Nordea Bank Abp · OMXHEX:NDA_FI
Nordea Bank Abp — Nordea Bank — FY2007 Earnings Presentation
135 slides from Nordea Bank Abp's earnings presentation, Feb 13, 2008
Slide 1: Investor Presentation 13 February 2008
Investor Presentation 13 February 2008
Slide 2: CEO Presentation
CEO Presentation
Slide 3: Strong result – based on growth strategy and prudent risk management
Strong result – based on growth strategy and prudent risk management Income EUR 7,886m (EUR 7,365m), up 8% on a comparable basis* Gap between income and cost growth of 2.0%-points* Risk-adjusted profit EUR 2,417m (EUR 2,107m), up 15% Profit before loan losses EUR 3,820m (EUR 3,543m), up 11%*
Slide 4: Limited effects on Nordea from financial market turmoil
Limited effects on Nordea from financial market turmoil Limited direct and indirect exposure to the sub-prime market as well as insignificant exposure to credit-linked structured investment vehicles Nordea benefits from a high quality balance sheet, well diversified and low risk business profile
Slide 5: Operating income up 8%
Operating income up 8% 2007/2006 Strong growth in Net interest income – up 11% EURm Double digit lending growth in all major segments, compensating for margin pressure 8 000 7 766 Increased deposit volumes and improved margins 7 166 Net commission income up 3% 7 000 Lending commission up 1
Slide 6: Cost increase in line with guidance
Cost increase in line with guidance Cost increas YoY 7% Cost increase in line with guidance given 6,4% in beginning of 2007 6% Cost growth reflecting execution of growth 5% strategy and related investments 4% Total number of employees up 8% in 2007 3,7% 3,1% Orgresbank accounts for approx. 1
Slide 7: Profit before loan losses up 11%
Profit before loan losses up 11% EURm 4 000 3 700 Top-line growth drives the profit increase 3 500 3 344 Contribution from all business units - 3 000 consistent delivery of Nordea’s organic 2 500 growth strategy 2 000 1 500 1 000 500 0 FY 2006 FY 2007 For comparison reasons two major non-recurri
Slide 8: Full year gap guidance met
Full year gap guidance met %-points 4,0 Full year gap of 2.0%-points 3,4 Income 8.4% 3,5 3,2 Costs 6.4% 3,0 Although significant investments in 2,5 growth areas and difficult market 2,0 2,0 conditions the gap guidance was reached 1,5 Solid performance in Q4 gave a positive 1,0 1,0 gap also
Slide 9: Strong and well diversified credit portfolio
Strong and well diversified credit portfolio Net loan losses EURm Recoveries maintained at high level and -10 limited new provisions -6 -13 -13 Credit quality remains stable cross sectors – -25 improved corporate ratings -28 -40 15 quarters in a row with positive net loan -55 losses -70 EUR
Slide 10: Bringing Nordea from Good to Great
Bringing Nordea from Good to Great Profit orientation - Cost, risk and capital Ambitious vision and targets Strong customer oriented values and culture Clear growth strategy 10
Slide 11: Ambitious vision and targets
Ambitious vision and targets Long term financial targets Target 2007 TSR (%) In the top quartile of # 3 of 20 European peer group Risk adjusted profit (EUR m)* Double in 7 years** 15% RoE (%) In line with top Nordic peers # 19.7% (19.1% excl non-recurring items) Capital structure policy Policy Divid
Slide 12: Total shareholder return (TSR) 2007
12 B an k % of -50 -40 -30 -20 -10 0 10 20 30 40 50 Ire la nd H B A O lli S e d RB Iri O sh S B B ank ar c Sw la y ed s So ba ci nk ét é SE G en B er a D lé a Er ns st k e e (1/1 2007 – 28/12 2007) Ll Ba oy n ds k U T ni SB B c re N P dito C P om ar m iba er s zb D a nk N B Total shareholder return
Slide 13: Strong growth in Risk-adjusted profit
Strong growth in Risk-adjusted profit EURm 2500 2 417 Up 15% 2250 2 107 Driven by top-line growth and strict 2000 cost management 1750 A good start for the long term target 1500 – defined in 2006 1250 1000 750 500 250 0 2006 2007 Risk-adjusted profit 13
Slide 14: Return on Equity (RoE) – in line with target
Return on Equity (RoE) – in line with target % 25 19.7% Jan - Dec 2007 21,4 19.1% excl non-recurring items 19,6 19,1 20 Combined focus on Organic growth 15 Resource optimisation Risk awareness 10 Efficient capital management 5 0 FY 2006 FY 2007 Nordea Average Nordic Peers (Danske, SEB,
Slide 15: Proposed dividend up 2%
Proposed dividend up 2% EURm EUR 1400 1,0 1 271 1 297 0,9 1200 0,8 1000 0,7 908 766 0,6 800 0,50 0,49 0,5 600 0,35 0,4 0,28 400 0,3 0,2 200 0,1 0 0,0 2004 2005 2006 2007 Total amount EURm Dividend per share EUR 15
Slide 16: A profitable organic growth strategy with clear initiatives
A profitable organic growth strategy with clear initiatives Existing Nordic customers and new customers Global and New European European niche Markets businesses Household strategy Private banking Corporate strategy • Reinforced #1 • Expanded distribution • Migration to • Added advisory • New Corpor
Slide 17: Significant potential in migrating household customers to higher segments
Significant potential in migrating household customers to higher segments Income Customers* Gold and Private banking (Index) (millions) 800 4,0 customers are the engines for 700 3,5 revenue growth 700 600 3,0 A Gold customer generates 2.9 500 3,5x 2,5 8 times higher income than a 400 2.4 2,0 Bro
Slide 18: Proactive sales drives growth in premium segments
