Slide 1: First Quarter Report 2011 Telephone conference
First Quarter Report 2011 Telephone conference 28 April 2011
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: First quarter results
First quarter results 3 28 April 2011 Telephone conference
Slide 4: Result highlights
Result highlights EURm Q1/11 Q4/10 Chg % Q1/10 Chg % Net interest income 1,324 1,365 -3 1,235 7 Net fee and commission income 602 618 -3 475 27 Net result items at fair value 544 504 8 548 -1 Other income 40 20 45 Total income 2,510 2,507 0 2,303 9 Staff costs -768 -675 14 -687 12 Total expenses -1,
Slide 5: High business activity in all segments
High business activity in all segments Total income monthly average Solid growth trends in relationship segments¹ Strong momentum in customer business Nov-09 Nov-10 Jul-09 Jul-10 May-10 Jan-10 Jan-11 Sep-09 Mar-10 Sep-10 Mar-11 Rolling 12 months Rolling 24 months 5 28 April 2011 Telephone confer
Slide 6: Stable net interest income
Stable net interest income Net interest income, EURm Solid trend in customer areas 1 356 1 365 Deposit volumes and margins 1 305 1 321 1 310 1 324 1 299 1 235 1 249 continue to increase Limited loan demand from large corporates High capital markets activity Household lending up 4% annualis
Slide 7: Change in net interest income
Change in net interest income Q1oQ4 YoY Volume-driven Nordic markets in local currencies -3 30 Corporate lending volumes -5 8 Household lending volumes 3 21 Corporate deposit volumes -1 -2 Household deposit volumes 0 3 Margin-driven Nordic markets in local currencies 26 61 Corporate lending margins
Slide 8: Interest rate sensitivity
Interest rate sensitivity - 3 components Increased sensitivity to EUR 540m Increased market rates, 100bps Q1/11 Structural interest income risk (SIIR) EURm Reflecting the effect on NII from re- Net Interest Income, rolling 12 pricing gaps¹ 540 months annualised approx Reduced interest risk i
Slide 9: Net fee and commission remains strong
Net fee and commission remains strong Net fee and commission income, EURm Down 3% from high level 618 Seasonal effects 602 538 525 Asset management commissions 437 463 475 continue to increase 412 381 89% of all composite index outperform index over the past 36 months Record high level of
Slide 10: Fair value result up 8%
Fair value result up 8% Net result from items at fair value, EURm Customer areas continue to perform well Good trading environment Strong results in Group Corporate 411 Centre 339 333 296 291 302 298 297 283 Q1/09 Q2/09 Q3/09 Q4/09 Q1/10 Q2/10 Q3/10 Q4/10 Q1/11 Customer areas 1 Other areas 2 ¹
Slide 11: Expenses down Q-o-Q
Expenses down Q-o-Q Total expenses, EURm Expenses down 6%, adjusted for FX and one-off gain in 4Q10 1 270 1 265 1 219 1 186 1 196 Currency effect of 4% y-o-y 1 164 1 116 1 090 1 087 Number of staff up 2% y-o-y Q1/09 Q2/09 Q3/09 Q4/09 Q1/10 Q2/10 Q3/10 Q4/10 Q1/11 11 28 April 2011 Telephone con
Slide 12: Risk-Weighted Assets and Core Tier 1 ratio
Risk-Weighted Assets and Core Tier 1 ratio RWA Q1 change, EURbn RWA excl transition rules down 1.8% driven by 0,5 0 1,7 RWA optimisation activities 1,2 185,1 Improved credit quality 181,7 Lower volumes in international Q4/10 Credit Growth Stand. RWA Q1/11 network quality Appr. efficiency Cor
Slide 13: Strong capital generation
Strong capital generation Core tier 1 capital, EURm Ability to adjust asset growth without jeopardising returns CAGR in core equity of 9.1% after dividend and rights issue 19 103 19 408 17 766 14 313 11 689 12 821 2006 2007 2008 2009 2010 Q1 2011 Dividend payout 13 28 April 2011 Telephone confer
Slide 14: Customer acquisition trend continues
