Slide 1: Interim Report Second Quarter 2006 Press Conference
Interim Report Second Quarter 2006 Press Conference Lars G Nordström President and Group CEO
Slide 2: Strong results reflecting robust and diversified business mix – RoE up to 21.2%
Strong results reflecting robust and diversified business mix – RoE up to 21.2% Net profit up 17% to EUR 1,405m (EUR 1,200m in H1 2005) Operating profit up 14% to EUR 1,790m (EUR 1,572m) Operating profit in Q2 up 5% to EUR 932m (EUR 884m Q2/05) Income up 8% to EUR 3,544m (EUR 3,276m) – Net i
Slide 3: Profitable growth in all Business Areas – continued strong performance in key growth areas
Profitable growth in all Business Areas – continued strong performance in key growth areas No. of core customers increased by 6% Consumer lending up 10%; No. of credit cards up 30% Strong growth in business volumes with small and medium sized enterprises (SMEs) Assets under Management up 11%
Slide 4: Changing market environment – interest rates
Changing market environment – interest rates ECB as well as Central banks in % Sweden and Norway increased 5.0 interest rates in H1 2006 4.5 Trend with increasing long term 4.0 interest rates continued 3.5 3.0 Interest rates still at historical low level 2.5 2.0 Effects on Nordea 1.5 Improve
Slide 5: Changing market environment – equity markets
Changing market environment – equity markets % International equity market turmoil 120 in Q2/06 Equity indexes down approx. 10% 115 since mid May 110 Increased uncertainty and risk premium 105 100 Effects on Nordea Impact on savings related 95 commissions – limited in Q2 90 Switch from equ
Slide 6: Operating profit
Operating profit YoY Up 14% EURm Profitable growth in all BAs – in total 1,000 operating profit up 20% 900 932 Business model and growth strategy 800 884 858 continues to pay off 700 748 Robust and diversified business mix 728 688 limited impact from volatile markets 600 Decision to incr
Slide 7: Continued growth in operating income
Continued growth in operating income YoY EURm 2,000 Up 8% 1,800 Increased focus on top line growth 1,759 1,785 1,600 1,582 1,694 1,601 1,696 Steady increase in net interest income 1,400 Volume growth more than 1,200 compensates for margin pressure 1,000 Commission income up 10% 800 Savin
Slide 8: Continuous increase in earnings per share - rolling 12 months
Continuous increase in earnings per share - rolling 12 months EUR 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 8
Slide 9: Revenue growth in Nordea
Revenue growth in Nordea EURm + 81 3,544 + 79 + 132 - 121 + 97 3,276 Income Lending Lending Savings: AM, Markets Other* Income H1/05 growth in margin Life, brokerage H1/06 Retail/CIB pressure and savings accounts * Including current accounts 9
Slide 10: Unchanged cost focus
Unchanged cost focus EURm 2,000 1,878 Reported costs up 3% 1,816 1,800 Costs excl. Life up 2% 1,600 In line with increased growth focus 1,400 EUR 30m of cost increase related 1,200 to investments in growth areas 1,000 800 600 400 200 0 H1/05 H1/06 10
Slide 11: Cost management culture firmly established
Cost management culture firmly established EURm 4,000 3,903 Since 2002 total costs in nominal 3,835 3,655 3,668 terms have decreased by 6% and 3,500 in real terms around 15% 3,000 Nordea accepts a moderate 2,500 increase in costs in the present 2,000 1,878 strong market environment to capture
Slide 12: Cost/income ratio continues downwards
Cost/income ratio continues downwards % 80 Down to 53% in H1 70 income up 8% 60 costs up 3% 60 56 53 Continuous efficiency 50 improvements 40 Delivery in line with financial targets 30 20 10 0 2004 2005 H1/06 12
Slide 13: Gap between income and cost development
Gap between income and cost development Percentage points Gap of 5% 10 Capture profitable revenue 9 opportunities 8 7 7 Top line increasingly contributing 7 6 Maintaining a gap secures delivery 6 5 of net profit and RoE 5 high value creation 4 Business model in Life focusing on 3 long te
Slide 14: Key growth areas – progress already visible
Key growth areas – progress already visible Accelerate market position within consumer credits incl. cards Continue to leverage on strong position within long-term savings, eg Private Banking and Life Strengthen the position in Sweden – focus on advisory services Harness Nordea’s leading pos
Slide 15: Increased number of core customers and volumes
Increased number of core customers and volumes Key elements in the programmes offered to Strong growth in core segment the customers: H1/05 to H1/06 more favourable prices the more business 14.3% customers do - for core customers a named 7.4% personal banking adviser at their service 6.4% 154
Slide 16: Accelerate market position within consumer credits and cards