Proactive sales drives growth in premium segments Nordic Gold segment YoY (Jan-Dec) Proactive sales creates growth 10.9% momentum – strong increase in 7.2% 3.5% PBA meetings 146 59 61 132 Continued growth in business with 2.4 2.2 Gold customers 11% increase in business volume Increased numbe
Slide 19: Growth Plan Sweden on track
Growth Plan Sweden on track % Income growth % Continuous investments in Swedish 10 advisory capacity 8 6 7,3 Focus on services and product segments 4 5,2 with strongest growth potential 4,1 2 0 Initiative continues in 2008 2007/2006 Jan-Sep 2007 Converting 76 offices from Svensk Kassaservice
Slide 20: Continued strong growth in Private Banking
Continued strong growth in Private Banking Average income per customer FY 2007 (Silver customer = 100) 800 700 Growth success of Private Banking 600 3.5x continued in 2007 400 Net inflow of EUR 4.3bn 200 200 100 120 new adviser 25 0 13,000 new customers Private Gold* Silver Bronze Multiple
Slide 21: Focus on Capital Markets products to corporate customers
Focus on Capital Markets products to corporate customers Customer driven demand for Capital Total revenues in Markets related to EURm Nordic Banking customers markets products continue to increase 500 Structured solutions offered to medium 478 and large corporates highly successful +26% 400 Co
Slide 22: Strong growth and well controlled risk exposure in New European Markets
Strong growth and well controlled risk exposure in New European Markets New European Markets Continued prudent credit policies in the EURm Baltic countries enables Nordea to grow 90 with stable credit quality 80 83 70 Total lending up 78%, excl. Orgresbank 60 68 63* Increased number of Gold cu
Slide 23: Outlook for 2008
Outlook for 2008 Turbulent development in international capital markets has significantly increased uncertainty for 2008 Costs related to investments in growth areas are expected to amount to EUR 100-120m 2008 Continued investments in growth areas and increased wage inflation is expected to le
Slide 24: CFO Presentation
CFO Presentation
Slide 25: Income statement summary
Income statement summary* EURm 2007 2006 Chg % Net interest income 4,282 3,869 11 Net fee and commission income 2,140 2,074 3 Net gains/losses on items at fair value 1,187 1,036 15 Equity method 41 68 -40 Other income 116 119 -3 Total operating income 7,766 7,166 8 Staff costs -2,388 -2,251 6 Other
Slide 26: Income statement summary
Income statement summary EURm Q4/07* Q3/07 Chg % Q4/06 Chg % Net interest income 1,143 1,092 5 1,006 14 Net fee and commission income 526 531 -1 549 -4 Net gains/losses on items at fair value 314 264 19 310 1 Equity method 12 10 20 7 71 Other income* 27 17 59 26 4 Total operating income 2,022 1,914
Slide 27: Net interest income
Net interest income 2007/2006 Up 11% EURm Double digit lending volume growth in all 1 200 1 143 1 092 major segments compensated for margin 1 100 1 043 pressure 1 006 1 004 1 000 Lending up 14% 900 Deposit volumes increased 12% 800 Strong inflow into savings accounts, up 21% 700 reflecting
Slide 28: Robust volume growth continues in all segments
Robust volume growth continues in all segments % 2007/2006 Q4oQ3 Total Lending, excl. repos 14% 6% – New European Markets 112% 23% – Nordic mortgage 11% 2% – Nordic consumer 12% 2% – Nordic corporate 16% 5% Total Deposits, excl. repos 13% 9% – New European Markets 60% 16% – Nordic household 12% 2% –
Slide 29: Change in net interest income
Change in net interest income EURm YoY Q4oQ3 Volume driven 350 21 -Lending volumes 259 19 -Deposit volumes 91 2 Margin driven -71 2 -Lending margins -201 -13 -Deposit margins 130 15 Orgresbank 56 10 Other, net 78 18 Total 413 51 29
Slide 30: Structural Interest Income Risk (SIIR)
Structural Interest Income Risk (SIIR) EURm, annualised effect on NII Q4/07 Q3/07 Q4/06 Increasing market rates, 100bp 235 249 220 Decreasing market rates, 100bp -267 -279 -249 Relative interest sensitivity largely unchanged over time, approx. 3% of total income and 5-6% of net interest income S
Slide 31: Net commission income
Net commission income 2007/2006 Up 3% EURm 600 Savings-related commissions up 7% Commission growth dampened by unchanged AuM 549 548 following switch from equity funds to savings accounts 535 531 526 500 Double digit growth in Life insurance and Brokerage 400 Lending-related commissions up
Slide 32: Net commission income – business trends
Net commission income – business trends EURm 1600 Savings related commissions main driver for 1400 1408 commission income 1320 1200 Accounts for approx 52% 1000 Payment commission second most important 800 factor for commission growth – close to 30% 776 600 738 with diverging underlying trend
Slide 33: Increased revenues from customer driven financial transactions
Increased revenues from customer driven financial transactions Net gains up 15% YoY EURm Net gains/losses on items at fair value 1500 Increased customer demand for risk 1 187 management products – and increased 1250 1 036 penetration of existing corporate customer 1000 base Despite market turm
Slide 34: Net gains/losses – focus on customer business
Net gains/losses – focus on customer business 2007/2006 EURm Up 15%, despite challenging markets 350 Up 10% in customer areas 300 300 288 273 274 Increased demand for risk management products among Nordic corporates 250 Revenues in Nordic Banking up 17% 200 186 Strong increase also in New
Slide 35: Operating income
