Nordea Bank Abp · OMXHEX:NDA_FI
Nordea Bank Abp — FY2009 Earnings Presentation
40 slides from Nordea Bank Abp's earnings presentation, Feb 10, 2010
Slide 1: Year-end Report 2009
Year-end Report 2009 Press and analyst conference 10 February 2010 Christian Clausen President and Group CEO
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: Highlights from 2009
Highlights from 2009 Strong year with consistent delivery on growth strategy – income up 11% and Risk-adjusted profit up 22% for full year 2009 Strong development in customer areas – income in Nordic Banking and Institutional and International Banking up 5% in fourth quarter Moderate loan loss
Slide 4: Result highlights
Result highlights EURm Q4/09 Q3/09 Chg % Q4/08 Chg % FY 09 FY 08 Chg % Net interest income 1,299 1,321 -2 1,386 -6 5,281 5,093 4 Net fee and commission 463 437 6 390 19 1,693 1,883 -10 Net gains/losses 351 486 -28 325 8 1,946 1,028 89 Other income 45 33 36 150 153 196 -22 Total income 2,158 2,277 -5
Slide 5: Net interest income – down 2% from high levels
Net interest income – down 2% from high levels Net interest income, EURm Unchanged lending volumes Increased Household market shares 1,386 Broadly unchanged corporate volumes – decrease 1,321 1,299 levelled out towards the end of the quarter Continued pressure on deposit margins and slightly
Slide 6: Continued positive trend in Net fee and commission income – up 6%
Continued positive trend in Net fee and commission income – up 6% Net fee and commission, EURm Savings commission continued the positive trend – up 11% 463 Asset management commissions up 21% - 437 increased AuM, increased margins due to change 390 in asset mix and performance fees Lending com
Slide 7: Strong net inflow continues - proves customer satisfaction
Strong net inflow continues - proves customer satisfaction Net flows AuM, EURbn 3.5 2.8 2.9 Net inflows of EUR 3.5bn in Q4 – 9% annualised 0.9 Improved position within savings market – -2.3 inflow from households during 2009 EUR 6.2bn Asset under Management up EUR Q4/08 Q1/09 Q2/09 Q3/09 Q4/09
Slide 8: Net gains/losses remains high in customers areas
Net gains/losses remains high in customers areas Net gains/losses, EURm Customer-driven capital markets 594 activities continues to perform strongly 515 486 Life & Pensions released a strong result also in the fourth quarter 351 325 Negative contribution from Group 284 Treasury in Q4 – mainly
Slide 9: Market league tables
Market league tables Nordic corporate Eurobond benchmark league table FY 2009 Nordic Equity Market league table FY 2009 Bookrunner Bookrunner Pos. Bank name Deal value EURm No. % share Pos. Bank name Deal value EURm No. 1 Deutsche Bank 3,192 16 16% 1 Nordea Markets 7,136 15 2 BNP Paribas 2,796 14 14
Slide 10: Expense growth well in line with expectations
Expense growth well in line with expectations Total operating expenses, EURm Up 6% - when excluding restructuring 1,219 costs of EUR 64m Total expenses up 12% compared to 1,150 1,155 1,087 previous quarter Underlying cost growth in local 32 currencies 3% compared to same quarter last year Re
Slide 11: Nordea compliant with remuneration guidelines presented
Nordea compliant with remuneration guidelines presented Payout ratio¹ down from 20.5% to 16.4% in bonus areas² Bonus ratio³ down from 7,0% to 6.2% in bonus areas² Bonuses up 25% to EUR 212m in bonus areas² – revenues up 40% 2009 - managers and material risk-takers will defer payment accordin
Slide 12: Stable net loan losses
Stable net loan losses Net loan losses, EURm Net loan losses in line with FY year 54bps outlook 52bps 52bps Net loan loss provisions in Q4 EUR 347 358 347 320 of which EUR 82m collective Loan losses correspond to 52bps 40bps individual (37bps) 12bps collective (17bps) 48bps excl. Danish
Slide 13: Impaired loans increases at a lower pace
Impaired loans increases at a lower pace Impaired loans, EURm Impaired loans gross – up 7% to EUR 4,102m or 135bps of total lending, up 9% in Q3 and 1 639 1 868 19% in Q2 835 EUR 535m or 732bps in the Baltic countries 2 212 2 234 1 389 54% impaired loans are performing Q4 2008 Q3 2009 Q4 2009
Slide 14: Proposed dividend in line with policy
Proposed dividend in line with policy Net profit, EURm Net profit down 29% due to lower net gains/losses and restructuring costs and higher net loan losses 637 626 Proposed 2009 dividend to be paid in 447 2010 of EUR 0.25 per share, corresponding to a payout ratio of 43% of net profit – in line
