Nordea Bank Abp · OMXHEX:NDA_FI
Nordea Bank Abp — Nordea Bank — Q3 2006 Earnings Presentation
125 slides from Nordea Bank Abp's earnings presentation, Oct 25, 2006
Slide 1: Investor Presentation 25 October 2006
Investor Presentation 25 October 2006
Slide 2: CEO Presentation
CEO Presentation
Slide 3: Continued strong results – exceeding targets
Continued strong results – exceeding targets Income up 12% to EUR 5,478m (EUR 4,877m in the first nine months of 2005) Gain on sale of shares in International Moscow Bank (IMB) of EUR 199m included in the third quarter Net profit up 29% to EUR 2,277m (EUR 1,763m) Operating profit up 24% to E
Slide 4: Organic growth strategy consistently pays off
Organic growth strategy consistently pays off – strong momentum in key growth areas Consumer lending up 12% Number of credit cards increased by 22% SMEs lending up 10% Increased cross-selling of Markets’ products to SMEs Assets under Management up 10% Strong growth in Private Banking N
Slide 5: Robust performance despite volatile markets
Robust performance despite volatile markets 4.1 5900 4.0 5800 3.9 5700 Strong rebound in equity markets and 3.8 5600 decreased concern for a hard landing 3.7 5500 in the US economy 3.6 5400 Market turbulence has had limited Percent Index 3.5 5300 3.4 5200 fundamental effects on Nordea 3.3 5100
Slide 6: Operating profit
Operating profit YoY Up 24% Up 15% excl. gain from sale of IMB shares EURm 1,100 1,063 Operating profit in BAs up 16% excl. 1,000 932 gain from sale of IMB shares 884 900 858 864 Business model and growth strategy 800 728 748 consistently pay off 688 700 Decision to invest in profitable gr
Slide 7: Continuous increase in earnings per share
Continuous increase in earnings per share - rolling 12 months EUR 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 Reported Excl. gain from sale of IMB 7
Slide 8: Revenue growth in Nordea
Revenue growth in Nordea +149 5,478 EURm +199 + 101 +142 + 10 4,877 Income Volumes, Savings: AM, Markets Gain from Other Income Jan-Sep/05 margins Life, brokerage sale of Jan-Sept/06 lending and savings IMB accounts shares 8
Slide 9: Unchanged cost focus
Unchanged cost focus EURm 3,000 2,806 Costs up 3% 2,800 2,712 2,600 In line with increased growth focus 2,400 Approx. half of the cost increase (EUR 2,200 45m) related to investments in growth 2,000 areas 1,800 1,600 General wage inflation above 3% 1,400 1,200 1,000 800 600 400 200 0 Jan-Sep
Slide 10: Cost/income ratio continues downwards
Cost/income ratio continues downwards % 70 Continued down to 53% in Jan- 60 Sept/06 (excl. gain from sale of IMB 60 56 shares) 53* income up 8% 50 costs up 3% 40 Reported C/I incl. IMB 51% Continuous strong growth in 30 revenues 20 Delivery in line with financial targets 10 0 2004 2005 J
Slide 11: Gap between income and cost development
Gap between income and cost development Percentage points 10 9 9 Reported gap of 9%, excl. full 8 impact from sale of IMB 5.1% 7 7 7 Capture profitable revenue 6 opportunities 5 5 Top line increasingly contributing 4 Maintaining a gap secures delivery 3 of net profit and RoE 2 1 high value
Slide 12: Key growth areas – progress already visible
Key growth areas – progress already visible Accelerate market position within consumer credits incl. cards Consumer lending up 12%, sale of credit cards up 23% Continue to leverage on strong position within long-term savings, eg Private Banking and Retail funds Strong increase in AuM - total
Slide 13: Customer programmes - increasing business rewards both customers & Nordea
Customer programmes - increasing business rewards both customers & Nordea Strong growth in core segment Sep 05 to Sep 06 Key focus 14.6% converting intermediate customers to core 7.6% customers 6.4% 160 customer satisfaction and loyalty 140 114 business volume per customer 1.4 106 1.3 Stro
Slide 14: Leverage strong position in long-term savings – Private Banking
Continue to leverage on strong position within long- term savings – Private Banking EURbn 50 45 Strong asset growth in Nordic Private 9 40 9 9 Banking 8 9 35 8 net inflow in Q3 13% annualised 8 30 result of roll-out of new common advisory concepts, particularly in Norway and 25 Sweden 20 39 31
Slide 15: Accelerate market position within consumer lending and cards
Accelerate market position within consumer lending and cards YoY EURbn Retail consumer lending Consumer lending up 12% 16 Approx. 400 000 new cards issued 15,4 14 13,9 14,2 14,9 In total 5.4 million cards issued 13,8 13,5 12 12,9 13,2 of which approx. 27% credit cards no. of credit cards u
