Nordea Bank Abp · OMXHEX:NDA_FI
Nordea Bank Abp — Nordea — Investor Day (March 2013)
129 slides from Nordea Bank Abp's investor day presentation, Mar 6, 2013
Slide 1: Capital Markets Day 2013
W) Capital Markets Day 2013
Slide 2: Nordea Capital Markets Day: Shaping the future relationship bank
Nordea Capital Markets Day Shaping the future relationship bank London, 6 March 2013
Slide 3: 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 4: Agenda
Agenda Registration and coffee 08.30-09.00 • Shaping the future relationship bank Christian Clausen 09.00-09.40 • Financial plan and targets Torsten Hagen Jørgensen 09.40-10.20 • Retail Banking Michael Rasmussen 10.20-10.50 Coffee break 10.50-11.10 • Wholesale Banking Casper von Koskull 11.10-11.40
Slide 5: Shaping the future relationship bank
Nordea ' Shaping the future relationship bank Christian Clausen, President and Group CEO
Slide 6: Leading platform in attractive markets
Leading platform in attractive markets The relationship bank business model has delivered 2015 plan – Shaping the future relationship bank
Slide 7: Nordea has the leading Nordic platform
Nordea has the leading Nordic platform Key facts Nordea’s geographic presence Leading financial services platform in the Nordic region ― Largest total operating income (~EUR10.2bn in 2012) ― Market share leader across the region in both retail and corporate markets ― ~31,500 employees Superior c
Slide 8: Nordic platform is macro economically sound
Nordic platform is macro economically sound… State of public finances – Europe vs. Nordics Nordic countries in AAA debt position 180 Gross Debt/GDP (%) for AAA Rated Countries Globally¹ Greece 106 160 140 88 89 83 Public debt, % of GDP (2012E) Ireland Italy 120 Portugal 68 100 Spain Belgium France 5
Slide 9: …and has some growth prospects
…and has some growth prospects Nordic real GDP development, % Nordic 3-month interest rates development, % 2.5% 0.9% 1.6% 2.3% 2,5% 2,35% 3,7% 3,5% 2,17% 2,7% 3,0% 1,94% 2,7% 2,5% 2,0% 1,91% 2,5% 1,87% 2,4% 1,57% 1,5% 1,7% 1,5% 1,20% 1,22% 1,15% 1,1% 1,0% 1,0% 0,8% 0,8% 0,80% (0.6)% (0.2)% 0,89% 0,5
Slide 10: Nordic customers are sophisticated users of the banking system
Nordic customers are sophisticated users of the banking system Banking volume per customer1 Online banking penetration Card usage 2012 EUR ‘000 2011 or latest available, % 2010, no. of transactions per card per year US 206 Norway 85 Denmark 250 Denmark 199 Finland 79 Norway 231 Norway 191 Sweden 78
Slide 11: Leading platform in attractive markets
Leading platform in attractive markets The relationship bank business model has delivered 2015 plan – Shaping the future relationship bank
Slide 12: Nordea has a unique position in the Nordics
Nordea has a unique position in the Nordics Global capabilities on par 1 Superior customer franchise 2 with international peers1 Retail Customers Corporates & Institutions No. of Market No. of Market relationships position relationships position Sweden (m) (‘000s) 4.2 #2-3 246 #1-2 Asset Capital Mar
Slide 13: Superior customer franchise: Retail customers
1 Superior customer franchise: Retail customers Gold and Private Banking customers and income Clear value proposition to relationship customers Customer’s benefits 3 000 4,0 …stability; a …holistic …one Trust bank’s bank for advice in best provider of all 3,5 ability… sunny and interest… services… 2
Slide 14: Superior customer franchise: Corporates and institutions
1 Superior customer franchise: Corporates and institutions Large corporates evaluation of quality and relationship Multi local presence 100% Nordea Only bank with a substantial lead bank footprint in all 90% markets 80% Deep and intimate local presence Important relationships 70% Peer 1 Peer 2
Slide 15: Global capabilities: The leading Nordic Capital Markets operation
2 Global capabilities: The leading Nordic Capital Markets operation Product capabilities on par with int’l peers Markets total income, EURm Very strong FICC capabilities 2 500 CAGR 15% ― Covering all major needs for Nordic customers 2 000 ― Size and scale to support efficiency 1 500 ― Leveraged in
Slide 16: Global capabilities: Largest and fastest growing Nordic Wealth Manager
2 Global capabilities: Largest and fastest growing Nordic Wealth Manager Outperforming Nordic peers on size and growth Strong net inflow progression, EURbn AuM EURbn Q4/12 11% (1)% 8% 5% 0% 1.0% 0.6% 1.1% 1.4% 1.5% 4.9% 9.1 218¹ 2,7 3,1 154 1,7 2,1 1,2 92 91 65 Nordea Peer 1 Peer 2 Peer 3 Peer 4 Q4/
Slide 17: Nordea is the most diversified Nordic bank
Nordea is the most diversified Nordic bank… Geographic exposure vs. Nordic peers¹, % Total loans to public by geography, % Largest market contribution Poland 2% Russia 1% Baltics 2% ~90% ~80% ~70% ~70% Norway 73% ~60% Finland 18% 27% 27% Denmark 24% Sweden 26% Nordea Peer 1 Peer 2 Peer 3 Peer 4 Peer
Slide 18: Lower earnings volatility and stable ROE over the cycle
