Nordea Bank Abp · OMXHEX:NDA_FI
Nordea Bank Abp — Q1 2005 Earnings Presentation
178 slides from Nordea Bank Abp's earnings presentation, Apr 27, 2005
Slide 1: Investor Presentation 27 April 2005
Investor Presentation 27 April 2005
Slide 2: CEO presentation
x Q O Q 0 Z CEO presentation
Slide 3: Strong results in the first quarter
Strong results in the first quarter z Net profit up 8% to EUR 495m (EUR 459m in Q1 2004) z Operating profit up 10% to EUR 688m (EUR 624m) z Total income up 1% to EUR 1,582m (EUR 1,569m) despite lower investment result and including additional other income of EUR 40m z Total expenses flat z Earnings
Slide 4: Stable development compared to Q4
Stable development compared to Q4 z Net profit up 4% to EUR 495m (EUR 476m in Q4 2004) z Operating profit up 2% to EUR 688m (EUR 677m) z Total income down 4% from seasonally high Q4 to EUR 1,582m (EUR 1,646m) z Total costs down 8% z Positive net loan losses 4
Slide 5: Volume growth in focus areas
Volume growth in focus areas z Mortgage lending to personal customers up 15% year-on-year z Lending to small and medium-sized corporates increased by 14% z Assets under Management up 11% to EUR 136bn z Written premiums in Life up 23% 5
Slide 6: Volume growth in focus areas
Volume growth in focus areas YoY QoQ z Lending, total 15% 6% – Mortgage lending +15% +2% – Consumer lending* +9% +3% – SME lending +14% +5% – CIB lending (excl. Markets) +18% +19% z Deposits, total 14% 1% – Household deposits +7% +-0% – SME deposits +6% -2% – CIB deposits (excl. Markets) +56% +10% *
Slide 7: Active capital management
Active capital management z Successful issues of Tier 1 instruments z Repurchase of 139 million shares completed z New mandate to repurchase own shares 7
Slide 8: Group financial targets
Group financial targets Key performance indicator Q1/05 2004 Target Total shareholder return (TSR), % #7 #3 In the top quartile of European peer group RoE, % 15.7 14.5* > 15% in 2005 and > 17% or in line with level of top Nordic peers from 2007 Costs**, EURm 865 3,502 Same cost level through 2007 as
Slide 9: Outlook 2005
Outlook 2005 z Stable Q1 result continues to support overall increased ambition level communicated at the Capital Markets Day, Nov 30 2004 z Nordea is well positioned to deliver results in accordance with revised financial targets z The flat cost target for the banking business remains unchanged z A
Slide 10: CFO presentation
CFO presentation Financials 10
Slide 11: Q1 Report - structure
Q1 Report - structure z IFRS – New accounting standards – New disclosure format z Main comparison YoY – QoQ supplementary information z Segment reporting expanded – New page 3; segment reporting YoY – “Full” P&L disclosed for all Business Areas QoQ – In addition; 5 quarters segment reporting for all
Slide 12: Key IFRS effects etc. vs. previous quarters
Key IFRS effects etc. vs. previous quarters Q1/05 z No goodwill amortisation EUR 40m z Life insurance consolidated line by line – Income EUR 73m – Expenses EUR 28m – Real estate income & costs reported net z New line “Items to fair value”, includes mainly – Main part of Markets’ income EUR 118m – Ma
Slide 13: Income statement summary
Income statement summary EURm Q1/05 Q1/04 Chg % Net interest income 897 854 5 Net fee and commission income 453 434 4 Net gains/losses on items at fair value 115 216 -47 Equity method 13 9 44 Other income 104 56 86 Total operating income 1,582 1,569 1 Staff costs -515 -519 -1 Other expenses -353 -33
Slide 14: Income statement summary
Income statement summary EURm Q1/05 Q4/04 Chg % Net interest income 897 920 -3 Net fee and commission income 453 467 -3 Net gains/losses on items at fair value 115 179 -36 Equity method 13 15 -13 Other income 104 65 60 Total operating income 1,582 1,646 -4 Staff costs -515 -523 -2 Other expenses -35
Slide 15: Net interest income
Net interest income YoY: EURm z NII up 5% 1000 z Strong volume growth 920 897 z Pressure on margins 854 875 800 846 – lending – deposits, mainly Sweden QoQ: 600 z Volumes continue to contribute z Pressure on margins, mainly: 400 – mortgages – large corporate lending 200 – SME deposits z Two days les
Slide 16: Change in net interest income
Change in net interest income QoQ YoY Volume driven 12 49 - Lending volumes 11 39 - Deposit volumes 1 10 Margin driven -10 -27 - Lending margins -4 -15 - Deposit margins -6 -12 Other -25 21 - Two days less -20 -10 - Other, net -5 31 Total -23 43 16
Slide 17: Net commission income
Net commission income EURm YoY: 500 z Underlying commission growth – Asset Management 467 450 443 453 – Life & Pensions 434 400 – lending – cards 300 QoQ: z Payments down from 200 seasonally high Q4 z Asset management transaction fees slightly down 100 z Low Corporate Finance commissions in Q1 0 Q1/
Slide 18: Breakdown of commission income
Breakdown of commission income EURm 160 140 138 137 140 135 136 134 130 120 121 120 116 100 94 94 91 91 80 88 60 55 57 51 50 49 40 34 20 27 29 28 27 24 23 19 -1 10 0 Q1/04 Q2/04 Q3/04 Q4/04 Q1/05 Deposit, payment and e-services - net Asset Mgmt - net Loans and Guarantees Brokerage Life insurance - n
Slide 19: Payment transactions, households
Payment transactions, households Payments transactions, total Card and e-banking payments Mill. Mill. 300 160 140 275 120 250 100 225 80 60 200 40 175 20 150 0 1 1 2 2 03 03 04 04 05 01 01 02 02 03 03 04 04 05 0 0 0 0 1/ 3/ 1/ 3/ 1/ 3/ 1/ 3/ 1/ 1/ 3/ 1/ 3/ 1/ 3/ 1/ 3/ 1/ Q Q Q Q Q Q Q Q Q Q Q Q Q Q
Slide 20: Net gains/losses on items at fair value
Net gains/losses on items at fair value EURm 240 YoY: 220 z Lower return from Group 200 216 Investment, Treasury 180 – financial markets with low 179 volatility 160 140 – falling interest rates Q1/04 120 z Markets down on strong Q1/04 100 115 80 77 QoQ: 60 63 40 z Lower return from Group 20 Investme
Slide 21: Net gains/losses on items to fair value
Net gains/losses on items to fair value EURm Q1/05 Q4/04 Q3/04 Q2/04 Q1/04 Markets 118 127 74 87 146 Premium income, Life 713 726 441 561 581 Investment result, Life 442 692 268 -57 639 Claims & benefits paid, Life -537 -705 -398 -186 -433 Change in technical provisions , Life -599 -417 -392 -402 -5
Slide 22: Other income and equity method
Other income and equity method EURm 140 YoY: 130 Other income: 120 110 13 z Income related to sale of the 100 104 general insurance business 90 2002, EUR 40m 80 16 70 15 73 Equity method: 60 9 15 65 50 56 54 z Increased profit contribution 40 from International Moscow 30 20 Bank by EUR 3m to EUR 7m
Slide 23: Total operating income
Total operating income YoY: EURm 1800 z Total income up 1% – NII up 5% 1600 1646 1569 1582 – Commissions up 4% 1400 1462 1450 – Net gains/losses down 47% 1200 – Income from sale of general insurance business in 2002, 1000 EUR 40m 800 QoQ: 600 z Total income down 4% from 400 seasonally high Q4 200 –