Slide 16: Stepwise increase in premiums in Life
Continue to leverage on strong position within long term savings – stepwise increase in premiums in Life EURm Net written premiums up 32% 1,200 1,100 Unit linked share of premiums 40% 474 1,000 390 404 Increased penetration in the customer 900 800 base – successful cooperation between 700 198
Slide 17: Growth in Sweden delivering according to targets
Growth in Sweden delivering according to targets To capture growth potential, more than 200 advisors and specialists have been recruited during the year Target areas for new recruitment have been; Private advisory services in the branches (90) Life & pension (62) Private Banking (20) Cor
Slide 18: Increased cross-selling of Markets related products to SMEs
Increased cross-selling of Markets related products to SMEs EURm Nordea Markets Successful penetration 700 Leveraging Nordea’s customer base 600 SME segment still under penetrated 500 Focus on customer solutions rather 400 than product push strong concepts in risk management and 300 asset-
Slide 19: Outlook
Outlook Nordea continues its successful execution of the organic growth strategy Nordea is confident in reaching the ambition of at least 5 %-points gap between revenue and cost growth for 2006 even when excluding the impact from the sale of shares in IMB A cost increase in line with the first
Slide 20: Summary
Summary Continued strong result despite fierce competition – exceeding targets RoE excl. gain from sale of IMB shares 20.7% Gap between revenue and cost growth 5 percentage points when excluding the full impact of IMB sale Improved cost efficiency Cost/income ratio down to 53% when excludi
Slide 21: CFO Presentation
CFO Presentation
Slide 22: Income statement summary
Income statement summary EURm Jan-Sept 06 Jan-Sept 05 Chg % Net interest income 2,863 2,730 5 Net fee and commission income 1,525 1,406 8 Net gains/losses on items at fair value 609 468 30 Equity method 72 46 57 Other income 409 227 80 Total operating income 5,478 4,877 12 Staff costs -1,645 -1,550
Slide 23: Income statement summary
Income statement summary EURm Q3/06 Q2/06 Chg % Q3/05 Net interest income 979 957 2 920 Net fee and commission income 497 521 -5 469 Net gains/losses on items at fair value 188 179 5 139 Equity method 17 30 -43 11 Other income 253 98 158 62 Total operating income 1,934 1,785 8 1,601 Staff costs -550
Slide 24: Net interest income
Net interest income YoY Up 5% EURm Up 6% in Business Areas 1,000 979 Increased contribution from deposits on back 900 913 920 933 927 957 of higher interest rate level and volume growth 800 NII from deposits accounts for approx. 17% of total revenues 700 Total lending up 11% 600 mortgage
Slide 25: Change in net interest income
Change in net interest income YoY Q3oQ2 Volume driven 237 25 -Lending volumes 184 20 -Deposit volumes 53 5 Margin driven -130 -17 -Lending margins -174 -28 -Deposit margins 44 11 Treasury 4 6 Other, net (incl. day count effect) 22 8 Total 133 22 25
Slide 26: Net commission income
Net commission income YoY EURm Up 8% 600 Savings commissions up 8% Asset Mgmt commissions up 9% 500 529 521 507 Life insurance up 11% 484 497 469 Brokerage up 9% 400 Payment commissions up 5% Cards up 9% 300 Q3oQ2 200 Down 5% Brokerage down due to seasonally 100 low activity and fe
Slide 27: Breakdown of commission income - gross
Breakdown of commission income - gross EURm 400 360 320 338 335 319 325 280 306 301 281 240 200 160 183 187 175 177 177 171 162 120 80 90 98 82 87 88 86 87 40 51 59 48 41 45 32 36 0 Q1/05 Q2/05 Q3/05 Q4/05 Q1/06 Q2/06 Q3/06 Savings related Payments related Lending related Other Of which Asset Mgmt O
Slide 28: Customer business drives increase in net gains/losses
Customer business drives increase in net/gains losses YoY EURm Revenue increase driven by 200 210 structured products 180 190 strong and stable core business in F/X and 160 159 164 164 fixed income trading 140 120 134 Net gains/losses in BAs increased by 27% 100 to EUR 538m 80 Q3oQ2 80 60 40
Slide 29: Increased revenues from net gains/losses in BAs
Increased revenues from net/gains losses in BAs Net/gains losses, EURm Q3/06 Q2/06 Q1/06 Q4/05 Q3/Q5 Q2/05 Q1/05 Retail 70 75 83 64 47 57 48 CIB 72 68 87 83 74 51 76 Asset Mgmt 7 4 8 10 6 3 4 Life 15 17 32 33 32 23 3 BAs 164 164 210 190 159 134 131 Group Treasury 8 7 40 -31 -21 68 -15 29
Slide 30: Group Treasury