…with lower earnings volatility and stable ROE over the cycle Net income volatility vs. Nordic peers1, % 147 54 61 13 24 11 Nordea Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 ROE development 2007-20122, % Stable ROE over the cycle 21,5 Not a single quarter below 19,1 18,1 8%. Every year above 11% 18,0 15
Slide 19: Sound risk profile with low loan losses over the cycle
Sound risk profile with low loan losses over the cycle… Annualised actual loan losses, bps Low over the cycle loan losses1, bps 41 20 10 0 (10) 23 (16) (20) 20 17 16 (30) (40) 6 (50) (60) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q
Slide 20: Already recognised by debt investors
…already recognised by debt investors 5-year CDS spread vs. European peers, bps Long-term funding issuance, EURbn 436 402 356 325 315 305 33 32 29 27 177 175 174 173 161 159 156 151 143 139 128 119 107 103 97 95 94 92 80 80 71 Nordea 2009 2010 2011 2012 Nordic peers European peers One of lowest CDS
Slide 21: Nordea is compliant on key regulatory requirements
Nordea is compliant on key regulatory requirements CT1 ratio above 13% LCR compliant CT1 capital policy > 13.0% 13,1 % 272% 265% 283% 12,2 % 157% 181% 144% 132% 129% 127% 11,8 % 100% Q2/12 Q3/12 Q4/12 Q2/12 Q3/12 Q4/12 Combined USD EUR Other regulatory requirements relating to banks’ business models
Slide 22: Nordea has continuously delivered on targets and improved performance
Nordea has continuously delivered on targets and improved performance 2006-2012 CAGR Key achievements (‘000s) 3,100 2,400 Focus on Increase in number of relationship relationship +4.5% p.a. customers driven by Nordea’s high quality customers franchise 2006 2012 (EURm) 10 236 7 377 Focus on incre
Slide 23: 2015 plan – Shaping the future relationship bank
Leading platform in attractive markets The relationship bank business model has delivered 2015 plan – Shaping the future relationship bank
Slide 24: Nordea will deliver an attractive total return to shareholders
Nordea will deliver an attractive total return to shareholders Nordea market commitments Strong capital generation and return of excess capital to our shareholders ROE target of 15% Attractive total at a CT1 ratio >13% shareholder return and with normalised interest rates Delivering low volatility r
Slide 25: Strong capital generation and return of excess capital to shareholders
Strong capital generation and return of excess capital to our shareholders Capital generation1, EURm Acc. dividend Acc. retained equity Core Tier 1 ratio expected to remain above 13%, with excess capital over our policy Attractive requirement to be returned to 19 696 shareholder shareholders return
Slide 26: Core Tier 1 ratio expected to remain above 13%
Core Tier 1 ratio expected to remain above 13% Core Tier 1 ratio development, % 13.1% ~1p.p. >13% ~1.5p.p. 11.2% 10.3% ~(1.5)p.p. ~(0.5)p.p. 2010 2011 2012 Basel III and Volume growth RWA Retained 2013E IAS19 impact / migration efficiency earnings and Other Basel 2.5 excl. transitional rules Basel I
Slide 27: Efficiency initiatives to keep RWAs flat
Efficiency initiatives to keep RWAs flat RWA development, EURbn ~5 185 ~20 ~10 168 ~168 ~168 ~(25) ~(10) 2011 2012 Regulation Growth Efficiency 2013E Growth Efficiency 2015E including including migration migration 27
Slide 28: Strong execution on the flat cost plan
Strong execution on the flat cost plan for nine quarters, costs to remain flat for another eight Total expenses (excl. FX & variable pay1), EURm Continued cost reductions with gross savings of ~EUR450m more than off-setting cost inflation 1 210 1 164 1 203 1 173 1 193 1 163 1 177 1 168 1 196 Underly
Slide 29: Well balanced plan to reach ambitious ROE target
Well balanced plan to reach ambitious ROE target Return on equity, % ~2p.p. >15% ~1p.p. >13% ~1p.p. 11.6% ~1p.p. >10% ~(1) p.p. 2012 Equity Regulation, Capital RoE Income Cost Lower loan 2015 ROE Normalised ROE at net capital 1 calibration adjusted generation efficiency, losses forecast interest 2 n
Slide 30: Stabilising loan losses and a maintained low risk profile
Stabilising loan losses and a maintained low risk profile Underlying credit quality remains solid in majority of markets — Finland, Norway, Sweden, Russia, Poland, and the Baltics Positive rating migration in institutional and household portfolios Losses in Denmark and Shipping remains at elev
Slide 31: Business Areas are very well positioned to deliver on the plan
Business Areas are very well positioned to deliver on the plan Retail Banking Wholesale Banking Wealth Management ■ Largest and most diversified retail ■ Leading wholesale bank in the ■ Largest private bank, asset bank in the Nordics Nordics manager and life & pensions provider in the Nordics ■ Succ
Slide 32: Continuous management across markets and segments
