Nordea Bank Abp · OMXHEX:NDA_FI
Nordea Bank Abp — Investor Day (October 2011)
43 slides from Nordea Bank Abp's investor day presentation, October 2011
Slide 1: Strategic direction
Strategic direction CEO Christian Clausen
Slide 2: Paradigm shift in European banking; Nordea's platform; Focused relationship strategy
• Paradigm shift in European banking • Strengths of Nordea’s platform • Focused relationship strategy
Slide 3: Objective to avoid bubbles resulting in recession
Objective to avoid bubbles resulting in recession Sub-prime Japanese crises Tulip mania 2008 asset 1630s price bubble 1980s Sovereign Bardi bank debt crisis crisis Great 2011 1344 depression 1929 IT bubble 2000 3•
Slide 4: Regulation - "never again"
Regulation - “never again” Capital requirements Funding requirements EUR 1 trillion in equity shortfall in EUR 2 trillion in additional Europe wholesale funding in Europe Liquidity requirements Recovery and resolution regimes EUR 1 trillion increase in additional Ongoing debate on solution liquidity
Slide 5: Expected future capital requirements
Expected future capital requirements European banks; per cent 13-20 4-8 9-12 7-8 ~4 Average* Average* Core tier Other capital Total 1 total (Tier 1, Tier 2 or cocos) Pre-crisis Current Future regulation situation *Estimates Goldman Sachs; Basel III capital definitions 5•
Slide 6: Calibration needed to find optimal capital level
Calibration needed to find optimal capital level Illustration Benefits to society Optimum Benefits outweigh costs Costs outweigh benefits ?% Capital requirements 6•
Slide 7: Funding & Liquidity rules: "One size fits all" does not work
Funding & Liquidity rules: “One size fits all” does not work Assets Liabilities Corporate Deposits Smaller share On balance book of savings as Partly off- on-balance balance deposits than in EU/US Large share off-balance Mortgage Wholesale Mortgage book On balance financed via book funding covered b
Slide 8: Structure of the banking sector (1/2)
Structure of the banking sector (1/2) Sources of financing for non-financial corporations; 2004-2008; percent Banks Non-Banks 25% Bank financing constituted around 60% three quarters of total financing in the euro area and 75% less than half in the US 40% Euro Area US Sources: ECB monthly bulletin O
Slide 9: Structure of the banking sector (2/2)
Structure of the banking sector (2/2) Split of retail savings & investments 2005-2009 average split of retail savings & investment portfolios (excl. L&P); per cent Sweden Western Europe (ex. Sweden) 4,7 8,3 24,6 11,3 44,1 60,5 19 26,7 Deposits Mutual funds Equities Bonds Other Source: IMF World Econ
Slide 10: Overall support to the regulatory initiatives but further measures needed
Overall support to the regulatory initiatives but further measures needed • Reconsider design of new requirements • Reconsider definition of new requirements • Reconsider the cumulative cost impact of new requirements Calibrate the levels (find the balance) & Ensure a level playing field with harmon
Slide 11: The impact of the 2008 crisis
The impact of the 2008 crisis Relative share price performance since 2007 European banks Nordea 120 100 80 60 40 -77% 20 0 Jan-07 Jun-07 Oct-07 Mar-08 Aug-08 Jan-09 Jun-09 Oct-09 Mar-10 Aug-10 Jan-11 May-11 Oct-11 Nordea Euro STOXX - banks Source : FactSet 23 October 11 •
Slide 12: Paradigm shift in European banking; Nordea's platform; Focused relationship strategy
• Paradigm shift in European banking • Strengths of Nordea’s platform • Focused relationship strategy
Slide 13: Diversified geographical reach
Finland Russia Diversified geographical reach Branches: 392 Household customers: 3.08m Branches: 48 Customers: 64 100 Corporate customers: 118 700 Employees: FTE’s 1 615 Employees*: FTE’s 4 304 Total lending: EUR 5.6bn Total lending: EUR 54.5bn Market rank: 22 Market rank: 1 Sweden Branches: 333 Hou
Slide 14: Nordea's markets macroeconomic sound
Nordea’s markets macroeconomic sound 15 Public deficit, % of GDP, 2011E US 10 Ireland UK Greece Spain France 5 Denmark EurozonePortugal Austria Belgium Italy Finland Netherlands Germany 0 Sweden -5 Norway -10 0 20 40 60 80 100 120 140 160 Public debt, % of GDP, 2011E Source: EU Commission spring for
Slide 15: All Nordic countries in AAA debt position
