Nordea Bank Abp · OMXHEX:NDA_FI
Nordea Bank Abp — Q2 2005 Earnings Presentation
118 slides from Nordea Bank Abp's earnings presentation, Aug 24, 2005
Slide 1: Investor Presentation 24 August 2005
Investor Presentation 24 August 2005
Slide 2: CEO presentation
x Q O Q 0 Z CEO presentation
Slide 3: Strong results in first half of 2005
Strong results in first half of 2005 z Operating profit of EUR 1,572m (EUR 1,481m) up 33% excluding the real estate gain of EUR 300m last year z Total income increased 8% to EUR 3,276m (EUR 3,031m) – Net interest income up 6% z Total expenses unchanged at EUR 1,816m (EUR 1,811) z Positive net loan l
Slide 4: Improving performance confirmed in Q2
Improving performance confirmed in Q2 z Net profit up 42% to EUR 705m (EUR 495m in Q1 2005) z Operating profit up 28% to EUR 884m (EUR 688m) z Total income up 7% z Total expenses largely unchanged z Positive net loan losses for the fifth consecutive quarter 4
Slide 5: Volume growth in all areas
Volume growth in all areas YoY QoQ z Lending, total +13% +3% – Mortgage lending +15% +5% – Consumer lending +14% +5% – SME lending +12% +4% – CIB lending +23% +5% z Deposits, total +8% +-0 – Household deposits +8% +3% – SME deposits +8% +2% – CIB deposits +12% -7% 5
Slide 6: Stable credit quality
Stable credit quality z Credit expansion with maintained prudence and collateral coverage z Well diversified loan portfolio EURbn 100 91 88 93 87 85 85 85 84 82 83 84 78 79 80 80 58 60 60 55 56 53 48 49 50 44 44 46 42 41 42 40 17 17 17 18 19 20 14 14 14 14 15 15 16 16 10 0 Q1/02 Q2/02 Q3/02 Q4/02 Q1
Slide 7: Nordea strengthens market position in Poland
Nordea strengthens market position in Poland z In June, Nordea signed an agreement to purchase Sampo’s Polish life and pension companies z Acquisition provides enhanced platform for continued profitable growth in the Polish market – good cross-selling opportunities z Nordea has a strong market posit
Slide 8: Increasing contribution from emerging home markets
Increasing contribution from emerging home markets z Increased market shares in the fast growing housing loan markets z Lending increased by 39% YoY – mortgage lending up 59% z No. of new customers doubled in targeted segments, supported by newly launched customer programs Operating profit, EURm H1/
Slide 9: Group financial targets
Group financial targets Key performance indicator H1/05 2004 Target Total shareholder return (TSR), % #10 #3 In the top quartile of European peer group RoE, % 19.2 14.5* > 15% in 2005 and > 17% or in line with level of top Nordic peers from 2007 Costs**, EURm 1,735 3,502 Same cost level through 2007
Slide 10: Outlook 2005
Outlook 2005 z Volume growth expected also in H2 supported by favourable macroeconomic conditions in Nordea’s home markets z Competition is however intense, and pressure on margins will continue to be challenging z Costs for the whole year expected to remain flat – costs estimated to be more evenly
Slide 11: CFO presentation
CFO presentation Financials 11
Slide 12: Income statement summary
Income statement summary EURm H1/05 H1/04 Chg % Net interest income 1,810 1,700 6 Net fee and commission income 937 884 6 Net gains/losses on items at fair value 329 293 12 Equity method 35 25 40 Other income 165 129 28 Total operating income 3,276 3,031 8 Staff costs -1,030 -1,006 2 Other expenses