Continuous management, across markets and segments, to deliver on group targets Nordea markets and segments Key comments Markets and Markets and Income, cost and RWA levers worked on in each segments with ROE>15% segments with ROE<10% Managed for increased Plan in place to restore market and segme
Slide 33: Nordea is committed to deliver on the 2015 plan
Nordea is committed to deliver on the 2015 plan Nordea market commitments Key initiatives and levers Strong capital generation Capital initiatives to maintain CT1 ratio >13% and return of excess capital to our shareholders Initiatives for income generation ROE target of 15% at a CT1 ratio >13% and w
Slide 34: Financial plan and targets
Nordea” Financial plan and targets Torsten Hagen J@rgensen, Group CFO
Slide 35: Nordea is committed to deliver on the 2015 plan
Nordea is committed to deliver on the 2015 plan Nordea market commitments Targets and policies CT1 ratio >13% Strong capital generation Capital policy Total capital ratio >17% and return of excess capital to our shareholders Pay-out ratio >40% Dividend Returning excess capital to policy shar
Slide 36: Prudent assessment of capital with 13% CT1 ratio
Prudent assessment of capital with 13% CT1 ratio Basel III capital ratio targets Optimising capitalisation level taking into account — Targets considered minimum targets in normal business conditions — Still considerable regulatory uncertainty, which can lead to target revision in the future ~4p.p
Slide 37: Excess capital generation to create capital repatriation and optimisation opportunities
Excess capital generation to create capital repatriation and optimisation opportunities Capital generation1, EURm 7 679 1 271 5 261 6 309 2 568 4 093 1 882 3 087 10 261 12 017 5 868 7 180 8 675 3 715 2006 2007 2008 2009 2010 2011 2012 2013E 2014E 2015E Active capital management Dividend Share buy-ba
Slide 38: Nordea is committed to deliver on the 2015 plan
Nordea is committed to deliver on the 2015 plan Nordea market commitments Key initiatives and levers Strong capital generation Capital initiatives to maintain CT1 ratio >13% and return of excess capital to our shareholders Initiatives for income generation ROE target of 15% at a CT1 ratio >13% and w
Slide 39: Core Tier 1 ratio expected to remain above 13%
Core Tier 1 ratio expected to remain above 13% Core Tier 1 ratio development, % 13.1% ~1p.p. >13% ~1.5p.p 11.2% 10.3% ~(1.5)p.p. ~(0.5)p.p. 2010 2011 2012 Basel III and Volume growth RWA Retained 2013E IAS19 impact / migration efficiency earnings and other Basel 2.5 excl. Basel III fully loaded tran
Slide 40: Efficiency initiatives to keep RWAs flat for 2012-2015
Efficiency initiatives to keep RWAs flat for 2012-2015 RWA development, EURbn ~5 ~20 168 ~168 ~10 ~168 ~(25) ~(10) 2012 Regulation Growth Efficiency 2013E Growth Efficiency 2015E including including 40
Slide 41: Regulation expected to increase RWA by ~EUR20bn
Regulation expected to increase RWA by ~EUR20bn Regulatory changes and RWA impact, EURbn Comments Higher capital requirements for derivatives by introducing a capital charge for CVA risk for OTC contracts CVA and CCP ~12 Derivatives cleared through a CCP will be subject to CCP capital requiremen
Slide 42: Efficiency initiatives to migrate regulatory effects
Efficiency initiatives to migrate regulatory effects Initiatives Comments Applying for use of internal models Roll-Outs ~21 Review of corporate rating models – including Model segmentation, parameter estimation ~5 Reviews Review of retail scoring models Review exposure class and product segm
Slide 43: Well balanced plan to reach ambitious ROE target
Well balanced plan to reach ambitious ROE target Return on equity, % ~2p.p. >15% ~1p.p. >13% ~1p.p. 11.6% ~1p.p. >10% ~(1) p.p. 2012 Equity Regulation, Capital RoE Income Cost Lower loan 2015 ROE Normalised ROE at net capital 1 calibration adjusted generation efficiency, losses forecast interest 2 n
Slide 44: Nordea is committed to deliver on the 2015 plan
Nordea is committed to deliver on the 2015 plan Nordea market commitments Key initiatives and levers Strong capital generation Capital initiatives to maintain CT1 ratio >13% and return of excess capital to our shareholders Initiatives for income generation ROE target of 15% at a CT1 ratio >13% and w
Slide 45: Initiatives for supporting NII growth and margin expansion
Initiatives for supporting NII growth and margin expansion Nordea Group income split Initiatives Blended margin Normalised 1,30% interest rates 23% 20% Repricing of 1,25% lending margins 19% 24% 1,20% More business with 1,15% existing customers 1,10% 58% 56% 1,05% Other (e.g. deposit margins Current
Slide 46: Income sensitive to higher interest rates
Income sensitive to higher interest rates, normalised rates not part of the main scenario NII sensitivity at interest rates +100 bps, EUR Weighted short term interest rates in the plan1 Volumes Income 2012 Sensitivity 4.7% 4.2% HH 87bn 470m Deposit 3.0% Margins Corp 113bn 110m 1.6% 1.3% 1.3% 1.0% 1.
