Nordea Bank Abp · OMXHEX:NDA_FI
Nordea Bank Abp — Q1 2008 Earnings Presentation
85 slides from Nordea Bank Abp's earnings presentation, Apr 29, 2008
Slide 1: Investor Presentation 29 April 2008
Investor Presentation 29 April 2008
Slide 2: CEO Presentation
CEO Presentation
Slide 3: Growth strategy on track - income growth continued and profit before loan losses increased
Growth strategy on track - income growth continued and profit before loan losses increased Income EUR 1,961m (EUR 1,873m), up 5% Net interest income EUR 1,181m (EUR 1,004m), up 18% Risk-adjusted profit up 1% - up 5% adjusted for Eksportfinans Profit before loan losses EUR 906m (EUR 881m), up
Slide 4: Nordea has managed challenging market conditions also in the first quarter 2008
Nordea has managed challenging market conditions also in the first quarter 2008 Benefiting from a solid funding name, well diversified business profile and a strong balance sheet Conservative liquidity strategy in place since creation of Nordea Well diversified funding bases, Nordic, EU and US
Slide 5: Strong liquidity position
Strong liquidity position Net Balance of Stable Funding Excess of long-term funding compared to long-term assets with maturity longer than 6 months According to target set by ALCO net balance of stable funding should be positive Liquidity Buffer End March approx. EUR 20bn of stand-by liqui
Slide 6: Operating income up 5%
Operating income up 5% YoY Up 5% - excl. Eksportfinans up 6% Operating income, EURm Net interest income – up 18% Continued growth in both lending and deposit volumes 1 961 1 873 Higher corporate lending margins Increase supported by strong growth in New European Markets, incl. Russia Net
Slide 7: Cost increase in line with guidance
Cost increase in line with guidance Cost increase YoY Unchanged cost growth compared to 2007 Cost growth reflecting execution of growth 6,4% 6,4% strategy and related investments Staff costs up 10% following increased 4,5% business activity, investment in growth areas and wage inflation Tota
Slide 8: Profit before loan losses up 3%
Profit before loan losses up 3% Profit before loan losses, EURm 906 Growth strategy on track 881 Income growth continues to drive the profit increase – investments in growth areas delivers Strong momentum both in Nordic countries as well as in New European markets Q1/07 Q1/08 * 8
Slide 9: Strong and well diversified credit portfolio
Strong and well diversified credit portfolio Loan losses, EURm New provisions remained at an unchanged 151 126 101 141 level while the amount of recoveries has 98 decreased – all in line with guidance 21 Net loan losses EUR 21m -13 -13 -6 -28 The credit quality remains strong -129 -111 -120 -1
Slide 10: Bringing Nordea from Good to Great
Bringing Nordea from Good to Great Profit orientation - Cost, risk and capital Ambitious vision and targets Strong customer oriented values and culture Clear growth strategy 10
Slide 11: Ambitious vision and targets
Ambitious vision and targets Long term financial targets Target 2007 Q1/08 TSR (%) In the top quartile of # 3 of 20 # 8 of 20 European peer group Risk adjusted profit (EUR m)¹ Double in 7 years² 15% 16%³ RoE (%) In line with top Nordic peers 19.7% 15.8% Capital structure policy Policy Dividend payou
Slide 12: Total shareholder return (TSR)
12 -50 -45 -40 -35 -30 -25 -20 -15 -10 -5 0 % Société Générale Bank of Ireland HBOS RBS Allied Irish Banks UniCredit Barclays Swedbank 1/1 2007 – 31/3 2008 Commerzbank Erste Bank SEB Danske Bank Total shareholder return (TSR) BNP Paribas Intesa Sanpaolo SHB Lloyds TSB KBC DnBNOR Top quartile Santand
Slide 13: Sustained growth in Risk-adjusted profit