Group Treasury Strong result in volatile market conditions annualised investment return in Q3 3.60% compared with funding cost of 3.25% operating profit up 35% YoY Group Investment Group Funding Jan-Sept Jan-Sept Jan-Sept Jan-Sept Jan-Sept Jan-Sept EURm 2006 2005 2006 2005 2006 2005 Net intere
Slide 31: Total operating income
Total operating income YoY Up 12% reported Up 8% excl. gain from sale of IMB shares EURm Steady increase in net interest income 2,000 1,934 1,785 lending volume growth compensating for 1,759 1734 1,800 1,694 1,696 margin pressure 1,601 1,600 strong revenue contribution from deposits 1,400
Slide 32: Expenses
Expenses YoY Up 3% - ambition to capture opportunities in growth markets EURm Approx. half of the cost increase (EUR 1,000 956 945 45m) related to investments within growth 914 31 933 928 896 23 21 900 35 31 23 areas 800 Growth Plan Sweden, Life, Poland & Baltics 393 367 372 355 700 364 345
Slide 33: Expense distribution
Expense distribution EURm +27 2,806 +45 +22 2,712 Expenses Increase in Investments in Cost increases Expenses Jan-Sept 05 variable growth areas* adj. for changed Jan-Sept 06 salaries variable salaries and investments in growth areas 33 *Such as investments in Growth Plan Sweden, Cards, Life, Private
Slide 34: Staff costs
Staff costs No. of recruited FTEs: approx. EURm 1,900 1,645 +26 +22 1,619 +47 No. of FTEs that 1,550 has left: approx. 1,250 Staff costs Wage Increased Subtotal Increase in Staff costs Jan-Sept 05 increases variable Staff costs FTEs, net Jan-Sept 06 salaries 34
Slide 35: Number of FTEs
Number of FTEs Strong market growth explains increase in FTEs 32,000 Shift towards increasing no. of advisors 29,052 29,201 29,396 28,730 28,925 and sales related FTEs in BAs and falling 28,000 no. of FTEs in processing and staff units 24,000 FTEs Q3/06 Q3/05 Chg YoY 2005 20,000 Retail 17,655 17
Slide 36: Cost/income ratio continues downwards
Cost/income ratio continues downwards % 70 Continued down to 53% in Jan- 60 Sept/06 (excl. gain from sale of 60 56 IMB) 53* income up 8% 50 costs up 3% 40 reported C/I incl. IMB 51% Continuous strong growth in 30 revenues 20 Delivery in line with financial targets 10 0 2004 2005 Jan-Sept
Slide 37: Loan losses
Loan losses YoY EURm Positive loan losses reflecting record 20 low new provisions coupled with recoveries maintained at a high level 0 -6 -7 -20 -23 -31 Q3oQ2 -40 -55 Continued flow of recoveries and low -60 new provisions -80 -89 Overall credit quality strong in all -101 markets -100 -120 05
Slide 38: Impaired loans
Impaired loans Net impaired loans as per cent of total lending: 21bp EURm. End of period Q3/06 Q2/06 Q1/06 Q4/05 Q3/05 Impaired loans, gross 1,604 1,677 1,712 1,820 1,994 Reserves -1,188 -1,272 -1,371 -1,481 -1,545 Impaired loans, net 416 405 341 339 449 Provisions/impaired loans, gross,% 74 76 80
Slide 39: Net profit
Net profit YoY EURm 900 872 Up 29%, 18% excl. gain from sale of IMB 800 740 Operating profit up 24% 700 665 673 Tax rate 22% (23% Ytd 05) following 600 563 revaluation of tax asset in Finland 506 Q3oQ2 500 400 Up 18% incl. IMB gain 300 Excl. IMB gain slightly lower 200 lower loan loss re
Slide 40: Continuous increase in earnings per share
Continuous increase in earnings per share - rolling 12 months EUR 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 Reported Excl. gain from sale of IMB 40
Slide 41: Return on equity
Return on equity % Higher RoE - 22.6% 25 20.7% excl. gain from sale of IMB At top level among Nordic peers 22.6 20 20.7 RoE well above 2007 target of >17% 18.8 18.0 15 10 5 0 2005 Jan-Sept/05 Jan-Sept/06 Excl. gain from sale of IMB shares 41
Slide 42: Capital position
Capital position % 8 Tier 1 ratio 6.9% 7 Profitable volume growth 7.0 7.0 6.9 6.8 6.8 6.8 Total capital ratio at 9.5% 6 5 4 3 2 1 0 Q2/05 Q3/05 Q4/05 Q1/06 Q2/06 Q3/06 42
Slide 43: Risk-weighted assets (RWA)
Risk-weighted assets (RWA) YoY EURbn 200 RWA up 14% 180 185 Total lending up 11% 180 174 160 169 159 162 Off-balance commitments up 30% 153 140 120 100 Q3oQ2 80 RWA up 3% 60 Lending up 2% 40 20 0 05 05 05 05 06 06 06 1/ 2/ 3/ 4/ 1/ 2/ 3/ Q Q Q Q Q Q Q 43
Slide 44: Return on risk weighted assets, annualised
Return on risk weighted assets, annualised EURbn % 200 2,2 180 2,0 185 180 1,77 174 1,8 160 169 159 162 1,64 153 1,6 140 1,39 1,53 1,46 * 1,4 120 1,29 1,20 1,2 100 1,0 80 0,8 60 0,6 40 0,4 20 0,2 0 0,0 Q1/05 Q2/05 Q3/05 Q4/05 Q1/06 Q2/06 Q3/06 * Excl. Gain from sale of IMB shares RWA Return on RWA (
Slide 45: Business trends
Business trends
