Nordea Bank Abp · OMXHEX:NDA_FI
Nordea Bank Abp — Q4 2017 Earnings Presentation
26 slides from Nordea Bank Abp's earnings presentation, Jan 25, 2018
Slide 1: Fourth quarter and full year results 2017
Fourth quarter and full year results 2017 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: Executive summary
Executive summary • Stable economic environment with synchronised growth across the Nordics • Stable underlying margins and volumes • De-risking of the bank largely finalised in the quarter • Negative impact on revenues, but positive impact on credit quality • Ultra low volatility lowered revenues,
Slide 4: Q4 2017 Group financial highlights
Q4 2017 Group financial highlights Q4/17 vs. Q4/16* 2017 vs. 2016* • Total revenues • -13% • -3% • Net Interest Income • -6% • -1% Income • Fee and Commission Income • -2% • +5% • Net Fair Value • -54% • -22% Costs • Total expenses • -7% • +4.2% • 9 (16) bps • 12 (15) bps • Loan loss level Credit qu
Slide 5: Net Interest Income
Net Interest Income 6 quarters development QoQ trend • Lower Net Interest Income mainly driven by de- 1,209 1,197 1,178 1,175 1,185 consolidation of the Baltic, de-risking in Russia 1,109 and Shipping, Oil and Offshore as well as FX • Margins and volumes largely unchanged • Group Functions somewhat
Slide 6: Net Interest Income
Net Interest Income 8 quarters development QoQ trend 110 • NII negatively impacted by de-risking, Baltic de-consolidation and Group Functions 105 100 • Nordic customer franchise has grown 5% Q417/Q116 95 90 85 80 75 Core Nordic franchise (excl. SOO) 70 Reported Other* 65 60 Q116 Q216 Q316 Q416 Q117
Slide 7: Net Fee and Commission Income
Net Fee and Commission Income 6 quarters development QoQ trend 867 866 • Increase in the quarter, mainly driven by asset 850 839 814 management 795 • Lower in payments and cards, driven by higher year-end expenses • High activity level in DCM and corporate finance Q316 Q416 Q117 Q217 Q317 Q417 7
Slide 8: Wealth Management
Wealth Management AuM development, EURbn QoQ trend • Largely unchanged AuM • Flow is negatively impacted by structural 332.1 330.9 changes (re-segmentation of customers and 330.1 330.4 322.7 closure of Zurich branch) • Continued solid flows from international institutional clients (+24% FY17) • 92%
Slide 9: Net Fair Value
Net Fair Value 6 quarters development QoQ trend • Higher income in customer-driven capital 498 480 markets activities 11 127 • Markets negatively impacted by ultra-low volatility 136 375 3 361 357 56 39 39 • Negative impact of Fair Value Adjustment of 96 91 26 235 EUR 80m q-o-q (impact from model ad
Slide 10: Costs
Costs Total expenses, EURm Comments 5,102 4.2% 26 • Cost performance 2017 vs 2016 in line with 146 4,982 target, +4.2%* 94 35 42 • Costs decline by 7%* in Q417 vs Q416 4,782 99 • Transformation costs of EUR 146m in Q4 FY16 Staff Compl. Deprec. Other FY17 Cost to FX FY17 adj** & risk, IT adj. transfo
Slide 11: Significant reduction in cash spending 2017-21
Significant reduction in cash spending 2017-21 Trend up to 2021 (EURbn) Comments ~5.5 • Efficiency initiatives are expected to lower P&L ~5.1 costs by approx. EUR 300m 2017-21 ~4.5-4.7 • P&L costs excluding depreciations and amortisations are expected to decrease by approx. EUR 600m 2017-21 • In add
Slide 12: Improved asset quality
Improved asset quality Total net loan losses, EURm Comments 127 135 129 • Net loan loss ratio* for Q4 at 9 bps (Q3 10) 111 113 106 • Mainly related to corporate customers spread out between Nordics and International units 79 71 • Largest individual loan loss related to Oil and Offshore and Manufactu
Slide 13: Common Equity Tier 1 ratio development Q417 vs Q317