Sustained growth in Risk-adjusted profit Risk-adjusted profit growth, % Up 1% to EUR 584m compared to 16 same quarter last year and 5% when 15 excluding Eksportfinans 5 1 2007 Q1/08 Rolling four quarters compared w ith FY 2006 EUR 2,107m Grow th in risk-adjusted profit Q108/Q107 Grow th in risk-ad
Slide 14: Return on Equity (RoE)
Return on Equity (RoE) Return on Equity, % Lower RoE in Q1 Higher equity prior to dividend payout 19,7 17,6 * Slightly lower net profit following net loan 15,8 losses FY 2007 Q1/08 Nordea Average Nordic Peers (Danske Bank, SEB, SHB, Swedbank, DnBNOR) * Adjusted for one-off 14
Slide 15: A profitable organic growth strategy with clear initiatives
A profitable organic growth strategy with clear initiatives Selected global New European Existing Nordic customers and new customers and European Markets business lines Household strategy Private banking Corporate strategy Based on strong Selective growth competencies strategy • Migration to • Added
Slide 16: Significant potential in migrating household customers to higher segments
Significant potential in migrating household customers to higher segments Income* Customers Gold and Private banking (Index) (millions) 1300 4,0 customers are the engines for revenue growth 1100 1200 3,5 3.7 3,0 A Gold customer generates 900 4x 7 times higher income than a 2,5 700 2.4 Bronze cus
Slide 17: Proactive sales drives growth in premium segments
Proactive sales drives growth in premium segments Nordic Gold segment YoY 14% Gold segment continues to be the 7% main engine for profitable growth 7% 131 115 Successful penetration of the 54 51 customer base 2.4 2.3 7% increase in number of Gold customers 1/5 are new customers in Nordea I
Slide 18: Growth Plan Sweden on track
Growth Plan Sweden on track Income growth % Income in Nordic Banking Sweden 7% Improved market position 7 Focus on services and product segments 4 with strongest growth potential; long term savings, consumer loans, capital market products Q108/Q107 Nordea Nordic Banking Sweden Initiative con
Slide 19: Continued strong growth in Nordic Private Banking
Continued strong growth in Nordic Private Banking Growth success of Private Banking Nordic Private Banking segment YoY continued in first quarter 2008 7% 13% Number of customers up 13% YoY 14% 45 1,500 new customers in Q1, mainly in 80 42 Norway and Sweden 71 782 684 Assets under Management
Slide 20: High corporate customer activity
High corporate customer activity Total income corporate customers, Income from corporate customers up EURm 18% in Q1 Strong growth in corporate lending 897 continued in Q1 Increased lending market shares in the higher 759 segments of the corporate market Successful execution of customer team
Slide 21: Increased demand for Capital market products in corporate segment
Increased demand for Capital market products in corporate segment Total revenues in Capital Markets Customer driven demand for Capital related to Nordic Banking markets products continue to increase customers, EURm Continued success in advising corporate customers to hedge their 146 market risk
Slide 22: Strong business development in all segments within New European Markets
Strong business development in all segments within New European Markets Selective growth strategy on track New European Markets total 11 new branches opened in Poland in Q1 2008 income, EURm Continued prudent credit policies in New European 94 Markets enables Nordea to grow with stable credit
Slide 23: Outlook for 2008
Outlook for 2008 Accelerating turmoil in financial markets has increased uncertainty about growth in the real economy Despite a somewhat weaker macroeconomic outlook, Nordea experiences high customer activity in almost all areas Lending growth expected to be somewhat lower in the remaining par
