Slide 1: Third Quarter Report 2009
Third Quarter Report 2009 Press and analyst conference 28 October 2009 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: Strong performance also in the third quarter
Strong performance also in the third quarter Net interest income up 1% Commission income up 6% Expenses down 3% Q3 2008 Q2 2009 Q3 2009 Q3 2008 Q2 2009 Q3 2009 Q3 2008 Q2 2009 Q3 2009 Risk-adjusted profit down 6% Loan losses 54bps Operating profit up 2% - up 30% YoY Q3 2008 Q2 2009 Q3 2009 Q3 2008 Q
Slide 4: Result highlights
Result highlights EURm Q3/09 Q2/09 Chg % Q3/08 Chg % Ytd/09 Ytd/08 Chg % Net interest income 1,321 1,305 1 1,296 2 3,982 3,707 7 Net fee and commission 437 412 6 480 -9 1,230 1,493 -18 Net gains/losses 486 594 -18 221 120 1,595 703 127 Other income 33 48 -1 108 46 Total income 2,277 2,359 -3 1,996 1
Slide 5: Resilient net interest income – up 1%
Resilient net interest income – up 1% Net interest income, EURm Continued increase in corporate lending 1,296 1,305 1,321 margins Re-pricing of credit risk and liquidity premiums Strongest increase in Finland, followed by Denmark and Sweden Total lending to the public increased 2% Househol
Slide 6: Net fee and commission income up 6% - positive trend continues
Net fee and commission income up 6% - positive trend continues Net fee and commission, EURm Savings commissions continued on the 480 positive trend – up 7% 437 Payment and card commissions up 2% 412 Lending commissions up 20% compared to a weak Q2 – high income in Shipping Nordea lead manage
Slide 7: Net gains/losses remains at high levels
Net gains/losses remains at high levels Net gains/losses, EURm Customer-driven capital markets 523 activities continues to perform strongly 496 Life & Pensions realised a strong result from recovery in financial buffers Contribution from Group Treasury decreased in Q3 from high levels 196 Ma
Slide 8: Cost management remains in focus
Cost management remains in focus Total operating expenses, EURm Total expenses down 3% compared to 1,116 1,087 previous quarter 1,060 Lower variable salaries and seasonal effects Cost growth 3% compared to same quarter last year – 7% in local currencies Cost/income ratio 48% - 53% one year a
Slide 9: Net loan losses – in line with outlook statement
Net loan losses – in line with outlook statement Net loan losses, EURm Stabilising loan losses – increased share of collective provisions 57bps* Net loan loss provisions in Q3 EUR 54bps 358m (EUR 425m) of which EUR 114m collective Loan losses corresponding to 54bps 37bps individual (41bps )
Slide 10: Expected losses – 25bps over the cycle
Expected losses – 25bps over the cycle 20 10 0 -10 -20 Expected losses 2009 – 25bps -30 -40 -50 -60 H1 2002 H2 2002 H1 2003 H2 2003 H1 2004 H2 2004 H1 2005 H2 2005 H1 2006 H2 2006 H1 2007 H2 2007 H1 2008 H2 2008 H1 2009 Q3 2009 2002 2003 2004 2005 2006 2007 2008 2009 10
Slide 11: Operating model proven by low volatility in operating profit
Operating model proven by low volatility in operating profit Quarterly operating profit development, EURm Strong profit generation capable to absorb loan losses Diversified business mix 356 425 358 320 explains low earnings volatility 21 36 89 Momentum in revenue growth 978 958 818 896 932 885
Slide 12: Macro pressure easing – impaired loans increases at a lower pace
Macro pressure easing – impaired loans increases at a lower pace Impaired loans and recivables, EURm Impaired loans gross – up 9% to EUR 3,851m 1 639 1 585 or 128bps of total lending, up 19% in Q2 57% of the impaired loans are still performing – 675 1 949 2 212 up from 55% in Q2 1 002 Q3 2008 Q2
Slide 13: Well diversified Baltic portfolio - 3% of total lending
Well diversified Baltic portfolio - 3% of total lending YTD Q3 Lending Impaired Majority of corporate lending to EURbn loans more solid segments - Large local State & Municipalities 0.4 0.0% and Nordic Nordic & International 0.9 0.6% Large local corporates 1.5 1.3% Higher risk in midsize segment
Slide 14: Strong capital position provides operational flexibility
Strong capital position provides operational flexibility Core Tier 1 capital ratio (excl. Hybrids) One of the strongest core capital 10.3 10.7 positions in Europe 9.2 9.4 8.4 7.5 All capital ratios significantly increased Continued strong net earnings Issuance of Tier 1 hybrid USD 1bn Q3/08
Slide 15: Nordea well in line with expected regulatory changes on liquidity risks
Nordea well in line with expected regulatory changes on liquidity risks Timing and details are still under discussion – indications point at an implementation end of 2010 Key measurements and ratios presented: Core Funding Ratio Ratio between retail deposits and long-term wholesale funding d
Slide 16: Ambitious long-term financial targets
Ambitious long-term financial targets Long term financial targets Target TSR (%) In the top quartile of European peer group Risk-adjusted profit (EUR m)¹ Double in 7 years² RoE (%) In line with top Nordic peers 1. Risk-adjusted profit is defined as total income less total expenses less expected loan
