Nordea Bank Abp · OMXHEX:NDA_FI
Nordea Bank Abp — Q3 2008 Earnings Presentation
31 slides from Nordea Bank Abp's earnings presentation, Oct 23, 2008
Slide 1: Interim Report Third Quarter 2008
Interim Report Third Quarter 2008 Press and analyst conference 23 October Christian Clausen President and Group CEO
Slide 2: Despite extreme market conditions…
Despite extreme market conditions… 2
Slide 3: …Nordea delivers a strong result
…Nordea delivers a strong result EURm Jan-Sep 08 Jan-Sep 07 Chg % Net interest income 3,707 3,139 18 Net fee and commission income 1,493 1,614 -7 Net gains/losses on items at fair value 703 893 -21 Equity method -21 29 Other income 67 69 -3 Total operating income 5,949 5,744 4 Staff costs -1,913 -1,
Slide 4: Highlights in third quarter
Highlights in third quarter Customer areas deliver according to plan, revenues up 10% in Nordic Banking and Institutional & International Banking Risk-adjusted profit up 5% in Customer areas – unchanged for the Group No reclassification made of interest-bearing securities out of the trading ca
Slide 5: Net interest income up 18%
Net interest income up 18% YoY Net interest income, EURm Strong growth in lending and deposit 3 707 volumes Lending up 14% - continued support of customer 3 139 demand Deposits up 13% Improved lending margins Third quarter with improved corporate margins reflecting normalised pricing of ri
Slide 6: Corporate customers: High business activity
Corporate customers: High business activity Total income corporate customers, EURm Income from corporate customers up 21% 2 916 compared to same period last year – NII up 23% 2 416 Strong result in Capital markets Improved market position in particular within Corporate Merchant Banking Stron
Slide 7: Household customers: Continued income growth
Household customers: Continued income growth Total income household Income from household customers up 3% customers, EURm compared to same period last year Strong contribution from NII - up 12% 2 515 2 581 Improved margins Negative impact from savings commissions Jan-Sep 07 Jan-Sep 08 7
Slide 8: Net fee and commission income down 7%
Net fee and commission income down 7% YoY Net fee and commission, EURm Savings-related commissions down 17% 1 614 AuM down 15% 1 493 Shift from equity to fixed income funds – negative mix effect Continued increase in lending-related commissions - up 9% Corporate Merchant Banking Payment
Slide 9: Net gains/losses – almost unchanged in customer areas
Net gains/losses – almost unchanged in customer areas YoY Net gains/losses, EURm Net gain/losses down 21% Customer areas only down EUR 34m with 748 714 strong increases in Nordic Banking and Institutional & International Banking but with negative valuation effects of EUR 100m Other areas affec
Slide 10: Equity method
Equity method Equity method, EURm Explained by Nordea’s minority holding 29 in Eksportfinans ASA (23%) -21 Jan-Sep 07 Jan-Sep 08 10
Slide 11: Cost growth maintained at same level as in 2007
Cost growth maintained at same level as in 2007 Total operating expenses, EURm Up 6.5% - unchanged growth level 3 188 compared to last year 2 993 Close to half of the cost increase related to investments in growth areas Staff costs up 8% Number of employees up 8% or 2,400 of which 1,100 in N
Slide 12: Operating profit
Operating profit Operating profit, EURm 2 805 2 615 Profit before loan losses unchanged at high level Operating profit down 7% Shift in loan losses – EUR 146m compared to positive EUR 54m the same period last year Jan-Sep 07 Jan-Sep 08 Write-backs EUR 54m Net loan losses of EUR 146m 12
Slide 13: Increased loan losses following economic downturn
Increased loan losses following economic downturn Loan losses, EURm 151 152 Net loan losses EUR 146m 140 121 98 89 Loan loss ratio of 8 basis points 21 36 New collective provisions in the Baltics of EUR 16m in Q3 -13 -6 -63 -85 -111 -120 -157 Q3/07 Q4/07 Q1/08 Q2/08 Q3/08 Gross loan losses Rev
Slide 14: Strong starting point when credit cycle turns
Strong starting point when credit cycle turns Total corporate lending, EUR 156bn Energy Other Consumer 4% 7% Strong and well diversified credit portfolio dur. Real estate 6% 24% Retail trade Modest increase in impaired loans - up 8% 17% Manufac. 8% Financial Mainly explained by increases in in
Slide 15: Strong starting point also in the Baltic countries
Strong starting point also in the Baltic countries Well diverisified Baltic lending portfolio Well managed risks - selective growth strategy in the Baltic countries – 2.7% of total loan portfolio Public and Growth 2007-2008 to customers with high other corp. 27% Household credit rating 35% Nor
Slide 16: Stable capital position
Stable capital position Tier I ratio Slowing RWA growth 8,3 Reported Tier I ratio 7.0% 7,9 7,9 7,0 7,0 7,0 Tier I ratio excl. transition rules 7.9% Full IRB implementation 9% New capital targets are being evaluated in light of financial crises, new regulation and ongoing implementation of