Slide 46: Robust volume growth continues
Robust volume growth continues YoY Q3oQ2 * Lending, total 10% 1% – Mortgage lending 13% 3% – Consumer lending** 12% 4% – SME lending 10% 2% – CIB lending excl. Markets 7% -4% Deposits, total 10% 0% – Household deposits 8% 2% – SME deposits 13% 2% – CIB deposits excl. Markets 18% -2% *Underlying volu
Slide 47: Total lending
Total lending EURbn 201 200 199 189 191 182 180 175 170 161 160 156 155 147 147 149 146 148 140 120 100 80 60 40 20 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 Corporate Housing loans Other loans Public sector 47
Slide 48: Household mortgages, volumes and margins
Household mortgages, volumes and margins EURbn % 75 1.6 70 1.5 70.6 65 68.5 1.4 64.5 65.8 60 62.6 1.3 60.4 55 57.7 1.2 54.5 56.3 50 52.6 50.0 1.1 45 48.2 48.9 45.7 1.0 40 44.3 0.9 35 0.8 30 0.7 25 20 0.6 15 0.5 10 0.4 5 0.3 0 0.2 Q1/03 Q2/03 Q3/03 Q4/03 Q1/04 Q2/04 Q3/04 Q4/04 Q1/05 Q2/05 Q3/05 Q4/0
Slide 49: Nordic mortgage market
Nordic mortgage market Nordic trends have converged margins stable in Denmark at approx. 50bp margins on new lending in Finland and Sweden – show signs of stabilisation margins in Norway approaching Nordic average – proactive pricing and lag effect from central bank hike Acceptable profita
Slide 50: Mortgage - performance in line with strategy
Mortgage - performance in line with strategy Strong market share growth in EURbn FI NO SE DE Norway and Denmark Market share 31.2% 12.3% 15.6% 15.2% EoP Aug 06 Nordea prioritising core Market share 25.7% 22.5% 12.7% 20.0% customers in Sweden and Finland of new lending Ytd Improved market posit
Slide 51: Retail consumer lending, volumes and margins
Retail consumer lending, volumes and margins EURbn % 16 4,8 15,4 14 14,9 4,2 13,9 14,2 13,5 13,8 12,9 13,2 12 12,4 12,4 12,5 12,7 3,6 12,1 12,2 12,2 10 3,0 8 2,4 6 1,8 4 1,2 2 0,6 0 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 51
Slide 52: Lending to corporates (SME), volumes and margins
Lending to corporates (SME), volumes and margins EURbn % 80 1,4 70 73,2 73,4 1,3 70,0 70,9 67,9 64,0 65,3 60 1,2 61,0 57,3 57,3 57,4 58,1 58,5 56,7 56,3 50 1,1 40 1,0 30 0,9 20 0,8 10 0,7 0 0,6 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 52
Slide 53: CIB lending, volumes and margins
CIB lending, volumes and margins* EURbn % 30 1.5 28 1.4 26 1.3 24 1.2 22 23.3 1.1 22.6 22.6 22.3 20 21.7 21.4 21.4 21.7 21.2 1.0 20.3 20.8 18 19.0 0.9 18.4 18.1 18.0 16 0.8 14 0.7 12 0.6 10 0.5 8 0.4 6 0.3 4 0.2 2 0.1 0 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 Q1/0
Slide 54: Total deposits
Total deposits EURbn 119 119 120 116 113 110 105 105 106 108 100 95 96 98 97 93 92 91 90 80 70 60 50 40 30 20 10 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 Of which household deposits 54
Slide 55: Retail deposits, households, volumes and margins
Retail deposits, households, volumes and margins EURbn % 50 2,4 49,6 50,1 45 46,9 47,0 47,1 2,2 45,7 43,8 44,1 40 42,3 42,9 2,0 40,7 41,7 41,3 40,2 40,4 1,8 35 1,6 30 1,4 25 1,2 20 1,0 0,8 15 0,6 10 0,4 5 0,2 0 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 Q
Slide 56: Structural Interest Income Risk (SIIR)
Structural Interest Income Risk (SIIR) EURm, annualised effect on NII* Q3/06 Q2/06 Q3/05 Increasing market rates, 100bp 174 175 140 Decreasing market rates, 100bp -165 -189 -182 Nordea deposits unchanged in Q3 at EUR 119bn Increased rate level reduces SIIR for rates down *Approx. end of period S
Slide 57: Retail deposits, SME, volumes and margins
Retail deposits, SME, volumes and margins EURbn % 40 1,6 35 1,4 34,8 34,7 33,4 32,6 30 31,5 1,2 30,5 30,1 28,9 28,8 29,4 28,3 28,4 25 26,2 26,3 26,7 1,0 20 0,8 15 0,6 10 0,4 5 0,2 0 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 57
Slide 58: CIB, deposits, volumes and margins
CIB, deposits, volumes and margins* EURbn % 24 0.60 22 23.2 0.55 22.1 22.3 21.8 20 21.0 21.2 0.50 20.4 18 18.5 0.45 17.9 18.0 16 0.40 14 15.4 15.2 0.35 14.4 14.9 12 13.3 0.30 10 0.25 8 0.20 6 0.15 4 0.10 2 0.05 0 0.00 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 Q2/0
Slide 59: Assets under management
Assets under management YoY EURbn Up 10% 158 160 154 153 144 148 Strong growth in Private 140 Banking, up 17% 120 Continued growth in Retail 100 funds, up 9% 80 Asset growth from well 60 diversified sale platforms Q3oQ2 40 Up 3% 20 0 Q3/05 Q4/05 Q1/06 Q2/06 Q3/06 Nordic Retail funds Europe
Slide 60: Net inflows