Operating income EURm 2007/2006 2 200 2 022 2 000 1 898 1 957 1 914 Up 8% 1 873 Net interest income up 11% 1 800 1 600 Net commission income up 3% 1 400 Net gains/losses up 15% Q4oQ3 1 200 1 000 Up 6% 800 Net interest income up 5% 600 Strong increase in both lending and deposit 400 vol
Slide 36: Revenue growth in Nordea (EURm)
Revenue growth in Nordea (EURm) 0.5% 8.4% 2.6% 36 7 766 186 1.8% 1.5% 130 1.2% 103 0.8% 87 58 7 166 Income 2006 Lending Savings Markets New Transaction Other Income 2007 (AM, Life European accounts and savings Markets accounts) 36
Slide 37: Expenses
Expenses 2007/2006 Up 6% Approx. half of the increase related to EURm investments in growth areas incl. Orgresbank 1,073 The other approx. 3%-points relates to increased 1 100 1,016 1,008 992 993 business volumes and underlying inflation 1 000 29 19 24 25 25 900 Staff costs up 6% reflecting
Slide 38: Expense growth in Nordea
Expense growth in Nordea 2.7% -1.5% -57 6.4% 104 1.6% 1.0% 60 0.8% 39 1.8% 30 68 4 066 3 822 7.9% Expenses Wage Higher Russia Investments Increased Efficiency Expenses 2006 increases variable in grow th business gains 2007 salaries and areas activity profit sharing 38
Slide 39: Growth in staff costs
Growth in staff costs 1.2% -0.5% 6.1% 1.1% 26 1.3% -12 25 3.0% 30 No. of recruited 68 FTEs: approx. Increased 3,100 number of FTEs. 2 388 No. of FTEs that 1,400 has left: approx. 2 251 2.000 Staff costs Wage Higher Increased Orgresbank Other Staff costs 2006 increases variable number of 2007 salarie
Slide 40: Number of FTEs
Number of FTEs 32 500 2007/2006 3 506 Number of FTE’s 31,721, up 8% or 3 180 2 970 30 000 2 798 2,500 1 775 New European Markets doubled to 27 500 3,500 FTEs, including Russia Close to 60 new branches in Poland and 25 000 Baltic countries 28 215 28 148 27 893 27 584 27 473 Nordic Banking up
Slide 41: Cost/income ratio continues to improve
Cost/income ratio continues to improve % 70 64 63 60 60 56 Continued down to 52% in 2007 53 52 Income up 8% 50 Costs up 6% 40 Strong growth in revenues combined with continuous focus on firm cost 30 management 20 10 0 2002 2003 2004 2005 2006 2007 41
Slide 42: Loan losses, net
Loan losses, net EURm 0 2007 -6 Positive at EUR 60m, reflecting -20 -13 -13 continued recoveries and limited new provisions -28 Strong credit quality in all markets -40 No specific industry concern Q4 effected by a decrease in global -60 transfer risk reserves and an increase of group wise p
Slide 43: Net profit
Net profit EURm 2007/2006 900 876 852 Profit before loan losses up 11% on a 816 comparable basis 800 761 701 Net profit up 3% on a comparable basis 700 Lower loan loss recoveries 600 Lower tax rate in 2006 Q4oQ3 500 Slightly higher tax rate in Q4 and lower 400 loan loss reversals 300 200 1
Slide 44: Gap in line with outlook
Gap in line with outlook Income growth Gap 2.0%-points – in line with full year % 12 10,4 outlook 9,9 10 8,4 Gap guidance reached while investing in 8 6,8 6,6 future growth and despite turbulent 6 market 4 Solid performance in Q4 gave a positive 2 gap in Q4 0 Q1 Q2 Q3 Q4 2007 Expense growth GA
Slide 45: Profitability maintained at high level
Profitability maintained at high level % 25 23,6 2007 22,7 20,6 21,4 RoE continue to meet target - 19.1% 20 18,0 19,1 excl. deposit fund in Finland 19.6% incl. non-recurring item 15 Somewhat lower return compared to last year 10 Lower loan loss recoveries Lower tax rate 2006 5 Higher equ
Slide 46: Strong increase in risk-adjusted EPS
Strong increase in risk-adjusted EPS 1,4 1,21 1,20 1,14 1,17 1,2 1,0 0,93 0,81 0,8 0,6 0,4 0,2 0,0 EPS, EUR* EPS, EUR reported EPS, risk adjusted, EUR* 2006 2007 * For comparison reasons two major non-reacurring items have been excluded. For 2007 the refund on Finnish deposit guarantee 46 system EUR
Slide 47: Earnings per share
Earnings per share - rolling 12 months EUR 1,2 1,1 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 Q3/06 Q4/06 Q1/07 Q2/07 Q3/07 Q4/07 Reported Risk adjusted 47
Slide 48: Capital position
Capital position
Slide 49: Strong business growth well managed in Basel II
Strong business growth well managed in Basel II EURbn Basel I RWA up 17% YoY, driven mainly by 216 growth in corporate lending 220 206 205 200 193 200 189 194 Leveraging on Basel II framework 185 185 176 177 180 171 Basel II RWA excl. transition rules down 3% 160 since end H1 to EUR 171bn desp
Slide 50: Volume growth and still strong capital position
Volume growth and still strong capital position % 9 8,3 7,9 8 7,7 6,9 7,1 7,1 7,2 7,0 Tier 1 7.0% according to Basel II incl. 6,8 6,8 6,8 7 6,6 transition rules 6 During Q4 volumes towards counterparties with 100% risk weight has increased, leading to a 5 slight decrease in Tier I 4 Tier 1 acc
Slide 51: Business trends
Business trends
Slide 52: Total lending
Total lending EURbn 245 260 239 230 240 222 214 220 201 199 200 191 180 160 140 120 100 80 60 40 20 0 Q1/06 Q2/06 Q3/06 Q4/06 Q1/07 Q2/07 Q3/07 Q4/07 Corporate Housing loans Other loans Public sector 52
Slide 53: Nordic household mortgages, volumes and margins
Nordic household mortgages, volumes and margins EURbn % 90 1,6 85 1,5 80 1,4 75 81,1 82,8 76,5 78,5 1,3 70 74,6 72,4 1,2 65 69,4 60 67,6 1,1 55 1,0 50 0,9 45 0,8 40 0,7 35 0,6 30 0,5 25 0,4 20 0,3 15 10 0,2 5 0,1 0 0,0 Q1/06 Q2/06 Q3/06 Q4/06 Q1/07 Q2/07 Q3/07 Q4/07 53
Slide 54: Nordic consumer lending, volumes and margins
Nordic consumer lending, volumes and margins EURbn % 18 17,8 4,5 16 17,5 16,5 16,9 15,9 4,0 14 15,1 15,1 14,2 3,5 12 3,0 10 2,5 8 2,0 6 1,5 4 1,0 2 0,5 0 0,0 Q1/06 Q2/06 Q3/06 Q4/06 Q1/07 Q2/07 Q3/07 Q4/07 54
