Nordea Bank Abp · OMXHEX:NDA_FI
Nordea Bank Abp — Q2 2014 Earnings Presentation
30 slides from Nordea Bank Abp's earnings presentation, Jun 30, 2014
Slide 1: Second Quarter Results 2014
Second Quarter Results 2014 Investor presentation
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
Highlights Nordea delivers solid and strong results Income holding up despite continued low lending demand, interest rates and volatility Activity in corporate advisory business and savings area remains strong Cost programme delivering according to plan Loan losses are down to 16 bps Opera
Slide 4: Q2 2014 financial results highlights
Q2 2014 financial results highlights 14
Slide 5: Financial results
Financial results EURm Q2/14 Q1/14 Chg % H1/14 H1/13 Chg % Net interest income 1,368 1,362 0 2,730 2,749 (1) 3 Net fee & commission income 708 704 1 1,412 1,287 10 13 Net fair value result 356 411 (13) 767 860 (11) (10) Total income* 2,456 2,501 (2) 4,957 4,996 (1) 2 Staff costs -907 -756 20 -1,663
Slide 6: Net interest income
Net interest income NET INTEREST INCOME DEVELOPMENT, EURm COMMENTS 1,391 1,386 1,390 1,362 1,368 • NII flat on Q1/14 • Up 2% in customer areas • Lower yield on fixed income holdings Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 6•
Slide 7: Net interest margin and volumes
Net interest margin and volumes BLENDED NET INTEREST MARGIN DEVELOPMENT COMMENTS 1.09% 1.07% 1.08% 1.07% 1.08% • Blended net interest margin up 1 bps • Underlying lending margins under pressure • Deposit margins largely unchanged Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 • Household and corporate lending volume
Slide 8: Net interest income and volume trends
Net interest income and volume trends Year-on-year in local currencies Retail Banking Lending volumes Net interest income RAROCAR Corporates +2% +2% +1% Mortgages +5% CIB Lending volumes Net interest income RAROCAR Corporates 0% +7% +3% 8
Slide 9: Net fee and commission income
Net fee and commission income NET FEE AND COMMISSION DEVELOPMENT, EURm COMMENTS 703 704 708 664 652 • Up 10% YTD compared to H1/13 180 194 162 • Lending commissions 170 172 Continued strong activity in the 145 147 148 Payments & cards savings- and corporate advisory 143 150 business 411 398 430 Savi
Slide 10: Net fair value
Net fair value NET FAIR VALUE DEVELOPMENT, EURm COMMENTS 416 411 • Low interest rates 346 333 356 • Low volatility 142 168 93 123 82 274 251 263 223 243 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Customer areas Other areas 10 •
Slide 11: Expenses under solid control
Expenses under solid control TOTAL EXPENSES*, EURm COMMENTS 1,256 1,283 1,234 1,237 1,196 • Costs are down 3% compared to previous quarter • Cost/income ratio improved 0.8% to 48.7% Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 * Excluding restructuring charge in Q2/14 11 •
Slide 12: Improved credit quality
Improved credit quality TOTAL NET LOAN LOSSES, EURm COMMENTS 236 241 203 198 • Ten year average of 16 bps reached 186 180 171 158 for first time since Q3/11 135 • Continued improvement in Denmark • Net reversals in Shipping Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 • Stable credit qualit
Slide 13: Solid funding operations
Solid funding operations LCR DEVELOPMENTS, % COMMENTS 140 159 140 159 • Issuance of EUR 6bn during Q2 134 127 127 117 114 • Conservative liquidity management • LCR compliant • Liquidity buffer EUR 62bn • 74% of the wholesale funding is Q4/13 Q1/14 Q2/14 long-term funded Combined USD EUR • Long-term
Slide 14: Risk exposure amount
Risk exposure amount RISK EXPOSURE AMOUNT, EURbn* COMMENTS 181 179 • Efficiencies of EUR 6.4bn in the 168 168 quarter 162 160 159 155 152 • Divestment of Polish operations finalised • REA reduced by EUR 2.3bn Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 RISK EXPOSURE AMOUNT DEVELOPMENT, EUR
Slide 15: CET 1 ratio up 60 bps
CET 1 ratio up 60 bps COMMON EQUITY TIER 1 RATIO DEVELOPMENT, % 0.6% -0.5% 0.2% 15.2% 0.3% 14.6% Common Equity Tier 1 Poland Efficiencies Other Profit net dividend* Common Equity Tier 1 ratio Q1/14 ratio Q2/14 * Assuming a payout ratio of 56% 15 •
Slide 16: Business area development
Business area development 14
Slide 17: Improved return in Business Areas