Slide 47: Lower funding costs expected
Lower funding costs expected Yearly funding costs Comments Issuance of long term funding has increased, the proportion of long term funding is now approximately 70% Lengthening of average maturity from 2.3 to 3.4 years (2007 – 2012) Wholesale funding costs expected to decrease from 2014 — Pres
Slide 48: Ancillary income growth driven by product capabilities
Ancillary income growth driven by product capabilities Nordea Group income split Initiatives Non NII-Income vs. Nordic peers 140 20% Nordea 23% Risk products 130 120 19% 24% Asset 110 management Nordic peers 100 58% 56% Transaction 90 related 80 70 Q4/07 Q2/08 Q4/08 Q2/09 Q4/09 Q2/10 Q4/10 Q2/11 Q4/
Slide 49: Cost efficiency to further improve in the 2015 plan
Cost efficiency to further improve in the 2015 plan Nordea total expenses (Excl. FX and variable pay), EURm Comments 1 210 1 164 1 203 1 173 1 193 1 163 1 177 1 168 1 196 Flat costs will be maintained throughout 2014 (excluding effect of FX and variable salaries, including profit sharing) Gross
Slide 50: Process and productivity enhancing initiatives
Process and productivity enhancing initiatives Clusters Main actions Reduce branches handling cash (~400 in 2009- 2012) Streamline physical Focus on advisory in remaining branches distribution Re-direct daily banking to online and self-service channels Enabling cost Target advisory services
Slide 51: Reduction of FTEs will continue, but at a slower pace
Reduction of FTEs will continue, but at a slower pace FTE development Comments 34,169 Process efficiency, reduced cash handling and investments in support systems enable FTE reduction (7.9)% (2,703) Number of FTEs down ~8% since launch of the 33,068 New Normal plan in summer 2011 Going forward
Slide 52: Infrastructure optimisation initiatives
Infrastructure optimisation initiatives Clusters Main actions Reduce headquarter sqms by 10% in step 1 Transform premises New HQs outside CBDs and reduced number of sites Branch closure and contract renegotiation Enhance Reduce and digitise physical mail by 12% in 2013 digitisation Digitis
Slide 53: Non-staff costs will continue to be flat or reduced
Non-staff costs will continue to be flat or reduced Other expenses, EURm Comments 600 Flat to reduced costs through 500 prudent cost management 400 Ongoing initiatives enables 300 reduction of other costs by 200 EUR250m in 2013-2015 100 Some cost categories have been 0 reduced significantly be
Slide 54: Loan losses expected to decrease
Loan losses expected to decrease Actual loan losses, bps Comments Average loan loss ratio approximately 20 16bps 10 For 2012, Banking Denmark and Shipping constituted more than half of 0 loan losses (10) Loan losses expected to revert to (16) around historical average during 2013- (20) 2015, f
Slide 55: Expectations in summary
Expectations in summary Nordea financial plan and expectations 2013-2015 CAGR ~4% Income growth Including normalised interest rates, CAGR ~6% CAGR ~0% 2012-14 (excl. FX and variable salaries) Cost growth Some cost growth 2015 if supported by income growth Approach 16bps during the period L
Slide 56: Nordea financial 2015 plan – Robust and resilient
Nordea financial 2015 plan – Robust and resilient Concluding remarks Nordea long term income and profit generation, EURbn 10,2 The financial plan is robust 9,5 9,3 9,1 — Most of the levers are within our own control 8,2 7,9 7,4 — Conservative macro outlook and assumptions 6,6 6,1 5,7 5,6 5,6 — Bal
Slide 57: Nordea is committed to deliver on the 2015 plan
Nordea is committed to deliver on the 2015 plan Nordea market commitments Key initiatives and levers Strong capital generation Capital initiatives to maintain CT1 ratio >13% and return of excess capital to our shareholders Initiatives for income generation ROE target of 15% at a CT1 ratio >13% and w
Slide 58: Retail Banking
Retail Banking Michael Rasmussen, Head of Retail Banking
Slide 59: The leading Nordic retail bank
The leading Nordic retail bank 2012 Retail income vs. Nordic peers, EURbn 5,5 3,7 3,0 3,0 2,9 1,6 Nordea Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Geographic presence Branches Customers (m) Employees (FTEs) Income (EURm) Market rank Denmark 207 1.7 3,934 1,551 2 Norway 97 1.0 1,402 1,013 2 Sweden 231 4.2 3
Slide 60: A fully diversified platform
A fully diversified platform Geographic diversification Largest market contribution, Nordea vs. Nordic peers1, % ~80% ~90% ~70% ~75% ~60% 70% 29% Nordea Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Income split, 2012 Geography Segment Poland 3% Baltic 3% Small 6% Medium Sweden Denmark 12% 29% 28% Gold Large 4
Slide 61: Performance of local franchise above market
Performance of local franchise above market ROE 2012 – Retail banking Denmark vs. market avg. ROE 2012 – Retail banking Finland vs. market avg. +1.4p.p. +0.6p.p. +0.5p.p. (0.3) p.p. 7,9% 9,7% 4.4% 5,1% Nordea Market Nordea Market ROE 2012 – Retail banking Sweden vs. market avg. ROE 2012 – Retail ban
Slide 62: Key Retail Banking value drivers
Key Retail Banking value drivers Key ambitions and initiatives Optimisation of household and SME relationships by a systematic Coherent business approach to enable further income potential system supporting relationship strategy Maintained lead to competitors on customer satisfaction High rete
Slide 63: Optimising household relationships
Optimising household relationships Customer programme to drive cross selling, Income / cost to serve per elevation and loyalty customer, EUR PBA as named 900 advisor Avg. Income Personal Premium banking Potential income New advisor custom- Silver with driving Bronze with Gold balance ers potential a