Slide 13: Income statement summary
Income statement summary EURm Q2/05 Q1/05 Chg % Net interest income 913 897 2 Net fee and commission income 484 453 7 Net gains/losses on items at fair value 214 115 86 Equity method 22 13 69 Other income 61 104 -41 Total operating income 1,694 1,582 7 Staff costs -515 -515 0 Other expenses -364 -35
Slide 14: Net interest income
Net interest income EURm YoY: 1000 z Up 6% or EUR 110m z Volume growth more than offset 920 897 913 margin pressure 854 875 800 846 – strong volume growth in SME and mortgage lending z Positive effect from active ALM 600 QoQ: 400 z Up 2% z Volume growth offset margin pressure 200 z Strong contributi
Slide 15: Change in net interest income
Change in net interest income YoY QoQ Volume driven - Lending volumes +87 +19 - Deposit volumes +19 +5 Margin driven - Lending margins -52 -15 - Deposit margins +14 +12 Other - Treasury +21 -21 - Day effect 0 +10 - Other, net +21 +6 15 Total +110 +16
Slide 16: Net commission income
Net commission income YoY: EURm z Up 6% 500 z Increased business volumes 484 – Loan commissions up 19% 467 – Investment commissions up 13% 450 443 453 434 Growth in card business 400 z z Other payment commissions down – lower volumes and price pressure 300 in PlusGirot – manual transactions decrease
Slide 17: Breakdown of commission income
Breakdown of commission income EURm 160 140 138 140 137 135 136 137 134 132 130 120 121 120 116 100 105 94 94 91 91 88 80 69 60 55 57 51 50 49 40 34 27 29 28 27 20 23 24 21 20 19 -1 10 0 Q1/04 Q2/04 Q3/04 Q4/04 Q1/05 Q2/05 Deposit, payment and e-services - net Asset Mgmt - net Loans and Guarantees B
Slide 18: Net gains/losses on items at fair value
Net gains/losses on items at fair value EURm YoY: 240 z Up 12% 220 216 214 z Significantly improved investment 200 return in Group Treasury 180 179 z Increased result in Markets from 160 high level 140 z Life unchanged 120 100 115 QoQ: 80 77 z Up 86% 60 63 z Strong investment return in 40 Treasury 2
Slide 19: Net gains/losses on items to fair value
Net gains/losses on items to fair value EURm Q2/05 Q1/05 Q4/04 Q3/04 Q2/04 Markets 136 118 127 74 87 Life 23 3 15 2 17 Group Investment, Treasury 52 9 52 -18 -58 Group funding, Treasury 16 -24 -14 8 6 Other -13 9 -1 -3 25 Total 214 115 179 63 77 19
Slide 20: Total operating income
Total operating income EURm YoY: 1800 z Up 8% 1600 1646 1694 z Strong development in all 1569 1582 business areas 1400 1462 1450 z Strong volume growth more 1200 than offset margin pressure 1000 – total lending up 13% – total deposits up 8% 800 z Net gains losses up 12% 600 400 QoQ: 200 z Up 7% 0 z
Slide 21: Expenses
Expenses EURm 979 YoY: 1000 903 908 43 914 z Expenses unchanged 902 45 41 865 413 34 35 380 39 353 364 z Efficiency gains compensating: 800 339 334 – inflation – increased business volumes 600 z Staff costs up 2% – reduction of FTEs off-set by general 519 523 515 515 wage increases 487 492 400 z Dep
Slide 22: Expenses in flat cost target