Slide 24: Expenses
Expenses EURm z Nordea’s flat cost target for 1000 979 the banking business remains 900 903 908 932 902 unchanged 867 873 865 865 800 830 z Flat cost target excludes: 700 – costs in Life 600 – depreciation of operational leasing 500 z This is a result of IFRS and 400 changed presentation format 300
Slide 25: Expenses
Expenses EURm YoY: 1000 979 908 43 z Total expenses kept flat 903 902 41 865 413 34 45 39 z Wage increases, inflation and 339 380 353 growth in business volumes 800 334 offset by efficiency gains and reduced no. of FTEs 600 519 523 QoQ: 492 515 487 400 z Down from seasonally high Q4 z Other expenses
Slide 26: Number of FTEs
Number of FTEs 32,000 FTEs Q1/05 2004 Q1/04 28,000 29,880 29,289 29,140 28,929 28,725 Retail 17,270 17,328 17,713 24,000 CIB 3,218 3,238 3,267 20,000 AM & Life 1,829 1,815 1,797 16,000 GPT 5,254 5,419 5,905 12,000 Other 1,126 1,056 1,198 8,000 Total 28,725 28,929 29,880 4,000 Chg, YoY -3.9% 0 Chg, Q
Slide 27: Cost/income ratio
Cost/income ratio % % 70 70 60 62 60 64 62 58 60 59 60 57 50 50 40 40 30 30 20 20 10 10 0 0 Q1/04 Q2/04 Q3/04 Q4/04 Q1/05 2002 2003 2004 27
Slide 28: Loan losses
Loan losses EURm YoY: 50 z Overall stable credit quality 40 42 z Reversals exceeded new provisions – 4th quarter in a row 30 QoQ: 20 z Stable credit quality 10 z No industry sector stands out 0 -3 -2 -10 -6 -10 Q1/04 Q2/04 Q3/04 Q4/04 Q1/05 28
Slide 29: Impaired loans
Impaired loans EURm. End of period Q1/05 Q4/04 Q3/04 Q2/04 Q1/04 Impaired loans, gross 2,097 2,249 2,420 2,563 2,615 Reserves 1,657 -1,706 -1,824 -1,898 -1,929 Impaired loans, net 440 543 596 665 686 Provisions/impaired loans, gross,% 79 76 75 74 74 Impaired loans, net/lending,% 0.26 0.34 0.39 0.43
Slide 30: Earnings per share – 12 months rolling
Earnings per share – 12 months rolling EUR 0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0 00 00 00 00 01 01 01 01 02 02 02 02 03 03 03 03 04 04 04 04 05 1/ 2/ 3/ 4/ 1/ 2/ 3/ 4/ 1/ 2/ 3/ 4/ 1/ 2/ 3/ 4/ 1/ 2/ 3/ 4/ 1/ Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Excl. Real estate gains/losses and deferred tax ass
Slide 31: Return on Equity
Return on Equity % 20 z RoE in line with target 18 of > 15% in 2005 16 16.9 14 15.2 15.7 14.5 12 10 8 6 4 2 0 2004 Q1/04 Q1/05 Reported Excl. real estate gains/losses 31
Slide 32: Active capital management
Active capital management Tier 1 ratio z Strong capital position % 10 z Tier 1 ratio 6.8% despite completion of 9 buyback programme of 5% of outstanding shares 8 – buyback of 90m shares in Q1 7 7.6 7.3 6.8 7.0 6.8 Authorisation from AGM to purchase up 6 z 5 to 10% of the total no. of shares 4 z Priv
Slide 33: Active capital management
Active capital management EURbn 14 z Basel II framework will better reflect actual risks 12 12.5 taken 10 9.9 z Long-term potential for 8 further capital reductions 8.3 6 and/or growth in business 4 2 0 Equity Tier 1 Capital Economic 6.5% Capital How much How much How much capital does capital must
Slide 34: Balance sheet - key items
Balance sheet - key items Change YoY EURbn Q1/05 2004 Q1/04 % Assets Loans to the public 170 161 148 15 Interest-bearing securities 30 29 35 -13 Other assets 84 89 76 11 Total assets 284 278 258 10 Liabilities Deposits 105 105 92 14 Debt securities 67 61 66 1 of which mortgage bonds 39 37 36 9 Liabi
Slide 35: Business trends
x Q O Q 0 Z Business trends 35
Slide 36: Total lending
Total lending EURbn 180 170.1 161.3 160 148.7 155.5 154.5 147.3 145.7 147.0 147.0 145.6 148.2 141.9 143.4 140 120 100 80 60 40 20 0 02 02 02 02 03 03 03 03 04 04 04 04 05 1/ 2/ 3/ 4/ 1/ 2/ 3/ 4/ 1/ 2/ 3/ 4/ 1/ Q Q Q Q Q Q Q Q Q Q Q Q Q Corporate Retail households mortgages Retail consumer loans Publ
Slide 37: Risk-weighted assets
Risk-weighted assets EURbn 180 160 153 140 145 140 136 137 137 140 140 135 135 135 134 135 120 100 80 60 40 20 0 02 02 02 02 03 03 03 03 04 04 04 04 05 1/ 2/ 3/ 4/ 1/ 2/ 3/ 4/ 1/ 2/ 3/ 4/ 1/ Q Q Q Q Q Q Q Q Q Q Q Q Q 37 End of period
Slide 38: Households mortgages, volumes and margins
Households mortgages, volumes and margins EURbn % 65 1.5 60 1.4 55 56.3 57.7 1.3 54.5 50 52.6 1.2 48.9 50.0 45 48.2 1.1 45.7 43.6 44.3 40 42.0 41.3 42.4 1.0 35 0.9 30 0.8 25 0.7 20 0.6 15 0.5 10 0.4 5 0.3 0 0.2 02 02 02 02 03 03 03 03 04 04 04 04 05 1/ 2/ 3/ 4/ 1/ 2/ 3/ 4/ 1/ 2/ 3/ 4/ 1/ Q Q Q Q Q Q
Slide 39: Consumer lending to households, volumes and margins
Consumer lending to households*, volumes and margins EURbn % 20 4.4 18 4.3 17.6 17.0 17.1 16 16.2 16.9 4.2 15.8 15.4 14 14.3 14.3 14.5 4.1 13.8 13.9 12 4.0 10 3.9 10.0 8 3.8 6 3.7 4 3.6 2 3.5 0 3.4 / 02 / 02 / 02 / 02 / 03 / 03 / 03 / 03 / 04 / 04 / 04 / 04 / 05 1 2 3 4 1 2 3 4 1 2 3 4 1 Q Q Q Q Q Q
Slide 40: Lending to corporates, SME, volumes and margins
Lending to corporates, SME, volumes and margins EURbn % 70 1.8 65 1.7 60 62.2 1.6 59.4 55 55.5 55.7 55.8 55.8 56.6 56.9 1.5 55.2 55.2 55.1 55.1 54.8 50 1.4 45 1.3 40 1.2 35 1.1 30 1.0 25 0.9 20 0.8 15 0.7 10 0.6 5 0.5 0 0.4 02 02 02 02 03 03 03 03 04 04 04 04 05 1/ 2/ 3/ 4/ 1/ 2/ 3/ 4/ 1/ 2/ 3/ 4/ 1
Slide 41: CIB, lending volumes and margins
CIB*, lending volumes and margins EURbn % 30 1.5 28 1.4 26 1.3 24 1.2 23.7 24.0 24.0 23.5 22 22.6 1.1 21.7 21.4 21.4 20 20.3 1.0 18 18.4 19.0 0.9 18.1 18.0 16 0.8 14 0.7 12 0.6 10 0.5 8 0.4 6 0.3 4 0.2 2 0.1 0 0.0 02 02 02 02 03 03 03 03 04 04 04 04 05 1/ 2/ 3/ 4/ 1/ 2/ 3/ 4/ 1/ 2/ 3/ 4/ 1/ Q Q Q Q
Slide 42: Total deposits
Total deposits EURbn 120 110 104.7 105.2 100 94.2 94.6 95.6 97.7 97.1 89.7 92.6 91.1 92.9 92.2 90 88.1 80 70 60 50 40 42.6 43.5 39.2 39.8 39.4 40.0 41.1 40.5 40.4 41.3 41.9 30 37.3 38.1 20 10 0 02 02 02 02 03 03 03 03 04 04 04 04 05 1/ 2/ 3/ 4/ 1/ 2/ 3/ 4/ 1/ 2/ 3/ 4/ 1/ Q Q Q Q Q Q Q Q Q Q Q Q Q Of
Slide 43: Retail deposits, households, volumes and margins
Retail deposits, households, volumes and margins EURbn % 50 2.5 45 2.3 44.8 44.4 43.2 43.8 43.4 43.6 42.6 40 40.9 41.9 2.1 39.2 39.8 38.1 35 37.3 1.9 30 1.7 25 1.5 20 1.3 15 1.1 10 0.9 5 0.7 0 0.5 02 02 02 02 03 03 03 03 04 04 04 04 05 1/ 2/ 3/ 4/ 1/ 2/ 3/ 4/ 1/ 2/ 3/ 4/ 1/ Q Q Q Q Q Q Q Q Q Q Q Q Q
Slide 44: Structural Interest Income Risk (SIIR)
Structural Interest Income Risk (SIIR) EURm, annualised effect on Nii* Q1/05 Q4/04 Increasing market rates, 100bp 123 192 Decreasing market rates, 100bp -150 -200 z Reduced sensitivity following implementation of ALM strategy z Ambition to gradually decrease interest rate sensitivity z Deposit volum
Slide 45: Retail deposits, SME, volumes and margins
Retail deposits, SME, volumes and margins EURbn % 40 1.6 35 1.4 30 30.5 1.2 30.0 28.3 28.4 28.9 28.8 27.7 25 25.5 26.3 26.5 26.2 26.3 26.7 1.0 20 0.8 15 0.6 10 0.4 5 0.2 0 0.0 02 02 02 02 03 03 03 03 04 04 04 04 05 1/ 2/ 3/ 4/ 1/ 2/ 3/ 4/ 1/ 2/ 3/ 4/ 1/ Q Q Q Q Q Q Q Q Q Q Q Q Q 45 End of period