Accelerate market position within consumer credits and cards YoY EURbn Consumer finance lending Consumer lending up 10% 16 645,000 new cards issued 14 14.2 14.9 In total 5.3 million cards issued 13.8 13.9 13.2 13.5 of which approx. 25% credit cards 12.9 12 no. of credit cards up 30% 10 Q2o
Slide 17: Continue to leverage on strong position within long-term savings – Private Banking
Continue to leverage on strong position within long- term savings – Private Banking EURbn Strong asset growth in Nordic Private 50 Banking 45 driven by 10% increase in customer base 9 9 strong performance despite turbulent market 40 9 8 conditions in Q2 35 8 8 net inflow in Q2 18% annualised
Slide 18: Continue to leverage on strong position within long term savings – premiums in Life
Continue to leverage on strong position within long term savings – stepwise increase in premiums in Life EURm Net written premiums up 35% H1oH1 1,200 up 49% Q2oQ2 1,100 1,000 474 Unit linked share of premiums 41% H1 390 404 900 Increased penetration in the customer 800 198 base – successful
Slide 19: Strengthen the position in Sweden – focus on advisory services
Strengthen the position in Sweden – focus on advisory services Capturing untapped potential in Sweden proceeding according plan More than 150 additional Personal banking advisors and specialists within private Banking and corporate pension recruited equals around 60% of the intended inflow of
Slide 20: Harness Nordea's leading position in capital markets – untapped potential among SMEs
Harness Nordea’s leading position in capital markets – untapped potential among SMEs EURm Nordea Markets Leveraging Nordea’s customer base 700 Customer driven growth 600 Focus on customer solutions rather 500 than product push 400 strong concepts in risk management and asset-liability manage
Slide 21: Customer business drives increase in net/gains losses
Customer business drives increase in net/gains losses YoY EURm 200 Net gains/losses in BAs increased by 41% 180 190 210 to EUR 374m 160 164 Strong success in selling Markets products 159 140 in Retail and CIB 120 131 134 Strong growth in customer driven business 100 80 structured products 80
Slide 22: Use the mortgage product as a potential customer acquisition vehicle – case Norway
Use the mortgage product as a potential customer acquisition vehicle – case Norway Gradual increase in market share in Norwegian household market for a number of years Mortgages close to 12% Consumer lending close to 11% Decision to offer more competitive client proposition in Norway Norde
Slide 23: Further position Nordea successfully in the Baltics, Poland and Russia
Further position Nordea successfully in the Baltics, Poland and Russia Russia Nordea’s strategy is to build its own presence in the Russian banking market to capture the growth opportunities seen in the large market in the Baltic Sea region Establish a fully controlled operation, either by obtai
Slide 24: Fundamentals in the Nordic economies remain strong
Fundamentals in the Nordic economies remain strong GDP growth in Den, Fin, Nor, Swe expected to be in the 2.9-3.9% range for 2006 and 2.1-2.9% in 2007 Rising inflation, however well in line with central bank’s targets (approx. 2% in 2006-2007) Robust increase in private consumption Moderate,
Slide 25: Outlook
Outlook Nordea’s growth strategy is paying off and progress increasingly visible in key growth areas No. of core clients continued to increase Nordea will continue the successful execution of its organic growth strategy Despite rising interest rates and a somewhat uncertain outlook for equit
Slide 26: Summary
Summary Strong result reflecting robust and diversified business mix – RoE 21.2% Nordea’s growth strategy is paying off increasing no. of core clients strong performance in long term savings – AuM up 11% supported by strong net inflow increased penetration among SME clients with Markets re
Slide 27: Interim Report Second Quarter 2006 Press Conference
Interim Report Second Quarter 2006 Press Conference Lars G Nordström President and Group CEO
Slide 28: Income statement summary
Income statement summary EURm H1/06 H1/05 Chg % Net interest income 1,884 1,810 4 Net fee and commission income 1,028 937 10 Net gains/losses on items at fair value 421 329 28 Equity method 55 35 57 Other income 156 165 -5 Total operating income 3,544 3,276 8 Staff costs -1,095 -1,030 6 Other expens
Slide 29: Income statement summary
Income statement summary EURm Q2/06 Q1/06 Chg % Q2/05 Net interest income 957 927 3 913 Net fee and commission income 521 507 3 484 Net gains/losses on items at fair value 179 242 -26 214 Equity method 30 25 20 22 Other income 98 58 69 61 Total operating income 1,785 1,759 1 1,694 Staff costs -552 -