Slide 55: Nordic corporate lending, volumes and margins
Nordic corporate lending, volumes and margins EURbn % 110 1,4 100 1,3 101,9 1,2 90 94,7 97,5 92,1 1,1 80 88,0 1,0 83,5 84,1 70 80,4 0,9 0,8 60 0,7 50 0,6 40 0,5 30 0,4 0,3 20 0,2 10 0,1 0 0,0 Q1/06 Q2/06 Q3/06 Q4/06 Q1/07 Q2/07 Q3/07 Q4/07 55
Slide 56: Shipping, Oil Services & International Division lending, volumes and margins
Shipping, Oil Services & International Division lending, volumes and margins EURbn % 12 1,5 1,4 10 11,1 1,3 10,3 1,2 9,9 10,1 9,4 1,1 8 9,1 9,1 1,0 8,6 0,9 0,8 6 0,7 0,6 4 0,5 0,4 0,3 2 0,2 0,1 0 0,0 Q1/06 Q2/06 Q3/06 Q4/06 Q1/07 Q2/07 Q3/07 Q4/07 56
Slide 57: Lending New European Markets, volumes and margins
Lending New European Markets, volumes and margins* EURbn % 9 1,5 1,4 8 1,3 8,2 1,2 7 7,1 1,1 6 1,0 6,2 0,9 5 5,2 0,8 4 4,6 0,7 4,0 0,6 3 3,7 0,5 3,4 0,4 2 0,3 1 0,2 0,1 0 0,0 Q1/06 Q2/06 Q3/06 Q4/06 Q1/07 Q2/07 Q3/07 Q4/07 57 * Poland and Baltic countries
Slide 58: Total deposits
Total deposits EURbn 142 150 135 140 133 126 126 130 119 119 120 113 110 100 90 80 70 60 50 40 30 20 10 0 Q1/06 Q2/06 Q3/06 Q4/06 Q1/07 Q2/07 Q3/07 Q4/07 Of which household deposits 58
Slide 59: Nordic household deposits, volumes and margins
Nordic household deposits, volumes and margins EURbn % 65 2,4 60 59,8 61,2 2,2 55 57,9 50 54,2 54,7 55,7 2,0 53,3 51,4 1,8 45 1,6 40 35 1,4 30 1,2 25 1,0 20 0,8 15 0,6 10 0,4 5 0,2 0 0,0 Q1/06 Q2/06 Q3/06 Q4/06 Q1/07 Q2/07 Q3/07 Q4/07 59
Slide 60: Nordic corporate deposits, volumes and margins
Nordic corporate deposits, volumes and margins EURbn % 50 1,6 45 48,9 46,8 1,4 44,1 44,7 45,0 40 41,4 40,6 1,2 35 37,9 1,0 30 25 0,8 20 0,6 15 0,4 10 5 0,2 0 0,0 Q1/06 Q2/06 Q3/06 Q4/06 Q1/07 Q2/07 Q3/07 Q4/07 60
Slide 61: Deposits Shipping, Oil Services & International Division, volumes and margins
Deposits Shipping, Oil Services & International Division, volumes and margins EURbn % 7 1,5 1,4 6,7 1,3 6 6,2 1,2 5 5,6 1,1 1,0 4,8 4,5 4,7 0,9 4 4,5 4,1 0,8 0,7 3 0,6 0,5 2 0,4 0,3 1 0,2 0,1 0 0,0 Q1/06 Q2/06 Q3/06 Q4/06 Q1/07 Q2/07 Q3/07 Q4/07 61
Slide 62: Deposits New European Markets, volumes and margins
Deposits New European Markets, volumes and margins* EURbn % 3,5 1,5 1,4 3,0 1,3 3,1 1,2 2,8 1,1 2,5 2,7 1,0 2,3 2,4 0,9 2,0 2,1 0,8 1,9 0,7 1,5 1,8 0,6 0,5 1,0 0,4 0,3 0,5 0,2 0,1 0,0 0,0 Q1/06 Q2/06 Q3/06 Q4/06 Q1/07 Q2/07 Q3/07 Q4/07 62 * Poland and Baltic countries
Slide 63: Nordic Banking, profit before loan losses
Nordic Banking, profit before loan losses 2007/2006 EURm 800 Up 11%, driven by top line growth 750 760 761 752 Income up 8% 700 650 686 688 Expenses up 4% 600 550 Double digit volume growth in most 500 business areas 450 400 C/I ratio continued to improve and 350 dropped to 50% (52%) 300 2
Slide 64: Nordic Banking
Nordic Banking Denmark Finland Norway Sweden EURm 2007 Chg 2007 Chg 2007 Chg 2007 Chg Total income 1,707 6% 1,696 12% 801 6% 1,717 7% Total expenses -824 5% -749 4% -450 4% -940 2% Profit before loan losses 883 6% 947 19% 351 9% 777 14% Operating profit 884 -10% 1,007 22% 358 -16% 751 11% 2007 2006
Slide 65: Institutional & International Banking, profit before loan losses
Institutional & International Banking, profit before loan losses EURm 2007/2006 140 Up 13% on a comparable basis 132 High business activity and solid growth in 120 122 115 all divisions – lending in New European 100 105 Markets up 77% (excl Orgresbank), 100 Shipping and Offshore up 18% 80 Prof
Slide 66: Institutional & International Banking
Institutional & International Banking Financial Institutions Shipping, Oil services New European & International Markets EURm 2007 Chg 2007 Chg 2007 Chg Total income 339 9% 237 8% 255 104% Total expenses -174 2% -50 11% -146 80% Profit before loan losses 165 17% 187 7% 109 148% Operating profit 165
Slide 67: New European Markets
New European Markets Poland Baltic countries Russia Total EURm 2007 Chg 2007 Chg 2007 2007 Chg Total income 89 32% 107 63% 63 255 104% Total expenses -53 13% -46 44% -39 -146 80% Operating profit 35 72% 60 111% 25 108 177% 2007 2006 2007 2006 2007 2007 2006 Lending, bn 2.7 1.6 5.5 3.0 1.6 9.8 4.6 De
Slide 68: Asset Management product result
Asset Management product result 2007/2006 EURm Income and product result up 4% 120 Strong net inflow in Private Banking 110 113 Number of customers up 16% 100 100 103 Net outflow from fund products driven by 90 94 increased demand for savings accounts 80 83 70 Largely unchanged assets and
Slide 69: Assets under management
Assets under management EURbn 2007/2006 180 163 165 Down EUR 1bn or 0.6% YoY 158 163 160 157 Overall net outflow EUR 2.4bn 140 Asset appreciation EUR 1.4bn 120 Net outflow in Retail funds EUR -2.7bn 100 Customers moving assets from funds to savings 80 accounts following increased interest
Slide 70: Net flows savings
Net flows savings Net flows AuM (EURbn) 4 2.6 Net outflow in AuM of EUR 2.4bn 2007 3 2.0 -1.3 Outflow from Retail funds EUR 2.7bn 2 -1.7 1 -2.0 Customers reducing their market exposure and -1 moving assets from funds into savings accounts -2 Net inflow to Private Banking -3 -4 Q4/06 Q1/07 Q2
Slide 71: Life insurance, product result
Life insurance, product result 2007/2006 Product result up 13% EURm New all-time high level 100 Result driven by strong fee contribution and profit 90 sharing 91 80 MCEV EUR 3,189bn up 11% 70 74 Value of new business EUR 194m – despite 67 regulatory changes in Sweden eg. removal of 60 “Kap