Expenses in flat cost target EURm 1000 z Flat cost target for the banking 979 business through 2007 900 908 932 914 903 902 800 867 873 865 865 870 z Flat cost target excludes: 830 – costs in Life 700 – depreciation of operational leasing 600 500 400 300 200 100 0 Q1/04 Q2/04 Q3/04 Q4/04 Q1/05 Q2/05
Slide 23: Number of FTEs
Number of FTEs z YoY, down by approx. 2% z Slight increase in Q2 reflecting increases in sales force: 32,000 – International Wealth Mgmt/Luxemburg 29,880 – Life 28,000 29,289 29,140 28,929 28,725 28,824 – Retail and P&B 24,000 z Flat cost target requires reduction of FTEs to offset inflation/wage in
Slide 24: Cost/income ratio
Cost/income ratio % 70 z Target: Continuous improvement z Flat costs while business volumes 60 64 62 continue to grow 60 50 55 – productivity gains z Income up 8% 40 30 20 10 0 2002 2003 2004 H1/05 24
Slide 25: Loan losses
Loan losses EURm YoY: 10 0 42 z Sale of shares in Pan Fish -2 -6 -3 -10 – reversal of EUR 98m -10 z Overall stable credit quality -20 z Credit expansion with -30 maintained prudence and -40 collateral coverage -50 -60 QoQ: -70 z Reversals exceeded new provisions -80 – 5th quarter in a row -90 -101 -
Slide 26: Impaired loans
Impaired loans EURm. End of period Q2/05 Q1/05 Q4/04 Q3/04 Q2/04 Impaired loans, gross 2,006 2,097 2,249 2,420 2,563 Reserves 1,581 1,657 -1,706 -1,824 -1,898 Impaired loans, net 425 440 543 596 665 Provisions/impaired loans, gross,% 79 79 76 75 74 Impaired loans, net/lending,% 0.24 0.26 0.34 0.39 0
Slide 27: Net profit
Net profit EURm YoY: 800 z Up 39% when adjusted for real 700 705 705 estate gain 2004 600 z Up 3% reported 500 476 495 459 400 438 QoQ: 300 z Up 42% 200 z Tax rate reduced following 100 revaluation of the deferred tax asset in Finland 0 Q1/04 Q2/04 Q3/04 Q4/04 Q1/05 Q2/05 27
Slide 28: Taxes
Taxes z Revaluation of deferred tax asset in Finland – tax asset of EUR 300m booked in Q3 2003 – increase by approx. EUR 60m in Q2 2005 z Revaluation of tax asset based on – Nordea’s expected ability to utilise loss carry-forward in foreseeable future z Tax asset is subject to a continuous evaluatio
Slide 29: Earnings per share – 12 months rolling
Earnings per share – 12 months rolling EUR 0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0 Q 0 Q 0 Q 0 Q 0 01 Q 1 Q 1 Q 1 Q 2 Q 2 02 Q 2 Q 3 Q 3 Q 3 Q 3 Q 4 Q 4 Q 4 Q 4 Q 5 05 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1/ 2/ 3/ 4/ 1/ 2/ 3/ 4/ 1/ 2/ 3/ 4/ 1/ 2/ 3/ 4/ 1/ 2/ 3/ 4/ 1/ 2/ Q Q Q Excl. Real estate gains/
Slide 30: Return on equity
Return on equity % 24 z Above target of 22 22.8 > 15% in 2005 20 18 19.3 19.2 16 16.9 14 14.5 14.4 12 10 8 6 4 2 0 2004 H1/04 H1/05 Q2/05 Reported Excl. real estate gains 2004 30
Slide 31: Capital situation
Capital situation Tier 1 ratio % z Profitable business expansion 8 – RWAs up 10% to EUR 159bn in 2005 7 7.6 7.3 6.8 7.0 6.8 7.0 z Tier 1 up to 7.0% despite strong 6 5 volume growth 4 z Tier 1 capital increased in Q2 3 – USD 600m Tier 1 bond 2 1 z Total capital ratio 9.4% 0 z Cancellation of approx.
Slide 32: Risk-weighted assets (RWA)
Risk-weighted assets (RWA) % 180 z Up 10% in 2005 160 153 159 z Growth in RWA reflects strong 140 145 135 140 140 increase in business volumes 120 – SME lending 100 – mortgage lending 80 – structured products in Markets 60 40 20 0 04 04 04 04 05 05 1/ 2/ 3/ 4/ 1/ 2/ Q Q Q Q Q Q End of period 32