Net inflows Net inflow EUR 9.4bn last 12 EURbn months 5 3.4 Net inflow EUR 1.8bn in Q3 4 3.3 Strong inflow in Nordic Private 3 1.8 Banking and new mandates for Institutional clients 2 0.9 0.6 Inflow of EUR 0.1bn in Retail 1 funds 0 Net outflow from European Fund Distribution -1 gross inf
Slide 61: Retail operating profit before loan losses
Retail operating profit before loan losses YoY EURm Profit up 16% 700 650 double digit volume growth 600 increased no. of core customers 600 589 550 577 544 556 sales of market related products 500 450 largely unchanged costs 400 350 Plan to capture untapped potential in 300 Sweden proce
Slide 62: CIB operating profit before loan losses
CIB operating profit before loan losses EURm YoY 180 Profit up 25% 160 169 160 Strong result in all divisions 140 144 145* High level of activity in M&A market 120 125 Good result in Markets 100 strong underlying demand for hedging products 80 Strong volume growth in Poland and 60 Baltic
Slide 63: Asset Management product result
Asset Management product result YoY EURm 100 Up 24% 90 96 93 Higher AuM 80 85 Double digit income growth 80 77 70 Improved income and result margin 60 Successful product launches 50 Lower transaction fees in Q3 40 30 20 10 Key ratios Q3/06 Q3/05 0 Q3/05 Q4/05 Q1/06 Q2/06 Q3/06 C/I ratio,
Slide 64: Life insurance, product result
Life insurance, product result YoY EURm Net written premiums up 32% 70 Unit link premiums up 90% 65 accounting for 40% of total premiums 60 61 56 56 Fee based business model continues 50 52 to deliver 40 30 20 10 Key ratios Q3/06 Q3/05 0 Inv return, % 2.7 2.1 Q3/05 Q4/05 Q1/06 Q2/06 Q3/06 Fi
Slide 65: Summary
Summary Continued strong result despite fierce competition – exceeding targets RoE excl. gain from sale of IMB shares 20.7% Gap between revenue and cost growth 5 percentage points when excluding the full impact of IMB sale Improved cost efficiency Cost/income ratio down to 53% when excludi
Slide 66: Facts & figures
Facts & figures
Slide 67: Facts & Figures, content
Facts & Figures, content Credit quality Page 75 Economic capital Page 84 Business areas Page 87 Balance sheet Page 114 Market shares Page 117 Appendix Page 125 67
Slide 68: Credit quality
Credit quality
Slide 69: Loan portfolio by customer category
Loan portfolio by customer category* EURbn 110 100 105 105 100 101 90 97 91 93 80 85 84 83 84 82 80 78 79 70 71 66 68 60 63 65 58 60 50 55 56 53 48 49 50 40 44 46 30 20 19 19 20 20 21 21 16 16 17 17 17 18 10 14 15 15 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/
Slide 70: Loan portfolio by customer group
Loan portfolio by customer group End Q3/06, EUR 201.1bn End Q3/05, EUR 182.1bn Public Public sector sector 1.9% 2.0% Companies Companies 45.7% Household 44.9% customers Household 52.4% customers 53.1% 70
Slide 71: Lending to household customers
Lending to household customers End of Q3/06 EUR 91.9bn Other loans comprise Other loans 23.4% consumer credits investment credits car financing overdraft facilities credit cards home equity credits Housing loans 76.6% 71
Slide 72: Lending to companies by industry
Lending to companies by industry End of Q3/06 EUR 105.5bn Construction 9% Shipping & Offshore Real estate 12% 27% Agriculture & Fishing Manufactoring 8% 14% Renting, consulting and other services 11% Transport and Other companies communication 10% 14% Commerce and services Finance 5% 10% 72
Slide 73: Loan portfolio in figures
Loan portfolio in figures EURbn Q3/06 Q2/06 Q1/06 Q4/05 Q3/05 Household customers 91.9 89.4 86.0 84.6 81.7 Real estate 28.6 28.0 26.8 26.2 25.6 Construction 3.3 3.6 2.9 2.9 3.1 Transport, communication 5.9 5.8 5.8 5.6 5.1 Trade and services 10.8 10.4 9.9 9.9 9.9 Manufacturing 14.6 14.5 14.0 13.4 12.
Slide 74: Lending by geographical area
Lending by geographical area End of Q3/06 EUR 201.1bn Latin America Asia 0.6% 1.1% USA Other non OECD Nordic countries 1.1% 0.5% and P&B 93.2% Other Other OECD 6.8% 0.3% Other EU countries Nordic countries and P&B, EURbn 3.2% Sweden 55.5 Denmark 54.9 Finland 41.8 Norway 32.5 P&B 4.2 74
Slide 75: Impaired loans
Impaired loans EURm. End of Q3/06 Gross Provisions Net Household customers 431 245 186 Manufacturing 314 277 37 Trade and services 161 119 41 Other companies 175 131 44 Real estate 127 91 36 Renting, Consulting and other services 141 125 16 Agriculture & Fishing 115 104 12 Construction 42 28 13 Tran
Slide 76: Loan losses
Loan losses YoY EURm Positive loan losses reflecting record 200 192 low new provisions coupled with 156 recoveries maintained at a high level 150 92 86 100 58 50 0 Q3oQ2 -7 -23 -50 -31 -54 Continued flow of recoveries and low -100 -89 new provisions -150 -123 -163 -147 -140 Overall credit qual