Slide 72: Markets, product result
Markets, product result 2007/2006 EURm Up 14% - despite challenging markets 160 154 149 Continued successful penetration of the corporate 140 segment 140 133 Strong demand from corporate customers for risk 120 management products Strongest increase from FX-products, Equity and 100 Structured
Slide 73: Summary – full year result 2007
Summary – full year result 2007 Strong result – based on growth strategy and prudent risk management culture Risk-adjusted profit up 15% Return on equity 19.7% Income up 8% on a comparable basis Continued efficiency gains – C/I 52% down from 53% Full year gap guidance met Volume growth
Slide 74: CRO Presentation
CRO Presentation
Slide 75: Well diversified lending portfolio
Well diversified lending portfolio Share of total lending, end of 2007 Household 44% Well-diversified lending mix Corporate 56% measured by customer segments and industry Stable over time Lending to companies by industry, end of 2007 Renting, Other EUR 133,3bn 8% Consulting Real estate and other
Slide 76: Well diversified revenues streams
Well diversified revenues streams Well diversified revenue streams, FY 2007 Four well balanced Nordic markets European and Increased revenue proportion from Global monoline business New European Markets 4.0% in 2007 New European 10% Different business cycles in the four Markets 4% Norway 12% N
Slide 77: Strong lending growth in the Baltic countries...
Strong lending growth in the Baltic countries... Growth total lending % Selective growth strategy for the Baltic 70 65 65 60 countries 50 50 41 38 Prudent credit policy from start of 40 30 25 operations enables Nordea to grow 20 business volumes with intact credit 11 10 6 quality 0 2005 2006 200
Slide 78: …with limited risk exposure
…with limited risk exposure EURbn Growth total lending 16 14,5 Nordea’s market share of new lending 14 12 10,7 13% (full year 2007) 10 8,6 8 Nordea’s market share of deposits 6% 6 (full year 2007) 4 2,9 1,9 2 0,9 0,6 0,5 0 2005 2006 2007 Q4/07 Total market EURbn Nordea EURbn EURbn Growth total d
Slide 79: Latvia
Latvia % Growth total lending In the forth quarter Nordea’s lending 90 83 growth slowed down somewhat in the 80 Baltic countries 70 61 56 60 50 The Q4 growth rate in Latvia was 52% 40 36 compared to 98% in the period until 30 20 17 17 20 end September 11 10 11 7 5 10 0 2006 2007 Q1/07 Q2/07 Q3/0
Slide 80: Impaired loans and total allowances
Impaired loans and total allowances EURm Q4 2007 Q3 2007 Q4 2006 Impaired loans, gross, individually assessed 1,321 1,344 1,616 Allowances for individually assessed loans 603 632 764 Impaired loans, net, individually assessed 719 712 852 Impaired loans, net / lending (%) 0,30 0.30 0.40 Allowances, i
Slide 81: Impaired loans
Impaired loans EURm. End of Q4/07 Gross Provisions Net Household customers 362 133 229 Manufacturing 354 181 173 Trade and services 181 81 100 Other companies 19 23 -4 Real estate 86 33 53 Renting, Consulting and other services 131 72 59 Agriculture & Fishing 29 14 15 Construction 47 18 29 Transport
Slide 82: Loan losses
Loan losses 2007/2006 EURm 330 299 Recoveries maintained at high level and limited new provisions 180 151 Nordea is confident in the overall 126 101 98 quality of its credit portfolio 30 Q4 effected by a decrease in global -13 -13 -6 transfer risk reserves and an increase -28 -82 of group wise
Slide 83: Possible effects on lending margins from market turmoil
Possible effects on lending margins from market turmoil Risk awareness – increasing default rates Increased interest rates and volatility – increased cost of capital Improved risk adjusted prices expected Exposure EURm 30 000 25 000 20 000 15 000 10 000 5 000 0 S 6+ 6 6- 5+ 5 5- 4+ 4 4- 3+ 3 3
Slide 84: Concluding remarks – full year result 2007
Concluding remarks – full year result 2007 Strong result – based on growth strategy and prudent risk management Limited effects on Nordea from financial market turmoil Full year gap target met – 2%-points Risk-adjusted profit up 15% a good start for the long term target Continued strong vo
Slide 85: Facts & figures
Facts & figures
Slide 86: Credit quality
Credit quality
Slide 87: Loan portfolio by customer category
Loan portfolio by customer category* EURbn 140 133 129 130 123 119 120 113 110 105 105 100 101 97 100 91 93 90 83 84 79 80 80 83 80 82 70 74 76 68 71 60 63 65 66 58 60 50 53 55 56 50 40 30 20 23 23 24 24 19 19 20 20 21 21 22 10 16 17 17 17 18 0 Q1/04 Q2/04 Q3/04 Q4/04 Q1/05 Q2/05 Q3/05 Q4/05 Q1/06 Q
Slide 88: Lending to household customers
Lending to household customers End of Q4/07 EUR 107.1bn Other loans comprise Other loans Consumer credits 22,6% Investment credits Car financing Overdraft facilities Credit cards Home equity credits Housing loans 77,4% 88
Slide 89: Loan portfolio in figures
Loan portfolio in figures EURbn Q4/07 Q3/07 Q2/07 Q1/07 Q4/06 Household customers 107,1 106.0 102.6 98.7 96.4 Real estate 36,8 34.5 32.5 31.6 30.7 Construction 4,6 4.1 3.9 3.6 3.4 Transport, communication 6,9 6.0 6.3 6.7 5.9 Trade and services 13,1 12.5 11.8 12.6 11.1 Manufacturing 20,7 18.6 19.4 17
Slide 90: Lending by geographical area
Lending by geographical area End of Q4/07 EUR 244.7bn Latin America Asien 0,6% USA 0,7% Nordic countries and 0,8% Other OECD Poland, Baltics and 0,4% Russia 93,3% Other Other non OECD 6,8% 0,6% EU countries 3,7% Nordic countries and Poland, Baltics and Russia, EUR 228.2bn Denmark 65.3 Sweden 62.