Slide 17: Despite extreme markets, Nordea funding operations have functioned well in Q3
Despite extreme markets, Nordea funding operations have functioned well in Q3 In September approx. EUR 2bn long-term funding has been issued Total long-term funding issued (EURbn) Among the transactions Lower Tier II 24 issue (EUR 500m) Strong performance in covered bond 20 markets in Denmark
Slide 18: Well diversified funding platform
Well diversified funding platform Total external funding EUR 276bn Well-diversified and strong funding base Competitive edge from leading Nordic Europe CD/CP Fin. Inst. Net market position and strong and broad 7% 3% deposit base US CD/CP 7% 40% of wholesale funding from covered bonds (20% of t
Slide 19: Wholesale funding mainly long-term
Wholesale funding mainly long-term Total long and short-term funding, EURbn 150 000 Total wholesale funding approx. EUR 125 000 100 000 132bn – 64% long-term financed 75 000 Insignificant long-term funding 50 000 matures the next 12 months 25 000 0 Liquidity buffers in Group Treasury 2004 2005
Slide 20: Ambitious targets
Ambitious targets Long term financial targets Target 2007 Jan-Sep 08 TSR (%) In the top quartile of # 3 of 20 # 3 of 20 European peer group Risk adjusted profit (EUR m)¹ Double in 7 years² 15% 14.6%³ RoE (%) In line with top Nordic peers 19.7% 15.7% Capital structure policy Policy Dividend payout-ra
Slide 21: Total shareholder return (TSR)
21 -90 -80 -70 -60 -50 -40 -30 -20 -10 0 % HBOS Bank of Ireland Allied Irish Banks RBS Commerzbank Swedbank Unicredit Lloyds TSB 1/1 2007 – 30/9 2008 SEB Barclays Danske Societe Generale Total shareholder return (TSR) DnBNOR Erste Bank KBC Intesa Sanpaolo SHB Santander Top quartile Nordea -16,3 BNP
Slide 22: Risk-adjusted profit
Risk-adjusted profit Accumulated risk-adjusted profit Accumulated risk-adjusted profit 14.6% since target was introduced January 1 14,7% 15,1% 14,6% 2007 12,3% 14,1% Up 1.5% in Q3 8,3% 2,8% Q107 Q207 Q307 Q407 Q108 Q208 Q308 Rolling four quarter compared with FY 2006 EUR 2 107m Long-term target
Slide 23: Return on Equity (RoE)
Return on Equity (RoE) Return on Equity, % Return on equity of 15.7% (19.5%) 19,7 Loan losses of EUR 146m compared 17,6 * to net recoveries of EUR 54m the 15,7 same period last year Higher effective tax rate Higher equity FY 2007 Jan-Sep 08 Nordea Average Nordic Peers (In H108 SEB, Swedbank,
Slide 24: All growth initiatives are developing according to plan
All growth initiatives are developing according to plan Selected global New European Existing Nordic customers and new customers and European Markets business lines Household strategy Private Banking Corporate strategy Based on strong Selective growth competencies strategy 9 Strengthen position in r
Slide 25: Gold segment – proactive sales drives growth
Gold segment – proactive sales drives growth 463 475 469 491 Profitable growth by increased sale 459 of the entire product range Income growth up 6% compared to 2 379 2 397 2 427 2 453 2494 the same quarter last year Number of Gold customers up 5% compared to Q307 Strengthened resources in k
Slide 26: Nordic Private Banking – strong growth of customer base
Nordic Private Banking – strong growth of customer base 118 Growth success in Nordic Private Banking continues 83 88 Number of customers up 10% - mainly 81 78 new external customers Income down 4% compared to same 82 quarter last year - negative effect from 78 79 82 75 weakened equity markets
Slide 27: Increased demand for Capital market products in corporate segment
Increased demand for Capital market products in corporate segment Total revenues in Capital Markets Customer driven demand for Capital related to Nordic Banking markets products customers, EURm Continued success in advising corporate 494 customers to hedge their market risk 437 Volatile market
Slide 28: Growth Plan Sweden on track
Growth Plan Sweden on track Total income Nordic Banking Sweden EURm Total income in Nordic Banking Sweden up 7% 456 Strong contribution from NII – up 18% 425 Improved market position Growth initiative focus on long term savings, consumer loans and capital Jan-Sep 07 Jan-Sep 08 market product
Slide 29: Outlook for 2008
Outlook for 2008 Macroeconomic outlook is deteriorating and uncertainty increasing A gradual slowdown of lending growth for the remaining part of the year – lending margins are expected to improve Uncertainty for financial markets and consequently also for Nordea’s savings- related fees as wel
Slide 30: Third quarter in summary
Third quarter in summary High business momentum in Customer areas Credit quality remains strong Strong capital position Stable and well-diversified funding base Maintained ambitious long-term financial targets All growth initiatives are developing according to plan 30
Slide 31: The leading Nordic bank
The leading Nordic bank, acknowledged for its people, creating superior value for customers and shareholders. 31