Slide 64: Optimising SME relationships
Optimising SME relationships Income / cost to serve per Corporate service model customer, EUR Small Medium Large 52,000 Potential income Increase share of wallet Medium (non-lending Large focus) develop Increase size of 8 800 wallet (all 19,000 Small Medium non-lending 600 entrepreneur care business
Slide 65: Maintained lead to competition on customer satisfaction
Maintained lead to competition on customer satisfaction Household satisfaction compared to peers, High and stable retention Avg. 2010-2012 98.6% 98.4% 76 98.3% 98.2% 98.0% 71 75 74 72 66 66 63 2008 2009 2010 2011 2012 Nordea Peer Average Source: Nordea Customer Satisfaction Index/Ennova 65
Slide 66: Optimisation continues to meet changing customer behaviour
Optimisation continues to meet changing customer behaviour Development of online channels, m Share of advisors in branch network, % 123 31 40% 37% 34% 4 33% 32% 352 356 354 322 60% 63% 66% 67% 68% 2009 2010 2011 2012 2008 2009 2010 2011 2012 Netbank logons Mobile logons Advisors Service & Support In
Slide 67: Restructuring of Nordic branch network successfully completed
Restructuring of Nordic branch network successfully completed Restructuring of branch network, % of branches Reduction in the of number of branches 93% 1 200 1 000 Number of Branches 800 47% 600 36% 400 17% 200 7% 0% 0 2009 2012 2009 2010 2011 2012 2013 Branches providing all services to all custome
Slide 68: Multichannel relationship banking is the next step
Multichannel relationship banking is the next step I will myself… An employee supports me to… …choose the …do daily …choose the …do daily right solution banking right solution banking Nordea wherever, whenever Online Voice response Contact centre Contact centre Visit Nordea ATM/ADM Advisory branch S
Slide 69: Key income drivers are re-pricing and share of wallet
Key income drivers are re-pricing and share of wallet Income levers overview Comments Re-pricing of lending stock to the pricing of new Re-pricing 35 lending on both household and corporate Leverage existing relationships, focusing on asset productivity for corporate and special attention to Cro
Slide 70: Further income potential exists within retail banking
Further income potential exists within retail banking Key activities Lending margin development Re-price existing household lending stock including 1,29% mortgages to the price of new lending 1,13% 1,19% 1,07% SRMs systematically analyse their portfolios to re-price 0,99% individual customer rel
Slide 71: Cross sales initiatives to further drive income
Cross sales initiatives to further drive income Products sales per personal banking advisor Products per Gold customer per week1 7,0 9 9 8 8 7 6,8 6,7 6,7 2009 2010 2011 2012 Denmark Finland Norway Sweden Nordic peers average Nordea Key activities Further emphasise the need for acquiring the full
Slide 72: Cross sales and share of wallet development and ambition
Cross sales and share of wallet development and ambition Net increase in Gold and Premium customers, Asset productivity, corporate1 2009–2015 25% 20% 3.0% 20% 2,7% 2,5% 2,6% 15% 14% 12% 10% 7% 5% 0% 2009 2010 2011 2012 2013 2014 2015 2010 2011 2012 2015 Target Target Target Target New customers Cust
Slide 73: Efficiency initiatives within Retail Banking
Efficiency initiatives within Retail Banking FTEs development Flat cost ambition Reduced number of branches and optimised contact policy in 2012 20 050 Flat costs 2013-2014 Cost reductions during the period 2013-2015 of approximately EUR175m 19 250 CAGR 2011-15 Dynamic resource allocation to
Slide 74: Return on allocated capital aspirations
Return on allocated capital aspirations Path to increased returns RaRoCaR development1, % Diversified franchise delivering high, growing and low- 16 volatile income 12,4 Income growth based on customer acquisition and increased cross sell 12 10,7 Nominal costs flat from 2013 -2014 8 Total FT
Slide 75: Re-cap of Retail Banking initiatives
Re-cap of Retail Banking initiatives Group Key ambitions and initiatives key initiatives and levers Optimisation of household and SME Coherent business relationships by a systematic approach to Low volatile income system supporting enable further income potential generation relationship strategy
Slide 76: Nordea Wholesale Banking
Nordea Wholesale Banking Casper von Koskull, Head of Wholesale Banking
Slide 77: The leading Nordic Wholesale Bank for corporate and institutional customers
The leading Nordic Wholesale Bank for corporate and institutional customers Key 2012 Wholesale Banking facts Corporate income, EURm #1 or #2 position in each of the Nordic countries Cross-sell 67% 73% ratio Total income EUR2,773m CAGR Operating profit EUR1,525m 7% 1 340 Cost/income ratio 34%
Slide 78: Vision and strategic positioning
Vision and strategic positioning Strategic vision Strategic positioning The leading relationship bank for our Size and competencies = Relevance customers The vision is International to be the The best Nordic provider of Working Product dimension: competition leading Capital Management services w
Slide 79: Key Wholesale Banking value drivers
Key Wholesale Banking value drivers Key ambitions and initiatives Relationship strategy Relationship strategy driving cross-sell and income growth supported by global Strengthened Wholesale Banking relationship management process product capabilities Further develop successful Markets strategy