Slide 46: CIB, deposit volumes and margins
CIB*, deposit volumes and margins EURbn % 24 0.6 22 23.2 0.6 20 21.0 0.5 18 0.5 17.9 18.0 16 0.4 15.4 15.2 14 14.2 14.4 14.9 0.4 13.3 12 12.6 13.0 13.1 0.3 10 0.3 8 0.2 6 0.2 4 0.1 2 0.1 0 0.0 02 02 02 02 03 03 03 03 04 04 04 04 05 1/ 2/ 3/ 4/ 1/ 2/ 3/ 4/ 1/ 2/ 3/ 4/ 1/ Q Q Q Q Q Q Q Q Q Q Q Q Q *Ex
Slide 47: Assets under Management
Assets under Management EURbn 160 z AuM climb to new all-time- 135.8 140 125.7 130.6 high at EUR 135.8bn 121.9 123.3 120 – net inflow of EUR 2.7bn in Q1 100 – asset appreciation EUR 80 2.5bn in Q1 60 40 20 0 Q1/04 Q2/04 Q3/04 Q4/04 Q1/05 Nordic retail funds Nordic private banking International wealt
Slide 48: Net inflows
Net inflows EURbn z Inflows into new, innovative 6 products 5 4.2 – ”Dynamic Fixed Income Fund” 4 2.7 z Stable inflow in Nordic Private 3 1.2 Banking 1.4 2.1 2 – streamlining of the private 1 banking concept 0 z Inflow by Institutional clients -1 primarily fixed income Q1/04 Q2/04 Q3/04 Q4/04 Q1/05
Slide 49: European Fund distribution
European Fund distribution EURm 8000 z Net inflow of EUR 0.2bn in Q1 7000 z Marketed in 10 major European 6000 markets 5000 z More than 1000 active distribution 4000 agreements 3000 z Nordea won “Best European fund” 2000 awards from both Lipper and 1000 Standard Poors 0 Q 0 Q 1 Q 1 Q 2 Q 2 Q 3 Q 3 Q
Slide 50: Segment reporting - customer responsible units
Segment reporting - customer responsible units Retail Asset Group Nordea EURm. Q1/05 CIB Sub total Life Treasury Banking Mgmt Functions Group Net interest income 739 105 9 853 0 39 5 897 Commission income 301 80 67 448 19 -1 -13 453 Net gains/losses 50 76 4 130 3 -15 -3 115 Other income 17 9 3 29 36
Slide 51: Retail Banking operating profit
Retail Banking operating profit EURm 600 z Strong increase in volumes 550 500 z Lower net positive loan losses 513 450 487 468 z Improved cost/income ratio 400 432 447 350 z Pressure on deposit margins 300 250 200 150 100 50 Key ratios Q1/05 Q4/04 0 Q1/04 Q2/04 Q3/04 Q4/04 Q1/05 C/I ratio, % 57 58 R
Slide 52: CIB operating profit
CIB operating profit EURm 180 z Increased business activity and 160 growth in income 140 149 148 z Volumes up 120 129 z High and stable income in 118 Markets 100 80 z Positive loan losses continued 79 60 40 20 Key ratios Q1/05 Q4/04 0 C/I ratio, % 51 57 Q1/04 Q2/04 Q3/04 Q4/04 Q1/05 RoEC, % 25 24 52
Slide 53: Increasing profit contribution from emerging home markets
Increasing profit contribution from emerging home markets Q1/05 Q4/04 Q3/04 Q2/04 Q1/04 Poland & the Baltic countries 6 7 5 3 4 International Moscow bank 7 3 4 1 4 Total contribution 13 10 9 4 8 53
Slide 54: Asset Management, product result
Asset Management, product result EURm 80 z AuM increased to EUR 135.8bn 70 z Product result up 6% 60 67 64 60 58 z Decreased expenses in Q1 57 50 40 30 20 10 Key ratios Q1/05 Q4/04 0 C/I ratio, % 54 58 Q1/04 Q2/04 Q3/04 Q4/04 Q1/05 AuM, EURbn 135.8 130.6 54
Slide 55: Life Insurance, product result
44 Life Insurance, product result EURm 70 z Stable result 60 z Maintained high level of 57 Premiums written 50 53 47 49 48 z Financial buffers stable 40 30 Key ratios Q1/05 Q4/04 20 Inv return, % 1.7 3.6 10 Financial 5.8 5.9 0 buffers*, % Q1/04 Q2/04 Q3/04 Q4/04 Q1/05 * Financial buffers in % of pro
Slide 56: Group Treasury operating profit
Group Treasury operating profit EURm 80 z Continued strong result from 70 Group Funding 60 60 z Drop in result from Group 50 55 40 Investment compared to strong 30 Q1 and Q4 2004 20 – less favourable market 22 10 conditions with low volatility 0 6 z Funding rate 3.0% in 2005 -10 (3.2% in 2004) -20 -
Slide 57: Group Functions and Eliminations
Group Functions and Eliminations QoQ: Q1/05 Q4/04 z Income from sale of general Total operating Income 30 4 insurance business, EUR 40m Total operating expenses -51 -54 General: Loan losses -16 -30 z Unallocated expenses in Group functions Operating profit -35 -80 z Central loan loss provisions 57
Slide 58: In summary
In summary z Strong and stable results z Volume growth in focus areas despite – intensifying competition – increasing pressure on margins z Fourth consecutive quarter with positive net loan losses z Going forward – maintaining strict risk and cost management – continue to capture revenue growth oppo
Slide 59: Facts & Figures
x Q O Q 0 Z Facts & Figures 59
Slide 60: Facts & Figures, content
Facts & Figures, content z Credit quality Page 61 z Economic capital Page 73 z Business areas Page 78 z Balance sheet Page 116 z Market shares Page 119 z Financial appendix Page 128 z IFRS Page 132 z Basel II Page 158 z Nordea share Page 162 z Nordea facts Page 170 z Macro statistics Page 174 60
Slide 61: Credit quality
x Q O Q 0 Z Credit quality 61
Slide 62: Loan portfolio by customer category
Loan portfolio by customer category* EURbn 100 91 87 85 88 85 85 84 82 83 84 78 79 80 80 56 58 60 53 55 48 49 50 44 44 46 42 41 42 40 16 16 17 17 17 18 20 14 14 14 14 15 15 10 0 02 02 02 02 03 03 03 03 04 04 04 04 05 1/ 2/ 3/ 4/ 1/ 2/ 3/ 4/ 1/ 2/ 3/ 4/ 1/ Q Q Q Q Q Q Q Q Q Q Q Q Q Corparate lending
Slide 63: Loan portfolio by customer group
Loan portfolio by customer group End Q1/05, EUR 170.1bn End 2004, EUR 161.1bn Public Public sector sector 2% 2% Household Household customers customers Companies Companies 44% 46% 52% 54% 63
Slide 64: Lending to household customers
Lending to household customers End of Q1/05 EUR 75.3bn Other loans z Strong growth in mortgage 23% lending z Other loans comprise – consumer credits – investment credits – car financing – overdraft facilities – credit cards Housing loans 77% 64
Slide 65: Lending to companies by industry
Lending to companies by industry End of Q1/05 EUR 91.1 bn Shipping & Offshore Construction Transport and 4% 3% communication 6% Real estate 27% Agriculture & Fishing 6% Renting, consulting and other services 6% Other companies 9% Manufacturing 14% Commerce and services Finance 10% 13% 65
Slide 66: Loan portfolio in figures
Loan portfolio in figures EURbn Q1/05 Q4/04 Q3/04 Q2/04 Q1/04 Household customers 75.3 73.4 71.5 69.5 66.3 Real estate 24.7 23.5 22.6 22.4 20.9 Construction 2.9 2.9 2.8 2.8 2.7 Transport, communication 4.9 4.6 4.4 4.3 4.3 Trade and services 9.4 8.6 8.5 9.3 8.8 Manufacturing 12.7 12.0 12.5 12.9 11.9
Slide 67: Lending by geographical area
Lending by geographical area End of Q1/05 EUR 170.1bn Latin America USA 0.5% Other non OECD 1.0% 0.6% Nordic countries Other OECD and P&B 0.5% 93.2% Other Asia 6.8% 0.6% Other EU countries Nordic countries and P&B 3.6% z Denmark 42.1 z Finland 34.0 z Norway 24.0 z Sweden 47.8 z P&B 2.3 67
Slide 68: Nordea real estate financing portfolio
Nordea real estate financing portfolio End of Q1/05 Total exposure approx. EUR 24.8bn Denmark 8.4% Sweden z Largest industry exposure Norway 19.4% 48.9% z Relatively large and financially strong companies z High level of collateral coverage z Dominantly Swedish exposure – out of which more than 50%
