Nordea Bank Abp · OMXHEX:NDA_FI
Nordea Bank Abp — Q3 2009 Earnings Presentation
35 slides from Nordea Bank Abp's earnings presentation, Oct 28, 2009
Slide 1: Third Quarter Report 2009 Telephone conference
Third Quarter Report 2009 Telephone conference 28 October 2009
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: CEO Presentation
Nordea ” a 43 —— CEO Presentation
Slide 4: 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 5: 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 Q1/06 Q2/06 Q3
Slide 6: 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 7: 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 358m 54bps (EUR 425m) of which EUR 114m collective Loan losses corresponding to 54bps 37bps individual (41bps )
Slide 8: 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 9: 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 10: CFO Presentation
Nordea ” a 43 —— CFO Presentation
Slide 11: 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 12: Underlying business trends
Underlying business trends Q3 2009 with Ytd 2009 with unchanged unchanged translation translation Reported EURm Q3 2009 Q2 2009 Chg % Chg % Chg % currencies currencies change% (compared with (compared with Q2 2009) Ytd 2008) Total operating income 2,277 2,359 -3 2,267 -4 7,211 21 16 Total operating
Slide 13: Resilient Net interest income – up 1%
Resilient Net interest income – up 1% EURm 1,386 1,356 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 – improvement also in NEM Total lending to the public increa
Slide 14: Underlying volume trends
Underlying volume trends % change in local currency Q3oQ2 Q3oQ3 Total Lending, excl. reversed repurchase agreements -1 3 – Nordic household mortgages 2 8 – Nordic consumer lending 2 4 – Nordic corporates -3 -1 – New European Markets -1 10 Total Deposits, excl. repurchase agreements -4 -2 – Nordic ho
Slide 15: Change in net interest income
Change in net interest income EURm Q3oQ2 9m YoY Volume driven Nordic markets local currencies -6 168 Corporate lending volumes -15 75 Household lending volumes 8 73 Corporate deposit volumes 0 15 Household deposit volumes 1 5 Margin driven Nordic markets local currencies -20 -86 Corporate lending ma
Slide 16: Net fee and commission income up 6% - positive trend continues
Net fee and commission income up 6% - positive trend continues EURm Savings commissions continued on the 480 437 positive trend – up 7% 412 390 381 Payment and card commissions up 2% Lending commissions up 20% compared to a weak Q2 – higher income in Shipping Nordea lead managed a number of
Slide 17: Net gains/losses remains at high levels
Net gains/losses remains at high levels Customer-driven capital markets Net gains/losses, EURm 528 activities continues to perform strongly 523 496 Life & Pensions realised a strong result following recovery in financial buffers (fee recognition EUR 46m) 292 Contribution from Group Treasury 19
Slide 18: Income growth in Nordea YoY, EURm
Income growth in Nordea YoY, EURm 5.9% -5.0% 10.8% 351 296 16.2% 4.5% 641 0.7% 2.0% 2.7% 42 -0.8% 120 50 158 6,915 5,949 Income Ytd Nordic IIB excl. New Life Markets GCC and FX effects Income Ytd 08 Banking NEM European Other other 09 Markets 17
Slide 19: Cost management in focus – expenses down 3%
Cost management in focus – expenses down 3% EURm 1 150 Total expenses down 3% compared to 1 090 1 116 1 087 1 060 34 31 37 35 previous quarter 30 Lower variable salaries and seasonal effects 461 394 392 382 395 Cost growth 3% compared to same quarter last year – 7% in local currencies 665 687
Slide 20: Reduced number of employees
Reduced number of employees Q3oQ2 4,402 4,291 4,342 4,344 Down 480 FTEs or 1.4% 4,320 Nordic Markets -440 New European Markets -40 29,606 29,464 29,311 29,166 YoY 28,710 Down 2% or 730 FTEs New European Markets +30 Nordic Markets -760 Q3/08 Q4/08 Q1/09 Q2/09 Q3/09 Nordea excl. New Eu
Slide 21: Expense growth in Nordea (EURm)
Expense growth in Nordea (EURm) 1.8% -5.8% 1.6% 0.7% 59 5.0% 21 186 51 3.3% 160 3,293 3,188 Expenses Ytd Wage IT development Other Pension FX-effects Expenses Ytd 2008 increases expenses 2009 20
Slide 22: 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 positions in Europe 10.7 All capital ratios significantly increased 10.3 9.4 Continued strong net earnings 9.2 8.4 Issuance of Tier 1 hybrid USD 1bn 7.5 Lowe
Slide 23: Risk weighted assets
Risk weighted assets Risk Weighted Assets (RWA), EURbn 218 RWA is actively managed down 194 192 191 170 169 RWA excluding transition rules down 1.1% to EUR 168.6bn since Q2 Decreased due to lower corporate exposures and limited impact from rating migration and change in credit quality Q3/08 Q2
Slide 24: 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 25: Competitive funding prices give relative strength in customer business
Competitive funding prices give relative strength in customer business Total long-term funding issued (EURbn) Funding markets continue to gradually 33 27 31 improve Continued strong demand for Nordea issuances EUR 12bn long-term funding issued in Q3 Successful issuance of a EUR 2bn three- ye
Slide 26: CRO Presentation
Nordea ” : - ENE = ee CRO Presentation
Slide 27: Stable and well diversified lending portfolio
Stable and well diversified lending portfolio Total lending to public Q3 2009, EUR 283bn Solid credit situation – half of the portfolio is low risk Commercial real estate Mortgage lending Construction Residential real estate No sector account for more Container ships Telecom operators than 13% o
Slide 28: Net loan losses – in line with outlook statement
Net loan losses – in line with outlook statement Loan losses, EURm Stabilising loan losses –increased share of 516 476 407 425 440 collective provisions 356 358 320 Net loan loss provisions in Q3 EUR 358m 152 89 (EUR 425m) of which EUR 114m collective Loan losses in Nordic Banking down 17% sin
Slide 29: 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, up 33% in Q1) 675 1 949 2 212 1 002 57% of the impaired loans are still performing – up from 55% i
Slide 30: Shipping and offshore – decreased lending volumes
Shipping and offshore – decreased lending volumes Well diversified and high quality portfolio – less than 4% of Group lending Loans and receivables, EURbn Less than 1.4% towards risk segments 11.8 Container 11.3 11.2 10.5 Offshore and Oil Focus on listed companies with healthy services Other s
Slide 31: Unchanged exposure towards private-equity fund owned companies
Unchanged exposure towards private-equity fund owned companies Portfolio Q3 2009, EUR 7.4bn Total exposure EUR 7.4bn or 3% of total lending in Nordea Communication and IT 7% Other Impaired loans unchanged from Q2 19% Food Products, Well diversified portfolio – more than Human Health and Other
Slide 32: Well diversified Baltic portfolio - 3% of total lending
Well diversified Baltic portfolio - 3% of total lending YTD Q3 Lending Impaired EURbn loans Majority of corporate lending to more solid segments - Large local and State & Municipalities 0.4 0.0% Nordic Nordic & International 0.9 0.6% Large local corporates 1.5 1.3% Higher risk in midsize segment
Slide 33: Slowed down rating migration
Slowed down rating migration Down-ratings have slowed Corporate rating migration Q309 / Q209 down during the quarter 9% of the corporate customers 87% 30% have migrated downwards in Q3 Down-rated Up-rated 4% of the corporate customers 25% have been up-rated in Q3 20% Rating migration on tota
Slide 34: 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 35: Third Quarter Report 2009 International telephone conference
Third Quarter Report 2009 International telephone conference 28 October 2009