Slide 33: Balance sheet - key items
Balance sheet - key items EURbn Q2/05 2004 Q2/04 Chg YoY % Assets Loans to the public 175 161 156 13 Interest-bearing securities 38 28 34 12 Other assets 98 89 73 34 Total assets 311 278 263 18 Liabilities Deposits 106 105 98 8 Debt securities 70 61 65 7 of which mortgage bonds 44 37 Liabilities to
Slide 34: Business trends
x Q O Q 0 Z Business trends 34
Slide 35: Volume growth in all areas
Volume growth in all areas YoY QoQ z Lending, total +13% +3% – Mortgage lending +15% +5% – Consumer lending +14% +5% – SME lending +12% +4% – CIB lending +23% +5% z Deposits, total +8% +-0 – Household deposits +8% +3% – SME deposits +8% +2% – CIB deposits +12% -7% 35
Slide 36: Total lending
Total lending EURbn 180 170.1 175.1 161.3 160 148.7 145.6 148.2 155.5 154.5 141.9 143.4 147.3 145.7 147.0 147.0 140 120 100 80 60 40 20 0 02 02 02 02 03 03 03 03 04 04 04 04 05 05 1/ 2/ 3/ 4/ 1/ 2/ 3/ 4/ 1/ 2/ 3/ 4/ 1/ 2/ Q Q Q Q Q Q Q Q Q Q Q Q Q Q Corporate Housing loans Consumer loans Public sect
Slide 37: Households mortgages, volumes and margins
Households mortgages, volumes and margins EURbn % 65 1.5 60 60.4 1.4 55 56.3 57.7 1.3 54.5 50 52.6 1.2 48.9 50.0 45 48.2 1.1 45.7 43.6 44.3 40 42.0 41.3 42.4 1.0 35 0.9 30 0.8 25 0.7 20 0.6 15 0.5 10 0.4 5 0.3 0 0.2 02 02 02 02 03 03 03 03 04 04 04 04 05 05 1/ 2/ 3/ 4/ 1/ 2/ 3/ 4/ 1/ 2/ 3/ 4/ 1/ 2/
Slide 38: Consumer lending to households, volumes and margins
Consumer lending to households*, volumes and margins EURbn % 20 5.0 18 4.5 4.0 16 3.8 4.0 4.0 3.7 4.2 3.7 14 2.1 2.3 3.0 3.4 14.5 3.5 13.8 13.4 12 12.2 12.2 12.4 12.4 12.5 12.7 13.0 3.0 10 2.5 8 2.0 6 1.5 4 1.0 2 0.5 0 0.0 / 03 / 03 / 03 / 03 / 04 / 04 / 04 / 04 / 05 / 05 1 2 3 4 1 2 3 4 1 2 Q Q Q Q
Slide 39: Lending to corporates, SME, volumes and margins
Lending to corporates, SME, volumes and margins EURbn % 70 1.8 65 1.7 65.0 60 61.0 62.2 1.6 55 57.3 57.3 57.4 58.1 58.5 1.5 56.6 57.1 56.7 56.3 55.2 55.2 50 1.4 45 1.3 40 1.2 35 1.1 30 1.0 25 0.9 20 0.8 15 0.7 10 0.6 5 0.5 0 0.4 02 02 02 02 03 03 03 03 04 04 04 04 05 05 1/ 2/ 3/ 4/ 1/ 2/ 3/ 4/ 1/ 2/
Slide 40: CIB, lending volumes and margins
CIB*, lending volumes and margins EURbn % 30 1.5 28 1.4 26 1.3 24 1.2 23.7 24 24 23.5 22 22.6 1.1 21.7 21.4 21.4 21.7 20 20.3 1.0 18 18.4 19 0.9 18.1 18 16 0.8 14 0.7 12 0.6 10 0.5 8 0.4 6 0.3 4 0.2 2 0.1 0 0.0 02 02 02 02 03 03 03 03 04 04 04 04 05 05 1/ 2/ 3/ 4/ 1/ 2/ 3/ 4/ 1/ 2/ 3/ 4/ 1/ 2/ Q Q Q
Slide 41: Total deposits
Total deposits EURbn 120 110 104.7 105.2 105.7 100 94.2 94.6 95.6 97.7 97.1 89.7 92.6 91.1 92.9 92.2 90 88.1 80 70 60 50 40 42.3 42.9 43.8 44.1 45.5 39.2 39.8 40.2 40.7 41.7 41.3 41.4 30 37.3 38.1 20 10 0 02 02 02 02 03 03 03 03 04 04 04 04 05 05 1/ 2/ 3/ 4/ 1/ 2/ 3/ 4/ 1/ 2/ 3/ 4/ 1/ 2/ Q Q Q Q Q Q
Slide 42: Retail deposits, households, volumes and margins
Retail deposits, households, volumes and margins EURbn % 50 2.5 45 45.5 2.3 43.8 44.1 42.9 40 40.7 41.7 41.3 41.4 42.3 2.1 39.8 40.2 39.2 38.1 35 37.3 1.9 30 1.7 25 1.5 20 1.3 15 1.1 10 0.9 5 0.7 0 0.5 02 02 02 02 03 03 03 03 04 04 04 04 05 05 1/ 2/ 3/ 4/ 1/ 2/ 3/ 4/ 1/ 2/ 3/ 4/ 1/ 2/ Q Q Q Q Q Q Q