Slide 24: CFO Presentation
CFO Presentation
Slide 25: Challenging market conditions in the first quarter
Challenging market conditions in the first quarter Financial market turmoil accelerated in the first quarter Corporate credit spreads widened sharply during the quarter Money market risk premiums back to highs seen last autumn Negative effects in the credit markets has spread to the equity m
Slide 26: Credit Default Swaps
Credit Default Swaps Europe 5y CDS spread level (in bps) Increasing CDS spreads will 2006 2007 jan-08 feb-08 mar-08 Last Anglo Irish Bank 9 110 165 245 385 260 over time be reflected in Alpha Bank 17 18 18 125 150 200 Sberbank Bank of Ireland 72 6 165 61 195 95 204 130 233 155 161 105 higher fundi
Slide 27: Limited impact on Nordea's profit from challenging market conditions
Limited impact on Nordea’s profit from challenging market conditions Limited valuation effects Total fixed income portfolio of EUR 50bn of which Life approx. EUR 20bn – remaining EUR 30bn trading portfolio and liquidity buffer, containing high quality repo eligible papers Approx. EUR 30m in ne
Slide 28: Effects of market turmoil on Nordea's funding operations
Effects of market turmoil on Nordea’s funding operations Largely normal funding operations, Nordea benefiting from: Well recognised name A highly rated bank (Aa1/AA-/AA-/AA) Focus on composition of investor base – geographical range as well as rating sensitivity Prudent liquidity managemen
Slide 29: Liquidity Risk Measures – key instruments to navigate through difficult markets
Liquidity Risk Measures – key instruments to navigate through difficult markets Net Balance of Stable Funding Long-term measure; excess of long-term funding compared to long-term assets Should, according to targets set by ALCO, be positive Liquidity Buffer End March approx. EUR 20bn of sta
Slide 30: Income statement summary
Income statement summary EURm Q1/08 Q1/07 Chg % Net interest income 1,181 1,004 18 Net fee and commission income 495 535 -7 Net gains/losses on items at fair value 280 291 -4 Equity method -18 10 Other income 23 33 -30 Total operating income 1,961 1,873 5 Staff costs -644 -585 10 Other expenses -384
Slide 31: Income statement summary
Income statement summary EURm Q1/08 Q4/07* Chg % Net interest income 1,181 1,143 3 Net fee and commission income 495 526 -6 Net gains/losses on items at fair value 280 314 -11 Equity method -18 12 Other income* 23 27 -15 Total operating income 1,961 2,022 -3 Staff costs -644 -615 5 Other expenses -3
Slide 32: Robust volume growth continues in all segments
Robust volume growth continues in all segments % YoY Q1oQ4 Total Lending, excl. reversed repos 14% 4% – Nordic household mortgages 10% 2% – Nordic consumer lending 11% 3% – Nordic corporates 16% 4% – New European Markets 106% 10% Total Deposits, excl. reversed repos 12% 5% – Nordic households 11% 2%
Slide 33: Net interest income
Net interest income YoY EURm 1 200 1 143 1 181 Up 18% 1 092 1 100 1 043 Strong increase in lending and deposit 1 004 1 000 volumes 900 Lending up 14% 800 Deposits up 12% 700 Strong contribution from New European 600 Markets Q1oQ4 500 400 Up 3% - continued strong quarterly 300 improvement
Slide 34: Change in net interest income
Change in net interest income EURm YoY Q1oQ4 Volume driven 95 27 -Lending volumes 72 24 -Deposit volumes 23 3 Margin driven 22 5 -Lending margins -9 9 -Deposit margins 31 -4 Orgresbank 25 0 Other, net 35 6 Total 177 38 34
Slide 35: Structural Interest Income Risk (SIIR)
Structural Interest Income Risk (SIIR) EURm, annualised effect on NII* Q1/08 Q4/07 Q1/07 Increasing market rates, 100bp 238 235 220 Decreasing market rates, 100bp -268 -267 -249 SIIR stable over time *Approx. end of period SIIR is defined as the effect on net interest income (NII) in the next 12 m