Customer acquisition trend continues Number of Gold and Private Banking Award-winning value proposition customers¹, 000 continue to attracts customers in relationship segments 3 041 2 994 Gold and Private Banking customers 2 826 increased by 47,000 in Q1 Increase by 6% p.a since 2007 Q1 2010 Q
Slide 15: Growth in CMB mainly driven by ancillary business
Growth in CMB mainly driven by ancillary business CMB Sweden ”lead Revenues, EURm Lending, EURbn relationships” %¹ 339 36 36 43 298 31 Q1 2010 Q1 2011 Q1 2010 Q1 2011 2008 2010 Leading corporate relationship bank in 3 of the 4 Nordic markets 15 28 April 2011 Telephone conference ¹ Greenwich study
Slide 16: Credit quality
Credit quality 16 28 April 2011 Telephone conference
Slide 17: Net loan losses on low levels
Net loan losses on low levels Net loan losses, EURm 22bps¹ – in line with expected losses over a business cycle 425 EUR 67m from Amagerbanken – 356 358 347 Danish deposit system provision Write-backs in the Baltics 261 245 207 22bps¹ 166 175 Q1/09 Q2/09 Q3/09 Q4/09 Q1/10 Q2/10 Q3/10 Q4/10 Q1/1
Slide 18: Improved credit quality
Improved credit quality Corporate rating distribution Positive rating EAD migration continues 20% Increased Decreased Reducing RWA by 15% EUR 0.5bn 10% 5% Rating 0% 6 5 4 3 2 1 6- 5- 4- 3- 2- 1- 6+ 5+ 4+ 3+ 2+ Q1 2010 Q1 2011 1+ 18 28 April 2011 Telephone conference
Slide 19: Continuous improvements in net migration
Continuous improvements in net migration Corporate rating migration Q410 / Q110 90.5% 30% Down-rated Up-rated 25% 20% 3.7% 5.8% 15% 10% 5% 4% 3% 1% 1% 0% 0% 0% 0% 0% 0% 0% > -4 -4 -3 -2 -1 0 1 2 3 4 >4 Number of notches up- and down-rated 19 28 April 2011 Telephone conference
Slide 20: Stable net loan losses
Stable net loan losses Loan losses, EURm Provisions up from low levels in 67 Norway 358 397 325 Large provisions in corporate 261 242 166 segment -97 -150 -231 Write-backs in the Baltic Q1 2010 Q4 2010 Q1 2011 countries Gross loan losses Danish guarantee scheme Reversals Net loan losses Net lo
Slide 21: Impaired loans
Impaired loans Impaired loans, EURm Impaired loans ratio down to 141bps 2 011 2 137 (146bps) 2 076 Impaired loans gross up 5% 2 838 2 938 58% performing 2 377 Q1 2010 Q4 2010 Q1 2011 Provisioning ratio down to 51% (52%) Performing Non-performing Total allowances, EURm 782 733 921 1 752 1 842
Slide 22: The Nordea platform – strong starting point
The Nordea platform – strong starting point 22 28 April 2011 Telephone conference
Slide 23: Relationship strategy delivers
Relationship strategy delivers Household Corporate New European Markets New Markets Move existing customers up to Increase market Continue successful relationship segments share with largest organic growth path Attract new customers customers in Poland to relationship segments Proactive ad
Slide 24: The platform is being upgraded
The platform is being upgraded Infrastructure Product Distribution & platforms capabilities Integrated New customer PB IT infrastructure savings acquisition (PB, Gold) • NTP offering Household • New IBM contract Branch network focus Multi- on advice not manual • Finance processes channel service tra
Slide 25: What the platform delivers
What the platform delivers Increased customer acknowledgement Improved market positions Productivity and efficiency Low risk Strong financials 25 28 April 2011 Telephone conference
Slide 26: Increased customer acknowledgement and improved market positions
Increased customer acknowledgement and improved market positions Total Group CSI CSI gap to peers Position in Prospera equity 71.8 ranking, Nordic avg. 3.0 5 70.6 12 -0.6 2007 2010 2007 2010 2006 2010 Household lending market share Private Banking, market share AuM, growth 2007-2010* Nordic avg. 21%
Slide 27: Improved productivity and efficiency ratios