Slide 43: Structural Interest Income Risk (SIIR)
Structural Interest Income Risk (SIIR) EURm, annualised effect on NII* Q2/05 Q1/05 Increasing market rates, 100bp 132 123 Decreasing market rates, 100bp -175 -150 z Reduced sensitivity year-on-year following implementation of ALM strategy z Decreased short-term interest rate in Sweden Q2 z Increased
Slide 44: Retail deposits, SME, volumes and margins
Retail deposits, SME, volumes and margins EURbn % 40 1.6 35 1.4 30 1.2 30.0 29.4 30.1 27.7 28.3 27.7 28.0 28.4 25 25.5 26.3 26.5 26.2 26.3 26.7 1.0 20 0.8 15 0.6 10 0.4 5 0.2 0 0.0 02 02 02 02 03 03 03 03 04 04 04 04 05 05 1/ 2/ 3/ 4/ 1/ 2/ 3/ 4/ 1/ 2/ 3/ 4/ 1/ 2/ Q Q Q Q Q Q Q Q Q Q Q Q Q Q 44 End
Slide 45: CIB, deposit volumes and margins
CIB*, deposit volumes and margins EURbn % 24 1.2 22 23.2 1.1 20 21.0 20.4 1.0 18 0.9 17.9 18.0 16 0.8 15.4 15.2 14 14.2 14.4 14.9 0.7 13.3 12 12.6 13.0 13.1 0.6 10 0.5 8 0.4 6 0.3 4 0.2 2 0.1 0 0.0 02 02 02 02 03 03 03 03 04 04 04 04 05 05 1/ 2/ 3/ 4/ 1/ 2/ 3/ 4/ 1/ 2/ 3/ 4/ 1/ 2/ Q Q Q Q Q Q Q Q Q
Slide 46: Assets under Management
Assets under Management EURbn 160 z AuM up 4% EUR 142bn in Q2 135.8 141.7 140 125.7 130.6 – net inflow of EUR 1.1bn 123.3 120 – asset appreciation EUR 4.8bn 100 z Considerable improvement in 80 investment performance 2005 60 – good performance in the new 40 hedge fund products 20 – additional funds
Slide 47: Net inflows
Net inflows EURbn 4 z Strong Inflows into new, 3 2.7 innovative products 1.2 2.1 1.1 z Stable inflow in Nordic Private 2 1.4 Banking 1 z Continued growth in 3rd party 0 fund distribution -1 z Small outflow from Institutional clients -2 – transfer of one large mandate back Q2/04 Q3/04 Q4/04 Q1/05 Q2/
Slide 48: Retail Banking operating profit
Retail Banking operating profit EURm 600 z Record high operating profit 550 – up 21% YoY 566 500 450 510 483 z Strong increase in volumes more 465 than offset margin pressure 400 444 425 350 z Business volume within Core 300 customers increased 14.5% 250 z Unchanged costs 200 150 100 50 Key ratios Q
Slide 49: CIB operating profit
CIB operating profit EURm 180 z Up 23% YoY 160 z Income up 8% 140 149 147 z Income remained on high level in 120 133 Q2 129 118 – recovery in Corporate Finance 100 – drop in Financial Institutions Division 80 79 z Increased costs 60 – higher IT-development costs 40 – higher performance related salar
Slide 50: Asset Management, product result
Asset Management, product result EURm 80 z Up 14% YoY 70 – income increased by 9% 67 – expenses increased by 5% 60 63 65 59 57 z Mgmt fees rise in parallel with 50 55 AuM while transaction related 40 income weaker due to lower 30 client activity in Q2 20 10 Key ratios Q2/05 Q1/05 0 C/I ratio, % 56 5
Slide 51: Life Insurance, product result
44 Life Insurance, product result z Down 9% YoY EURm 70 – comparing with strong result H1/04 – investments in prioritised areas 60 z Up 8% in Q2 57 50 53 z High investment return 52 49 48 – 12.1% annualised 47 40 z Increased financial buffers 30 Key ratios Q2/05 Q1/05 20 Inv return, % 4.1 1.7 10 Fin
Slide 52: Life - profit drivers
