Nordea Bank Abp · OMXHEX:NDA_FI
Nordea Bank Abp — Q2 2008 Earnings Presentation
30 slides from Nordea Bank Abp's earnings presentation, Jul 22, 2008
Slide 1: Interim Report Second Quarter 2008
Interim Report Second Quarter 2008 Press and analyst conference 22 July Christian Clausen President and Group CEO
Slide 2: Q2 2008 in short
Q2 2008 in short 9 High business activity and record results from customer areas 9 Continued strong delivery from growth initiatives – execution continues according to plan 9 Volatile and weakened financial markets 9 Credit quality remains solid 9 Strong capital position 9 Stable and well-diversifie
Slide 3: Income statement summary
Income statement summary EURm H108 H107 Chg % Net interest income 2,411 2,047 18 Net fee and commission income 1,013 1,083 -6 Net gains/losses on items at fair value 482 629 -23 Total operating income 3,953 3,830 3 Total operating expenses -2,128 -2,000 6 Profit before loan losses 1,825 1,830 0 Loan
Slide 4: High business activity and strong results from customer operations
High business activity and strong results from customer operations Second quarter strongest ever in customer areas Revenues, operating profit and risk-adjusted profit Revenues driven by NII – up 18% H1/H1 The strong volume growth continues – total lending up 16%, excl. reversed repos Total
Slide 5: High corporate customer activity
High corporate customer activity Total income corporate customers, Income from corporate customers up 21% EURm compared to Q207 1 029 Strong lending growth – margins are improving Improved market position primarily in 847 Corporate Merchant Banking Increased lending market shares especially
Slide 6: Net interest income up 18%
Net interest income up 18% YoY Net interest income, EURm Strong increase in lending and deposit 2 411 volumes 2 047 Lending up 16% Deposits up 10% Corporate lending growth across the Nordic region and from most sectors Up 20% Stable deposit margins Q2oQ1 Maintained strong growth also i
Slide 7: Net fee and commission income down 6%
Net fee and commission income down 6% YoY Savings-related commission down 16% Net fee and commission, EURm AuM down 12% - weak equity markets and lower risk appetite among customers 1 083 1 013 Lower transaction activity Margin decrease - shift from equity-related to fixed income-related fun
Slide 8: Continued strong delivery from growth initiatives
Continued strong delivery from growth initiatives Selected global New European Existing Nordic customers and new customers and European Markets business lines Household strategy Private Banking Corporate strategy Based on strong Selective growth competencies strategy • Migration to • Added advisory
Slide 9: Significant potential in migrating household customers to higher segments
Significant potential in migrating household customers to higher segments Income* Customers (Index) (millions) Gold and Private Banking 4,0 1200 customers are the engines for 1200 3.7 3,5 revenue growth 1000 3,0 Approx. 1 million potential Gold 800 4x 2,5 customers in the customer 2.4 2,0 600 ba
Slide 10: Proactive sales drives growth in premium segments
Proactive sales drives growth in premium segments Nordic Gold segment YoY 14% Gold segment continues to be the 8% main engine for profitable growth 6% 135 118 Successful penetration of the 55 51 customer base 2.4 2.3 6% increase in number of Gold customers 20% are new customers in Nordea No.
Slide 11: Growth Plan Sweden on track
Growth Plan Sweden on track Income growth % Income in Nordic Banking Sweden 6% 6 Improved market position Focus on long term savings, consumer -2 loans and capital market products H108/H107 Initiative continues in 2008 Nordea Nordic Banking Sweden Focus on advisory capacity – 100 advisors
Slide 12: Continued strong growth in Nordic Private Banking
Continued strong growth in Nordic Private Banking Nordic Private Banking segment YoY Growth success in Nordic Private 10% 12% Banking continues 9% 47 Number of customers up 12% YoY 82 42 73 763 Income down 9% compared to same 702 quarter last year - negative effect from weakened equity markets
Slide 13: Increased demand for Capital market products in corporate segment
Increased demand for Capital market products in corporate segment Total revenues in Capital Markets Customer driven demand for Capital related to Nordic Banking markets products customers, EURm Continued success in advising corporate customers to hedge their market risk 333 297 Volatile market
Slide 14: Continued high activity in New European Markets
Continued high activity in New European Markets New European Markets total Selective growth strategy on track income, EURm Total lending up 85% - strongest growth in 107 Russia 94 Total income up 67% 83 More than 5% of Group income 64 68 Operating profit doubled to EUR 51m Total number o
Slide 15: Volatile and weakened financial markets