Slide 69: Nordea shipping portfolio
Nordea shipping portfolio Distribution by type of vessel End of Q1/05 Total exposure approx. EUR 6.3bn Reefers Combined 3% vessels Other dry cargo 1% 4% Pure car carries Bulkers z Outstanding, EUR 5.5bn 17% 4% Ferries z Well diversified portfolio by 6% type of vessel Cruise Crude tankers 6% 13% z Fo
Slide 70: Nordea fisheries financing
Nordea fisheries financing End of Q1/05 Total exposure approx. EUR 1.8 bn Fish processing/ export z Total outstanding EUR 1.5bn 23% Fish z Mainly Norwegian exposure farming 43% z Exposure to Fish farming EUR 0.8bn – represents approx. 0.5% of total loan book Fishing vessels 34% 70
Slide 71: Impaired loans
Impaired loans EURm. End of Q1/05 Gross Provisons Net Household customers 438 -267 171 Real estate 124 -98 26 Construction 51 -41 10 Transport, communication 149 -110 39 Trade and services 221 -182 39 Manufacturing 316 -284 32 Finance 61 -54 7 Renting, Consulting and other services 159 -125 34 Other
Slide 72: Loan losses
Loan losses EURm 200 YoY: z Overall stable credit quality 150 128 129 127 131 z Reversals exceeded new 100 91 provisions – 4th quarter in a row 42 50 0 QoQ: -3 -2 -10 -6 z Stable credit quality -50 z No industry sector stands out -100 -86 -97 -150 -132 -129 -141 -200 Q1/04 Q2/04 Q3/04 Q4/04 Q1/05 Gr
Slide 73: Economic capital
Economic capital 73
Slide 74: Economic capital (EC)
Economic capital (EC) z EC is the capital required by Nordea to cover unexpected losses z 5 different risk categories are incorporated z The measurement period is one year z The confidence level is 99.97% z The economic capital may change over time due to: – composition of risk exposures – changes i
Slide 75: Economic capital
Economic capital EURbn 10.0 z Economic capital reduced 9.0 by EUR 0.1bn in Q1 8.7 8.0 8.4 8.4 8.4 8.3 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 Q1/04 Q2/04 Q3/04 Q4/04 Q1/05 75
Slide 76: Economic capital per business area
Economic capital per business area End of Q1/05 Asset Mgmt TreasuryOther 5% 1% EC per business area, Q1/05 & Life 11% EURbn Retail Banking 5.2 CIB 1.6 Asset Mgmt 0.1 CIB 20% Life 0.9 Retail 63% Treasury 0.4 Other 0.2 Total 8.3 76
Slide 77: Distribution of economic capital - by risk category
Distribution of economic capital - by risk category End of Q1/05 Life risk Operational risk 1% 9% Business risk 9% Market risk 17% Credit risk 64% 77
Slide 78: Retail Banking
x Q O Q 0 Z Retail Banking 78
Slide 79: Retail Banking
Retail Banking EURm Q1/05 Q4/04 Q3/04 Q2/04 Q1/04 Net interest income 739 766 727 716 726 Commission income 301 320 297 287 288 Net gains/losses 50 49 40 52 45 Equity method 3 16 4 3 4 Other income 14 8 10 21 11 Operating income 1,107 1,159 1,078 1,079 1,074 Staff costs -260 -274 -259 -263 -262 Othe
Slide 80: Retail Banking operating profit by main area
Retail Banking operating profit by main area Retail DK FI NO SE Nordic functions EURm Q1 Q4 Q1 Q4 Q1 Q4 Q1 Q4 Q1 Q4 Q1 Q4 Net interest income 739 766 208 211 196 204 117 122 204 214 14 16 Non-interest income 368 394 107 101 88 94 39 43 132 141 2 14 Total income 1,107 1,160 315 312 284 298 156 165 33
Slide 81: Retail Banking lending and deposit volumes
Retail Banking lending and deposit volumes Lending, EURbn Q1/05 Q4/04 Q3/04 Q2/04 Q1/04 Q4/03 Q3/03 Q2/03 Denmark 38.2 37.4 36.0 35.5 34.3 33.4 33.0 32.4 Finland 32.4 31.6 30.4 29.5 28.3 27.5 27.2 26.4 Norway 21.4 21.0 20.0 19.9 19.3 18.8 19.2 18.9 Sweden 43.5 42.6 40.9 40.0 38.3 38.8 38.9 38.0 Depo
Slide 82: Retail Banking margins
Retail Banking margins % Q1/05 Q4/04 Q3/04 Q2/04 Q1/04 Q4/03 Q3/03 Q2/03 Lending to SME’s 1.12 1.12 1.12 1.18 1.21 1.19 1.23 1.19 Mortgages, households 0.89 0.90 0.91 0.96 0.99 0.97 1.10 1.03 Consumer loans, 3.93 3.94 3.98 4.05 4.13 4.09 4.13 4.06 households Deposits, SME’s 0.86 0.91 0.93 0.90 0.96
Slide 83: Retail Banking breakdown of deposits
Retail Banking breakdown of deposits Denmark, EURbn Q1/05 Q4/04 Q3/04 Q2/04 Q1/04 Q4/03 Q3/03 Q2/03 Corporate 7.4 7.2 7.1 7.2 6.7 5.8 5.7 5.7 Households, current 2.8 2.7 2.7 2.6 2.5 2.4 2.4 2.4 accounts Households, savings 7.0 6.9 6.9 6.8 6.7 6.7 6.7 6.6 accounts Finland, EURbn Q1/05 Q4/04 Q3/04 Q2/
Slide 84: Retail Banking breakdown of deposits
Retail Banking breakdown of deposits Norway, EURbn Q1/05 Q4/04 Q3/04 Q2/04 Q1/04 Q4/03 Q3/03 Q2/03 Corporate 6.2 5.7 5.6 5.7 5.7 5.5 5.6 5.5 Households, current 1.4 1.3 1.3 1.2 1.2 1.1 1.1 1.1 accounts Households, savings 3.6 3.6 3.6 3.6 3.5 3.4 3.5 3.5 accounts Sweden, EURbn Q1/05 Q4/04 Q3/04 Q2/04
Slide 85: E-banking & transactions
E-banking & transactions 85
Slide 86: E-banking customers, all clients
86 Ja n- 0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 5 0 Ju 0 Mill. ly - 0 Ja 0 n- 0 Ju 1 ly - 0 Ja 1 n- 0 Ju 2 ly - 0 Ja 2 n- 0 Ju 3 l- 0 Ja 3 E-banking customers n- 0 Ju 4 l- 0 Ja 4 n- 05 Ja n- 0 50 100 150 200 250 300 350 400 Ju 00 (1,000) ly- 0 Ja 0 E-banking customers, all clients n- Ju 01 ly- 0 Ja 1 n- Ju 0
Slide 87: Payments and log-ons, all clients
Payments and log-ons, all clients E-banking payments E-banking log-ons Mill. Mill. 50 50 45 45 40 40 35 35 30 30 25 25 20 20 15 15 10 10 5 5 0 0 Q 0 Q 0 Q 1 Q 1 Q 2 Q 2 Q 3 Q 3 Q 4 Q 4 05 00 00 01 02 03 03 04 0 0 0 0 0 0 0 0 0 0 1/ 3/ 1/ 3/ 1/ 3/ 1/ 3/ 1/ 3/ 1/ 1/ 4/ 3/ 2/ 1/ 4/ 3/ Q Q Q Q Q Q Q Q D
Slide 88: Penetration on the net, all clients
88 Ja n- 0 5 10 15 20 25 30 35 40 45 % M 01 ay Se -01 pt - Ja 01 n- M 02 ay - S e 02 p- 0 Ja 2 n- M 03 ay - Se 03 p- 0 Ja 3 n- M 04 ay - Se 04 p- 0 Mutual funds penetration rate Ja 4 n- 05 Ja n 0 10 20 30 40 50 60 70 80 % M -00 ay Se -00 pt - Ja 00 n Penetration on the net, all clients M -01 ay Se -
Slide 89: Cards, all clients
89 Q 0 20 40 60 80 100 120 140 160 Mill. 1/ 01 Q 3/ 01 Q 1/ 02 Q 3/ 02 Q 1/ 03 Q 3/ 03 Q 1/ 04 Card payments Cards, all clients Q 3/ 04 Q 1/ 05 Ja 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 n- Mill. M 01 ay Se -01 pt - Ja 01 n- M 02 ay Se -02 pt - Ja 02 n- M 03 ay - Se 03 p- 0 Ja 3 n M -04 ay - Se
Slide 90: Payment transactions, households
Payment transactions, households Payments transactions, households Breakdown of transactions Mill. Mill. 300 150 140 275 130 120 110 250 100 90 225 80 70 60 200 50 40 175 30 20 10 150 0 1 1 2 2 03 03 04 04 05 01 01 02 02 03 03 04 04 05 0 0 0 0 1/ 3/ 1/ 3/ 1/ 3/ 1/ 3/ 1/ 1/ 3/ 1/ 3/ 1/ 3/ 1/ 3/ 1/ Q
Slide 91: Payment transactions, households
Payment transactions, households Million Q1/05 2004 2003 2002 2001 2000 Manual transactions 25.6 103.9 112.5 125.3 141.0 163.9 Payterminals 5.3 23.6 27.1 31.7 34.3 35.6 Card payments 129.1 527.8 459.9 395.5 333.5 263.1 Cash withdrawal 43.1 190.4 197.4 204.4 207.2 202.5 ATM Direct debit 26.1 98.5 86.
