Nordea Bank Abp · OMXHEX:NDA_FI
Nordea Bank Abp — Q2 2023 Earnings Presentation
43 slides from Nordea Bank Abp's earnings presentation, Jul 17, 2023
Slide 1: Debt investor presentation Q2 2023
Nordea Debt investor presentation Q2 2023 |
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: Table of contents
Table of contents 1. Nordea half-year 2023 update 4 2. Credit quality 16 3. Capital, liquidity and funding 25 4, Macroeconomy 38 ° Nordea
Slide 4: 1. Nordea half-year 2023 update
1. Nordea half-year 2023 update Nordea
Slide 5: Nordea today
Nordea today The largest financial services group in the Nordics Household* Small and medium- Large corporates Asset and wealth sized companies _and institutions management shares in lending, savings and investments Business position - Universal bank with a 200-year history of supporting and growing
Slide 6: Second-quarter highlights 2023
Second-quarter highlights 2023 Executive summary High income growth and strong operating profit - Net interest income up 40%, net fee and commission income down 6% and net fair value result up 14% - Operating profit up 26% to EUR 1,718m Return on equity* 18.4% and earnings per share up 32% to EUR 0.
Slide 7: Key financials
Key financials Second-quarter results 2023 income statement and key ratios Q223 Q222 Q2/Q2 Q123 Q2/Q1 Net interest income 1,831 1,308 40% 1,765 4% Net fee and commission income 751 797 -6% 765 -2% Net insurance result 68 53 28% 46 48% Net fair value result 290 254 14% 345 -16% Other income 15 16 0 T
Slide 8: Net interest income
Net interest income Stable volumes, higher deposit margins Year-over-year bridge, EURm y a 145 1,831 588 1308 3 Ze —__ Q222 Volumes Margins Other FX Q223 Quarter-over-quarter bridge, EURm 29 55 1,831 85 Q123 Volumes Margins Other FX Q223 Net interest income up 40% Continued growth in corporate lendi
Slide 9: Sweden Norway Denmark
• - - • - 5,0 - 4,0 - 3,0 - 2,0 Sweden Norway • 1,0 Denmark Finland ~ 0,0 ~ - -1,0 - Q122 Q222 Q322 Q422 Q123 Q223 Q323 Q423 Q124 Q224 Q324 Q424
Slide 10: Net fee and commission income
Net fee and commission income Lower asset management and lending income Year-over-year bridge, EURm N Q222 Asset Brok.& Pay.& Lending Other mgmt. advisory cards Quarter-over-quarter bridge, EURm FX N Q123 Asset Brok.& Pay.& Lending Other mgmt. advisory cards Net fee and commission income down 6% Sav
Slide 11: Net fair value result
Net fair value result Sustained high levels of customer activity Net fair value result, EURm 396 345 N7 7 290 254 Fen 0 238 45 62 = aes’ 26 17 =e Q222 Q322 Q422 Q123 Q223 Hl Customer areas* Treasury & other** 1 Market-making operations 1 * Excludes fair value adjustments to loans held at fair value
Slide 12: Costs
Costs Continued additional investments Year-over-year bridge, EURm v | _ 60 oy 58 1,205 se BE Q222 Underlying Additional Regulatory fees FX Q223 costs tech and risk management investments Quarter-over-quarter bridge, EURm r 14220 yoo 15 234 To 19 Q123 Underlying Additional Regulatory fees FX costs t
Slide 13: Group Leadership Team (GLT), GLT-1 and GLT-2
CO2 € x2 13 3) Group Leadership Team (GLT), GLT-1 and GLT-2
Slide 14: Sustainability at the core
Sustainability at the core Further strengthened climate targets in our lending portfolio Progress -1 9% (2022) Sector Sub-sector Emissions Metric Base year Baseline Target Target Current status scope year Shipping Vessels 1 aoe sdwtenm 2019 83 2030 -30% 8.4 AER (2021) Residential Households and tena
Slide 15: Sustainability at the core
Sustainability at the core Actively engaging to drive transition and capture growth opportunities Channelling capital towards sustainable solutions Green and sustainability linked loans Total volumes, EURbn Nordea Asset Management Assets under management, EURbn Sustainability linked loans 95% ons Il
Slide 16: 2. Credit quality
2. Credit quality Nordea
Slide 17: Credit portfolio
