Nordea Bank Abp · OMXHEX:NDA_FI
Nordea Bank Abp — FY2005 Earnings Presentation
21 slides from Nordea Bank Abp's earnings presentation, Feb 22, 2006
Slide 1: Year-end Report 2005 Press conference
Year-end Report 2005 Press conference 22 February 2006 Lars G Nordström President and Group CEO
Slide 2: Record result in 2005 - supported by strong development also in the fourth quarter
Record result in 2005 - supported by strong development also in the fourth quarter z Operating profit increased by 25% on a comparable basis to EUR 3,048m* z Record result in all business areas z Total income increased by 7% to EUR 6,573m z Total expenses unchanged at EUR 3,668m z Cost/income ratio
Slide 3: Growth of income – based on strong volume growth
Growth of income – based on strong volume growth YoY QoQ z Lending, total 17% 4% – Mortgage lending 15% 3% – Consumer lending* 15% 3% – SME lending 15% 3% – CIB lending 20% 4% z Deposits, total 10% 7% – Household deposits 7% 0% – SME deposits 10% 6% – CIB deposits 5% 19% 3 *Retail consumer lending (
Slide 4: Gap between income and cost development
Gap between income and cost development Percentage points 10 z Increased efficiency when 9 delivering top line growth 8 z Capture profitable revenue 7 opportunities 6 z Cost reductions were the main 5 driver for bottom line growth 2003- 4 2004 3 z Top line increasingly contributing 2 z Maintaining a
Slide 5: Cost/income ratio
Cost/income ratio % 70 z Strict cost management and top line focus 60 64 62 60 z Flat costs while business volumes 56 continue to grow 50 – productivity gains 40 – structural cost savings 30 z Income up 7% in 2005 20 10 z Target: Continuous improvement 0 2002 2003 2004 2005 5
Slide 6: Growth strategy
Growth strategy z Organic growth strategy to increase share of wallet among existing clients in Nordic home markets – relaunched customer programmes – product development – new resources, mainly in Sweden – transparent market pricing z Organic growth main route also in the Baltic’s, Poland and Russi
Slide 7: Initiatives to increase profitable growth
Initiatives to increase profitable growth z Increased focus on savings, advisory services and product development z Customer programmes in all markets with transparent price and benefit structure z Hiring of saving and Life specialists z Nordea will over a two-year period extend its branch network a
Slide 8: Key growth areas
Key growth areas z Accelerate market position within consumer credits – including cards z Enhance the already strong position within long-term savings z Leverage Nordea’s leading position in capital markets z SME banking provides opportunity z Continue growth in mortgages z Further position Nordea s
Slide 9: Increased focus on advisory services – higher share of income being non-interest income
Increased focus on advisory services – higher share of income being non-interest income EURbn z Increasing proportion on non- 7000 6,127 6,573 interest income 6000 5,670 5,639 z In line with strategy 5000 44% 43% 39% 40% 4000 z Individual client focused advice and product offering increasingly 3000
Slide 10: Increased sales performance – substantial potential for further profitable growth
Increased sales performance – substantial potential for further profitable growth Retail Retail personal Customers Volumes 1) Customers Volumes 2) corporate customers Million EURbn 1,000 EURbn customers Senior La Private banking re relationship rg Co Personal banker e managers 1.3 145 17 62 te dia R
Slide 11: Customer programmes - increasing business rewards both customers & Nordea
Customer programmes - increasing business rewards both customers & Nordea Strong growth in core segment z Key elements in the programmes offered End 2004 to End 2005 to the customers: 16.4% – more favourable prices the more business client does - and for the core customers a named 9.0% personal bank
Slide 12: Strong franchise within capital markets activities
Strong franchise within capital markets activities Operating profit within Markets division EURm 180 z Leading positions within debt capital markets, structured 160 169 157 158 162 products, derivatives, trading in 140 153 F/X and fixed income 120 z Entirely client driven business 100 z Clients amon
Slide 13: Further leverage the leading position in capital markets and strong corporate relationships
Further leverage the leading position in capital markets and strong corporate relationships z Increase penetration (share of wallet) and stimulate demand among SME’s for Markets related products – positive signs in 2005 z Leverage strong relationship with large corporates z Offering of Corporate Fin
Slide 14: Increased profit from the Baltics, Poland and Russia
Increased profit from the Baltics, Poland and Russia z 37% increase in lending volumes 2005 z Low risk strategy z Bolt-on acquisitions z Acquisition of Sampo PTE in Poland, incl. from 1 Jan 2006 Operating profit, EURm 2005 2004 Chg Poland and Baltic countries 32 20 +60% Russia, IMB 22 14 +57% Total
Slide 15: Strict cost management remains
Strict cost management remains z Unchanged costs in 2005 – down when excluding Life & operational leasing z Since 2002 total costs in nominal terms have decreased by 6% and in real terms around 15%… z …despite increases in business volumes z Continuous improvement being the main driver to the increa
Slide 16: Major structural cost initiatives
Major structural cost initiatives • Nordea started lean bank initiative 2005 Lean Banking • Lean initiative is a bottom-up process starting with branches and sales processes • Includes support functions and processes such as product development • Continue the external spend reduction initiative in p
Slide 17: Outlook
Outlook z Economic outlook 2006 indicates a continued strong GDP growth in Nordea’s home markets z Strong volume growth expected to continue also in 2006 z Lower margin level for new business implies that income growth will be lower than volume growth also in 2006 z At Capital Markets Day in Novembe
Slide 18: In summary - 2005
In summary - 2005 z Nordea’s best year so far z Strong performance and record results in all business areas z Gap between income and cost development 7 percentage points z Strong volume growth in all business areas - more than offset margin pressure z Positive loan losses for 7th consecutive quarter
Slide 19: Year-end Report 2005 Press conference
Year-end Report 2005 Press conference 22 February 2006 Lars G Nordström President and Group CEO
Slide 20: Income statement summary
Income statement summary Jan-Dec Jan-Dec Chg % EURm 2005 2004 Net interest income 3,663 3,495 5 Net fee and commission income 1,935 1,794 8 Net gains/losses on items at fair value 615 535 15 Equity method 67 55 22 Other income 293 248 18 Total operating income 6,573 6,127 7 Staff costs -2,082 -2,021
Slide 21: Income statement summary
Income statement summary EURm Q4/05 Q3/05 Chg % Net interest income 933 920 1 Net fee and commission income 529 469 13 Net gains/losses on items at fair value 147 139 6 Equity method 21 11 91 Other income 66 62 6 Total operating income 1,696 1,601 6 Staff costs -532 -520 2 Other expenses -393 -345 1