Life - profit drivers EURm Q2/05 Q1/05 Q4/04 Q3/04 Q2/04 Traditional insurance Fee contribution/profit sharing 35 30 24 22 39 Contribution from cost result 0 1 1 1 -1 Contribution from risk result 2 5 2 5 5 Inv. return on Shareholders Equity 4 3 2 4 0 Other profits 5 3 15 8 8 Total Profit Traditiona
Slide 53: Group Treasury, operating profit
Group Treasury, operating profit EURbn z Up to EUR 103m from EUR 100 80 81 28m year-on-year 55 60 60 z Successful market positioning 40 6 20 22 resulted in strong increase in 0 net gains/losses in Q2 -20 – both in Group Investment and -40 Group Funding -60 -80 -27 z Nordea awarded Best -100 Financia
Slide 54: In summary
In summary z Strong volume growth in all business areas - more than offset margin pressure z Increased income in net gains/losses – successful position taking z Unchanged costs z Improved operating and net profit z RoE clearly above target z Improved cost/income ratio z Going forward – capture profi
Slide 55: Facts & Figures
x Q O Q 0 Z Facts & Figures 55
Slide 56: Facts & Figures, content
Facts & Figures, content z Credit quality Page 57 z Economic capital Page 66 z Business areas Page 69 z Balance sheet Page 102 z Market shares Page 105 z Appendix Page 113 56
Slide 57: Credit quality
x Q O Q 0 Z Credit quality 57
Slide 58: Loan portfolio by customer category
Loan portfolio by customer category* EURbn 100 91 93 87 85 88 85 85 84 82 83 84 78 79 80 80 58 60 60 53 55 56 48 49 50 44 44 46 42 41 42 40 17 17 17 18 19 20 14 14 14 14 15 15 16 16 10 0 02 02 02 02 03 03 03 03 04 04 04 04 05 05 1/ 2/ 3/ 4/ 1/ 2/ 3/ 4/ 1/ 2/ 3/ 4/ 1/ 2/ Q Q Q Q Q Q Q Q Q Q Q Q Q Q C
Slide 59: Loan portfolio by customer group
Loan portfolio by customer group End Q2/05, EUR 175.1bn End Q2/04, EUR 155.5bn Public Public sector sector 2% 2% Household Household customers customers 45% Companies Companies 45% 53% 53% 59
Slide 60: Lending to household customers
Lending to household customers End of Q2/05 EUR 78.9bn z Strong growth Other loans 23% z Other loans comprise – consumer credits – investment credits – car financing – overdraft facilities – credit cards Housing loans 77% 60
Slide 61: Lending to companies by industry
Lending to companies by industry End of Q2/05 EUR 92.6 bn Shipping & Offshore Construction Transport and 5% 3% communication 6% Real estate 27% Agriculture & Fishing 6% Renting, consulting and other services 6% Other companies 9% Manufacturing 14% Commerce and services Finance 10% 14% 61
Slide 62: Loan portfolio in figures
Loan portfolio in figures EURbn Q2/05 Q1/05 Q4/04 Q3/04 Q2/04 Household customers 78.9 75.3 73.4 71.5 69.5 Real estate 25.1 24.7 23.5 22.6 22.4 Construction 2.6 2.9 2.9 2.8 2.8 Transport, communication 5.6 4.9 4.6 4.4 4.3 Trade and services 9.8 9.4 8.6 8.5 9.3 Manufacturing 12.9 12.7 12.0 12.5 12.9
Slide 63: Lending by geographical area
Lending by geographical area End of Q2/05 EUR 175.1bn Asia USA 0.7% Latin America 1.2% 0.6% Nordic countries and P&B Other non OECD 92.8% 0.6% Other 7.2% Other OECD 0.4% Other EU countries Nordic countries and P&B 3.7% z Denmark 47.2 z Finland 36.1 z Norway 26.1 z Sweden 50.3 z P&B 2.8 63
Slide 64: Impaired loans
Impaired loans EURm. End of Q2/05 Gross Provisions Net Household customers 442 -265 177 Real estate 127 -109 18 Construction 49 -41 8 Transport, communication 128 -96 32 Trade and services 204 -149 55 Manufacturing 340 -300 40 Finance 62 -51 11 Renting, Consulting and other services 158 -123 35 Othe