Slide 36: Net fee and commission income
Net fee and commission income YoY EURm Down 7% 600 Savings-related commission down 15% 548 AuM down 10% due to weak equity markets 535 531 526 500 495 Lower transaction activity Shift to low risk products with lower margins 400 Lending-related commission up 2% reflecting high business vo
Slide 37: Net gains/losses – focus on handling customers risk management needs
Net gains/losses – focus on handling customers risk management needs EURm YoY 350 300 Down 4% 300 288 274 275 Kept at high level in customer areas 250 despite challenging markets 200 186 Focus on value added products with higher margins 150 Q1oQ4 100 78 Despite a 11% drop another strong 50 1
Slide 38: Unchanged net gains despite challenging market conditions
Unchanged net gains despite challenging market conditions EURm Strong and stable income from customer 300 291 areas 280 250 Income in Group Treasury maintained at high level 200 Increased customer demand for risk 150 management products and increased penetration of existing corporate customer
Slide 39: Operating income
Operating income YoY Up 5% EURm Diverging trend on different income lines reflecting customer behaviour – in total 2 200 1 957 2 022* 1 961 strong increase 2 000 1 873 1 914 Net interest income up 18% 1 800 Continued strong volume growth in both lending 1 600 and deposits 1 400 Net commiss
Slide 40: Income growth in Nordea (EURm)
Income growth in Nordea (EURm) -2.7% 1.8% 33 -50 2.9% -1.2% 5.9%* -23 4.7% 54 3.4% 1 961 63 1 873 Inco me Q1/07 Lending New Euro pean Transactio n Savings Capital Other A sset Ekspo rtfinans Inco me Q1/08 M arkets acco unts acco unts M arket M anagement pro ducts and Funds * Income growth excluding
Slide 41: Expenses
Expenses YoY EURm Up 6% - mainly driven by investments in 1,073 1,055 1 100 1,008 growth areas 992 993 29 27 1 000 Excluding Russia 4.5% 24 25 25 900 Staff costs up 10% reflecting investment 429 384 800 383 391 372 in growth areas and wage inflation 700 FTE’s up 10% of which Russia accounts
Slide 42: Expense growth in Nordea
Expense growth in Nordea 1.0% -2.5% 2.7% 10 25 6.4% 26 1.8% 18 1.4% 2.0% 14 1 055 20 992 Expenses Q1 Wage Higher variable Russia Investments in Increased Efficiency Expenses Q1 2007 increases salaries and grow th areas business gains 2008 profit sharing activity 42
Slide 43: Growth in staff costs
Growth in staff costs 0.1% 10.1% 2.2% 5 1.2% 13 2.4% 7 3.4% 14 20 No. of recruited 644 FTEs: approx. Increased 4,000 number of FTEs. No. of FTEs that 1,500 585 has left: approx. -2,500 Staff costs Q1 Wage Higher variable Increased Russia Other Staff costs Q1 2007 increases salaries and number of FTE
Slide 44: Number of FTEs
Number of FTEs 32 500 3 813 YoY 3 506 3 180 Up 10% or 3,000 FTE’s 2 970 30 000 New European Markets +2,000 1 773 27 500 Nordic markets +1,000 Q1oQ4 Up approx. 700 FTE’s 28 595 25 000 28 215 28 148 27 893 27 573 Mainly New European Markets 22 500 20 000 Q1/07 Q2/07 * Q3/07 Q4/07 Q1/08 Norde
Slide 45: Cost/income ratio
Cost/income ratio % 70 64 63 60 Increased to 54% in Q1 60 56 53 53 54 Income up 5% 52 50 Costs up 6% Unchanged at 53% - excl. 40 Eksportfinans 30 Continued momentum in organic growth strategy combined with 20 focus on cost management 10 0 2002 2003 2004 2005 2006 2007 Q1/07 Q1/08 45
Slide 46: Net loan losses
Net loan losses EURm 30 Q1/08 21 Unchanged level of new provisions and 20 lower reversals and recoveries – in line with outlook 10 Net loan losses of EUR 21m was recorded in the first quarter, following 15 0 consecutive positive quarters -10 -6 Credit quality in the well diversified -13 -13 le
Slide 47: Net profit