Slide 91: Economic capital
Economic capital
Slide 92: Economic capital (EC)
Economic capital (EC) EURbn End 11 10,9 December 10 10,3 10,5 EC per business area (EURm) 2007 9,9 9 9,6 Nordic Banking 7,686 8 IIB 1,368 7 6 Savings & Life Products 1,136 5 Treasury 510 4 Private Banking 46 3 GST 117 2 1 Other 0 0 Total 10,863 Q4/06 Q1/07 Q2/07 Q3/07 Q4/07 92
Slide 93: Economic capital – distribution
Economic capital – distribution End of Q4/07 Group Services Group Treasury & Technology Life risk Savings & Life 5% 1% Operational risk 1% Products Business risk 9% 11% 9% Institutional & International Banking 13% Market risk 15% Credit risk Nordic Banking 66% 70% 93
Slide 94: Nordic Banking
Nordic Banking
Slide 95: Nordic Banking lending and deposit volumes
Nordic Banking lending and deposit volumes Lending, EURbn Q4/07 Q3/07 Q2/07 Q1/07 Q4/06 Q3/06 Q2/06 Denmark 62.7 59.4 57.6 56.5 54.5 51.1 50.8 Finland 47.5 45.7 45.0 43.5 42.4 41.4 40.4 Norway 37.2 36.3 34.8 32.0 31.3 30.2 28.7 Sweden 59.8 58.1 55.6 56.2 52.8 52.3 51.4 Deposits, EURbn Q4/07 Q3/07 Q2
Slide 96: Nordic Banking breakdown of lending
Nordic Banking breakdown of lending Denmark, EURbn Q4/07 Q3/07 Q2/07 Q1/07 Q4/06 Q3/06 Q2/06 Corporate 27.5 26.1 25.8 25.1 23.9 21.4 21.6 Household mortgages 24.9 24.3 23.7 23.1 22.5 21.8 20.8 Consumer lending 7.3 7.2 6.9 6.7 6.5 6.3 6.0 Finland, EURbn Q4/07 Q3/07 Q2/07 Q1/07 Q4/06 Q3/06 Q2/06 Corpo
Slide 97: Nordic Banking breakdown of lending
Nordic Banking breakdown of lending Norway, EURbn Q4/07 Q3/07 Q2/07 Q1/07 Q4/06 Q3/06 Q2/06 Corporate 19.1 18.6 17.6 15.9 15.3 14.8 13.9 Household mortgages 17.1 16.8 16.1 15.2 15.2 14.6 13.9 Consumer lending 1.1 1.1 1.1 1.1 1.0 1.0 1.0 Sweden, EURbn Q4/07 Q3/07 Q2/07 Q1/07 Q4/06 Q3/06 Q2/06 Corpora
Slide 98: Nordic Banking breakdown of deposits
Nordic Banking breakdown of deposits Denmark, EURbn Q4/07 Q3/07 Q2/07 Q1/07 Q4/06 Q3/06 Q2/06 Corporate 12.6 12.3 11.1 11.3 10.5 10.1 10.8 Households, current 3.4 3.4 3.5 3.2 3.4 3.3 3.4 accounts Households, savings 15.6 15.4 15.3 14.8 14.2 14.0 13.9 accounts Finland, EURbn Q4/07 Q3/07 Q2/07 Q1/07 Q
Slide 99: Nordic Banking breakdown of deposits
Nordic Banking breakdown of deposits Norway, EURbn Q4/07 Q3/07 Q2/07 Q1/07 Q4/06 Q3/06 Q2/06 Corporate 12.1 12.6 12.1 11.6 11.0 10.4 10.2 Households, current 2.2 2.2 2.2 1.9 2.1 2.1 2.3 accounts Households, savings 4.5 4.6 4.1 4.0 4.0 4.0 3.7 accounts Sweden, EURbn Q4/07 Q3/07 Q2/07 Q1/07 Q4/06 Q3/0
Slide 100: Nordic Banking margins
Nordic Banking margins % Q4/07 Q3/07 Q2/07 Q1/07 Q4/06 Q3/06 Q2/06 Q1/06 Lending to Corporate 0.86 0.88 0.91 0.90 0.93 0.94 0.98 1.00 Mortgages, households 0.51 0.52 0.57 0.55 0.57 0.63 0.69 0.76 Consumer loans, 3.04 3.17 3.15 3.29 3.29 3.41 3.56 3.64 households Deposits, SME’s 0,99 0,98 0.96 0.92 0
Slide 101: Payments & transactions
Payments & transactions
Slide 102: E-banking customers and payments
102 0,0 0,5 1,0 1,5 2,0 2,5 3,0 3,5 4,0 4,5 5,0 Mill. Feb-00 June- Oct-00 Feb-01 June- Oct-01 Feb-02 June- Oct-02 feb-03 jun-03 okt-03 feb-04 jun-04 okt-04 feb-05 jun-05 E-banking customers okt-06 feb-06 jun-06 okt-06 feb-07 jun-07 okt-07 0 5 10 15 20 25 30 35 40 45 50 55 60 Mill. Q1/00 Q1/01 E-bank
Slide 103: Cards, all customers
Cards, all customers Card payments Issued debit and credit cards Mill. Mill. 240 5,0 220 200 4,0 180 160 140 3,0 120 100 2,0 80 60 1,0 40 20 0,0 0 Q1/01 Q1/02 Q1/03 Q1/04 Q1/05 Q1/06 Q1/07 Q4/07 jan-03 jan-04 jan-05 jan-06 jan-07 Jan-01 Jan-02 dec-07 Debit cards Credit cards 103
Slide 104: Payment transactions, households
Payment transactions, households 250 200 150 100 50 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 03 03 03 03 04 04 04 04 05 05 05 05 06 06 06 06 07 07 07 07 Manual transactions Payment ATMs Card payments Cash withdrawal ATMs Direct debit Netbank payments 104
Slide 105: Payment transactions, households