Slide 92: Corporate and Institutional Banking (CIB)
Corporate and Institutional Banking (CIB) 92
Slide 93: Corporate and Institutional Banking
Corporate and Institutional Banking EURm Q1/05 Q4/04 Q3/04 Q2/04 Q1/04 Net interest income 105 109 95 101 100 Commission income 80 81 95 77 79 Net gains/losses 76 57 43 27 97 Equity method 7 5 5 3 5 Other income 2 5 2 8 3 Operating income 271 257 240 216 284 Staff costs -77 -70 -69 -76 -79 Other exp
Slide 94: CIB operating profit by main area
CIB operating profit by main area Shipping Corporate Financial Offshore and CIB Banking Instititutions Oil services Poland & Baltic Other Markets Division Division Division EURm Q1 Q4 Q1 Q4 Q1 Q4 Q1 Q4 Q1 Q4 Q1 Q4 Q1 Q4 Net interest income 105 108 43 44 10 9 33 30 17 16 2 9 11 13 Commission income 8
Slide 95: CIB lending and deposit volumes and margins
CIB lending and deposit volumes and margins Lending, EURm Q1/05 Q4/04 Q3/04 Q2/04 Q1/04 Q4/03 Q3/03 Q2/03 Corporate Banking Division 12.8 10.9 11.3 12,1 10,7 11.1 13.5 14.5 Financial Institutions Division 2.0 1.4 1.6 2.1 1.4 1.8 2.4 2.8 Shipping, Offshore and Oil 6.5 5.9 6.1 6.1 6.0 5.5 5.4 5.3 Serv
Slide 96: Nordea operations in Poland and the Baltic countries
Nordea operations in Poland and the Baltic countries End of Q1/05 Estonia Latvia Lithuania Poland Total Customers 37,100 24,600 11,300 300,500 373,500 Branches/salespoints 10 11 7 36 64 Number of FTEs 212 187 121 860 1,390 Total assets, EURm 801 677 400 1,371 3,250 Credits, EURm 670 525 341 1,161 2,
Slide 97: Asset Management & Life
Asset Management & Life 97
Slide 98: Asset Management
Asset Management EURm Q1/05 Q4/04 Q3/04 Q2/04 Q1/04 Customer responsible units: Net interest income 9 9 9 9 9 Commission income 67 77 60 57 61 Net gains/losses 4 4 1 6 5 Equity method 0 0 0 0 0 Other income 3 2 2 3 2 Operating income 83 92 72 75 77 Staff costs -26 -26 -23 -22 -23 Other expenses -21
Slide 99: Assets under Management - breakdown
Assets under Management - breakdown EURbn Q1/05 Q4/04 Net inflow 2.7 1.2 Change in value * 2.5 3.7 Total change +5.2 +4.9 Assets under management start of quarter 130.6 125.7 Assets under management end of quarter 135.8 130.6 Breakdown of AuM: Nordic retail funds** 39.3 40.4 Nordic private banking 2
Slide 100: Assets under Management - breakdown
Assets under Management - breakdown Retail Fund sales funds* through Private Institutional Life & AuM, Q1/05, (sold through EURbn third-parties Banking clients Pensions own distribution) Denmark 14.4 - 12.1 9.7 15.9** 52.1 Finland 6.8 - 12.2 3.8 7.3 30.1 Norway 1.6 - 0.6 3.0 3.7 8.8 Sweden 16.5 - 4.
Slide 101: Asset structure
Asset structure* Q1/05 Q4/04 Int'l. fixed income Int'l. fixed 13% income Nordic 12% Nordic Nordic equities fixed equities 13% Nordic income 13% fixed 47% income 49% Int'l. equities Int'l. 27% equities 26% *Includes all assets under management excluding private banking assets. 101
Slide 102: Life Insurance
Life Insurance EURm Q1/05 Q4/04 Q3/04 Q2/04 Q1/04 Customer responsible units: Net interest income 0 0 0 0 0 Commission income 19 4 16 18 20 Net gains/losses 3 15 2 17 11 Equity method 0 0 0 0 0 Other income 36 41 35 31 35 Operating income 58 60 53 66 66 Staff costs -16 -19 -15 -15 -15 Other expenses
Slide 103: Life - breaking out profit drivers
Life - breaking out profit drivers z Fee based on size of life provisions in “with profit” companies – DK, FI, SE II Fee contribution z Profit-sharing from the Norwegian business (existing model, change pending) Contribution from cost z 25% of surplus/deficit from cost result in DK, 100% from FI and
Slide 104: Life - profit drivers
Life - profit drivers EURm Q1/05 Q4/04 Q3/04 Q2/04 Q1/04 Traditional insurance Fee contribution/profit sharing 30 24 22 39 40 Contribution from cost result 1 1 1 -1 0 Contribution from risk result 5 2 5 5 1 Inv. return on Shareholders Equity 3 2 4 0 4 Other profits 3 15 8 8 4 Total Profit Traditiona
Slide 105: Life - investments
Life - investments EURbn 30 27.1 z Equities 26.4 24.8 24.8 25.4 25 – predominantly listed equities 20 – 1/3 Nordic, 2/3 international z Bonds 15 – ¾ Nordic issuers 10 – primarily govmn’t & mortgage inst. 5 0 Q1/04 Q2/04 Q3/04 Q4/04 Q1/05 Equities Bonds Real estate Unit linked Alternative investments
Slide 106: Life - asset allocation
Life - asset allocation Total, EURbn Equities, % Q1/05 Q4/04 Q1/05 Q4/04 Denmark 12.6 12.3 20 20 Finland 7.3 7.0 20 18 Norway 3.7 3.5 13 12 Sweden 2.9 2.9 3 5 Total 26.5 25.7 16 16 106
Slide 107: Life - solvency situation
Life - solvency situation End of Q1/05 Required Actual Solvency Solvency in % EURm solvency solvency buffer of requirement Denmark 476 532 56 112 Finland 217 587 370 271 Norway 132 242 110 183 Sweden 68 142 74 208 107
Slide 108: Life – solvency sensitivity
Life – solvency sensitivity End of Q1/05 Denmark Finland Norway Sweden % Solvency in % of requirement 112 271 183 208 Equities drop 12% 110 234 181 199 Interest rates down 50bp 109 297 183 217 Interest rates up 50bp 114 256 183 199 108
Slide 109: Life – financial buffers
Life – financial buffers* EURm % of total provisions Q1/05 Q4/04 Q1/05 Q4/04 Denmark 829 847 7.9 8.2 Finland 223 203 4.4 4.0 Norway 42 45 1.4 1.6 Sweden 78 82 4.6 4.8 Total 1,172 1,177 5.8 5.9 109 * Financial buffers are defined in accordance with local regulations and practices.
