Slide 1: Third Quarter Report 2012 International Telephone Conference
Third Quarter Report 2012 International Telephone Conference
Slide 2: Disclaimer
Disclaimer This presentation contains forward-looking statements that reflect management’s current views with respect to certain future events and potential financial performance. Although Nordea believes that the expectations reflected in such forward-looking statements are reasonable, no assurance
Slide 3: Key messages: New Normal plan delivers on cost, capital and income
Key messages New Normal plan delivers on cost, capital and income • Unchanged costs through 2012, excluding FX effects • Cost/income ratio 51% YTD (54% 9m 2011*) • Improved RoE to 11.4% YTD (10.6% 9m 2011*) • Core Tier 1 ratio improved to 12.2% • Loan losses at 27 bps YTD (20bps 9m 2011) • Income in
Slide 4: Key messages: Progress in building the future bank business model
Key messages Progress in building the future bank business model • New Normal plan delivers on cost, capital and income • Retail Banking: Advice based distribution model, improved capital efficiency • Wholesale Banking: Developed relations, focus on adding high value at right price • Wealth Manageme
Slide 5: Financial highlights; Building the future bank business model
• Financial highlights • Building the future bank business model
Slide 6: Financial result – Q3/12
Financial result – Q3/12 EURm Q3/12 Q2/12 Change % Q3 YTD 12 Q3 YTD 11 Change % Net interest income 1,441 1,462 -1 4,323 4,029 7 Net fee and commission income 605 611 -1 1,812 1,807 0 Net fair value result 377 494 -24 1,340 1,011 33 Other income 46 39 18 131 96 36 Total income 2,469 2,606 -5 7,606 6
Slide 7: Change in net interest income
Change in net interest income Change, EURm Q-o-Q Y-o-Y Volume-driven NII 0 172 Lending -2 146 Deposits 2 26 Spread-driven NII -14 233 Lending 17 492 Deposits -31 -259 Spread costs -12 -130 GCC, including Treasury -5 47 Other 10 -28 Total -21 294 7•
Slide 8: Lending, volumes and margins
Lending, volumes and margins Lending volumes EURbn Q3/12 and development q-o-q Margin* development q-o-q Household Corporate 65.8 66.5 Banking Denmark 50.2 Banking Finland 45.4 45.3 Banking Norway 0% 0% 0% 0% -5% Banking Sweden Corp & Inst Banking 13.4 -3% Shipping Banking Banking Bankning Banking C
Slide 9: Deposits, volumes and margins
Deposits, volumes and margins Deposit volumes EURbn Q3/12 and development q-o-q Margin* development q-o-q Household Corporate 42.8 Banking Denmark 32.7 33.5 Banking Finland 30.0 Banking Norway 20.0 Banking Sweden 0% 1% -4% -1% 11% Corp & Inst Banking 4.8 3% Shipping Banking Banking Bankning Banking
Slide 10: Net commission income remains at high levels
Net commission income remains at high levels Total net fee and commission income, EURm 618 602 623 611 605 • Down 1% q-o-q 582 588 596 525 • Increased asset management and lending commission • Decreased commissions on payments, cards and custody Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12
Slide 11: Net fair value
Net fair value Total net result from items at fair value, EURm 544 • Continued high demand in 504 506 469 494 customer areas 446 377 • Negative valuation changes in 356 liabilities accounted for at fair value 111 Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 11 •
Slide 12: Strong access to funding
Strong access to funding Long-term funding, EURbn 33 32 • EUR 25bn issued in long-term 27 25 funding • Of which 54% senior, 40% covered and 6% Tier two 2009 2010 2011 Q3/12 YTD • Redemptions for 2012 are Nordea covered bonds spreads vs EUR 15bn European governments Spread vs MS (bps) • Improved spre
Slide 13: Strong capital generation
Strong capital generation Core Tier 1 capital, EURm • Tier 1 capital is up by 86% since 21 796 20 677 2006 19 103 17 766 • CAGR of 9% after dividend and 14 313 adjusted for rights issue 12 821 11 689 2006 2007 2008 2009 2010 2011 Q312YTD Dividend payout Anticipated dividend 13 •
Slide 14: Risk Weighted Assets under strict control
Risk Weighted Assets under strict control Risk-weighted assets (RWA), EURbn* • RWA decreases EUR 2bn due to 185 decreased credit risk and market 183 risk 182 181 180 • Further improved quality in 179 liquidity buffer • RWA optimisation reduces RWA by EUR 0.5bn • In total limited effect from rating m
Slide 15: Improved Core Tier 1 ratio
Improved Core Tier 1 ratio Core Tier 1 capital ratio, % (excl. Hybrids)* • Improved ratio by 40 bps since 12.2 Q2 2012 due to 11.6 11.8 11.0 11.0 11.2 • Strong profit generation 10.7 10.4 10.3 10.0 • Decreased RWA • Improved CT1 ratio by 220 bps since Q2 2010 • Lending growth of 17% • Full dividend
Slide 16: Credit quality
Credit quality Total net loan losses, EURm • Broadly in line with long-term risk 263 appetite 254 242 218 217 • Low loan losses in Norway, 207 Sweden and Finland 166 • Continued elevated levels in 118 Denmark and Shipping 112 • Effects from stricter rules in Denmark • Lower individual provisions Q3/