Net profit EURm YoY 900 Profit before loan losses up 3% 816 800 761 764 * Net profit down 2% 701 687 Net loan losses EUR 21m (positive EUR 13m) 700 Lower tax rate in Q1/07 600 Q1oQ4 500 Higher tax rate in Q1 and negative net 400 loan losses 300 200 100 0 Q1/07 Q2/07 Q3/07 Q4/07 Q1/08 * For
Slide 48: High profitability
High profitability % Q1/08 25 23,6 22,7 Return on equity of 15.8% 21,4 20,6 20,7 Net loan losses EUR 21m compared to 20 19,1 18,0 recoveries EUR 13m the same quarter last year 15,8 15 Higher equity RaRoCar 20.7% - higher Economic 10 Capital High profitability – but not yet full 5 positive
Slide 49: Increase in risk-adjusted EPS
Increase in risk-adjusted EPS 0,3 0,27 0,26 0,3 0,23 0,22 0,2 0,2 0,1 0,1 0,0 EPS, EUR EPS, risk adjusted, EUR Q107 Q108 49
Slide 50: Earnings per share
Earnings per share - rolling 12 months EUR 1,2 1,1 1,0 0,9 0,8 0,7 0,6 0,5 0,4 0,3 0,2 0,1 0,0 Q1/03 Q2/03 Q3/03 Q4/03 Q1/04 Q2/04 Q3/04 Q4/04 Q1/05 Q2/05 Q3/05 Q4/05 Q1/06 Q2/06 Q3/06 Q4/06 Q1/07 Q2/07 Q3/07 Q4/07 Q1/08 Reported Risk adjusted 50
Slide 51: Capital management
Capital management
Slide 52: ICAAP in Nordea
ICAAP in Nordea Supervisor’s evaluation The 20th of March the FSA completed its assessment of Nordea’s ICAAP FSA concluded that Nordea has enough capital in relation to the risk exposures ICAAP – Internal Capital Adequacy Assessment Process Purpose is to review the management, mitigation a
Slide 53: Stable RWA despite strong volume growth
Stable RWA despite strong volume growth EURbn RWA excl. transition rules up 3% to EUR 220 205 176bn 200 201 193 194 200 189 176 177 176 Mainly effected by strong corporate lending growth 180 171 160 Increased collateral ratio dampens the effect 140 Market risk slightly higher 120 RWA incl.
Slide 54: Still strong capital position
Still strong capital position % 9 8,3 8,2 7,9 8 7,7 6,8 6,8 7,1 7,2 7,0 7,2 Tier I ratio excl. transition rules 8.2% 7 Tier I ratio 7.2% incl. transition rules 6 (7.0% in Q4) 5 Changed transition rules leads to an increased 4 Tier I ratio 3 2 1 0 Q1/07 Q2/07 Q3/07 Q4/07 Q1/08 Tier I Basel I Ti
Slide 55: Economic Capital – distribution
Economic Capital – distribution End of Q1/08 Economic Capital, EUR 11.7bn (EUR 9.9bn Q1 2007) Group Services Group Treasury & Technology Life risk Savings & Life 5% 1% 1% Operational risk Products Business risk 9% 11% 8% Institutional & International Banking 13% Market risk 14% Credit risk Nordic Ba
Slide 56: Customer areas
Customer areas
Slide 57: Operating profit by markets
Operating profit by markets Denmark Finland Norway Sweden New European Markets EURm Q1/08 Chg Q1/08 Chg Q1/08 Chg Q1/08 Chg Q1/08 Chg Total income 428 4% 420 3% 220 19% 430 7% 94 135% Total expenses -218 7% -194 10% -118 8% -242 4% -50 108% Profit before loan losses 210 0% 226 -3% 102 34% 188 11% 44
Slide 58: New European Markets
New European Markets Poland Latvia Estonia Lithuania Russia EURm Q1/08 Chg Q1/08 Chg Q1/08 Chg Q1/08 Chg Q1/08 Chg Total income 29 52% 15 41% 8 21% 6 43% 38 - Total expenses -17 32% -6 41% -4 27% -3 57% -18 - Profit before loan losses 12 93% 9 4% 4 15% 3 31% 21 - Operating profit 12 100% 9 39% 4 13%
Slide 59: Financial Institutions and Shipping Oil services & International
Financial Institutions and Shipping Oil services & International Financial Shipping, Oil Institutions services & International EURm Q1/08 Chg Q1/08 Chg Total income 102 21% 59 11% Total expenses -46 12% -14 17% Profit before loan losses 56 30% 45 10% Operating profit 56 30% 45 10% Q1/08 Q1/07 Q1/08
Slide 60: Customer segments
Customer segments
Slide 61: Nordic personal customer segments
Nordic personal customer segments Yearly growth,% Largely unchanged income within 14 13 Nordic Private Banking despite negative effect from equity markets 7 7 Strong inflow of new customers 4 Strong growth in business volumes 1 outside asset management -1 Income growth in Gold segment 7% -2