Slide 80: Relationship strategy driving cross-sell and income growth
Relationship strategy driving cross-sell and income growth Key activities Corporate income3, EURm Successful customer relationship strategy ― Strategic partnerships based on superior industry 1 340 and customer knowledge 1 010 ― Greenwich Share1 and Quality2 Leader - Nordic large corporate banking
Slide 81: Further develop successful Markets strategy
Further develop successful Markets strategy The Key leading Nordic capital markets franchise messages Market positions Deep understanding of customer needs - fully integrated into Nordea relationship strategy and cooperating closely with customer units #1 bookrunner in #1 Nordic bank in Nordic co
Slide 82: Further develop successful Markets strategy (cont'd)
Further develop successful Markets strategy (cont’d) Key messages Markets income, EURm Competitive advantage built on broad product range and 2 500 deep market penetration – advice, liquidity/placing power CAGR 15% and pricing 2 000 Systematic concept for cross-selling to grow event-driven busin
Slide 83: Developing the organisational platform
Developing the organisational platform Key messages Wholesale Banking operating model Full value chain approach, end-to-end alignment towards customer Relation- — WB organisation created in June 2011 ship Products Control Manage- and and IT ment Customer delivery systems support a deeper penetra
Slide 84: Active business selection for further re-pricing
Active business selection for further re-pricing, supported by pricing initiatives Key activities CIB average lending margin1, % Active business selection — Systematic review of all new transactions by centralised committees +~20bps 1,45% — Regular follow-up on lowest performing customers 1,41% —
Slide 85: Leveraging leading access to capital markets financing
Leveraging leading access to capital markets financing Comments Nordic corporate bonds – ranking by bookrunner Increasing use of capital markets to Value (EURm) No. % Share supply customers with attractive 1 Nordea Markets 5,849 121 14.3 2 SEB 4,336 76 10.6 financing 3 Danske Bank 3,652 58 8.9 4 D
Slide 86: Structured segment review for daily business optimisation
Structured segment review for daily business optimisation ILLUSTRATION Income RWA Income mix PD / Avg rating Other Trade finance Loans Pay- ments Q4/11 Q1/12 Q2/12 Q3/122014 P Q4/11 Q1/12 Q2/12 Q3/12 2014 P Capital Markets Q4/11 Q1/12 Q2/12 Q3/12 RAROCAR RAROCAR clusters Lending margin Won/lost deal
Slide 87: Wholesale Banking initiatives to maintain flat costs
Wholesale Banking initiatives to maintain flat costs Comments Wholesale banking total FTE number Strong starting point with C/I ratio of 34% for 2012 6 464 6 505 6 426 6 274 6 233 6 173 Streamlining of processes 6 121 6 066 Zero growth in direct cost excluding performance driven bonuses in Mar
Slide 88: Wholesale Banking initiatives to maintain flat RWAs
Wholesale Banking initiatives to maintain flat RWAs Key activities RWA development, EURbn Strong Wholesale Banking track record Customer targeted initiatives 79 78 — RWA caps per division introduced 65 — Active business selection/de-selection — Move customers to capital-light solutions — Optimiz
Slide 89: Initiatives drive increased return on customer activities
Initiatives drive increased return on customer activities Path to increased returns RaRoCaR development, % Increased customer income 17 Increased use of capital-light customer financing 16 Strict resource management 15 14 One operating model 13 Strategic alignment across the entire value c
Slide 90: Re-cap of Wholesale Banking initiatives
Re-cap of Wholesale Banking initiatives Group Key ambitions and initiatives key initiatives and levers Relationship strategy driving cross-selling Relationship strategy Income supported by global product Relationship management process generation capabilities Successful markets strategy One
Slide 91: Wealth Management
91
Slide 92: Wealth Management in brief
Wealth Management in brief Private Banking Asset Management Life & Pensions Income 2012 EUR524m (+5%) Income 2012 EUR435m (+13%) Income 2012 EUR499m (+29%) Largest private bank in the Nordic Largest asset manager in the Nordic Largest Life & Pension provider in the Nordic Largest Nordi
Slide 93: Largest and fastest growing wealth manager in the Nordics
Largest and fastest growing wealth manager in the Nordics AuM development, EURbn Q4 2012 Q4/12 218 Q4 2011 Q4/11 187 154 141 92 91 82 80 68 65 67 59 60 53 Nordea Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 Growth 16.5% 5.3% 13.4% 8.8% 11.2% (8.0)% 6.8% Source: Companies Q4/12 Interim Reports Note: Gro
Slide 94: Well diversified business model with growth in all segments and markets
Well diversified business model with growth in all segments and markets Year end 2012 AuM, EURbn Retail Private Inst. 3rd Party Life & Total 1 year funds1 banking clients distribution pensions3 2 growth Denmark 10 22 20 0 24 76 9% Finland 4 19 5 0 10 38 13% Norway 3 4 6 0 9 22 22% Sweden 22 13 5 0 8
Slide 95: Strategy review starting with the external factors
Strategy review starting with the external factors Value drivers Changes in customer preferences Capitalise growth momentum Competition Macro and demographic development Enhanced value propositions New technology New regulation Efficiency & prioritisation Government austerity affecting pensions 95
Slide 96: Key Wealth Management value drivers