Slide 17: Net loan losses quarterly by country – excluding Shipping
Net loan losses quarterly by country – excluding Shipping 250 • Still certain overleveraged 200 Danish household and 150 agriculture customers EUR 145m behind the provisions 100 50 EUR 46m • A limited number of individual provisions in the EUR 8m 0 other countries EUR -17m -50 Q3/09 Q3/10 Q3/11 Q3/1
Slide 18: Underlying stabilisation in Denmark
Underlying stabilisation in Denmark House prices, index = 2006* Forced sales* 110 500 400 100 300 90 200 80 100 70 0 2006 2008 2010 2012 2006 2008 2010 2012 Single-family houses Summer houses Flats Single family houses Corp property Forced sales total (seasonally-adj) Number of bankruptcies* Loan lo
Slide 19: Shipping loan losses and impaired loans
Shipping loan losses and impaired loans Shipping Net loan losses, EURm Shipping Net impaired loans, EURm EUR 558m EUR 54m • Further deterioration of collateral • Gross impaired loans down 4% q-o-q values • Need for additional loan loss provisions 19 •
Slide 20: Challenges remained within Shipping
Challenges remained within Shipping Ship values Shipping orderbook as % of existing fleet 180 90% VLCC. 5 year old Tanker Bulker Cape Bulker. 5 year old Containership 150 Panamax Containership. 75% 5 year old 120 60% 90 45% MUSD 60 30% 30 15% 0% 0 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan
Slide 21: Impairment rate gross, basis points
Impairment rate gross1, basis points • Impairment rate gross increased to 181bps. • Still Danish household and agriculture customers behind the increases (new impaired volume approx. EUR 410m), to a large 89 extent explained by the clarified and 76 Denmark stricter impairment rules introduced 66 by
Slide 22: Highest increase of impaired loans in collaterised loan books
Highest increase of impaired loans in ”collaterised” loan books Change in impaired loans %, Index 100 = Q3 2011 250 Nordea total, provisioning ratio 41% 225 Shipping, 200 provisioning ratio 35% Agriculture, 175 provisioning ratio 30% 150 Real estate, provisioning ratio 36% 125 Household, provisionin
Slide 23: Financial highlights; Building the future bank business model
• Financial highlights • Building the future bank business model
Slide 24: The relationship strategy has been instrumental to Nordea
The relationship strategy has been instrumental to Nordea Execution of the relationship strategy 2007/2008 2008/2009 2010/2011 2011/2012 Profitable Middle of Prudent New organic the road growth Normal growth Generating Balancing “Supporting Focus on resources cost, risk and customers to restoring to
Slide 25: … and it continues to drive performance …
… and it continues to drive performance … Relationship strategy Performance in New Normal Close and lifelong Capital efficiency relationships with customers = Focus on right Funding customers/projects efficiency Capital efficient solutions Many products per customer Diversification/lower risk Liquid
Slide 26: … and Nordea's position continues to be one of strength
… and Nordea’s position continues to be one of strength 2011/2012 Continued to grow the number of core customer relationships New Normal Continued to deliver plan top league ROE As we are Focus on executing the New One of the strongest ratings Normal plan, restoring in the sector Nordea’s position R
Slide 27: The relationship strategy; a superior model for working with customers
The relationship strategy; a superior model for working together with customers in the new environment Customer’s benefits … stability; a Confidence in … holistic advice … one provider of bank on both bank’s ability … in best interest … all services… sunny and rainy days Know Advice Service Commit t
Slide 28: The New Normal plan continues to deliver: cost efficiency
The New Normal plan continues to deliver In terms of cost efficiency Group FTE development Total expenses, EUR million 171 34 138 34 169 33 844 1 265 1 275 1 266 1 276 1 290 1 293 1 242 33 068 32 557 31 988 31 692 Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 On
Slide 29: The New Normal plan continues to deliver: capital efficiency
The New Normal plan continues to deliver In terms of capital efficiency Risk Weighted Assets development, EURbn* 3.7 • Reduced RWA by more than 9.3 EUR 9bn since beginning of 2011 3.5 due to improved efficiency 9.9 5.9 185.1 179.0 Q4/10 Credit Growth FX & other Basel 2.5 RWA Q3/12 Quality optimizati
Slide 30: Key messages: New Normal plan delivers on cost, capital and income
Key messages New Normal plan delivers on cost, capital and income • Unchanged costs through 2012, excluding FX effects • Cost/income ratio 51% YTD (54% 9m 2011*) • Improved RoE to 11.4% YTD (10.6% 9m 2011*) • Core Tier 1 ratio improved to 12.2% • Loan losses at 27 bps YTD (20bps 9m 2011) • Income in
Slide 31: Third Quarter Report 2012 International Telephone Conference
Third Quarter Report 2012 International Telephone Conference