 58,3 21,6 22,5 19,6 20,2 20,6 20,4 20,6 18,6 18,9 +2% Q1/10 Q2/10 Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q1/10 Q2/10 Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 # customers p
Slide 36: Capital efficiency strengthens our Core Tier 1
Capital efficiency strengthens our Core Tier 1 RWA development, EURbn 0,1 0,77 • International branches move from -0,6 standardised to foundation IRB -3,2 • Positive rating migrations in household and corporates 185,2 • Negative migration in institutional counterparties 182,3 • Derivative book lower
Slide 37: Execution of capital efficiency
Execution of capital efficiency • Roll-outs in progress • Advanced IRB in corporate portfolio • Foundation IRB for Baltics • IMM approval for counterparty credit risk • Initiatives • Improved collateral model for Nordea Bank Luxembourg • Increased use of central counterparty clearing • Focus on capi
Slide 38: Key messages
Key messages • Strong business momentum continues • High earnings power… • Highest ever Q1 income and profit • Revenue growth of 1% • Close to 22,000 new relationship customers • Stable costs • RoE of 11.7% • Strengthened Core Tier 1 ratio to 11.6% • … and further progress in change agenda • Buildin
Slide 39: First Quarter Report 2012 International telephone conference
First Quarter Report 2012 International telephone conference