Slide 110: Life – buffer sensitivity
Life – buffer sensitivity End of Q1/05 Denmark Finland Norway Sweden EURm Financial buffers* 829 223 42 78 Equities drop 12% -176 -82 -41 -6 Interest rates down 50bp 123 56 0 +6 Interest rates up 50bp 7 -32 +4 -6 * Financial buffers are defined in accordance with local regulations and practices. 110
Slide 111: Group Treasury
Group Treasury 111
Slide 112: Group Treasury
Group Treasury EURm Q1/05 Q4/04 Q3/04 Q2/04 Q1/04 Net interest income 39 37 24 25 11 Commission income -1 -1 -2 -2 -2 Net gains/losses -15 38 -10 -52 55 Equity method 0 0 0 0 0 Other income 10 0 6 13 3 Operating income 33 74 18 -16 67 Staff costs -3 -4 -1 -2 -2 Other expenses -8 -10 -11 -9 -10 Depre
Slide 113: Group Treasury operating profit by main area
Group Treasury operating profit by main area Total Group Investment Group Funding EURm Q1/05 Q4/04 Q1/05 Q4/04 Q1/05 Q4/04 Net interest income 39 37 -11 -14 50 51 Net fee and commission income -1 -1 -1 -1 0 0 Net gains/losses on items at fair value -15 38 9 52 -24 -14 Other operating income 10 0 10
Slide 114: Group Treasury - investments
Group Treasury - investments EURbn 20 z Equities 16.8 16.6 16.5 – listed, unlisted & private equity 16.2 16.0 15 funds z Bonds 10 – ¾ Nordic issuers – primarily government and mortgage institutions 5 0 Q1/04 Q2/04 Q3/04 Q4/04 Q1/05 Fixed income Equities End of period 114
Slide 115: Group Treasury – risk management
Group Treasury – risk management z Interest rate risk (VaR) – risk related to interest rate positions, calculated as VaR z Equity risk (VaR) – risk related to equities, calculated as VaR, comprise all equities including listed, unlisted and private equity EURm, end of period Q1/05 2004 2003 Interest
Slide 116: Balance sheet
Balance sheet 116
Slide 117: Balance sheet
Balance sheet EURm End of Q1/05 End of 2004 End of Q1/04 Treasury bills and other interest-bearing securities 11,121 12,758 9,524 Loans and receivables to credit institutions 22,335 20,628 20,309 Loans and receivables to the public 170,112 161,295 148,208 Derivatives 23,566 26,697 19,242 Other asset
Slide 118: Capital base
Capital base EURm Q1/05 Q4/04 Q3/04 Q2/04 Q1/04 Core equity 12,474 12,549 12,449 12,041 11,262 Deductions insurance companies and other -1,245 -1,004 -817 -657 -769 Core equity in the capital base 11,229 11,545 11,632 11,384 10,493 Hybrid capital 914 757 782 287 285 Minority interests 14 4 3 3 6 Gro
Slide 119: Market shares
Market shares * Statistics as Feb 2005 119
Slide 120: Market position in Nordic markets
Market position in Nordic markets Market shares Denmark Finland Norway Sweden Personal customers - mortgage lending 14.5% 32.3% 11.2% 16.1% - consumer lending 15.9% 30.9% 11.0% 9.9% - deposits 21.8% 33.7% 8.4% 18.9% Corporate customers - lending 21.5% 36.2% 16.9% 14,0% - deposits 23.2% 39.6% 16.6% 2
Slide 121: Personal customer deposits - market volume & share
121 Fe 02 b -F 0 100 200 300 400 500 0 100 200 300 400 500 M -02 02 eb ay -m DKKbn NOKbn Au -02 02 ay g -A N - 02 02 ug ov -N F e - 02 03 ov b - M -03 03 Feb ay -M Au - 03 03 ay g -A N - 03 03 ug ov -N F e - 03 04 ov Norway b Denmark -F M -04 04 eb ay -M Au - 04 04 ay g -A N - 04 04 ug ov -N F e - 0
Slide 122: Corporate deposits - market volume & share
122 Fe Fe b b 0 100 200 300 400 0 50 100 150 200 250 300 350 M -02 M - 02 ay ay DKKbn NOKbn Au -02 A -02 g ug N - 02 N - 02 ov ov F e - 02 F e - 02 b b M -03 M -03 ay ay Au -03 Au -03 g g N - 03 N - 03 ov ov F e - 03 Norway F e - 03 Denmark b b M -04 M -04 ay ay A -04 A -04 ug ug N - 04 N - 04 ov ov
Slide 123: Personal customer lending - market volume & share
123 Fe Fe b b 0 200 400 600 800 1000 0 50 100 150 200 250 300 350 M -02 M -02 DKKbn ay ay NOKbn Au -02 A -02 g ug N - 02 N - 02 ov ov F e - 02 F e - 02 b b M -03 M -03 ay ay A -03 A -03 ug ug N - 03 N - 03 ov ov F e - 03 Norway F e - 03 Denmark b b M -04 M -04 ay ay A -04 A -04 ug ug N - 04 N - 04 o
Slide 124: Mortgage lending households - market volume & share
124 Fe Q b 1 0 200 400 600 800 1000 0 200 400 600 800 M -02 Q / 01 ay 2 DKKbn Q / 01 3 NOKbn A -02 ug Q / 01 N - 02 4 ov Q / 01 1 F e - 02 Q / 02 b 2 M -03 Q / 02 ay 3 Q / 02 A -03 ug 4 Q / 02 N - 03 1 ov Q / 03 F e - 03 2 Q / 03 Norway Denmark b 3 M -04 Q / 03 ay 4 A -04 Q / 03 ug 1 Q / 04 N - 04 2
Slide 125: Corporate lending - market volume & share
125 Fe Fe b b 0 100 200 300 400 500 0 100 200 300 400 500 M -02 M -02 ay ay DKKbn NOKbn A -02 Au -02 ug g N - 02 N - 02 ov ov F e - 02 F e - 02 b b M -03 M -03 ay ay A -03 A -03 ug ug N - 03 N - 03 ov ov F e - 03 Norway F e - 03 Denmark b b M -04 M -04 ay ay A -04 Au -04 ug N - 04 g ov N - 04 ov F e
Slide 126: Investment funds - market volume & share
Investment funds - market volume & share DKKbn Denmark EURbn Finland 600 32% 40 34% 500 30% 32% 400 28% 30 30% 300 26% 28% 20 26% 200 24% 10 24% 100 22% 22% 0 20% 0 20% 3 S 4 3 3 5 D 3 3 D 4 4 03 04 3 4 5 3 03 4 04 -0 0 -0 -0 -0 -0 -0 -0 -0 -0 -0 -0 0 0 n- n n- n- ar ar ar ep ep ec ec p- - p- - ar a
Slide 127: Market share, equity dealing - Nordea Markets
Market share, equity dealing - Nordea Markets % 10 9 8 8.6 8.9 7 6 6.1 5 5.1 4.7 4.7 4 3 3.6 3.7 2 1 0 ki o m en sl sin ol ag O kh el h oc H en St op C 2004 Ytd 2005 127
Slide 128: Financials - appendix
Financials - appendix 128
Slide 129: Quarterly development
Quarterly development EURm Q1/05 Q4/04 Q3/04 Q2/04 Q1/04 Net interest income 897 920 875 846 854 Net fee and commission income 453 467 443 450 434 Net gains/losses on items at fair value 115 179 63 77 216 Equity method 13 15 15 16 9 Other income 104 65 54 73 56 Total operating income 1,582 1,646 1,4
Slide 130: Non-recurring gains and losses in operating profit
Non-recurring gains and losses in operating profit EURm Q1/05 Q4/04 Q3/04 Q2/04 Q1/04 Q4/03 Q3/03 Q2/03 Real estate sales and 300* write downs Real estate sales and -115* write downs OM/HEX shares 27 Inkassosentralen 8 Huoneistokeskus 43 Nordisk Renting 32 Sale of general ins. 40 Total 40 0 0 300* 0
Slide 131: Total IT-related expenses
Total IT-related expenses* EURm 200 YoY: 180 z Kept flat 182 160 165 166 164 z Increased transaction 161 volumes 140 120 100 QoQ: 80 z Down 10% 60 40 20 0 Q1/04 Q2/04 Q3/04 Q4/04 Q1/05 *Refers to IT operations, service expenses and consultant fees including personnel etc, but 131 excluding IT expens
Slide 132: IFRS
IFRS 132
Slide 133: IFRS – effects on financial statements
IFRS – effects on financial statements 1. Introduction 2. Opening Balance effects Key effects on P&L 3. Reconciliation of 2004/2005 P&L 4. Segment reporting Appendix Reconciliation of Operational income statement & restated IFRS income statement 2004 133
Slide 134: IFRS – Opening balance 2005
IFRS – Opening balance 2005 z Swedish accounting standards have been gradually aligned to IFRS since 2000 – 29 standards implemented by year-end 2004 z Implementation of IFRS from 1 January 2005 will increase equity by EUR 160m (net of tax) z Main standards affecting the opening balance: – IFRS 3 Bu
Slide 135: IFRS – Opening balance 2005