Slide 77: Economic capital
Economic capital
Slide 78: Economic capital (EC)
Economic capital (EC) EURbn 10 9 9.2 9.3 EC per business area 8.9 9.0 9.0 8 (EURm) Q3/06 7 Retail Banking 5,712 6 CIB 1,924 5 Asset Mgmt 162 4 Life 1,007 3 Treasury 356 2 GPT 126 1 Other 17 0 Q3/05 Q4/05 Q1/06 Q2/06 Q3/06 Total 9,305 78
Slide 79: Economic capital – distribution
Economic capital – distribution End of Q3/06 Asset Mgmt Treasury Other Life risk Operational & Life 4% 2% 1% Business risk 12% 9% risk 12% CIB Retail Market risk 21% 15% Credit risk 61% 63% 79
Slide 80: Retail Banking
Retail Banking
Slide 81: Retail Banking lending and deposit volumes
Retail Banking lending and deposit volumes Lending, EURbn Q3/06 Q2/06 Q1/06 Q4/05 Q3/05 Q2/05 Q1/05 Q4/04 Denmark 48.7 47.5 45.5 45.1 43.2 41.3 38.5 37.4 Finland 38.6 37.7 36.4 35.6 34.8 33.8 33.0 31.6 Norway 27.4 26.8 26.0 25.2 24.3 23.3 21.8 20.4 Sweden 48.8 49.1 46.5 46.1 45.2 43.3 44.0 42.6 Depo
Slide 82: Retail Banking breakdown of lending
Retail Banking breakdown of lending Denmark, EURbn Q3/06 Q2/06 Q1/06 Q4/05 Q3/05 Q2/05 Q1/05 Q4/04 Corporate 19.1 18.2 18.2 18.1 17.0 16.1 14.7 14.3 Household mortgages 21.8 20.8 20.3 19.6 18.8 17.9 17.2 16.8 Consumer lending 6.3 6.0 5.8 5.8 5.8 5.7 5.5 5.3 Finland, EURbn Q3/06 Q2/06 Q1/06 Q4/05 Q3/
Slide 83: Retail Banking breakdown of lending
Retail Banking breakdown of lending Norway, EURbn Q3/06 Q2/06 Q1/06 Q4/05 Q3/05 Q2/05 Q1/05 Q4/04 Corporate 12.7 12.7 12.3 12.0 11.5 11.1 10.6 10.4 Household mortgages 14.0 13.3 12.8 12.4 11.9 11.4 10.5 10.1 Consumer lending 1.0 1.0 0.9 0.9 0.8 0.8 0.7 0.6 Sweden, EURbn Q3/06 Q2/06 Q1/06 Q4/05 Q3/05
Slide 84: Retail Banking breakdown of deposits
Retail Banking breakdown of deposits Denmark, EURbn Q3/06 Q2/06 Q1/06 Q4/05 Q3/05 Q2/05 Q1/05 Q4/04 Corporate 8.3 8.0 7.8 7.8 8.0 7.2 6.8 7.2 Households, current 3.3 3.4 3.1 3.2 3.1 3.1 2.9 2.9 accounts Households, savings 9.9 9.9 9.5 9.4 9.5 9.0 8.4 8.1 accounts Finland, EURbn Q3/06 Q2/06 Q1/06 Q4/
Slide 85: Retail Banking breakdown of deposits
Retail Banking breakdown of deposits Norway, EURbn Q3/06 Q2/06 Q1/06 Q4/05 Q3/05 Q2/05 Q1/05 Q4/04 Corporate 8.3 8.3 7.7 7.4 6.9 6.3 6.2 5.7 Households, current 2.1 2.2 2.0 1.8 1.7 1.7 1.4 1.4 accounts Households, savings 3.8 3.7 3.7 3.7 3.9 3.8 3.6 3.5 accounts Sweden, EURbn Q3/06 Q2/06 Q1/06 Q4/05
Slide 86: Retail Banking margins
Retail Banking margins % Q3/06 Q2/06 Q1/06 Q4/05 Q3/05 Q2/05 Q1/05 Q4/04 Lending to SME’s 0.95 0.98 1.00 1.04 1.06 1.09 1.13 1.13 Mortgages, households 0.63 0.70 0.75 0.76 0.81 0.85 0.92 0.93 Consumer loans, 3.53 3.61 3.66 3.74 3.81 4.04 4.07 4.18 households Deposits, SME’s 1.03 1.02 1.01 1.05 1.06
Slide 87: Payments & transactions
Payments & transactions
Slide 88: E-banking customers and payments
88 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-02 Oct-02 Feb-03 Jun-03 Oct-03 Feb-04 Jun-04 E-banking customers Oct-04 Feb-05 Jun-05 Oct-06 Feb-06 Jun-06 0 5 10 15 20 25 30 35 40 45 50 55 Mill. Q1/00 Q3/00 Q1/01 Q3/01 E-banking customers, all
Slide 89: Issued cards and card payments
89 0.0 1.0 2.0 3.0 4.0 5.0 Mill. Jan-01 May-01 Sept-01 Jan-02 May-02 Sept-02 Jan-03 May-03 Debit cards Sep-03 Jan-04 May-04 Sep-04 Jan-05 May-05 Cards, all customers Issued debit and credit cards Credit cards Sep-05 Jan-06 May-06 Sep-06 0 20 40 60 80 100 120 140 160 180 Mill. Q1/01 Q3/01 Q1/02 Q3/02
Slide 90: Payment transactions, households
Payment transactions, households 200 180 160 140 120 100 80 60 40 20 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 Manual transactions Payment ATMs Card payments Cash withdrawal ATMs Direct debit Netbank payments 90
Slide 91: Payment transactions, households
Payment transactions, households Jan-Sept Mill. 2005 2004 2003 2002 2001 2006 Manual transactions 82.5 124.6 129.1 137.7 150.6 166.2 Payterminals 12.6 19.7 23.6 27.1 31.7 34.3 Card payments 514.9 603.6 527.8 459.9 395.5 333.5 Cash withdrawal ATM 125.0 181.7 190.4 197.4 204.4 207.2 Direct debit 81.4
Slide 92: Corporate and Institutional Banking
Corporate and Institutional Banking
Slide 93: CIB lending and deposit volumes and margins
CIB lending and deposit volumes and margins Lending, EURbn Q3/06 Q2/06 Q1/06 Q4/05 Q3/05 Q2/05 Q1/05 Q4/04 Corporate Banking Division 12.0 12.7 12.0 11.1 10.9 12.0 12.8 10.8 Financial Institutions Division 1.3 1.5 2.0 1.7 1.8 2.0 2.0 1.4 International and Shipping Division 9.1 9.1 8.6 8.5 8.1 7.7 6.