Improved return in Business Areas RETURN DEVELOPMENT YTD, GROUP AND BUSINESS AREAS GROUP RETAIL BANKING WHOLESALE BANKING WEALTH MANAGEMENT RaRoCaR RaRoCaR RaRoCaR RaRoCaR 15% 30% 15% 14% 14% 25% 14% 13% H1/13 H1/14 H1/13 H1/14 H1/13 H1/14 H1/13 H1/14 INCOME -1% INCOME -1% INCOME -1% INCOME 9% COSTS
Slide 18: More relationship customers choose Nordea
More relationship customers choose Nordea RELATIONSHIP CUSTOMERS (GOLD, PREMIUM AND PB), ‘000s COMMENTS 3,219 3,094 3,145 2,850 3,016 • 46,300 new relationship customers in 2,675 H1, 5% more than H1 2013 2,558 2,417 Denmark • 3.22 million relationship customers in Finland total, up 33% since beginni
Slide 19: Leading provider to large corporates and institutions
Leading provider to large corporates and institutions NORDIC ECM Q2/14, EURm COMMENTS Nordea 1,603 Peer 1,561 • Leading provider in capital markets Peer 1,295 Peer 1,215 activities Peer 1,086 Peer 1,062 • No.1 arranger of syndicated loans Peer 787 Peer 726 • Awarded best Equity Research House Peer 6
Slide 20: Record high savings inflow
Record high savings inflow AUM DEVELOPMENT, EURbn COMMENTS 248.3 • Highest quarterly net inflow ever, 238.7 232.1 EUR 4.8bn 226.8 217.8 • All time high AuM at EUR 248bn • Strong interest among Nordic and International retail customers Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 • Record high net flow in Nordic NE
Slide 21: 2015 plan update
2015 plan update 14
Slide 22: The 2015 plan – an update
The 2015 plan – an update Nordea market commitments Key initiatives and levers Strong capital generation and Capital initiative to improve the CET1 ratio increased payout ratio in 2014 and 2015 while maintaining a strong capital base Initiatives for income generation To reach a ROE of 13% at the req
Slide 23: Strong capability to generate capital
Strong capability to generate capital COMMON EQUITY TIER 1 CAPITAL*, EURm COMMENTS Dividend payout (accrued dividend for H1/14) • CET 1 capital 20 677 21 961 23 112 23 172 Doubled the capital base in 7 years 19 103 17 766 14 313 • Increased CET 1 ratio from 6.8% to 11 689 12 821 15.2% 2006 2007 2008
Slide 24: Income holding up
Income holding up Re-pricing New customers Ancillary income • Lending margins up 7 bps • Continued strong inflow of • Strengthened capital YoY (RB) household customers markets position ~ 45,600 new (externally • Lending margins up 16 bps • Strong performance in recruited) Gold and YoY (WB) Equities,
Slide 25: Efficiency initiatives are in place to achieve the 5% cost reduction by end-2015
Efficiency iniatives are in place to achieve the 5% cost reduction by end-2015 Branch closures and reduced cash handling 25% Insourcing of IT services 17% Reduced external spend 15% Capital Markets savings 10% Increased Offshoring 6% % of total cost efficiency iniatives Streamlining & automation 6%
Slide 26: Key initiatives of the cost efficiency programme 1(2)
Key initiatives of the cost efficiency programme 1(2) Actions Branch closures and • Reduction of branches and cash outlets reduced cash handling • Savings 2/3 staff, 1/3 facilities Insourcing of • Insourcing of IT-services: Replace higher-cost consultants with IT service employees • Reduced marketin
Slide 27: Key initiatives of the cost efficiency programme 2(2)
Key initiatives of the cost efficiency programme 2(2) Actions • Streamlining of product offering (80-90% per country) Streamlining & • Automation of processes automation • Savings – 2/3 staff, 1/3 IT investments HQ programme • Lower facilities costs Moderated expansion • Reductions in Private Bankin
Slide 28: RoE – strong underlying business performance
RoE – strong underlying business performance +1.4% 13.0% -1.0% Re-pricing Capital increase Ancillary income Interest rates Lower costs Volumes Other 12.0% Lower 11.6% loan losses Q2 2013 Business External Q2 2014 performance factors 28 • Excluding restructuring charge in Q2/14
Slide 29: Progress in summary
Progress in summary PROGRESS ON NORDEA FINANCIAL PLAN 2015 IN Q2/14 CET1 capital ratio • CET 1 capital ratio up 60 bps to 15.2% P • Risk Exposure Amount Total efficiencies of EUR 24bn of which 6bn in the quarter P Income growth • Income holding up (P) Costs • Cost programme delivering according to p
Slide 30: Second Quarter Results 2014
Second Quarter Results 2014 Investor presentation