IFRS – Opening balance 2005 EURm Reported Equity 2004 (end of period) 12,549 IFRS 3 Goodwill amortisation +161 IAS 39 Loan loss provisions +70 IAS 39 Financial instruments -37 IAS 36 Impairment of assets -29 IAS 1 Minority interests +13 Other opening balance issues -16 Equity Opening Balance 1 Jan 2
Slide 136: Opening balance - key comments
Opening balance - key comments z Net effect on equity and Tier 1 capital as disclosed in the Annual Report for 2004 – Page 34 - 37 provides explanatory comments z No major changes expected prior to announcement of result for Q1/05 z Revisions and updates during 2005 may occur – Changes as a result o
Slide 137: IFRS – Profit and loss
IFRS – Profit and loss z The implementation of the new standards is expected to have a positive effect on Nordea’s reported earnings in 2005 z IFRS 3 regarding goodwill means that no amortisation of goodwill will be made, but impairment test will, as previously, be performed – net effect on Nordea i
Slide 138: IFRS – Profit and loss
IFRS – Profit and loss z Restatement of Income Statement 2004 EURm Reported earnings 2004 1,914 No Goodwill amortisation +161 Minority interests recorded as equity +3 Reported earnings (excluding effects of IAS 39) 2,078 138
Slide 139: Line by line consolidation of Life
Line by line consolidation of Life z No effect on Net Interest Income z Commission income will include: – “Expense loading” (+) – Unit Linked commissions (+) – Sales commissions and fund mgmt. fees (-) z Real estate income and expenses related to Life’s investment portfolio reported on the “Other in
Slide 140: Net gains / losses on items to fair value
Net gains / losses on items to fair value z “New” line in the P&L Comprises: EURm 2004 – Income in Markets, except commissions 434 (previously reported as “Trading income”) – Premium income in Life 2,309 (except “expense loading”, UL com. & com. expenses) – Investment result in Life 1,543 45 – Claim
Slide 141: Other issues
Other issues z Staff & other expenses in Life will increase reported expenses (EUR 117m) – Nordea will report real estate income and costs in Life on same line (“Other income”) Uncertainty remains regarding market practice on this issue z Depreciation of operational leases will increase reported exp
Slide 142: Comments to reconciliation of:
Comments to reconciliation of: z Operational income statement 2004 Restated IFRS income statement 2004 Refers to Bridges 1-3, provided as slides 150 -152 142
Slide 143: Effect per IFRS standard - Bridge no. 1
Effect per IFRS standard - Bridge no. 1 z IFRS 4 - Life – Not restated for 2004 – Fair value already main valuation principle in Nordea – Effect of Deferred Acquisition Cost-standard expected to be limited – Limited total effect in P&L expected going forward z IFRS 3 - Life line by line – One line c
Slide 144: Effect per IFRS standard, cont’d
Effect per IFRS standard, cont’d z IFRS 3 - Consolidation, new companies – Some smaller companies previously accounted for using “Equity method” – Negligible effects on income and costs – No effect on reported net profit 2004 z IAS 39 - Lending – Not restated for 2004 – Interest income related to im
Slide 145: Effect per IFRS standard, cont’d
Effect per IFRS standard, cont’d z IAS 39 - Other than lending – Not restated for 2004 – May lead to increased volatility going forward related to valuation of financial instruments – Nordea will use hedge accounting for financial assets/liabilities where relevant – Minor effects on P&L as long as h
Slide 146: Effect per IFRS standard, cont’d
Effect per IFRS standard, cont’d z IAS 38 / IFRS 3 - Goodwill – No amortisation of goodwill will be made in 2005 – Impairment tests will, as previously, be performed – Amortisation in 2004 restated (reversed) – Positive effect on restated operating profit of EUR 161m for 2004 (actual depreciation 20
Slide 147: Reclassifications according to IFRS - Bridge no. 2
Reclassifications according to IFRS - Bridge no. 2 z Treasury – 2004 P&L line “Investment earnings, banking” will be deleted – Result element, EUR 8m, has been reclassified to other lines in the P&L, as follows: – “Net interest income” shows NII on Treasury’s bond portfolio (main part of investment
Slide 148: Reclassifications according to IFRS (cont’d)
Reclassifications according to IFRS (cont’d) z Markets – 2004 P&L line “Trading” will be deleted – Result element, EUR 481m, has been reclassified to other lines in the P&L, as follows: – “Fee and commission income” shows commission income in Markets (Note that brokerage already in 2004 was included
Slide 149: Reclassifications according to IFRS (cont’d)
Reclassifications according to IFRS (cont’d) z Other financial income – Small amounts of other financial income in Business Areas or Treasury have in 2004 been reported as “Net interest income” – Such amounts have been reclassified to “Net gains/losses on items to fair value”, where relevant z Equit
Slide 150: Reclassifications according to IFRS (cont’d)
Reclassifications according to IFRS (cont’d) z Depreciation – Depreciation of tangible and intangible assets will be shown on a separate line – Reclassified from “Other expenses” z Leasing depreciation – Depreciations of operational leases (Nordea = lessor) reclassified from “Net interest income” to
Slide 151: Summary - Bridge no. 3
Summary - Bridge no. 3 Shows summary of bridges no. 1 & 2: z Operational income statement 2004 z Net effect of Bridge no. 1 - effect per IFRS standard z Operational income statement 2004, including effects per IFRS standard z Net effect of Bridge no. 2 - reclassifications according to IFRS z Full IF
Slide 152: IFRS restatements in Segment Reporting 2004
IFRS restatements in Segment Reporting 2004 z Goodwill Depreciations discontinued (Retail EUR 21m, CIB EUR 14m, Group functions and Eliminations EUR 126m). z Depreciations operational leasing reclassified (Retail EUR 37m EUR moved from net interest to depreciations). z Trading income split into IFRS
Slide 153: Other restatements in Segment Reporting 2004
Other restatements in Segment Reporting 2004 z Change in principles for allocation of costs in Markets to Retail (Retail EUR 18m / CIB EUR -18m). z Change in principles for allocation of costs in Group IT to Business Areas (Retail EUR 23m / CIB EUR 9m / AM EUR 5m). z Changed principle for capital be
Slide 154: Restated Segment Reporting FY 2004
Restated Segment Reporting FY 2004 Retail Corporate Asset Total Life Group Group Total Banking and Mgmt 2004 Treasury functions 2004 Institutional and EUR m Banking eliminations Customer Responsible Units Net interest income 2,936 404 36 3,376 0 97 22 3,495 Net fee and commission income 1,192 332 25
Slide 155: Profit and loss statement 31.12.2004 IFRS effects per standard
PROFIT AND LOSS STATEMENT 31.12.2004 2004 IFRS effects per standard Total 1) 1) 1) IFRS 4 IFRS3 IFRS 3 IAS 39 IAS 39 IAS 38/ IFRS 3 Total effect Income statement Actual Line by line consolidation Loans and other than Loans IFRS 3 Minority Operational EURm Life Life New companies receivables and rece
Slide 156: Income statement 2004 transition of operational to IFRS
