Slide 1: Second Quarter Report 2010
Second Quarter Report 2010 Telephone conference 21 July 2010
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
Key messages 9 We deliver according to our plan 9 Continued strong customer business 9 Result from items at fair value decreased from high levels 9 Improved outlook 3 21 July 2010 Telephone conference
Slide 4: Continued strong customer business
Continued strong customer business Income in Corporate Income in Household Total income segment segment Q2 2009 Q1 2010 Q2 2010 Q2 2009 Q1 2010 Q2 2010 Q2 2009 Q1 2010 Q2 2010 Number of Gold Lending volumes Impaired loans customers Q2 2009 Q1 2010 Q2 2010 Q2 2009 Q1 2010 Q2 2010 Q2 2009 Q2 2010 Q2 2
Slide 5: Outlook 2010
Outlook 2010 Nordea expects macroeconomic recovery to continue in 2010 The global development is still fragile and hence uncertainty remains, the outlook for the Nordic markets has improved during the year Excluding currency effects in 2010, Nordea expects cost growth to be broadly in line wit
Slide 6: Second Quarter Results
Second Quarter Results 6 21 July 2010 Telephone conference
Slide 7: Result highlights
Result highlights EURm Q2/10 Q1/10 Chg % Q2/09 Chg % H1/10 H1/09 Chg % Net interest income 1,249 1,235 1 1,305 -4 2,484 2,661 -7 Net fee and commission income 538 475 13 412 31 1,013 793 28 Net result from items at fair value 339 548 -38 594 -43 887 1,109 -20 Other income 35 45 -22 48 -27 80 75 7 To
Slide 8: Underlying business trends
Underlying business trends Q2 2010 with Q2 2010 with unchanged unchanged translation translation Reported EURm Q2 2010 Q1 2010 Chg % Chg % Chg % currencies currencies change% (compared with (compared Q1 2010) with Q2 2009) Total operating income 2,161 2,303 -6 2,137 -7 2,069 -12 -8 Total operating -
Slide 9: Net interest income up 1%
Net interest income up 1% EURm Solid trend in customer operations 1,305 1,321 continues 1,299 1,235 1,249 Lending and deposit volumes up Margins stable Remains subdued by the low interest rate levels Lower contribution from Group Treasury Slight increase in average funding cost when matu
Slide 10: Underlying volume trends
Underlying volume trends % change in unchanged currency Q2oQ1 Q2oQ2 Total Lending, excl. reversed repurchase agreements 2 4 – Nordic household mortgages 2 9 – Nordic consumer lending 1 7 – Nordic corporates 2 0 – New European Markets 4 1 – FID and Shipping 3 -3 Total Deposits, excl. repurchase agree
Slide 11: Change in net interest income
Change in net interest income Q2oQ1 YoY Volume-driven Nordic markets local currencies 13 31 Corporate lending volumes 8 -30 Household lending volumes 4 56 Corporate deposit volumes 0 1 Household deposit volumes 1 4 Margin-driven Nordic markets local currencies -15 -133 Corporate lending margins 0 10
Slide 12: Interest rate sensitivity
Interest rate sensitivity - 3 components Increased market rates, 100bps Q2/10 Q1/10 Structural interest income risk (SIIR) EURm Reflecting the effect on NII from re- pricing gaps* Net Interest Income, approx 430 450 Net result from items at fair value, Dynamic effects on net interest income ap
Slide 13: Net fee and commission income up 13%
Net fee and commission income up 13% 538 Higher income contribution from EURm 475 437 463 corporate advice 412 Continued strong performance in savings area High activity in capital markets Q2/09 Q3/09 Q4/09 Q1/10 Q2/10 13 21 July 2010 Telephone conference
Slide 14: Strong demand for risk management products remains
Strong demand for risk management products remains Net result from items at fair value, Capital markets activities in customer EURm 594 areas¹ continues to perform - up 25% 548 515 Market volatility increased corporate 486 demand for fixed income and FX products 351 2 325 339 Continued strong
Slide 15: Expenses in line with outlook
Expenses in line with outlook EURm Cost management remains firm 1 219 1 186 1 116 1 164 1 087 Increase in Q2 related to Group 471 445 initiatives and currency effects 392 438 382 Total expenses up 6% compared to 687 670 702 687 701 same quarter last year Up 1% adjusted for currency effects Q
Slide 16: Risk Weighted Assets
Risk Weighted Assets Risk Weighted Assets (RWA), EURbn Up 3.0% - excluding transition rules Increased credit risks due to corporate and 206 retail volume growth 198 192 185 179 170 Continued slowdown in rating migration, +0.3% (+0.4% in Q1) Improved average credit quality Approx. -1% Q2/
Slide 17: Strong capital position maintained