Payment transactions, households Mill. 2007 2006 2005 2004 2003 2002 Manual transactions 100.3 108.7 124.6 129.1 137.7 150.6 Payterminals 13.9 16.3 19.7 23.6 27.1 31.7 Card payments 832.1 735.1 621.0 527.8 459.9 395.5 Cash withdrawal ATM 161.6 164.8 181.7 190.4 197.4 204.4 Direct debit 119.2 106.3 1
Slide 106: Institutional & International Banking
Institutional & International Banking
Slide 107: Institutional & International lending and deposit volumes and margins
Institutional & International lending and deposit volumes and margins Lending, EURbn Q4/07 Q3/07 Q2/07 Q1/07 Q4/06 Q3/06 Q2/06 Q1/06 Financial Institutions Division 1.9 2.9 2.8 1.7 1.5 1.3 1.5 2.1 SOSI 11.1 10.1 10.3 9.9 9.4 9.1 9.1 8.6 New Markets 9.8 8.0 6,8 5.2 4.6 4.0 3.7 3.4 Total* 24.6 22.6 21
Slide 108: Nordea operations in New European Markets
Nordea operations in New European Markets End of Q4/07 Estonia Latvia Lithuania Poland Russia Total Customers 66,650 65,700 83,000 411,100 34,800 1,391,2501 Branches/salespoints 19 19 16 85 30 169 Number of FTEs 315 405 271 1,110 1,368 3,506 Total assets, EURm 1,833 2,537 1,709 3,115 2,025 11,219 Co
Slide 109: Asset Management & Life Insurance
Asset Management & Life Insurance
Slide 110: Breakdown of AuM by market and channels
Breakdown of AuM by market and channels Retail funds* Fund sales 2007 (sold through through Private Institutional Life & Total by EURbn own distribution) third-parties Banking customers Pensions** market Denmark 8.2 - 18.5 11.0 18.8 56.5 Finland 7.1 - 17.0 5.4 9.1 38.5 Norway 1.8 - 2.9 3.5 5.6 13.7
Slide 111: Asset Management margins
Asset Management margins Bps 80 79 72 74 Negative impact on income 71 70 65 margins from financial market 60 turmoil 50 43 36 38 36 Lower trading activity 40 30 30 Lower performance fees 20 10 0 -10 -20 -30 -23 -21 -21 -21 -24 Q4/06 Q1/07 Q2/07 Q3/07 Q4/07 Income margin Operating expenses marg
Slide 112: Asset structure
Asset structure* Q4/07 Q4/06 Int'l. fixed Int'l. fixed income income 18% 17% Nordic Nordic fixed fixed income Nordic income Nordic 43% equities 42% equities 14% 14% Int'l. Int'l. equities equities 25% 27% *Average AuM for Asset Management activities excl. Nordic Private Banking activities. 112
Slide 113: European fund distribution
European fund distribution EURm 8 000 7 000 6 000 5 000 4 000 3567 3 000 2 000 1 000 0 -1 000 524 Q1/03 Q3/03 Q1/04 Q3/04 Q1/05 Q3/05 Q1/06 Q3/06 Q1/07 Q3/07 Net inflow AuM 113
Slide 114: Asset under Management
Asset under Management Net inflow AuM EURm EURm 5 000 180 000 4 000 160 000 3 000 140 000 120 000 2 000 100 000 1 000 80 000 0 60 000 -1 000 40 000 -2 000 20 000 -3 000 0 Q1/03 Q3/03 Q1/04 Q3/04 Q1/05 Q3/05 Q1/06 Q3/06 Q1/07 Q3/07 Net inflow AuM 114
Slide 115: Life - breaking out profit drivers
Life - breaking out profit drivers Fee based on size of life provisions in “with profit” companies – DK, FI Fee contribution Profit-sharing from the Norwegian business (existing model, change pending) Contribution from 25% of surplus/deficit from cost result in DK, 100% from FI and SE cost res
Slide 116: Life - profit drivers
Life - profit drivers EURm Q4/07 Q3/07 Q2/07 Q1/07 Q4/06 Traditional insurance Fee contribution/profit sharing 59 39 38 37 47 Contribution from cost result -1 0 -1 -1 -4 Contribution from risk result 11 7 7 5 9 Return on Shareholders’ equity/other profits 12 -1 12 6 15 Total Profit Traditional 81 45
Slide 117: Life – gross written premiums by market
Life – gross written premiums by market EURm Q4/07 Q3/07 Q2/07 Q1/07 Q4/06 Denmark 362 307 299 329 328 Norway 240 257 154 257 205 Finland 165 123 178 213 238 Sweden 115 68 87 97 191 Other 156 150 98 125 150 Total 1.038 905 816 1.021 1.112 117
Slide 118: Life, investments
Life, investments EURbn 35 33.6 34.1 33.9 Equities 32.5 33.0 Predominantly listed equities 30 1/3 Nordic, 2/3 International 25 Bonds 20 3/4 Nordic issuers Primarily government and 15 mortgage institutions 10 5 0 Q4/06 Q1/07 Q2/07 Q3/07 Q4/07 Equities Real Estate Alternative investments B
Slide 119: Life - asset allocation
Life - asset allocation Total, EURbn Equities, % Q4/07 Q3/07 Q4/07 Q3/07 Denmark 14.9 14.8 26 26 Finland 8.8 8.9 19 19 Norway 5.3 5.3 20 21 Sweden 3.6 3.7 15 12 Total 33.9 34.1 22 22 119