Credit portfolio Well diversified with strong credit quality Income and loan portfolio very well spread across Nordic countries, currencies, business areas and industries* 7 6% Operating’ income 20% e Sweden e Finland 21% Operating income Personal Business Banking Banking * FY 2022 ** REA‘ risk expo
Slide 18: Net loan losses and similar net result
Net loan losses and similar net result Continued strong credit quality Net loan losses and similar net result, EURm 38 || - Individual Collective Net loan losses Nordea Kredit Total provisions provisions (net) fair value adj. and write-offs Impaired (Stage 3) loans and PD of total loans, % 1.0 r 0.8
Slide 19: Impairments and provisioning coverage
Impairments and provisioning coverage Strong and stable portfolio credit quality Stage 2 and 3 loans at amortised cost, EURm * Stage 3 (impaired) loans slightly up at 0.83% (0.80% in Q1 2023) * Stage 2 loans up 7% q/q, related I Stage 2 to few portfolios MM Stage 3 0223 * Coverage ratio for stage 3
Slide 20: Denmark Finland Norway
4,0 3,5 • 3,0 Denmark Finland Norway Sweden 2,5 • 2,0 1,5 1,0 • 0,5 • 0,0 2022 2023 2024 2025 -0,5 -1,0 9,0 8,0 • 7,0 6,0 5,0 4,0 3,0 2,0 Denmark Finland • 1,0 Norway Sweden 0,0 2022 2023 2024 2025 20
Slide 21: Real estate management industry (REMI)
Real estate management industry (REMI)* Well-diversified portfolio, high-quality lending Lending volumes stable 30 30 31 30 30 Q222) Q322) = Q422) —-Q123,— Q223 Hl Commercial real estate MM Commercial residential real estate 91% of portfolio with low probability of default (PD) 27bn MM c2 2022 BB a3
Slide 22: DK FI NO
• 68% 65% 62% 61% 63% 53% 56% 52% 55% 53% 45% 49% - 27% 23% 17% 8% 8% 7% 4% 4% 4% 0% DK FI NO SE Total Current 20% value decline • Current 20% value decline 0–40% LTV 51–60% LTV 71–80% LTV 41–50% LTV 61–70% LTV >80% LTV - - 4,4 4,4 4,1 4,0 45% 3,1 37% 2,1 2,0 2,0 2,0 2,0 26% 26% 29% • 19% 9% - 6% 3%
Slide 23: RW floor Q222 Q322
49 RW floor • 50% 8 - 6 30 5 97% 97% 98% 97% 96% • • 1% 1% 1% 1% 1% 3% 3% 2% 2% 3% Q222 Q322 Q422 Q123 Q223 Q223 1-notch 2-notch 3-notch Impact Stage 1 Stage 2 Stage 3 • 60 59 61 61 59 55 55 57 51 53 Impairment rate (bp) Coverage ratio (%) Q222 Q322 Q422 Q123 Q223
Slide 24: Cost of risk
Cost of risk Loan losses settling below historical average Significant de-risking (EURbn) Mix change Focus on Nordic markets International and shipping, oil and 313 327 313 327 offshore exposure oo ue w + 58 69 9, _ 999 Public sector 4B 92% 99% h Ml Household a8 40 Hl corporate vo 105 7 Non-_. 24 2
Slide 25: 3. Capital, liquidity and funding
3. Capital, liquidity and funding Nordea
Slide 26: Capital
Capital Significant buffer to capital requirements . Capital position and requirements (%) 20,5% CET1 ratio CET1 Total Own funds Q2 2023 requirement capital ratio requirement Q2 2023 HB Actual O-SI| Ml Pillar 2 requirement © CCyB* MCCoB HE Minimum CET1 requirement 26. *CCyBper country: DK: 2.5%, Fl:
Slide 27: Capital
Capital Strong position; additional share buy-back launched CET1 capital ratio development, % 0,9 -0.7 15.7 i | 0.1 o1 16.0 <2.0 Q123 Profit Dividend Volumes Other Q223 Requirement accrual excl. deriv. Capital policy buffer I CET1 requirement REA development, EURbn 151 149 145 142 140 Q222 Q322 Q422
Slide 28: Balance sheet
Balance sheet Strong balance sheet structure Q2 2023 Other assets Other liabilities Derivatives Derivatives /: [sates] ~ Short-term funding Liquid assets Liquidity buffer Long-term funding Long-term assets ~ Assets Liabilities 28 Total assets EUR 602bn at end of Q2 2023 + Strong balance sheet with d
Slide 29: Liquidity
Liquidity Strong liquidity position Liquidity buffer composition, EUR 114bn * Robust liquidity position Currency split Asset split pi - Liquidity coverage ratio (LCR) 160% fo MmsEK OE - Net stable funding ratio (NSFR) 119% MM EUR ® Level 1 cash & central bank USD Level 1 excl. covered bonds . wee ee
Slide 30: SEK (EUR 33bn eq.) NOK
