Slide 1: Second quarter and half year results 2013
Second quarter and half year results 2013 - Strengthened customer relations, flat costs and higher capital Press Conference 17 July 2013 Christian Clausen, Group CEO
Slide 2: Report highlights
Report highlights Nordea delivers on income initiatives, cost efficiency and capital Welcomed 23 000 new relationship customers Unchanged expenses for 11 consecutive quarters Pro forma Basel III core tier one ratio of at least 14.0% Continued stabilisation of credit quality Uncertain mac
Slide 3: Q2 2013 financial results highlights
• Q2 2013 financial results highlights • Delivering on the plan
Slide 4: Financial results Q2/13
Financial results Q2/13 EURm Q2/13 Q1/13 Ch. % H1/13 H1/12 Ch. % Net interest income 1 391 1 358 2 2 749 2 788 (1) Net fee and comm. income 664 623 7 1 287 1 191 8 Net fair value result 416 444 (6) 860 955 (10) Total income1 2 490 2 506 (1) 4 996 5 016 0 Staff costs (753) (754) 0 (1 507) (1 502) 0 T
Slide 5: Net interest income
Net interest income Net interest income development, EURm Comments NII up in quarter — Lending margins are up 1 415 1 393 1 382 1 391 — Largely unchanged deposit 1 373 1 358 margins — Improved NII in Group Treasury — One additional interest day Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 5•
Slide 6: Stable Net Interest Margin but lower volumes
Stable Net Interest Margin but lower volumes Blended net interest margin development, % Comments 1.5% 1.2% 107 bps Blended net interest margin up 2 0.9% bps in Q2/13 0.6% Blended margin is unchanged in 0.3% 0.0% Retail Banking but improved in Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Wealth Management
Slide 7: Net fee and commission income
Net fee and commission income Net fee and commission income, EURm Comments Continued strong trend 682 664 623 Increased savings and 588 603 595 investments commissions Increased M&A activity and strong equity customer activity Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 7•
Slide 8: Assets under Management
Assets under Management Assets under Management*, EURbn Comments 210.4 217.8 223.3 219.2 196.7 199.3 Strong net inflow of 2.9bn in quarter • Higher bond yields affects fixed income assets Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Net inflow, EURbn 3.1 2.6 2.9 2.2 1.2 -0.4 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q
Slide 9: Good demand for risk management products
Good demand for risk management products Net fair value development, EURm Comments Good demand in customer driven business 160 220 High customer activity in the 132 155 108 128 currency and fixed income areas Period of high volatility 303 310 289 288 272 269 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13
Slide 10: Flat costs for eleven consecutive quarters
Flat costs for eleven consecutive quarters Total expenses (excl. FX and variable pay), EURm Comments 1 172 1 131 1 170 1 139 1 158 1 128 1 129 1 140 1 157 1 128 1 120 Expenses under solid control Number of FTE’s down by more than 2% y-o-y Flat costs for 11 quarters - to Q4/10 Q1/11 Q2/11 Q3/11
Slide 11: Robust credit quality
Robust credit quality Total net loan losses, EURm Comments 263 236 241 Credit quality remains robust 215 203 198 1861) 118 112 Stable underlying level of impaired loans Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Provisioning ratio remained stable 1) Poland reported as discontinued o
Slide 12: Denmark gradually improving
Denmark gradually improving House price index1 Loan losses net, EURm, Retail Banking Denmark 110 200 100 150 100 90 50 0 80 -50 70 -100 Q2/11Q3/11Q4/11Q1/12Q2/12Q3/12Q4/12Q1/13Q2/13 2006 2007 2008 2009 2010 2011 2012 2013 Collectively assessed Single-family houses Flats Portfolio assessed non-signif
Slide 13: Shipping credit quality is stabilising
Shipping credit quality is stabilising Ship values VLCC. 5 year old Loan losses net, EURm, Shipping Cape Bulker. 5 year old MUSD Panamax Containership. 5 year old 80 180 70 150 60 120 50 40 90 30 60 20 10 30 0 0 -10 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11
Slide 14: Strong access to funding
Strong access to funding Long term funding, EURbn Comments 33 32 29 Strong diversified funding platform Conservative liquidity management 15 - LCR compliant - Liquidity buffer EUR 66bn One of the lowest funding costs of any 2010 2011 2012 H1/13 bank in Europe LCR developments Combined USD EUR
Slide 15: Risk weighted assets
Risk weighted assets Risk-weighted assets , EURbn* Comments RWA down EUR 6.7bn on 183 185 182 181 180 179 previous quarter 168 168 • FX effects 162 • Decreased derivative exposures Efficiency gains of EUR 2bn in quarter Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 * Basel 2.5 excluding