Slide 62: Corporate customer segments and Financial institutions
Corporate customer segments and Financial institutions Income up 16% within Nordic Yearly growth,% Corporate Merchant Banking/Large 21 corporate 18 Volume and margins increase 17 16 Contributing with 49% of total income in corporate segment (EUR 436m) 11 11 Other corporate customers revenues
Slide 63: New European Markets
New European Markets Corporate customers, yearly growth % Strong volume growth in the NEM corporate 238 segment fuelled by Russian operations (Total income EUR 71m) Lending volumes up approx. 120% - in Poland and the Baltics up 70% 102 Successful acquiring of new corporate customers Margins
Slide 64: Product dimension
Product dimension
Slide 65: Product income
Product income Other Life & Pensions 5% Corporate lending 5% 18% Payment products 11% Mortgage lending 8% Capital Markets products 15% Consumer lending 8% Savings products & Asset management 9% Corporate deposits 8% Household deposits 13% 65
Slide 66: Product revenue growth (EURm)
Product revenue growth (EURm) 4 50 32 3 2 1 23 3 1 961 20 7 59 1 873 Q1/07 Corporate Mortgage Consumer Corporate Household Cards Guarantees Capital Life & Savings & Residual* Q1/08 lending lending lending deposits deposits and markets Pension Asset documentary management payments * Net of income not
Slide 67: Savings products and Asset Management, product result
Savings products and Asset Management, product result EURm Income and product result affected by 120 lower AuM due to equity market 110 downturn 110 100 106 Strong development within institutional 98 90 asset management activities 89 80 Income and product result down 23% 70 and 45% respectivel
Slide 68: Capital Markets Products, product result
Capital Markets Products, product result EURm Unchanged income despite challenging 250 market conditions 216 High volatility in many product areas provided 197 good business opportunities 200 190 182 Focus on risk-management products to corporate customers continued 150 142 Strongest contrib
Slide 69: Life and Pension, product result
Life and Pension, product result EURm Premiums up 6% compared to Q1/07 100 Premiums in Sweden up 69% - new product launches 90 Strong contribution from Poland 91 80 Product result down 3% compared to first 70 quarter last year 67 60 Negatively affected by equity market downturn and 58 58 p
Slide 70: Assets under Management
Assets under Management EURbn 165 163 163 157 AuM decreased EUR 10bn in Q1 147 Market depreciation EUR 9bn Net outflows EUR 1bn Continued outflow from Retail funds Customers moving assets from mutual funds to savings accounts More stable situation in Nordic Private Banking and Life and P
Slide 71: Net outflow from Asset Management due to equity market downturn
Net outflow from Asset Management due to equity market downturn Net flows AuM, EURbn Net outflow in AuM of EUR 1.0bn in Q1 2.6 Net outflow from Retail funds EUR 1.7bn -1.3 -1.0 Customers continues to reallocate savings to low -1.7 risk savings accounts with attractive terms -2.0 Inflow into
Slide 72: Nordic household mortgages, volumes and margins
Nordic household mortgages, volumes and margins EURbn % 90 1,6 85 1,5 80 84,0 1,4 75 81,1 82,8 76,5 78,5 1,3 70 74,6 72,4 1,2 65 69,4 60 67,6 1,1 55 1,0 50 0,9 45 0,8 40 0,7 35 0,6 30 0,5 25 0,4 20 0,3 15 10 0,2 5 0,1 0 0,0 Q1/06 Q2/06 Q3/06 Q4/06 Q1/07 Q2/07 Q3/07 Q4/07 Q1/08 72
Slide 73: Nordic consumer lending, volumes and margins
Nordic consumer lending, volumes and margins EURbn % 18 4,5 17,8 18,3 16 17,5 4,0 16,5 16,9 15,9 14 15,1 15,1 3,5 14,2 12 3,0 10 2,5 8 2,0 6 1,5 4 1,0 2 0,5 0 0,0 Q1/06 Q2/06 Q3/06 Q4/06 Q1/07 Q2/07 Q3/07 Q4/07 Q1/08 73