Slide 94: Nordea operations in Poland and the Baltic countries
Nordea operations in Poland and the Baltic countries End of Q3/06 Estonia Latvia Lithuania Poland Total Customers 51,450 39,550 33,150 351,600 1,204,750* Branches/salespoints 14 16 10 41 81 Number of FTEs 309 325 186 847 1,679 Total assets, EURm 1,202 1,279 801 1,808 5,089 Commitments***, EURm 1,061
Slide 95: Asset Management & Life Insurance
Asset Management & Life Insurance
Slide 96: Breakdown of AuM by market and channels
Breakdown of AuM by market and channels Retail funds* Fund sales Q2/06 (sold through through Private Institutional Life & Total by EURbn own distribution) third-parties Banking customers Pensions market Denmark 17.7 - 16.6 10.9 18.1** 63.3 Finland 6.8 - 14.6 4.2 8.6** 34.2 Norway 1.7 - 1.8 3.8 4.7**
Slide 97: Asset Management – margins
Asset Management – margins* Q3oQ2 Bps 71 70 Income margin down 2bp, 70 63 66 64 which can be a ascribed to lower and more 60 normalised transaction income 50 40 37 35 32 Operating expenses margin in line 30 30 30 with last quarter 20 Result margin unchanged 10 0 Unchanged asset mix -10 -20
Slide 98: Asset structure
Asset structure* Q3/06 Q3/05 Int'l. fixed Int'l. fixed income income 13% 13% Nordic Nordic Nordic Nordic equities fixed equities fixed 14% income 14% income 46% 44% Int'l. Int'l. equities 27% equities 29% *Average AuM for Asset Management activities excl. Nordic Private Banking activities, in Q3 thi
Slide 99: European fund distribution
European fund distribution EURbn 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 -1,000 Q3/00 Q1/01 Q3/01 Q1/02 Q3/02 Q1/03 Q3/03 Q1/04 Q3/04 Q1/05 Q3/05 Q1/06 Q3/06 Inflow AuM 99
Slide 100: 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 cost 25% of surplus/deficit from cost result in DK, 100% from FI and SE res
Slide 101: Life - profit drivers
Life - profit drivers EURm Q3/06 Q2/06 Q1/06 Q4/05 Q3/05 Traditional insurance Fee contribution/profit sharing 34 35 36 33 43 Contribution from cost result 0 -4 -1 -1 0 Contribution from risk result 6 6 7 10 7 Inv. return on Shareholders Equity 6 1 0 1 3 Other profits 5 5 5 6 7 Total Profit Traditio
Slide 102: Life – net written premiums by market
Life – net written premiums by market EURm Q3/06 Q2/06 Q1/06 Q4/05 Q3/05 Denmark 244 262 237 296 222 Norway 134 205 236 147 90 Finland 151 221 241 273 164 Sweden 95 153 151 254 68 Other 97 124 107 111 33 Total 720 964 972 1,081 577 102
Slide 103: Life, investments
Life, investments EURbn Equities 35 30,5 31,1 predominantly listed equities 29,1 29,9 30,3 30 1/3 Nordic, 2/3 international 25 Bonds ¾ Nordic issuers 20 primarily govmn’t & mortgage inst. 15 10 5 0 Q3/05 Q4/05 Q1/06 Q2/06 Q3/06 Equities Real Estate Alternative investments Bonds Unit link
Slide 104: Life - asset allocation
Life - asset allocation Total, EURbn Equities, % Q3/06 Q2/06 Q3/06 Q2/06 Denmark 14.0 13.6 27 25 Finland 8.3 8.1 21 19 Norway 4.4 4.5 17 16 Sweden 3.4 3.2 6 6 Total 31.1 30.3 21 19 104
Slide 105: Life - solvency situation
Life - solvency situation End of Q3/06 Required Actual Solvency Solvency in % of EURm solvency solvency buffer requirement Denmark 505 614 109 122 Finland 230 766 536 333 Norway* 145 302 157 208 Sweden** 67 144 77 215 * Excluding unit linked company ** Nordea Life Sweden I 105
Slide 106: Life – solvency sensitivity
Life – solvency sensitivity End of Q3/06 Denmark Finland Norway Sweden Solvency in % of requirement 122 333 208 215 Equities drop 12% 122 270 208 212 Interest rates down 50bp 119 359 208 211 Interest rates up 50bp 124 308 208 197 106
Slide 107: Life – financial buffers
Life – financial buffers EURm % of total provisions Q3/06 Q2/06 Q3/06 Q2/06 Denmark 1,318 1,352 11.7 12.4 Finland 286 222 5.3 4.2 Norway 157 146 4.6 4.1 Sweden 139 189 8.3 12.0 Total 1,901 1,909 8.7 9.0 107
Slide 108: Life – buffers in different scenarios
Life – buffers in different scenarios End of Q3/06 EURm Denmark Finland Norway Sweden Financial buffers, actual 1,318 286 157 139 Equities drop 12% 1,069 141 81 124 Interest rates down 50bp 1,213 345 162 78 Interest rates up 50bp 1,398 229 152 190 108
Slide 109: Balance sheet
Balance sheet
Slide 110: Balance sheet
Balance sheet 30 Sept 31 Dec 30 Sept EURm 2006 2005 2005 Treasury bills and other eligible bills 7,304 7,280 13,582 Loans and receivables to credit institutions 27,244 31,578 24,521 Loans and receivables to the public 201,126 188,460 181,920 Derivatives 24,419 28,876 32,282 Other assets 68,612 69,35
