Nordea Bank Abp · OMXHEX:NDA_FI
Nordea Bank Abp — Q3 2020 Earnings Presentation
22 slides from Nordea Bank Abp's earnings presentation, Oct 22, 2020
Slide 1: Third quarter results 2020
Third quarter results 2020 Frank Vang-Jensen, President, 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: Executive summary
Executive summary • Strong result – continued positive trends across business areas and countries ➢ Total income up 4% y/y, driven by strong growth in net interest income and net fair value result ➢ Growth in mortgage lending volumes and assets under management at record high of EUR 326bn • Good pro
Slide 4: Group quarterly results Q3 2020
Group quarterly results Q3 2020 Income statement and key ratios Q320 Q319 Q3/Q3 Q220 Q3/Q2 EURm, excluding items affecting comparability* Net interest income 1,146 1,083 6% 1,091 5% Net fee and commission income 729 756 -4% 673 8% Net fair value result 274 211 30% 318 -14% Other income 23 35 -33% 10
Slide 5: Net interest income – strong growth driven by higher mortgage lending volumes
Net interest income – strong growth driven by higher mortgage lending volumes Year-over-year bridge, EURm Comments +6% • Net interest income up 6%, highest growth rate 1,164 25 18 1,146 since 2012 24 1,083 32 • Increased mortgage market shares • Increase in both household and corporate deposits • Hi
Slide 6: Net fee and commission income – improved from Q2, but still below pre-COVID-19 levels
Net fee and commission income – improved from Q2, but still below pre-COVID-19 levels Year-over-year bridge, EURm Comments -4% • Net fee and commission income down 4% 5 756 15 26 • Savings income up 4%, driven by strong asset 20 734 management net inflows and market performance 4 5 729 • Card and pa
Slide 7: Net fair value result – improved result in Markets
Net fair value result – improved result in Markets Net fair value result, EURm Comments • Net fair value result up 30% +30% • Customer areas broadly in line with previous year 318 266 21 274 • Markets result improved due to high level of market 12 211 24 33 109 92 35 activity 44 9 47 71 8 201 209 16
Slide 8: Costs – continued development of strong cost culture and progress on cost plan
Costs – continued development of strong cost culture and progress on cost plan Year-over-year bridge, EURm Comments 2,175 • Costs down 6%, delivering on cost plan 1,014 -6% • Staff costs down 5% 1,161 36 1,125 26 9 1,089 • Increase in IT costs and restructuring-related premises costs in quarter • VA
Slide 9: Net loan losses – credit quality still strong
Net loan losses – credit quality still strong Drivers of net loan losses Q320, EURm Comments • Net reversal of EUR 2m in Q3 – net loan losses close to zero for all business areas • Total management buffer of EUR 650m maintained 59 -61 • Credit outlook unchanged: full-year 2020 net loan losses expect
Slide 10: First instalment-free periods expiring – almost all customers resuming normal servicing
First instalment-free periods expiring – almost all customers resuming normal servicing Customers granted instalment-free periods, ‘000s Comments 43 • Approximately 95,000 customers, including 9,000 corporates, granted COVID-19 instalment-free period • Corresponds to loan amount of around EUR 19bn 2
Slide 11: Capital – strong capital position to support customers while maintaining dividend capacity
Capital – strong capital position to support customers while maintaining dividend capacity CET1 capital ratio development, % Comments 0.2 0.2 0.1 0.1 • CET1 capital ratio at 16.4% 6.2* • Risk exposure amount (REA) down EUR 4bn to EUR 151bn – limited credit REA migration during Q3 15.8 16.4 10.2 • Ca
Slide 12: Personal Banking – strong mortgage lending volume growth
Personal Banking – strong mortgage lending volume growth Total income, EURm Comments -8% • Strong mortgage lending volume growth of 6%*, and high 902 858 824 814 834 levels of customer activity • Higher market shares and improving customer satisfaction 539 523 517 501 540 • Total income down 8% due
Slide 13: Business Banking – strong lending volume growth in Sweden and Norway
Business Banking – strong lending volume growth in Sweden and Norway Total income, EURm Comments +5% • Total income up 5%, increased business activity and 591 575 531 546 557 increasing number of bond issues in quarter • Total lending volumes up 4%*, with strongest growth in Sweden 346 346 352 and N
Slide 14: Large Corporates & Institutions – tangible progress with repositioning plan
Large Corporates & Institutions – tangible progress with repositioning plan Total income, EURm Comments • Strong capital markets and continued volatility +21% 465 482 • Several major corporate transactions but lower credit demand 414 405 397 • Strong results in all product segments in Markets 211 22
Slide 15: Asset & Wealth Management – very strong net inflow
Asset & Wealth Management – very strong net inflow Total income, EURm Comments +4% • Total income up 4% due to strong net inflows in all 268 258 segments 236 13 246 18 226 13 17 16 • Assets under management (AuM) up 4% to EUR 326bn – highest quarterly net inflow (EUR 4.6bn) since Q316 216 201 190 18
Slide 16: Progress on 2022 business plan – one year after Capital Markets Day 2019
Progress on 2022 business plan – one year after Capital Markets Day 2019 On track towards 2022 financial targets Selected key performance indicators Create great customer experiences Group Customer satisfaction, household +3% points since Q319 C/I* 50%, ROE* >10% Customer satisfaction, corporate +6%
Slide 17: Nordea is committed to delivering on financial targets
Nordea is committed to delivering on financial targets Cost-to-income ratio in FY22 Return on equity in FY22 50% >10% Capital policy Dividend policy 60-70% payout of distributable 150-200 bp profits to shareholders management buffer Excess capital intended to be distributed above the regulatory CET1
Slide 18: Q&A
Q&A
Slide 19: Appendix
Nordea Appendix
Slide 20: Loan book – still well-diversified with strong underlying credit quality in Q320
Loan book – still well-diversified with strong underlying credit quality in Q320 Well-diversified portfolio Five segments with 4% of Updated analysis of COVID-19 across countries and total exposures significantly impact by segment segments affected 0.1% Mining & supporting activities EUR 13bn, 4% Si
Slide 21: Credit quality – impaired loans further reduced
Credit quality – impaired loans further reduced Stage 2 and 3 loans at amortised cost, EURm Comments • Provision coverage for potential losses in stage 3 unchanged from high level of Q2 at 43% • Slight deterioration in credit quality observed for significantly 12,512 13,576 10,989 10,748 11,181 affe
Slide 22: Nordic economic development – resilient economies rebounding
Nordic economic development – resilient economies rebounding GDP development Comments • Danish GDP down 6.8% in Q2, reflecting exports and domestic demand; house prices at all-time high in Q3 • Finnish GDP down 4.5% in Q2; house prices unchanged compared with last year • Norwegian mainland GDP down