Slide 120: Life - solvency situation
Life - solvency situation End of Q4/07 Required Actual Solvency Solvency in % of EURm solvency solvency buffer requirement Denmark 532 725 193 136 Finland 235 696 462 297 Norway* 183 426 243 233 Sweden** 65 131 66 201 * Excluding unit linked company ** Nordea Life Sweden I 120
Slide 121: Life – solvency sensitivity
Life – solvency sensitivity End of Q4/07 Denmark Finland Norway Sweden Solvency in % of requirement 136 297 233 201 Equities drop 12% 137 242 227 163 Interest rates down 50bp 135 334 233 226 Interest rates up 50bp 136 260 233 170 121
Slide 122: Life – financial buffers
Life – financial buffers EURm % of total provisions Q4/07 Q3/07 Q4/07 Q3/07 Denmark 1,387 1,546 12.0 13.5 Finland 328 395 6.3 7.6 Norway 234 237 5.8 5.6 Sweden 281 273 18.1 17.1 Total 2,230 2,451 10.0 11.9 122
Slide 123: Life – buffers in different scenarios
Life – buffers in different scenarios End of Q4/07 EURm Denmark Finland Norway Sweden Financial buffers, actual 1,387 328 234 281 Equities drop 12% 1,072 201 145 256 Interest rates down 50bp 1,368 413 235 248 Interest rates up 50bp 1,312 243 235 314 123
Slide 124: Balance sheet
Balance sheet
Slide 125: Balance sheet
Balance sheet End Dec End Dec EURm 2007 2006 Treasury bills and other eligible bills 8,503 6,678 Loans and receivables to credit institutions 24,262 26,792 Loans and receivables to the public 244,682 213,985 Derivatives 31,498 24,207 Other assets 80,109 75,228 Total assets 389,054 346,890 Deposits b
Slide 126: Capital base
Capital base EURm Q4/07 Q3/07 Q2/07 Q1/07 Q4/06 Core equity 17,160 16,261 15,459 15,858 15,271 Hybrid capital loans 1,409 1,431 1,441 1,440 1,458 Deferred tax assets -185 -314 -344 -340 -369 Goodwill -2,088 -1,999 -1,968 -1,951 1,770 Other items net -2,066 -1,458 -1,126 -1,905 -1,443 Tier 1 capital
Slide 127: Market position
Market position
Slide 128: Market position in Nordic markets
Market position in Nordic markets Market shares Denmark Finland Norway Sweden* Personal customers - mortgage lending 15.5% 30.8% 12.0% 14.9% - consumer lending 14.1% 29.6% 11.7% 9.7% - deposits 21.1% 32.2% 8.5% 17.6% Corporate customers - lending 18.4% 36.9% 17.2% 13.7% - deposits 21.7% 44.4% 18.0%
Slide 129: Appendix
Appendix
Slide 130: Ratings
Ratings Moody’s S&P Fitch DBRS Short Long Short Long Short Long Short Long Nordea Bank AB P-1 Aa1 A-1+ AA- F1+ AA- R-1 (high) AA Nordea Bank D P-1 Aa1 A-1+ AA- F1+ AA- R-1 (high) AA Nordea Bank F P-1 Aa1 A-1+ AA- F1+ AA- R-1 (high) AA Nordea Bank N P-1 Aa1 A-1+ AA- F1+ AA- R-1 (high) AA Nordea Hypot
Slide 131: Largest registered shareholders, 31 December 2007
Largest registered shareholders, 31 December 2007 Shareholder Number of Percent of Change 30 days, shares, mill Nordea mill shares Swedish state 515.6 19.9 % 0.0 Sampo Oyj 238.3 9.2 % 15.7 Nordea Denmark Fund 102.5 3.9 % 0.0 Robur Funds 64.9 2.5 % 4.5 SHB/SPP Funds 51.7 2.0 % -4.8 Alecta 36.1 1.4 %
Slide 132: Market development – interest rates
Market development – interest rates Change % 31-12-07 30-09-07 Q3/07 Short, EUR (one week) 3.97 4.17 -0.20 Long, EUR (5 years) 4.51 4.48 0.03 Short, DK 3.82 4.11 -0.29 Long, DK 4.66 4.65 0.01 Short, NO 5.40 4.89 0.50 Long, NO 5.43 5.55 -0.07 Short, SE 4.18 3.88 0.30 Long, SE 4.74 4.68 0.06 132
Slide 133: Macro data – Nordic market
Macro data – Nordic market % 2007e 2008e 2009e Gross domestic product DK 1.7 1.4 1.5 FI 4.0 2.6 3.2 NO 5.6 2.9 2.4 SE 2.7 2.1 2.0 Inflation DK 1.6 2.5 2.6 FI 2.5 2.7 2.2 NO 0.7 3.3 2.5 SE 2.2 3.2 2.2 Private consumption DK 2.2 1.8 1.8 FI 3.7 3.3 2.7 NO 6.8 3.0 2.3 SE 3.2 2.7 2.2 Unemployment DK 3.4
Slide 134: Financial calendar 2008
Financial calendar 2008 13 February - full year 2007 29 April - interim report for the first quarter 22 July - interim report for the second quarter 23 October – interim report for the third quarter www.nordea.com/ir 134
Slide 135: 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