Slide 111: Capital base
Capital base EURm Q3/06 Q2/06 Q1/06 Q4/05 Q3/05 Core equity 14,288 13,479 13,572 12,918 12,946 Hybrid capital loans 1,457 1,458 1,462 1,472 1,395 Deferred tax assets -275 -304 -308 -327 -460 Goodwill -1,765 -1,800 -1,795 -1,794 -1,804 Other items net -1,001 -634 -1,210 -831 -696 Tier 1 capital 12,70
Slide 112: Market shares
Market shares
Slide 113: Market position in Nordic markets
Market position in Nordic markets Market shares Denmark Finland Norway Sweden Personal customers - mortgage lending 15.2% 31.2% 12.3% 15.6% - consumer lending 14.8% 30.8% 11.1% 9.5% - deposits 21.7% 32.9% 8.3% 17.8% Corporate customers - lending 19.9% 34.7% 16.8% 14.0% - deposits 25.3% 41.9% 15.8% 1
Slide 114: Personal customer deposits - market volume & share
114 Ju Au 0 100 200 300 400 500 600 g- A n-0 0 100 200 300 400 500 600 O 03 ug 5 DKKbn ct NOKbn - O - 05 c D 03 ec D t- 05 Fe -03 e b Fec-0 Ap -04 b 5 r- A - 05 Ju 04 pr n Ju - 05 Au -0 4 g- A n-0 O 04 ug 5 ct O - 05 D -04 ec c D t- 05 Fe -04 ec b Fe -0 Ap -05 r- b 5 A - 05 Ju 05 pr n Norway Denmark
Slide 115: Corporate deposits - market volume & share
115 A Ju ug 0 100 200 300 400 500 0 100 200 300 400 O - 03 Aun-0 c DKKbn g 3 NOKbn D t- 0 O -0 ec 3 c 3 Fe -0 3 De t- 03 b c A - 04 Fe -0 3 pr b Ju - 04 Ap - 04 A n-0 r ug 4 Ju - 04 O - 04 A n-0 c ug 4 D t- 0 O -0 ec 4 c 4 Fe -0 4 D t- 04 b ec A - 05 Fe -0 4 pr b Ju - 05 Ap - 05 A n-0 r Norway Ju -
Slide 116: Personal customer lending - market volume & share
116 A Ju ug 0 100 200 300 400 A n-0 0 200 400 600 800 1000 1200 O -0 DKKbn ug 3 NOKbn c 3 O -0 D t- 03 e c 3 Fec-0 D t- 03 ec b 3 Fe -0 3 A - 04 b p Ju r- 04 A - 04 pr A n-0 J u - 04 ug 4 O - 04 Au n-0 c g 4 D t- 0 O -0 ec 4 c 4 Fe -0 4 D t- 04 ec b Fe -0 4 A - 05 pr b Ju - 05 A - 05 pr A n-0 Norway
Slide 117: Mortgage lending households - market volume & share
117 A Ju ug n- 0 200 400 600 800 1000 0 200 400 600 800 1000 O -0 0 DKKbn NOKbn c 3 S 3 D t- 03 ep e - Fec-0 D 03 b 3 ec -0 A - 04 p M 3 Ju r- 04 ar -0 A n-0 Ju 4 ug 4 O -0 n- c 4 0 D t- 0 O 4 ec 4 ct -0 Fe -0 4 D 4 b ec -0 A - 05 pr M 4 Ju - 05 ar -0 A n-0 Norway Denmark ug 5 Ju 5 n- O - 05 c 0 D t
Slide 118: Corporate lending - market volume & share
118 A Ju ug 0 100 200 300 400 500 600 0 100 200 300 400 500 600 700 O - 03 Aun-0 c g 3 DKKbn NOKbn D t- 0 O -0 ec 3 c 3 Fe -0 3 D t- 03 b ec A - 04 Fe -0 3 pr b Ju - 04 A - 04 pr A n-0 J u - 04 ug 4 O - 04 A n-0 c ug 4 D t- 0 O -0 ec 4 c 4 Fe -0 4 De t- 04 b c A - 05 Fe -0 4 pr b Ju - 05 Ap - 05 A n
Slide 119: Appendix
Appendix
Slide 120: Ratings
Ratings Moody’s S&P Fitch Short Long Short Long Short Long Nordea Bank AB P-1 Aa3 A-1+ AA- F1+ AA- Nordea Bank D P-1 Aa3 A-1+ AA- F1+ AA- Nordea Bank F P-1 Aa3 A-1+ AA- F1+ AA- Nordea Bank N P-1 Aa3 A-1+ AA- F1+ AA- Nordea Hypotek* Aaa A-1+ AAA Nordea Kredit Aaa AAA Norgeskreditt P-1 A1 *Covered bon
Slide 121: Total Shareholder Return (TSR), %
Total Shareholder Return (TSR),% Nordea peer group* 1/1-06 – 29/9-06 % 40 41 35 30 25 29 26 20 23 20 21 15 18 19 17 10 14 14 9 9 11 5 8 8 8 4 4 5 0 -5 -10 B K K S K K O S R S O B D K A B E S K SH AN AN BO AN AN BC R BO NO Y IT TS AN N E SE AL BA N K AM LA ED BA D RI BA B B R B B H nB DS EL R R S ED
Slide 122: Largest registered shareholders, end of Q3/2006
Largest registered shareholders, end of Q3/2006 Shareholder Number of shares % Swedish state 515.6 19.9 Nordea Danmark fund 102.5 4.0 Robur Funds 69.7 2.7 Alecta 69.6 2.7 SBH/SPP Funds 60.9 2.3 SEB Funds 49.1 1.9 AMF Pension 46.3 1.8 Nordea Funds 38.1 1.5 Skandia Life Insurance 34.4 1.3 Second Swedi
Slide 123: Market development – interest rates
Market development – interest rates Change % 30-06-06 30-09-06 Q3/06 Short, EUR (one week) 2.76 3.05 0.29 Long, EUR (5 years) 3.94 3.84 -0.10 Short, DK 2.89 3.24 0.35 Long, DK 4.08 3.99 -0.09 Short, NO 2.85 3.06 0.21 Long, NO 4.48 4.42 -0.05 Short, SE 2.21 2.54 0.33 Long, SE 3.97 3.93 -0.04 123
Slide 124: Macro data – Nordic market
Macro data – Nordic market % 2006e 2007e 2008e Gross domestic product DK 2.5 1.9 2.0 FI 4.4 2.7 2.9 NO 3.1 2.3 2.4 SE 4.2 2.9 2.5 Inflation DK 2.0 2.0 1.9 FI 1.7 1.6 1.6 NO 2.6 1.4 2.1 SE 1.4 2.0 2.1 Private consumption DK 2.5 2.0 1.9 FI 3.6 2.2 2.6 NO 3.1 2.6 2.4 SE 3.3 3.0 2.2 Unemployment DK 4.6
Slide 125: Financial calendar 2007
Financial calendar 2007 Q4 report 2006 will be published on 21 February www.nordea.com/ir 125