Slide 74: Nordic corporate lending, volumes and margins
Nordic corporate lending, volumes and margins EURbn % 110 1,4 1,3 100 106,3 101,9 1,2 90 94,7 97,5 92,1 1,1 80 88,0 1,0 83,5 84,1 70 80,4 0,9 0,8 60 0,7 50 0,6 40 0,5 30 0,4 0,3 20 0,2 10 0,1 0 0,0 Q1/06 Q2/06 Q3/06 Q4/06 Q1/07 Q2/07 Q3/07 Q4/07 Q1/08 74
Slide 75: Nordic household deposits, volumes and margins
Nordic household deposits, volumes and margins EURbn % 65 2,4 60 61,2 62,1 2,2 55 59,8 57,9 2,0 50 53,3 54,2 54,7 55,2 51,4 1,8 45 1,6 40 35 1,4 30 1,2 25 1,0 20 0,8 15 0,6 10 0,4 5 0,2 0 0,0 Q1/06 Q2/06 Q3/06 Q4/06 Q1/07 Q2/07 Q3/07 Q4/07 Q1/08 75
Slide 76: Summary – Q1 2008
Summary – Q1 2008 Strong result despite challenging market conditions Limited impact on P/L from market turmoil Continued strong funding position Income up 6% excl. Eksportfinans Robust volume growth continues in all segments Cost increase in line with guidance – mainly driven by growth
Slide 77: CRO Presentation
CRO Presentation
Slide 78: Well diversified lending portfolio
Well diversified lending portfolio Share of total lending, EUR 254bn Public Well-diversified lending mix measured by sector Household 2% 43% customer segments and industry Stable industry split over time Stronger growth in corporate lending Corporate than household lending the last six 55% mon
Slide 79: Well diversified income stream
Well diversified income stream Revenues streams Q1 2008 Global and Four similarly large Nordic markets European niche Increased income proportion from Other Norway New businesses 10% 11% New European Markets 5.0% in Q1 9% European Markets Finland Different business cycles in the four 21% 5% No
Slide 80: Total market risk at unchanged level since year end
Total market risk at unchanged level since year end* Value at Risk (VaR) level in Nordea’s EURm 31 Mar, 08 31 Dec, 07 trading and investment activities Total risk, VaR 60.1 58.9 unchanged Interest rate risk, VaR 63.4 57.2 Decreased Equity risk VaR in Q1 from Equity risk, VaR 4.6 32.9 EUR 33m to
Slide 81: Strong lending growth in the Baltic countries
Strong lending growth in the Baltic countries % Growth total lending 78 80 Selective growth strategy for the 70 65 65 60 Baltic countries 50 49 50 40 35 38 Prudent credit policy from start of 32 30 operations enables Nordea to grow 20 business volumes with intact credit 10 0 quality 2005 2006 20
Slide 82: Impaired loans and total allowances
Impaired loans and total allowances EURm Q1 2008 Q4 2007 Q1 2007 Impaired loans, gross, individually assessed 1,443 1,432 1,465 Allowances for individually assessed loans 562 603 668 Impaired loans, net, individually assessed 882 830 797 Impaired loans, net / lending (%) 0.30 0.34 0.36 Allowances, i
Slide 83: Impaired loans
Impaired loans EURm. End of Q1/08 Gross Allowances Net Personal customers 415 127 288 Manufacturing 326 153 173 Trade and services 211 77 134 Other companies 44 22 22 Real estate management 86 19 67 Renting, consulting and other services 135 69 66 Agriculture and fishing 42 17 25 Construction 74 30
Slide 84: Loan losses
Loan losses EURm 330 Net loan losses EUR 21m Unchanged modest new provisions 180 126 151 141 and with lower reversals and 101 98 recoveries – in line with guidance 21 30 Credit quality in the well-diversified -13 -28 -13 -6 lending portfolio remains strong -120 -129 -111 -120 -140 -157 -270 -4
Slide 85: Concluding remarks
Concluding remarks Growth strategy on track – income growth continued and profit before loan losses increased Nordea has managed challenging market conditions also in first quarter Strong funding and liquidity position High customer activity and continued strong growth in volumes Sustained