Inc o me s tate me nt 2004 Ope ratio nal Re c las s ific atio n o f amo unts to fit ne w IFRS mo de l To tal c hang e Ne w PL Movement of Le a s ing Othe r fin Equity method De pre cia tion to de pre cia tion Trans itio n o f o pe ratio nal to IFRS EURm incl IFRS effect Tre a s ury Ma rke ts Ins ura
Slide 157: Operational income statement
C h a n g e s f ro m p re s e n t O p e ra t i o n a l f o rm a t t o A d ju s t e d O p e ra t io n a l in c o m e s t a t e m e n t EURm 2004 IF R S e f f e c t s O p e ra t i o n a l i n c l IF R S IF R S P L 2004 T o t a l in t e r e s t in c o m e 8 ,0 0 8 8 ,0 0 8 -4 4 7 ,9 6 4 T o t a l in t
Slide 158: Basel II
Basel II 158
Slide 159: Benefits for Nordea in Basel II
Benefits for Nordea in Basel II z Business case for Basel II can be drawn from the reduction in risk weighted assets and hence capital needed under the chosen implementation plan z Equally important are the indirect benefits; – improved risk management standards – improved efficiency in the credit p
Slide 160: Implementation plan with regards to Basel II
Implementation plan with regards to Basel II z Nordea has the ambition as regards credit risk to move towards IRB approach starting with foundation approach 2007 and moving gradually towards advanced approach z With regards to operational risk Nordea intends to implement a standardised approach, alr
Slide 161: Expected effects on capital requirements
Expected effects on capital requirements z For Nordea, as for most Nordic banks, the new Accord is expected to have a positive effect on minimum required capital z The main reason is the Groups lending portfolio mix; – household lending portfolio, representing 45% of the Groups total lending, where
Slide 162: Total shareholder return (TSR) 2005
Total shareholder return (TSR) 2005 Nordea peer group* COMMERZBANK 18.7 KBC 16.7 HYPOVEREINSBANK 13.6 SEB 12.7 ALLIED IRISH BANK 11.4 DnB NOR 11.3 NORDEA 10.1 SOCIETE GENERALE 10.1 SWEDBANK 8.2 DANSKE BANK 7.5 LLOYDS TSB 5.5 BNP 3.8 BANK OF IRELAND 2.4 HBOS 1.2 ABN AMRO 0.1 SHB 0.0 BARCLAYS -1.2 RBO
Slide 163: Total shareholder return (TSR) 2004
Total shareholder return (TSR) 2004 Nordea peer group* KBC 56.0 DnBNOR 38.3 NORDEA 29.8 ALLIED IRISH BANK 25.4 SEB 24.5 DANSKE BANK 23.7 HBOS 22.5 BARCLAYS 21.3 SWEDBANK 20.8 SHB 20.6 BANK OF IRELAND 15.8 LLOYDS TSB 12.8 RBOS 10.0 BNP 9.3 ABN AMRO 9.2 SOCIETE GENERALE 8.8 COMMERZBANK -4.2 HYPOVEREIN
Slide 164: Peer group by market cap, EURbn
Peer group* by market cap, EURbn 13 April 2005 RBOS BARCLAYS BNP HBOS LLOYDS TSB ABN AMRO SOCIETE GENERALE KBC NORDEA DANSKE BANK ALLIED IRISH BANK HYPOVEREINSBANK SHB BANK OF IRELAND DnB NOR SEB COMMERZBANK SWEDBANK 0 10 20 30 40 50 60 70 80 164 *As defined by Nordea
Slide 165: Shareholder structure, end of Q1 2005
Shareholder structure, end of Q1 2005 4.2% 2.4% 5.9% 29.2% 5.9% International institutions Swedish institutions 6.3% Swedish state Finnish public Finnish institutions Danish institutions Danish public 19.5% Swedish public 26.6% Number of shareholders approx. 486,000 165
Slide 166: Largest registered shareholders, end of Q1 2005
Largest registered shareholders, end of Q1 2005 Shareholder Number of shares % Swedish state 515.6 19.5 Nordea Danmark fund 102.5 3.9 Robur Funds 67.3 2.5 Alecta 67.2 2.5 SBH/SPP Funds 60.0 2.3 Nordea Funds 40.5 1.5 SEB Funds 39.9 1.5 Fourth Swedish National Pension Fund 34.2 1.3 Skandia Life Insura
Slide 167: Number of shares
Number of shares Type of Number of Outstanding Date transaction Subject shares issued shares Jan, 2000 New issue Merita 815,800,287 2,091,067,728 April, 2000 New issue Unidanmark 869,776,488 2,960,844,216 June, 2000 New issue Unidanmark 18,348,501 2,979,192,717 2000-2001 New issue Conversions* 3,473
Slide 168: Increased dividend
Increased dividend z Per share, EUR 0.28 z Total, EURm 766 z Pay-out ratio 40% z Dividend yield (calculated on share price Dec 30, 2004) 3.8% z Ex dividend date 11 April z Record date 13 April z Payment date 20 April 168
Slide 169: Data per share
Data per share Q1/05 2004 2003 2002 2001 EUR EUR EUR EUR Dividend n.a 0.28 0.25 0.23 0.23 Core equity per share, EUR 4.74 4.63 4.28 4.06 4.00 Earnings per share, EUR 0.18 0.74 0.51 0.30 0.53 Share price, end of period, SEK 71.5 67.0 54.0 38.4 55.5 P/E ratio2) 10.3 10.8 11.7 14.0 11.3 1) Core equity
Slide 170: Ratings
Ratings Moody’s S&P Fitch BFSR Short Long Short Long Short Long Individ. Nordea Bank D B** P-1 Aa3 A-1 A+* F1+ AA- B Nordea Bank F B P-1 Aa3 A-1 A+* F1+ AA- B Nordea Bank N B- P-1 Aa3 A-1 A+* F1+ AA- B Nordea Bank AB B P-1 Aa3 A-1 A+* F1+ AA- B Nordea Hypotek P-1 Aa3 A-1 Nordea Kredit Aaa AAA Norges
Slide 171: Group financial targets
Group financial targets Key performance indicator Q1/05 2004 Target Total shareholder return (TSR), % #7 #3 In the top quartile of European peer group RoE, % 15.7 14.5* > 15% in 2005 and > 17% or in line with level of top Nordic peers from 2007 Costs**, EURm 865 3,502 Same cost level through 2007 as
Slide 172: Strong distribution network throughout the Nordic and Baltic Sea region
Strong distribution network throughout the Nordic and Baltic Sea region Finland Branch offices 361 Personnel 8,244 Sweden Branch offices 248 Helsinki Personnel 7,163 Stockholm St Petersburg Norway Oslo Tallinn Branch offices 125 Copenhagen Riga Personnel 3,406 Vilnius Moscow Denmark Warzaw Branch of
Slide 173: Large customer base with high penetration in e-banking
Large customer base with high penetration in e-banking Baltic Sea Total DK FI NO SE Region Banking customers (1,000) Personal customers 1,600 2,970 640 4,070 330 9,610 Corporate customers 71 332 70 450 40 960 Life insurance customers (1,000) 636 334 304 500 65 1,840 E-banking customers (1,000) 703 1
Slide 174: Market development – interest rates
Market development – interest rates Change 31-12-04 31-03-05 % Q1/05 Short, EUR (one week) 2.10 2.08 -0.02 Long, EUR (5 years) 3.02 3.07 0.05 Short, DK 2.15 2.13 -0.02 Long, DK 3.11 3.00 -0.11 Short, NO 1.75 1.80 0.05 Long, NO 3.15 3.46 0.31 Short, SE 2.02 2.00 -0.02 Long, SE 3.29 3.13 -0.16 174
Slide 175: Short interest rates - average (one week)
Short interest rates - average (one week) % 3.0 2.5 2.57 2.0 2.09 2.08 2.15 2.16 2.16 2.16 2.13 2.03 2.04 2.05 2.07 2.06 2.00 1.99 1.92 1.83 1.81 1.8 1.75 1.5 1.0 0.5 0.0 EUR DKK SEK NOK Q1/04 Q2/04 Q3/04 Q4/04 Q1/05 175
Slide 176: Market development - GDP
Market development - GDP % 4.0 3.5 3.7 3.7 3.5 3.5 3.5 3.4 3.3 3.0 3.0 2.5 2.5 2.4 2.4 2.4 2.0 1.9 1.5 1.5 1.0 0.5 0.7 0.4 0.0 Denmark Finland Norway Sweden 2003 2004(e) 2005(e) 2006(e) Source: Nordea Markets Economic Research Estimates from February 2005. In Norway, forecasts are for mainland GDP 1
Slide 177: Macro data
Macro data % 2004e 2005e 2006e Gross domestic product DK 2.4 2.5 1.9 FI 3.7 3.5 3.3 NO 3.5 3.7 2.4 SE 3.5 3.4 3.0 Inflation DK 1.2 1.7 1.9 FI 0.2 1.5 1.8 NO 0.4 1.4 1.9 SE 0.5 0.6 2.0 Private consumption DK 4.3 2.9 1.6 FI 3.2 2.8 2.6 NO 4.3 4.0 2.3 SE 1.8 0.6 1.4 Unemployment DK 6.4 5.8 5.3 FI 8.3 8
Slide 178: Financial calendar 2005
Financial calendar 2005 z Q2 report 2005 will be published on 24 August z Q3 report 2005 will be published on 26 October www.nordea.com/ir 178