Strong capital position maintained Core Tier 1 capital ratio (excl. Hybrids) Core tier 1 ratio 10.0% - minor 10.3 10.1 10.0 decrease in Q2 9.2 9.2 9.0 High customer activity offset by solid net profit generation Nordea part of CEBS’ EU-wide Q2/09 Q1/10 Q2/10 stress tests to be published 23 Tra
Slide 18: Strong funding operations despite a challenging second quarter
Strong funding operations despite a challenging second quarter Total long-term funding issued, EURbn EUR 10.5bn of long-term funding issued in Q2 31 EUR 5.9bn Nordic covered bonds net 23 EUR 4.6bn senior unsecured 22 20.9 In June after several weeks of no market supply Nordea reopened the se
Slide 19: Credit quality is improving
Credit quality is improving 19 21 July 2010 Telephone conference
Slide 20: Stable and well diversified lending portfolio
Stable and well diversified lending portfolio Total lending to public, EURbn Total lending up 3% 292 303 278 2% adjusted for repos and currency 28 26 27 effects 89 101 104 55% corporate lending – no sector accounting for more than 13% 163 165 171 Limited changes between sectors – no new area
Slide 21: Credit quality improving
Credit quality improving EURm 48 29 27 58 Net loan losses down to 35 bps 468 425 413 452 34bps individual (26bps) 358 346 358 261 316 245 1bps collective (11bps) -91 -82 -135 -97 -128 114bps in the Baltic countries (166bps) Q2/09 Q3/09 Q4/09 Q1/10 Q2/10 Excluding guarantee scheme Gross loa
Slide 22: Impaired loans somewhat decreased in Q2
Impaired loans somewhat decreased in Q2 Impaired loans, EURm Impaired loans gross down 1% 2 076 2 094 EUR 4,407m or 135bps (140bps) 1 585 52% of impaired loans performing 2 377 2 313 1 949 Q2 2009 Q1 2010 Q2 2010 Performing Non-performing Minor increase in collective allowances – Total allow
Slide 23: Signs of stabilisation in Denmark
Signs of stabilisation in Denmark Banking Denmark Net loan losses, Increased activity in the housing EURm market 207 Interest rate level critical going forward 48 153 Some signs of improvement in the 143 27 29 137 agricultural sector 58 159 Many small and mid-sized 124 45bps 116 115 79 compa
Slide 24: Positive signs recorded in all economies in the NEM area
Positive signs recorded in all economies in the NEM area Baltic net loan losses, EURm Baltic net loan losses continued to 62 65 decrease in Q2 - reflecting the 41 32 improved economic climate 22 Limited provisions for Poland and 18 24 24 2 4 Russia – confirming the strong credit Q2/09 Q3/09 Q4/0
Slide 25: Rating migration
Rating migration Corporate rating migration Q210 / Q110 84% 30% Down-rated Up-rated 25% 20% 8% 8% 15% 10% 5% 5% 5% 2% 2% 0% 0% 1% 1% 0% 0% 0% > -4 -4 -3 -2 -1 0 1 2 3 4 >4 Number of notches up- and down-rated 25 21 July 2010 Telephone conference
Slide 26: Prudent growth strategy – Group initiatives on track in all areas
Prudent growth strategy – Group initiatives on track in all areas 26 21 July 2010 Telephone conference
Slide 27: Careful navigation of the Prudent growth strategy
Careful navigation of the Prudent growth strategy Increase business with Exploit global Supplement Nordic existing Nordic customers and European growth through Keeping strong business and attract new customers business lines investments in New European Markets momentum 1. Future distribution 6. Gr
Slide 28: Activities related to the initiatives are on track
Activities related to the initiatives are on track Future distribution 14 branches transformed to new branch format Increased number of 360-degree advisory meetings New customer acquisition Growth in number of customers continue to perform strongly – 73,000 new Gold and Private Banking custome
Slide 29: Activities related to the initiatives are on track
Activities related to the initiatives are on track Growth Plan Corporate Merchant Banking (CMB) Sweden According to plan in terms of income development and customer relations Increased share of wallet – cash management mandates won Customer driven Markets business Capital market products to co
Slide 30: Strong foundation for reaching long-term targets
Strong foundation for reaching long-term targets Future distribution Risk-adjusted profit, EURm New customer acquisition 3,914 10% CAGR Growth plan Finland required CMB Sweden 2,786 Customer-driven Markets business 2,239 2,279 1,957 Growth plan Poland Top league IT performance Product platforms Infr
Slide 31: Key messages
Key messages We deliver according to our plan Continued strong customer business Income from corporate customers up 10% and from household customers up 7% Increased lending, deposits and AuM volumes Solid inflow of new customers – increased market shares in all markets Positive developme