Slide 15: Solid Nordea platform to build on
Solid Nordea platform to build on 15 10 February 2010 Year-end report 2009
Slide 16: Strength of Nordea's business model proven by low volatility in operating profit
Strength of Nordea’s business model proven by low volatility in operating profit Quarterly variation operating profit*, % >250 137 140 50 36 19 9 Nordea Average Nordic peers** European Peers 16 10 February 2010 Year-end report 2009 *Calculation based on covariance of 12 quarters operating profit s e
Slide 17: A very strong relative starting point – one of the strongest capital positions globally
17 Mizuho Citigroup UBS Sumitomo Mitsui Allied Irish Banks 10 February 2010 Bank of Ireland Danske Bank Deutsche Bank BBVA Unicredit Landesbank capital (RAC) analysis Wells Fargo Bank of America Bank of New York Mellon Credit Agricole Year-end report 2009 Intesa Sanpaolo Barclays Credit Suisse Nat A
Slide 18: …and among the strongest banks in Europe on capital and funding costs
…and among the strongest banks in Europe on capital and funding costs One of the highest Price-to-book ratios in Europe – i.e. lowest cost of capital One of the lowest CDS-spreads in Europe – i.e. lowest cost of funding 18 10 February 2010 Year-end report 2009
Slide 19: Strong credit management – in line with moderate expected losses over the cycle
Strong credit management – in line with moderate expected losses over the cycle Bps 20 10 0 -10 Expected losses 25bps -20 -30 -40 -50 -60 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 2002 2002 2003 2003 2004 2004 2005 2005 2006 2006 2007 2007 2008 2008 2009 2009 2002 2003 2004 2005 2006 2007 2008
Slide 20: Group strategy and initiatives 2010 - 2012
Group strategy and initiatives 2010 - 2012 20 10 February 2010 Year-end report 2009
Slide 21: Great Nordea vision launched in 2007
Great Nordea vision launched in 2007 Prudent risk management Profit orientation Efficient capital management Ambitious vision & Leading Nordic bank targets Double risk adjusted profit in 7 years “Profitable organic growth” strategy Clear growth strategy supported by Group initiatives Stron
Slide 22: Journey towards Great - from Profitable organic growth to Prudent growth
Journey towards Great - from “Profitable organic growth” via “Middle of the Road” to “Prudent growth” Middle of the Profitable organic growth Prudent growth road Great 07 08 09 10 11 12 Nordea Next level strategy based Organic growth strategy on stronger position 9 Keep income growth Group initiativ
Slide 23: 2007 – 2008: Profitable organic growth
2007 – 2008: “Profitable organic growth” Profitable organic Middle of the Prudent growth growth road Great 07 08 09 10 11 12 Nordea Next level strategy based Organic growth strategy on stronger position 9 Keep income growth Group initiatives launched to momentum Next generation of initiatives suppor
Slide 24: Delivery on long-term targets
Delivery on long-term targets RAP – clearly on track to reach TSR 2007-2009 2013 target 20 1 0 42.3% -20 34.6% -40 -60 Top quartile -80 -100 BBVA AIB Lloyds Commerzbank Barclays Swedbank BNP Paribas BOI RBS KBC SEB DnBNOR SHB Erste Danske Nordea Intesa Sanpaolo Unicredit Santander Societe Generale Q
Slide 25: Customer satisfaction improving vs. competition
Customer satisfaction improving vs. competition CSI index (aggregate) 2007-2009¹ 2007 2009 +0,9 Nordea 70,6 71,5 71,2 - 3,6 Peers 67,6 -0,6 3,9 25 10 February 2010 Year-end report 2009 ¹High involvement customers, corresponding to Gold and Silver segment customers
Slide 26: Strengthening of our leading position in the Nordics
Strengthening of our leading position in the Nordics 10,000 new Gold customers a month – main part new Nordea customers # Gold customers, 000 Household 2,603 Capture potential in existing customers base Acquisition of new customers in Gold segment 2,474 Sales activities and customer contacts at reco
Slide 27: New European Markets – an important part of the journey towards Great Nordea
New European Markets – an important part of the journey towards Great Nordea Total income NEM, EURm Cost/Income ratio 542 Profitable growth in targeted segments 482 57 46 115 new branches opened in Poland 255 44 Pro-active risk management – income has absorbed loan losses even in 2009 2007 200