Common Equity Tier 1 ratio development Q417 vs Q317 Quarterly development Comments • CET1 ratio continued to strengthen to 19.5% 0.2 0.3 0.2 19.5 in Q4 19.2 0.0 • REA inflation of EUR 1.5bn mainly due to Finnish mortgage floors (Article III buffer) • Tier 1 ratio increased to 22.3% (21.4% in Q3) • N
Slide 14: Strong improvement of management buffer
Strong improvement of management buffer 187 189 Management buffer (bps) 50-150bps is the range for the buffer 151 124 107 101 93 63 Q116 Q216 Q316 Q416 Q117 Q217 Q317 Q417 14
Slide 15: Board proposes a dividend per share of EUR 0.68
Nordea Bank Board proposes a dividend per share of EUR 0.68 €0.68 €0.64 €0.65 €0.62 €0.43 €0.34 €0.26 2011 2012 2013 2014 2015 2016 2017 “Nordea’s dividend policy is to maintain a strong capital position and the ambition is to achieve a yearly increase in the dividend per share” 15
Slide 16: Group transformation
Group transformation Nordea
Slide 17: Ambitious ramp-up with large investments in Compliance and Resilience
Ambitious ramp-up with large investments in Compliance and Resilience Development spend (gross*) • Capacity upgrade in 1st, 2nd and 3rd line Compliance & • Enforcing the crisis management governance and capabilities Operational risk • Comprehensive training and certifications of key staff 1,000 • Si
Slide 18: Core Banking Platform enables simplification and new digital services
Core Banking Platform enables simplification and new digital services 2015 2020 Prepare & Pilot Deposits Country based rollouts: Loans & Mortgages Transaction accounts Data cleansing and decommissioning Progressing according to plan and on the brink of first major • Higher cost efficiency customer
Slide 19: Increased roll-out frequency and improved products to our customers
Increased roll-out frequency and improved products to our customers Open banking – platform for financial Nordea Ventures services New mobile bank (beta) Wallets Chat, chatbots, face-to- Nordic bank face online meetings collaboration Nordea Investor – new . Mobile FX trading for savings platform cor
Slide 20: One Nordea - next step in simplified legal structure
One Nordea - next step in simplified legal structure ONE SIMPLIFIED LEGAL STRUCTURE RE-DOMICILIATION TO THE BANKING UNION • First step taken on January 1st 2017 to simplify the legal structure towards operating as One • Logical move to be supervised within the banking Nordea union given our size, ge
Slide 21: Delivering customer value
Delivering customer value 21
Slide 22: Nordea is the local champion
Nordea is the local champion League tables Selected credentials FY 2017 #1 on Corp. Bonds EURm* FY 2017 #2 on Green Bonds USDm January 2018 November 2017 December 2017 Merger of Tele2 and Accelerated bookbuild Accelerated bookbuild Nordea 8,468 Nordic peer 1,743 Com Hem Nordic peer 6,511 Nordea 1,44
Slide 23: Customer deliveries at a higher pace
Customer deliveries at a higher pace Nordic awards and top rankings • Best private bank • IT innovation of the year • Best in real estate finance • Best transaction banking • Number one ranking for our large corporates operation • Price cutter of the year • Fund company of the year 23
Slide 24: Opportunities and collaboration
Opportunities and collaboration Tech investments Strategic partnerships • Apple Pay • Nordea Ventures will invest in start-ups and growth companies • Samsung Pay • Fin-tech hubs dedicated to the fin-tech community, connects • Tink start-ups, financial institutions and regulators. • Wrapp • Our Open
Slide 25: Strong return on Nordea funds
Strong return on Nordea funds • Nordea Swedish Stars funds were in top among Swedish funds – first time an ESG fund is a top performer • Nordea best performer among Norwegian funds • Nordea Denmark rated best on performance among the largest Danish fund companies 25
Slide 26: Fourth quarter and full year results 2017
Fourth quarter and full year results 2017