Key Wealth Management value drivers Key ambitions and initiatives Leverage the strength of a diversified business model and broad distribution capabilities Capitalise growth Elevate Retail Banking customers to Private Banking momentum Accelerate external customer acquisition Private Banking
Slide 97: The Private Banking concept creates value for customers and shareowners
The Private Banking concept creates value for customers and shareowners # of Retail Banking customers fulfilling Private Revenue increase Banking criteria (2012) >160% Income increase when Elevated 8,500 elevated to private banking1 Share of wallet New 6,000 Higher investment 32,000 returns Ma
Slide 98: Solid growth momentum and a scalable business model in institutional sales
Solid growth momentum and a scalable business model in institutional sales Institutional sales net flows, EURm Comments 10 000 30 Institutional clients margin (bps RHS) Institutional clients 8 500 3rd party distribution 25 Institutional clients – Highest Tier 11 penetration in the Nordics, 7 000 2
Slide 99: Strong investment capabilities is a core part of our value propositions
Strong investment capabilities is a core part of our value propositions Morningstar rating1 Investment performance – GIPS2 54 funds 18 11.7% in average return on assets managed 46% by Asset Management 2012 (8.5% last 3 88 funds 28 years) 131 funds 43 27 funds 87% of composites outperforming 9 be
Slide 100: Integrated wealth value chain drives customer value and innovation
Integrated wealth value chain drives customer value and innovation Integrated value chain business model Advice & service Concepts and sales Products support Customers Funds Life and pension products Account products Other investment products Asset allocation advice Retail banking Asset management S
Slide 101: Efficiency and prioritisation
Efficiency and prioritisation C/I development Efficiency initiatives 2013-2015 Increased straight-through processing 1.5p.p. 4.3p.p. Offshoring of IT development and maintenance 57.5 58.6 Reduction of IT complexity 56.0 54.3 Front line operational excellence programs Reduction of complexit
Slide 102: Shift from traditional life to market return products
Shift from traditional life to market return products is a key capital efficiency driver Premium and AuM composition AuM by customer guarantee level, EURbn Market return products GWP, EURm % of GWP and AuM 6 000 100% 51 1% 90% 19% 5 000 80% 70% 4 000 32 26% 30 0% 60% >5% 0% 3 000 50% 29% 7% 3-5% 45%
Slide 103: 15% ROE ambition in Life & Pension in 2015
15% ROE ambition in Life & Pension in 2015 ROE progression Comments Cost efficiency achieved through 0,5% increased straight-through-processing and 0,9% 0.9% 0.5% 15,0% 15.0% 14.2% other levers 14.2% 1,3% 1.3% Capital efficiency through continued 0,4% 0.4% customer migration from traditional 11.
Slide 104: Re-Cap of Wealth Management initiatives
Re-Cap of Wealth Management initiatives Group Key ambitions and initiatives key initiatives and levers Leverage diversified business model and broad distribution Capitalise growth Elevate Retail Banking customers to Private Banking Income generation momentum Accelerate external customer acquis
Slide 105: Credit risk management
7) Credit risk management Nordea™ Ari od Group CRO
Slide 106: The most diversified Nordic bank
The most diversified Nordic bank Geographic exposure vs. Nordic peers¹, % Total loans to public by geography, % Largest market contribution Poland 2% Russia 1% Baltics 2% ~90% ~80% ~70% ~70% Norway ~60% Finland 73% 18% 27% 27% Denmark 24% Sweden 26% Nordea Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Total: E
Slide 107: Sound risk profile with low loan losses over the cycle
Sound risk profile with low loan losses over the cycle Low over the cycle loan losses, Actual loan losses, bps 10Y avg., bps Diversification results in: Huge workout efforts avoided 41 Focus on finding good 20 solutions for impaired loans Fewer actual loan losses 10 0 (10) 23 (16) (20) 20 17 1
Slide 108: Adequate provisioning levels
Adequate provisioning levels Provisioning level Nordea Group, % Comments 100% Provisioning ratio, % Nordea’s overall provisioning level 90% considered to be adequate Whereof individual provisions, % 80% Stable individual provisions over time 70% Collective provisions reduced 60% 50% Loan los
Slide 109: Overall sound portfolio across geographies and sectors
Overall sound portfolio across geographies and sectors with limited problems Lending by geography, % 2012 Net loan losses by geography Poland Russia Country EURm Ratio, bps Baltics 2% 1% Finland 142 16 2% Sweden 35 4 Denmark 581 71 1 Norway Finland Norway 128 21 18% 27% Baltics 3 4 Denmark Poland 38
Slide 110: Danish macro environment improving
1 Danish macro environment improving House price index1 State of public finances – Europe vs. Nordics 110 180 Greece 100 160 90 140 Public debt, % of GDP (2012E) 80 Ireland Italy 120 Portugal 70 2006 2008 2010 2012 100 Spain Belgium Single-family houses Summer houses Flats France 80 United Germany U
Slide 111: Signs of impaired loans levelling off in Denmark
1 Signs of impaired loans levelling off in Denmark Retail banking Denmark, impaired loans, EURm Impaired loans by sector, 2012, EURm1 4 000 Other Consumer 3 500 12% Staples 3 000 (Food, 2 500 Agriculture 2 000 etc.) 1 500 24% 1 000 500 0 Real Estate Q4/11 Q1/12 Q2/12 Q3/12 Q4/12 Household Mgmt. & 30
Slide 112: Loan losses in Denmark decreasing
1 Loan losses in Denmark decreasing Loan losses net, Retail Banking Denmark Nordea loan losses in Denmark vs. peers, 5Y avg., bps 200 Peer 1 52 150 Nordea 53 100 Peer 2 53 50 0 Peer 3 107 (50) Peer 4 158 (100) Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12 Peer 5 156 Collectively assessed Portfolio