Slide 28: 2009: Middle of the road
2009: “Middle of the road” Middle of Profitable organic growth Prudent growth the road 07 08 09 10 11 12 Middle of the road 9 Keep income growth momentum 9 9 Cost, risk and capital in Cost, risk and capital take the lead the lead 9 9 Maintain income growth Enable us to accelerate out of the crisis m
Slide 29: Now time for prudent growth with careful navigation
Now time for prudent growth with careful navigation Prudent growth Managing the risks Capture opportunities • Careful navigation in New Group initiatives: • Move closer in what is an improving • Growth investments relationship segments but still uncertain and develop concepts macro economic • Effici
Slide 30: 2010 – 2012: Prudent growth
2010 – 2012: “Prudent growth” Middle of the Profitable organic growth road Prudent growth Great 07 08 09 10 11 12 Nordea Next level strategy based Organic growth strategy on stronger position 9 Keep income growth Group initiatives launched to momentum Next generation of initiatives support the strat
Slide 31: We confirm our organic growth strategy
We confirm our organic growth strategy Increase business with Exploit global Supplement Nordic existing Nordic customers and and European growth through attract new customers business lines investments in New European Markets Proactively elevate relationship customers to higher segments, attract new
Slide 32: We continue with the next generation of Group initiatives
We continue with the next generation of Group initiatives Increase business with Exploit global Supplement Nordic existing Nordic customers and European growth through and attract new customers business lines investments in New European Markets 1. Future distribution 6. Growth plan Poland 2. New cus
Slide 33: Next generation of initiatives (1/2)
Next generation of initiatives (1/2) Group initiative Objective • Branch network optimization, including alignment of capacity Future distribution to customer potential, new formats with increased advisory Growth capacity and reduced share of other branch staff initiatives • Upgrade online offering
Slide 34: Next generation of initiatives (2/2)
Next generation of initiatives (2/2) Group initiative Objective • Comprehensive program to reduce IT cost and improve Top league IT performance efficiency, incl. IT sourcing, lean IT Efficiency / • Offshore center in Poland foundation initiatives Product platforms • More efficient cards and payments
Slide 35: Result effects from initiatives and investments
Result effects from initiatives and investments 2010-2012 EUR 64m restructuring charge in Q42009 2010 impact One-off investments of EUR ~240m of which EUR ~140m accounted for as expenses in Restructuring income statement 16 CSO/tellers and Fionia Impact on running cost neutral – including Bank e
Slide 36: Initiatives support long term target of doubling RAP in seven years
Initiatives support long term target of doubling RAP in seven years… Future distribution Risk adjusted profit EUR m New customer acquisition Growth plan Finland 4500 4000 10% CAGR CMB Sweden required 3500 Customer driven Markets 3000 business 2500 2000 Growth plan Poland 1500 1000 Top league IT perf
Slide 37: … and secure our strategic ambitions
… and secure our strategic ambitions …to secure sufficient income Growth strategy generation to create great customer experiences and long term value …in markets where we operate – Best relationship retaining existing and attracting bank new customers …for everything we do in order One operating mod
Slide 38: A Great European bank, acknowledged for its people
A Great European bank, acknowledged for its people, creating superior value for customers and shareholders 38 10 February 2010 Year-end report 2009
Slide 39: Outlook 2010
Outlook 2010 Nordea expects the macroeconomic recovery to continue in 2010 – development is still fragile and hence uncertainty remains Nordea will pursue a prudent growth strategy, balancing opportunities and risks, and will invest in the future through several growth and efficiency initiatives
Slide 40: Key messages
Key messages Strong year – risk-adjusted profit up 22% Solid business development in all areas – cost growth well in line with expectations Continued execution of efficiency programmes Continued stabilisation of credit quality and loan losses at expected levels Group initiatives to support