Volatile and weakened financial markets 5 Rising interest rates following 4,75 2008 increased inflation expectations 4,5 Continued weakening of equity 4,25 4 3,75 markets 3,5 3,25 Volatile corporate credit spreads 3 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Dec Jan Feb Mar Apr May Jun 3 month EU
Slide 16: Net gains/losses – limited impact from volatile and weakened financial markets
Net gains/losses – limited impact from volatile and weakened financial markets YoY Almost unchanged in Customer operations Net gains/losses, EURm Still limited valuation effects related to the 562 538 credit market turmoil Approx. EUR 50m in H1 (EUR 20m in Q2) Revenues in treasury operations
Slide 17: Higher operating income
Higher operating income YoY Operating income, EURm Total income up 3% 3 953 3 830 Net interest income up 18% Net commission income down 6% Net gains/losses down 23% H107 H108 17
Slide 18: Cost growth maintained at same level as in 2007
Cost growth maintained at same level as in 2007 Cost increase YoY Up 6.4% - unchanged level compared to last year 6,4% 6,4% Close to half of the cost increase related to investments in growth areas Staff costs up 9% Number of employees up 7% FY 2007 H108/H107 18
Slide 19: Strong and well diversified credit portfolio
Strong and well diversified credit portfolio Share of total lending, EUR 270bn Other Net loan losses EUR 57m recorded in NEM 8% the first half year 5% DK 25% Loan loss ratio of 5 basis points SE 26% Both reversals and new provisions FI 19% lower than last quarters NO 17% Loan losses, EURm Othe
Slide 20: Well diversified credit exposure also in the Baltics
..well diversified credit exposure also in the Baltic’s Share of total lending, EUR 270bn Baltics Other Total lending in the Baltic countries 2% 8% DK accounts for 2.5% of Nordea’s loan 25% portfolio SE 26% FI Nordic related lending accounts for approx. 19% 25% of corporate portfolio NO 17% Well
Slide 21: Largely stable impaired loans
Largely stable impaired loans Impaired loans and recivables, EURm The overall credit quality remains strong Modest increase in impaired loans 488 487 Increase in impaired loans explained by increases in 508 515 576 in the Baltic countries – from very low levels Majority of impaired loans are
Slide 22: Strong capital position
Strong capital position Reported Tier I ratio 7.0% Tier I ratio Tier I ratio excl. transition rules 8,3 7,9 7.9% 7,0 7,0 Strong capital position based on stable profit generation and expected approval of the IRB Retail portfolio as well as considering Pillar II regulations New capital target
Slide 23: Strong and broad funding base in Nordea
Strong and broad funding base in Nordea Total external funding EUR 275bn Competitive edge from leading Nordic market position and strong and broad deposit base Covered Domestic Bonds Fixed 19% Nordea operates in 2nd and 4th Income largest covered bond markets in 2% Europe (Denmark and Sweden) No
Slide 24: Ambitious targets
Ambitious targets Long term financial targets Target 2007 H108 TSR (%) In the top quartile of # 3 of 20 # 5 of 20 European peer group Risk adjusted profit (EUR m)¹ Double in 7 years² 15% 14.1%³ RoE (%) In line with top Nordic peers 19.7% 16.0% Capital structure policy Policy Dividend payout-ratio >
Slide 25: Total shareholder return (TSR)
25 -80 -70 -60 -50 -40 -30 -20 -10 0 % HBOS Bank of Ireland RBS Barclays Allied Irish Banks Societe Generale Swedbank SEB 1/1 2007 – 30/6 2008 Danske Bank Lloyds TSB Unicredit Commerzbank Total shareholder return (TSR) Erste Bank Intesa Sanpaolo BNP Paribas SHB KBC DnBNOR Top quartile Nordea -15,2 S
Slide 26: Risk-adjusted profit
Risk-adjusted profit Accumulated risk-adjusted profit Accumulated risk-adjusted profit 14.1% 14,7% 15,1% since target was introduced 1 January 14,1% 12,3% 2007 Growth in risk-adjusted H108/H107 down 1% 8,3% Growth in risk-adjusted profit in customer areas up 5% H108/H107 2,8% Target to doubl
Slide 27: Return on Equity (RoE)
Return on Equity (RoE) Return on Equity, % Return on equity of 16% (19.5%) Loan losses of EUR 57m compared to net 19,7 recoveries of EUR 41m the same quarter last 17,6 * year 16,0 14 Higher tax Higher equity FY 2007 H108 Nordea Average Nordic Peers (In H108 SEB, Swedbank, DnBNOR) * Adjusted
Slide 28: Outlook for 2008
Outlook for 2008 Uncertainty has increased Nordea expect lending growth to be lower in the remaining part of the year, but still at a high level. Corporate lending margins are expected to increase further Nordea still expects customer operations to deliver according to plan Nordea expects to
Slide 29: Q2 2008 in short
Q2 2008 in short 9 High business activity and record results from customer areas 9 Continued strong delivery from growth initiatives – execution continues according to plan 9 Volatile and weakened financial markets 9 Credit quality remains solid 9 Strong capital position 9 Stable and well-diversifie
Slide 30: Interim Report Second Quarter 2008
Interim Report Second Quarter 2008 Press and analyst conference 22 July Christian Clausen President and Group CEO