Slide 113: Nordea's diversified shipping portfolio will recover in line with market
2 Nordea’s diversified shipping portfolio will recover in line with market Shipping portfolio breakdown as at 31/12/12 Shipping loan losses 2012, per segment, % Miscellaneous Miscellaneous (Property, shares,cash, (Property, shares,cash, bank/state guarantees) bank/state guarantees) 2% Crude Tankers
Slide 114: Shipping collateral values in the process of bottoming out
2 Shipping collateral values in the process of bottoming out Ship values1, USDm Shipping orderbook as % of existing fleet1 90% 180 Tanker Bulker Containership 150 75% 120 60% 90 45% 60 30% 30 15% 0 0% Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 J
Slide 115: Gradual recovery expected in Shipping from early 2014
2 Gradual recovery expected in Shipping from early 2014 Earning forecasts, dry bulk Comments '000 USD/d 23,6 15,9 14,5 16,1 Challenges in the broader tanker and bulk 11,4 12,0 7,5 9,5 8,1 8,7 6,9 8,4 8,1 10,5 8,8 11,0 segments primarily resulting from oversupply of vessels 2012 2013E 2014E 2015E H
Slide 116: Impaired loans likely to decrease in shipping
2 Impaired loans likely to decrease in shipping following expected recovery from early 2014 Shipping, impaired loans, EURm Comments 1 000 Impaired loans in Shipping likely to be reduced 800 from 2014 600 Stable quality in performing part of portfolio over 400 time 200 Active management of the
Slide 117: Shipping loan losses remain elevated for now
2 Shipping loan losses remain elevated for now Loan losses, shipping Comments 80 Lending to Shipping constitutes 2.1% of total 71 lending, only 70 63 63 — Offshore, oil services, cruise and ferries 60 60 excluded 54 Low investment appetite for shipping assets 50 and banks’ lower willingness to l
Slide 118: Stable outlook in Finland, Norway and Sweden
Stable outlook in Finland, Norway and Sweden Development in impaired loans, EURm Comments 1000 No early warning signals in Finnish, Norwegian 800 and Swedish household markets 600 Stable volumes of impaired loans over time 400 Supported by key macro economic indicators 200 such as: 0 — GDP gro
Slide 119: Net loan losses at low level in Finland, Norway and Sweden
Net loan losses at low level in Finland, Norway and Sweden Finland loan losses, EURm Fairly stable house prices, % 29 20 21 11 12 14 14 10 1 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12 Norway loan losses, EURm 21 24 15 13 7 8 (1) (5) (16) Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q4/
Slide 120: Sound credit process and prudent risk framework
Sound credit process and prudent risk framework Sound credit processes unchanged since 2000 Harmonised, streamlined and risk adjusted end to end corporate credit process Increased focus on high risk credits Accurate and equitable allocation of capital Corporate Increased transparency in the cr
Slide 121: Risk appetite defines Nordea's risk taking boundaries
Risk appetite defines Nordea’s risk taking boundaries Risk appetite framework introduced in 2011 Risk appetite dashboard Ensures holistic approach and increased risk Category Metric awareness Single customer concentration Industry concentration 19 specific risk boundaries – across all risk
Slide 122: Key conclusions
Key conclusions ■ Risk appetite framework ensures holisitc approach and increased risk awareness ■ Stable credit strategy and policies unchanged since year 2000 – one Nordea approach ensured ■ Diversified credit portfolio provides low loan losses over time ■ Loan loss situation has stabilised and is
Slide 123: Concluding remarks and Q&A
Slide 124: Nordea is committed to deliver on the 2015 plan
Nordea is committed to deliver on the 2015 plan Nordea market commitments Key initiatives and levers Strong capital generation Capital initiatives to maintain CT1 ratio >13% and return of excess capital to our shareholders Initiatives for income generation ROE target of 15% at a CT1 ratio >13% and w
Slide 125: Business Area plans focused on Group initiatives and levers
Business Area plans focused on Group initiatives and levers Group initiatives and levers Key value drivers in Business Areas Retail Banking Wholesale Banking Wealth Management Capital initiatives to maintain Coherent business Relationship strategy CT1 ratio >13% system supporting supported by global
Slide 126: Business Areas are very well positioned to deliver on the plan
Business Areas are very well positioned to deliver on the plan Business Area contribution, 2012 Operating income Operating profit FTEs Economic capital 5% 3% 13% 7% 14% 16% 9% 44% 11% 54% 57% 50% 27% 19% 34% 37% Total: EUR10.2bn Total: EUR4.1bn Total: 31,466 Total: EUR24.3bn Retail Banking Wholesale
Slide 127: Wholesale Banking within Nordea
Wholesale Banking within Nordea Share of Group total operating income Share of Group total operating profit 27% 37% Share of total FTEs Share of economic capital 19% 34% Wholesale Banking Other 127
Slide 128: Wholesale Banking – result highlights
Wholesale Banking – result highlights Key financials Comments Strong growth in income 2012, driven by continued re- FY FY Chg. pricing and strong capital markets activities EURm 2011 2012 2012/2011 Net Interest Income 1,184 1,155 (2)% — Underlying increase in customer interest income more than off
Slide 129: Shaping the future relationship bank
Nordea capital markets day Shaping the future relationship bank London, 6 March 2013