4% 0%2 2 2% 2% 2%4% 1% 7% 7% 80% 93% 96% NOK SEK DKK (EUR 33bn eq.) (EUR 15bn eq.) (EUR 50bn eq.) 3% 18% 7% 25% 7% 17% 0% 23% 26% 11% 23% 18% 7% 64% 68% 16% 61% 4% 19% JPY 32% 9% GBP CHF 41% (EUR 1bn eq.) (EUR 3bn eq.) (EUR 1bn eq.) USD (EUR 15bn eq.) EUR (EUR 31bn) 30
Slide 31: Long term funding
Uf 2023 Long term funding y Best FG Isstier zy Solid funding operations Nordea vv Ly cmdportal' ee Wholesale funding outstanding, EUR 196bn * Long term issuance CD&CP above 1Y - EUR 5.4bn* in long term debt issued during Q2 Hl cpacr below 1Y - EUR 3.3bn covered bonds and EUR 2.1bn in senior non- I G
Slide 32: Sustainability at the core
Sustainability at the core Enhanced focus on sustainable funding Assets available for green funding totaling EUR 11.5bn - EUR 5.4bn in NBAbp’s green bond asset portfolio - EUR 6.1bn available assets for Green covered bond issuance from Nordea’s mortgage subsidiaries + EUR3.3bn outstanding of green b
Slide 33: Sustainability at the core
Sustainability at the core Nordea sustainable linked loan (SLL) funding framework * Nordea SLL funding framework launched in 2022 - The SLL funding framework allows issuance of bonds with reference to the impact of the SLLs on Nordea’s balance = i * Nordea Bank - SLL asset portfolio (EURbn) sheet in
Slide 34: Covered bonds
Covered bonds Nordea covered bond operations Four aligned covered bond issuers with complementary roles Legislation Cover pool assets Cover pool size Covered bonds outstanding oc Issuance currencies Rating (Moody's / S&P) Included in Nordea Green Framework Issued Green CB's Nordea Eiendomskreditt ri
Slide 35: Funding transactions
Funding transactions Nordea recent benchmark transactions Issuer Type Currency Amount (m) FRN/ Issue ite) Callable Nordea Bank Senior non-preferred, Green ae NOK 1,800 FRN/Fixed Jun-23 Jun-28 Nordea Bank Senior non-preferred, Green cy SEK 3,000 FRN/Fixed Jun-23 Jun-26 Nordea Bank Senior non-preferre
Slide 36: Final requirements from 1 Jan. 2024
Final requirements from 1 Jan. 2024 – − − – − − – Final requirements from 1 Jan. 2024
Slide 37: Point of non viability Resolution
Point of non viability Resolution – – 13 - 3 3 22 CET1 AT1 T2 SNP target Remaining senior Q2 23 Q2 23 Q2 23 unsecured debt
Slide 38: 4. Macroeconomy
4. Macroeconomy Nordea
Slide 39: Nordic economic development
Nordic economic development Resilient economies are facing headwinds GDP development Unemployment rate 140 Tindex 2007Q1=100 GDP, level Index 2007Q1=100 mo MY Unemployment % " 135 135 10 10 —Sweden fl ~ 120 | = Sweden S 130 ° ° 125 | —penmark —— 125 e e 120 | —Fintand _f - 120 7 7 110 NV no s / ine
Slide 40: Nordic economies
Nordic economies Higher for longer interest rates Policy rates 45 40 35 30 25 20 15 10 05 00 -05 1.0 m2 13 % Policy rates 10 0s 0.0 -05 “1.0 4°15 16 «17 «18 19 20° «21 22 23 Norway == Denmark == Euro Area 24” 25 ==sweden * Central banks are continuing to combat the high inflation Public balance/debt
Slide 41: Households
Households Feeling the squeeze Household debt Household savings 300 19% of disposable Household debt % of disposable[ 30° 20.0 4% of disposable Household saving rate 20.0 275 income income|. 275 a5] income 175 250 250 15.0 = Sweden 225 225 2s —benmark 200 200 10.0 —Fintand 175 7s 7s 150 150 5.0 125
Slide 42: Housing markets
Housing markets Higher interest rates imply downside risks on the housing market Housing prices Households’ credit growth 250 1 dex, 2007=100 Housing prices index, 2007-100] *°° 19.0 N65 iy Households’ credit growth vyiyp 2° 3m moving average 25 125 225 225 10.0 10.0 200 7s 7S 175 5.0 5.0 25 25 150
Slide 43: Contacts
Contacts Investor Relations Matti Ahokas Head of Investor Relations Mobile: +358 40 575 9178 matti.aahokas@nordea.com Group Treasury Anders Frank-Leessoe Group Treasurer, Head of Group Treasury Tel: +45 55477672 Mobile: +45 61612157 anders.frank@nordea.com 43 Maria Caneman Head of Debt IR and Rating