All Nordic countries in AAA debt position Gross debt/GDP (%) for AAA rated countries globally 94 88 83 84 80 70 66 53 54 51 46 37 24 18 5 Licht HK Lux Aus Swe Den Fin Swi Nor NL Austria Ger UK Can Fra Sin Note: Number of AAA countries refers to S&P’s credit ratings. Source: Deutsche Bank, IMF and Sw
Slide 16: Large, diversified customer base
Large, diversified customer base Income split per customer segment, Q3 2011 Household Corporate segments = 45% segments = 55% 16
Slide 17: Sound risk profile
Sound risk profile Actual loan losses, bps 20 10 0 -10 Expected losses, 25bps -20 -30 -40 -50 -60 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 17 •
Slide 18: Attractive savings platform
Attractive savings platform AuM growth, Q210 - Q211, % Gross written premium growth 12 month rolling, Q210-Q211, % Household deposits growth, Q210 - Q211, % Source: Interim report; National statistics for gross written premiums. Note: Growth rates in local currency 18 •
Slide 19: Low volatility in operating profit
Low volatility in operating profit Nordic peers, operating profit coefficient variation, % 12 quarters up to Q2 2011 Source: Company reports 19 19
Slide 20: Sound funding and liquidity position
Sound funding and liquidity position Increased Liquidity buffer covers short-term issuance EUR bn 63 • Liquidity buffer increased since 62 2007 • 30-days survival horizon in line with Nordea risk appetite 38 • Size of liquidity buffer > short term funding • Small changes to composition 23 required t
Slide 21: A solid capital position
A solid capital position Development of Core Tier 1-ratio 11,3% 11,0% 11,0% 11,0% 10,7% 10,8% 10,5% 10,4% 10,3% 10,1% 10,3% 10,0% 10,0% 9,8% 9,5% Q1 10 Q2 10 Q310 Q4 10 Q1 11 Q2 11 Q3 11 21 •
Slide 22: Relative market cap development
Relative market cap development Nordea peer group*; market cap, year end; EURbn 2007 2008 2009 2010 2011 (Oct. 24) 1. Santander 92.5 1. Santander 54,0 1. Santander 95,2 1. Santander 66,0 1. Santander 53,5 2. Unicredit 75,9 2. BBVA 32,4 2. BNP Paribas 66,2 2. BNP Paribas 57,0 2. BNP Paribas 38,1 3. I
Slide 23: Paradigm shift in European banking; Nordea's platform; Focused relationship strategy
• Paradigm shift in European banking • Strengths of Nordea’s platform • Focused relationship strategy
Slide 24: The journey continues
The journey continues Execution of the relationship strategy 2007/2008 2008/2009 2010/2011 2011/2012 Profitable Middle of Prudent New organic the road growth Normal growth Generating Balancing Supporting Focus on resources cost, risk and customers to restoring to invest in capital – accelerate ROE –
Slide 25: Benefits of the relationship strategy
Benefits of the relationship strategy Satisfying customer needs Focus on most attractive customers Capital & funding efficiency Low risk and diversification – mirror of economy 25
Slide 26: Delivery on the strategy in Retail Banking
Delivery on the strategy in Retail Banking Average income per Gold customer Q3 2010 vs Q3 2011 •Gold customers up >5% +14% •HH Private banking customers up 4% •Number of products per Gold customer stable at a high level >6 •Households savings net sales of EUR Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Q3-11 4.5b
Slide 27: Delivery on the strategy in Wealth Management
Delivery on the strategy in Wealth Management Net inflow, Q210 - Q211*, EURbn Deliveries the past year Leading Nordic asset manager – highest net inflow and AuM growth among Nordic peers* Awarded best Private Bank in the Nordic region Income per Private Banking customer increased Highest gro
Slide 28: Delivery in Wholesale Banking
Delivery in Wholesale Banking Nordic leader in quality and volume Nordic leader in customer relationships, Percent Number of relationships Nordea Quality of delivery, index Nordea Peer 1 Peer 2 Peer 3 Peer 4 House bank Core Other Source: Own analyses 28 •
Slide 29: Improved Group productivity ratios
Improved Group productivity ratios Business volumes¹/FTE, EURm Manual transactions in branch network, ‘000 9 784 9 670 9 358 20,7 20,8 20,2 8 545 8 437 19,6 8 386 8 402 18,6 18,9 7 656 17,8 7 532 17,6 16,8 Q2/09 Q3/09 Q4/09 Q1/10 Q2/10 Q3/10 Q4/10 Q1/11 Q2/11 Q2/09 Q3/09 Q4/09 Q1/10 Q2/10 Q3/10 Q4/1
Slide 30: Banks will need to reach a competitive ROE level