Productivit y Improved productivity and efficiency ratios Business volumes¹/FTE, EURm Income/customer, EURt 20,7 221 219 20,2 19,6 18,9 203 207 205 207 18,6 201 200 200 17,6 17,8 16,3 16,8 Q1/09 Q2/09 Q3/09 Q4/09 Q1/10 Q2/10 Q3/10 Q4/10 Q1/11 Q1/09 Q2/09 Q3/09 Q4/09 Q1/10 Q2/10 Q3/10 Q4/10 Q1/11 ¹Le
Slide 28: Loan losses in line with expected losses over a business cycle
Loan losses in line with expected losses over a business cycle Loan losses, bps Income statement 2010, EURm 20 Total operating income 9,334 10 Total operating expenses -4,816 0 Profit before loan losses 4,518 -10 Expected losses, 25bp Net loan losses -879 -20 -30 -40 -50 -60 H1 H2 H1 H2 H1 H2 H1 H2
Slide 29: Top-league risk-adjusted profit and shareholder return
Top-league risk-adjusted profit and shareholder return Risk-adjusted profit, 2007- 2011 Ytd Total shareholder return, 2007 - 2011 Ytd 52.3.% 40 38.7% 20 6,5 0 -20 -40 Top quartile -60 -80 -100 Ro lling fo ur quarter co mpared with FY 2006 EUR 1,957m Nordea Peers Peers Peers Peers Peers Peers Peers P
Slide 30: Best in class profitability
Best in class profitability - Positive impact from operational performance Adjusted¹ Return on Equity 2007- 2011 Ytd 2010 RoE impact from different variables compared to 2007, % 20 19,1 6 17,6 4 14,8 15 14,1 12 2 11,3 11,3 10 0 9,7 9,3 7,6 -2 5 -4 2,2 -6 0 2007 2008 2009 2010 Average Q1 2011 -8 2007
Slide 31: Adapting to New Normal
Adapting to New Normal 31 28 April 2011 Telephone conference
Slide 32: Changed environment – higher raw material costs
Changed environment – higher raw material costs Core Tier 1 capital ratio (excl. Hybrids), % Increased capital requirements… 10,7 7,5 2007 Q1 2011 Liquidity buffer, EURbn …as well as liquidity buffer 56 23 2007 Q1 2011 Average bond maturity, years …and prolonged long-term funding 3,7 3,0 2,3 2,1 200
Slide 33: Committed to continue deliver RoE in the top league
Committed to continue deliver RoE in the top league Return on Equity (RoE) Best performing European banks will probably reach ROE 12,8 levels of around 15% 12,0 12,2 12,0 11,7 11,3 Nordea is committed to take 9,5 necessary steps to maintain 8,1 position in the top league Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
Slide 34: Increase capital efficiency
Increase capital efficiency Negative effect from new regulations is expected to be offset by: Advanced IRB Efficiency gains - optimise use of RWA Mitigation actions – less capital intensive solutions RWA efficiency initiatives covering processes, data and methodologies Focus on capital l
Slide 35: Increase focus on cost efficiency
Increase focus on cost efficiency Adjust group initiatives to mainly support efficiency and profitability Level of cost increase will be reduced during 2H2011¹ Continuing into 2012 35 28 April 2011 Telephone conference ¹ In local currencies
Slide 36: New organisation - focus on momentum and efficiency
New organisation - focus on momentum and efficiency Three main Business Areas Retail Banking Wholesale Banking Wealth Management All parts of value chains to be incorporated Objective to improve efficiency, increase RoE and deepen customer relationship 36 28 April 2011 Telephone conferen
Slide 37: Changes in the Group Executive Management
Changes in the Group Executive Management Peter Schütze to retire from Nordea Two new members: Torsten Hagen Jørgensen Head of Group Operations and Other Lines of Business Peter Nyegaard Chief Operating Officer of Wholesale Banking 37 28 April 2011 Telephone conference
Slide 38: Key messages
Key messages Strong business momentum continues Strong platform and relationship strategy delivers Taking Nordea into New Normal Maintain business momentum and focus on returns Capital efficiency Cost efficiency RoE 38 28 April 2011 Telephone conference
Slide 39: First Quarter Report 2011 Telephone conference
First Quarter Report 2011 Telephone conference 28 April 2011