Slide 16: Core Tier 1 ratio +80 bps in Q2 due to profit generation and RWA efficiencies
Core Tier 1 ratio +80 bps in Q2 due to profit generation and RWA efficiencies Core Tier 1 ratio development, % 0.13% 0.27% 0.01% 0.15% -0,01% 0.20% 14.0% 13.2% Core Tier 1 Credit Growth RWA FX effects & Profit net Core Tier 1 Core Tier 1 ratio Q1 Quality efficiency Other dividend deductions ratio Q2
Slide 17: Divestment of Polish operations
Divestment of Polish operations Improves Core Tier 1 ratio and increases return The transaction Divestment of Polish banking, financing and life insurance operations to PKO Bank Polska for EUR 694m. The rationale A rational structural change supporting our strategy to build the future relationship b
Slide 18: Delivering on the plan
• Q2 2013 financial results highlights • Delivering on the plan
Slide 19: 2015 plan – progress against our published goals
2015 plan – progress against our published goals Nordea market commitments Key initiatives and levers Strong capital generation Capital initiatives to maintain and return of excess capital CT1 ratio >13% to our shareholders Initiatives for income generation ROE target of 15% at a CT1 ratio >13% and
Slide 20: Pro forma CT1 ratio under Basel III
Pro forma CT1 ratio under Basel III Approx. Approx. 1.0 - 15.0 - 2.0% 16.0% Approx. Approx. Approx. 0.3% 0.5 - 14.0 - 1.5 - 2.0% -0,8% 1.0% 14.5% Approx. Approx. 15.5 - 0.5 - 1.0% 16.0% 14,0% Approx. 14.0 - 14.5% Q2/2013 Nordea Poland CRDIV RWA efficiency Proforma end Additional Proforma end until 2
Slide 21: New Regulation Expected to Increase RWA by ~EUR11-17bn
New Regulation Expected to Increase RWA by ~EUR11-17bn Regulatory Change & RWA Impact, EURbn Comments Higher capital requirements for derivatives by introducing a capital charge for CVA risk CVA and CCP for OTC contracts ~6 Derivatives cleared through a CCP will be subject to CCP capital require
Slide 22: Broad range of initiatives in place to mitigate regulatory effects
Broad range of initiatives in place to mitigate regulatory effects Initiatives Comments Applying for use of internal models, e.g. Roll-Outs • Advanced IRB • Nordea Bank Russia (application sent) • International units (application sent) Review of corporate rating models – including segmentation,
Slide 23: Income holding up – challenging environment mitigated
Income holding up – challenging environment mitigated Total income, EURm Key income related activities in Q2 New customers • Over 22,000 externally recruited Relationship customers, 2 470 2 546 2 412 2 570 2 506 2 490 total >42,000 in H1 (RB) • 1.5% increase in Private Banking’s customer base (WM)
Slide 24: Costs in check – eleven quarters of flat costs
Costs in check – eleven quarters of flat costs Total expenses (excl. FX & variable pay1), EURm 1 172 1 131 1 170 1 139 1 158 1 128 1 129 1 140 1 157 1 128 1 120 Underlying costs Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Avg. '15 1 Variable
Slide 25: Cost initiatives progressing according to plan
Cost initiatives progressing according to plan – 45m of gross savings realised in Q2 (over 85m total in H1) Optimise • Optimisation of distribution mix, reduced cash-handling (RB) physical • Right-sizing of Russian branch network, resulting in FTE distribution reductions (WB) • Automating transactio
Slide 26: Loan losses development in Q2 – decreasing in line with plan
Loan losses development in Q2 – decreasing in line with plan Actual loan losses, bps Comments 30 The credit quality continues 20 to be robust 10 Loan losses still 0 concentrated to two specific (10) (16) areas, Denmark and (20) Shipping – but credit quality (30) stabilised and (40) improvements
Slide 27: RoE – underlying business performance does not fully compensate
RoE – underlying business performance does not fully compensate for challenging macro environment and regulation Return on Equity, per cent Comments Income initiatives delivering YTD Q2 2012 – YTD Q2 2013 Increased ancillary business, according to plan 0,8 -0,2 0,2 Lower interest rates and hig
Slide 28: Progress in summary
Progress in summary Progress on Nordea financial plan 2013-2015, in Q2 2013 CT1 ratio Core Tier 1 ratio +80 bps in Q2 to 14.0% P RWA RWA down over EUR 6bn in quarter P Income growth Income holding up (P ) Costs Underlying costs flat for 11 consecutive quarter th P Loan losses Decreasing in
Slide 29: Second quarter and half year results 2013
Second quarter and half year results 2013 - Strengthened customer relations, flat costs and higher capital Press Conference 17 July 2013 Christian Clausen, Group CEO