Slide 17: Over delivery on long-term targets
Over delivery on long-term targets Risk-adjusted profit compared to baseline 46.8% 38.3% 27.0% 15.0% 12.6% 15.3% 14.3% 16.5% 8.4% 2.7% 14.1% Q107 Q207 Q307 Q407 Q108 Q208 Q308 Q4/08 Q1/09 Q2/09 Q3/09 Rolling four quarter compared with FY 2006 EUR 1,957m Long-term target for average yearly growth 17
Slide 18: Total shareholder return (TSR)
18 -100 -80 -60 -40 -20 0 20 % RBS AIB BoI Lloyds Commerzbank Swedbank KBC SEB 1/1 2007 – 30/9 2009 Societe Generale Unicredit Erste Danske Total shareholder return (TSR) Barclays Intesa Sanpaolo BBVA BNP Paribas DnBNOR Nordea -2.9 Top quartile SHB Santander Source: ThomsonReuters Ecowin
Slide 19: Return on equity
Return on equity Nordic peers - average RoE 2007-2009*, % 15.4 14.6 13.6 9.6 5.7 5.2 Nordea * Adjusted for one-offs - Q3 numbers, excluding Danske Bank and SHB which are still to report Nordic peers: Danske Bank, DnB NOR, SEB, SHB, Swedbank 19
Slide 20: Business development
Nordea ™ Business development
Slide 21: Strong Nordea brand name continues to attract customers in Gold segment
Strong Nordea brand name continues to attract customers in Gold segment Number of Gold customers, '000 Strategy to capture potential in existing 2,567 2,533 customer base as well as acquire new 2,461 customers in premium segments increasingly successful Number of Gold customers increased by more
Slide 22: Improved position in Corporate Banking markets
Improved position in Corporate Banking markets reflecting current performance and competitive offering Total income CMB and Large corporates, EURm The corporate relationship strategy with the 574 568 aim to build house-bank relations proven 505 successful Support to house-bank corporate customer
Slide 23: Capital markets – strong strategy execution
Capital markets – strong strategy execution Total income Capital Markets Risk-management products to corporate Products, EURm 592 customers 519 Sales activity and number of transactions continue to be high 281 Normalising market conditions lead to pressure on margins and somewhat lower volumes
Slide 24: Market league tables
Market league tables Nordic corporate Eurobond benchmark league table Q1-Q3 2009 Nordic Equity Market league table Q1-Q3 2009 Bookrunner Bookrunner Pos. Bank name Deal value EURm No. % share Pos. Bank name Deal value EURm No. 1 Deutsche Bank 3,025 15 17.8% 1 Nordea Markets 6,792 11 2 BNP Paribas 2,2
Slide 25: Strong net inflows proves customer satisfaction
Strong net inflows proves customer satisfaction Net flows AuM, EURbn Asset under Management up EUR 2.9 2.8 12.7bn or 9% - net inflows of EUR 2.9bn Improved position within savings market – Q3 inflows to households including Private Banking EUR 2.2bn 0.6 0.9 Retail funds up EUR 1.1bn in Q3 – st
Slide 26: Positive business momentum in Life
Positive business momentum in Life Nordea is clearly the largest Life insurer Gross Premiums Written, EURm in the Nordics 1,045 1,051 Increased gross premiums written 1,013 Refocusing of the Finnish business towards unit-linked Continued strong sales of the Swedish endowment product Placera
Slide 27: Continued execution of efficiency programmes
Continued execution of efficiency programmes Cost/Income, % Improved cost/income ratio – down to 53 48% in Q3 compared to 53% one year 47 48 ago 51% Nordic Banking 41% New European Markets Q3 2008 Q2 2009 Q3 2009 Target to reduce number employees by 2% in 2009 was meet during the quarter Num
Slide 28: Consistent delivery on growth strategy
Consistent delivery on growth strategy Total income, EURm 2,359 2,279 2,277 2,251 Consistent income growth 2,142 – also in challenging 1,992 1,957 1,996 market conditions 1,898 1,914 1,961 1,873 1,780 Resilience in the 1,754 1,734 business franchise Successful growth initiatives Performance
Slide 29: The journey towards Great Nordea continues
The journey towards Great Nordea continues Great Nordea The overall risk levels have gone down – Profit orientation – cost, risk and capital uncertainty of the strength in economic recovery is high Nordea is in a position of strength – strong Ambitious vision and targets foundation on capital, f
Slide 30: Outlook
Outlook Risk-adjusted profit for 2009 is expected to be higher than in 2008 Cost growth in 2009 is expected to be at approx. the same level as in the first nine months Loan loss provisions for the first nine months, excluding contested legal claim, was 55bps – in line with the Outlook from the
Slide 31: Key messages
Key messages Results remain at high levels Operating profit up 2% - strong income generation and lower loan loss provisions Over-delivery on long-term targets Strong business development Increase in number customers and market shares Continued execution of efficiency programmes Consist
Slide 32: The leading Nordic bank, acknowledged for its people
The leading Nordic bank, acknowledged for its people, creating superior value for customers and shareholders. 32