Banks will need to reach a competitive ROE level Great Customer Experiences Competitive Business bank momentum Low capital and Top-league funding cost ROE 30 •
Slide 31: What New Normal is for Nordea
What New Normal is for Nordea Execution of a focused relationship strategy Further develop a sustainable business model Generating top league ROE Target: 15% ROE in a normalised macro- economic environment 31 •
Slide 32: New Normal is execution of a "Focused relationship strategy"
New Normal is execution of a “Focused relationship strategy” Christian Clausen President and Group CEO Themes Units Michael Rasmussen Retail Banking Casper von Koskull Wholesale Banking Peter Nyegaard (COO) Gunn Wærsted Wealth Management Torsten H. Jørgensen Group Operations & Other Lines of Busines
Slide 33: 1. Disciplined ROE focus in adapting the business model
1. Disciplined ROE focus in adapting the business model High Sustainability Improve • Support of relationship resource strategy (cost, capital and allocation / • Attractive long term trends Sustainability mix • Balanced in funding and funding) capital consumption • Prudent risk level Exit or • Oppor
Slide 34: 1. Implications on different levels
1. Implications on different levels • Group targets and caps cascaded to Business Units Christian Clausen President and Group CEO Units Michael Rasmussen Retail Banking Casper von Koskull Wholesale Banking Peter Nyegaard (COO) Gunn Wærsted Wealth Management Torsten H. Jørgensen Group Operations & Ot
Slide 35: 1. Products will have to be re-priced to reflect "true" cost
1. Products will have to be re-priced to reflect “true” cost Example of cconsequences on margins (ceteris paribus); illustration EXAMPLE: 5Y LOAN, 90% UTILIZED LARGE CORPORATE WITH BBB RATING Change %* Drivers Before crisis/ regulation • Larger and higher quality liquidity buffer Contingent • Increa
Slide 36: 2. Move to more cost efficient distribution
2. Move to more cost efficient distribution Key initiatives in Retail Banking • Focus resources on key segments Customer Customer • Reallocation of resources between Gold Monthly spend and Premium segments • Adjusted contact policy/number of Netbank – Branch Branch Contact Contactcenter centre Onlin
Slide 37: 2. Cost efficiency in staff, support and IT & operations
2. Cost efficiency in staff, support and IT & operations • Lowered use of resources in all units especially Staff & support in staff and central functions • Improved efficiency in central processes, e.g., Finance process, HR, etc. • Outsourcing to external service providers • Administrative tasks mo
Slide 38: 2. Cost efficiency – staff reductions
2. Cost efficiency – staff reductions • A 6% reduction of employees by the end of 2012: • Denmark 500 - 650 employees • Finland 500 - 650 employees • Norway 200 - 300 employees • Sweden 500 - 650 employees • Parts of staff reduction natural turn-over and voluntary agreements 38 • 38
Slide 39: 3. Significant potential from all levers on capital efficiency
3. Significant potential from all levers on capital efficiency • New front office Customer profitability tools Credit portfolio improving transparency on capital use and management funding cost • Move to capital light products and solutions • Portfolio composition review • Advanced IRB for Corporate
Slide 40: New Group organisation as of June 1st
This image cannot currently be displayed. New Group organisation as of June 1st Christian Clausen President and Group CEO Group Identity & Group Human Communications Resources Casper von Koskull Torsten H. Jørgensen Fredrik Rystedt Ari Kaperi Michael Rasmussen Wholesale Banking Gunn Wærsted Group Op
Slide 41: Roadmap to 15% ROE target
Roadmap to 15% ROE target Illustrative 15% 11% Starting point Operational Capital Normalised Top league efficiency efficiency macro- economic environment 41 •
Slide 42: Nordea committed to maintain top position
Nordea committed to maintain top position The best banks will be the strongest banks • Lower cost of capital and funding… • ....thereby the ability to support customers • Strategic flexibility Top league returns to be one of the best banks • 15% RoE required • Prudent risk level 42 •
Slide 43: Strategic direction
Strategic direction Christian Clausen, President and Group CEO