Nordea Bank Abp · OMXHEX:NDA_FI
Nordea Bank Abp — Investor Day (October 2019)
12 slides from Nordea Bank Abp's investor day presentation, Oct 25, 2019
Slide 1: Financial plan and targets
Financial plan and targets Capital Markets Day Christopher Rees, Group CFO 25 October 2019
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 assuran
Slide 3: We have a strong financial foundation to build on
We have a strong financial foundation to build on Solid capital position AA rating (CET1 Ratio 15.4% Q319 AA (AA- by all 3 rating agencies) and RAC¹ ratio 11.6% Q219) Strong liquidity position Solid credit quality (NSFR 110%² and LCR 188% Q319) Proven capital Diversified business and generation capa
Slide 4: Weak financial performance in recent years calls for an accelerated financial plan
Weak financial performance in recent years calls for an accelerated financial plan Return on equity vs peers Indexed total shareholder return Nordea 10.8 Peer average 91 Nordea, R4Q 8.0 77 Peer average, R4Q Q215 Q216 Q217 Q218 Q219 Q215 Q216 Q217 Q218 Q219 Relative RoE Peers (weighting): DB (30%), D
Slide 5: Financial targets
Financial targets Cost/income ratio in FY22 Return on equity in FY22 50% >10% Capital policy from 2020 Dividend policy from 2020 60-70% pay-out of distributable 150-200 bps profits to shareholders.¹ management buffer Excess capital intended to be distributed above the regulatory CET1 requirement to
Slide 6: Gross cost reductions exceed investments and inflation
Gross cost reductions exceed investments and inflation Cost changes by end 2022 2-3% CAGR ~-5% CAGR For 2020, we expect ~4,900 to reach a cost base 700-800m below EUR 4.7bn C/I 50% We plan to continue delivering annual net cost reductions beyond 2020 Cost 2019 Inflation IT & Investments Gross Gross
Slide 7: Delivery of 700-800m gross cost reduction
Delivery of 700-800m gross cost reduction Fewer people until 2022 700-800m ▪ Majority of the planned reductions in head office and central functions People ▪ Reduction in number of external consultants ▪ Nearshoring Staff Reduced IT spend ▪ Outsourcing ▪ Continued decommissioning, automation and clo
Slide 8: Intensified business activity and customer focus start to show results
Intensified business activity and customer focus start to show results Household lending (EURbn) Market share Swedish mortgages 20 % Share of market growth +3-4%¹ Back book 14 % +3% 160 14 % 151 146 147 -5 % 2016 2017 2018 Q319 Jun Sep Dec Mar Jun Sep Dec Mar Jun Aug 17 17 17 18 18 18 18 19 19 19 Co
Slide 9: Increased clarity under the SSM
Increased clarity under the SSM October 2018: Today: 1 January 2020: Single Supervisory Further clarity attained SREP¹ enters into force Mechanism (SSM) entry ▪ Permission for continued use ▪ Stable foundation, of internal models predictability and level ▪ Comprehensive assessment playing field ▪ Fi
Slide 10: New capital policy and uses of capital
New capital policy and uses of capital Capital policy from 2020 150-200 bps management buffer above the regulatory CET1 requirement Uses of capital Organic growth ~15% 150-200 bps 1.3% 60-70% dividend pay-out ratio For 2019 Nordea targets a dividend of EUR 0.40 per share 3.0% Management buffer Maxim
Slide 11: The path to exceed 10% return on equity in 2022
The path to exceed 10% return on equity in 2022 Expected return on equity development 2019 to 2022 Drivers of profitability Positive momentum on >10% lending volumes Income impact Net flow in AuM Net cost reduction ~8% WB repositioning helping on both profit and capital Stable credit quality Sep 19
Slide 12: Financial targets
Financial targets Cost/income ratio in FY22 Return on equity in FY22 50% >10% Capital policy from 2020 Dividend policy from 2020 60-70% pay-out of distributable 150-200 bps profits to shareholders.¹ management buffer Excess capital intended to be distributed above the regulatory CET1 requirement to