Slide 65: Loan losses
Loan losses EURm 200 YoY: 157 150 129 127 131 z Sale of shares in Pan Fish 91 – reversal of EUR 98m 100 z Overall stable credit quality 50 z Credit expansion with 0 maintained prudence and -3 -2 -10 -6 collateral coverage -50 -100 QoQ: -97 -101 -150 -132 -129 -141 z Reversals exceeded new provisions
Slide 66: Economic capital
Economic capital 66
Slide 67: Economic capital (EC)
Economic capital (EC) EURbn 10 z EC up EUR 0.5bn in Q2 9 as lending increased 8.8 8 8.4 8.4 8.4 8.3 EC per business area, Q2/05 7 EURbn 6 Retail Banking 5.4 5 CIB 1.8 4 Asset Mgmt 0.1 3 Life 1.0 2 Treasury 0.4 1 Other 0.1 0 Total 8.8 Q2/04 Q3/04 Q4/04 Q1/05 Q2/05 67
Slide 68: Economic capital
Economic capital End of Q2/05 Distribution by business area Distribution by risk category Asset Mgmt Treasury Other Operational Life risk & Life 4% 1% risk 1% Business 12% risk 9% 10% CIB Market risk 20% Retail 16% Credit risk 63% 64% 68
Slide 69: Retail Banking
x Q O Q 0 Z Retail Banking 69
Slide 70: Retail Banking
Retail Banking EURm H1/05 H1/04 Chg, % Net interest income 1,491 1,432 4 Commission income 599 556 8 Net gains/losses 109 97 12 Equity method 10 7 Other income 43 49 Operating income 2,252 2,141 5 Staff costs -515 -525 -2 Other expenses -725 -712 2 Depreciations -26 -24 8 Operating expenses -1,266 -
Slide 71: Retail Banking lending and deposit volumes
Retail Banking lending and deposit volumes Lending, EURbn Q2/05 Q1/05 Q4/04 Q3/04 Q2/04 Q1/04 Q4/03 Q3/03 Denmark 41.3 38.2 37.4 36.0 35.5 34.3 33.4 33.0 Finland 33.8 32.4 31.6 30.4 29.5 28.3 27.5 27.2 Norway 22.6 21.4 21.0 20.0 19.9 19.3 18.8 19.2 Sweden 43.3 43.5 42.6 40.9 40.0 38.3 38.8 38.9 Depo
Slide 72: Retail Banking breakdown of lending
Retail Banking breakdown of lending Denmark, EURbn Q2/05 Q1/05 Q4/04 Q3/04 Q2/04 Q1/04 Q4/03 Q3/03 Corporate 16.1 14.4 14.3 13.7 13.8 13.4 13.2 13.1 Household mortgages 17.9 17.2 16.8 16.4 15.9 15.2 14.6 14.1 Consumer lending 5.7 5.5 5.3 5.2 5.1 5.0 5.0 4.9 Finland, EURbn Q2/05 Q1/05 Q4/04 Q3/04 Q2/
Slide 73: Retail Banking breakdown of lending
Retail Banking breakdown of lending Norway, EURbn Q2/05 Q1/05 Q4/04 Q3/04 Q2/04 Q1/04 Q4/03 Q3/03 Corporate 10.8 10.3 10.4 10.3 10.4 10.1 10.7 11.2 Household mortgages 10.5 9.9 9.7 9.3 9.2 8.5 8.0 7.7 Consumer lending 1.8 1.3 1.1 0.9 0.8 0.8 0.8 0.8 Sweden, EURbn Q2/05 Q1/05 Q4/04 Q3/04 Q2/04 Q1/04
Slide 74: Retail Banking breakdown of deposits
Retail Banking breakdown of deposits Denmark, EURbn Q2/05 Q1/05 Q4/04 Q3/04 Q2/04 Q1/04 Q4/03 Q3/03 Corporate 7.2 7.4 7.2 7.1 7.2 6.7 5.8 5.7 Households, current 2.9 2.8 2.7 2.7 2.6 2.5 2.4 2.4 accounts Households, savings 9.3 8.1 7.9 7.7 7.7 7.1 7.6 7.5 accounts Finland, EURbn Q2/05 Q1/05 Q4/04 Q3/
Slide 75: Retail Banking breakdown of deposits
Retail Banking breakdown of deposits Norway, EURbn Q2/05 Q1/05 Q4/04 Q3/04 Q2/04 Q1/04 Q4/03 Q3/03 Corporate 6.4 6.2 5.7 5.6 5.7 5.7 5.5 5.6 Households, current 1.5 1.4 1.3 1.3 1.2 1.2 1.1 1.1 accounts Households, savings 3.8 3.6 3.6 3.6 3.6 3.5 3.4 3.5 accounts Sweden, EURbn Q2/05 Q1/05 Q4/04 Q3/04
Slide 76: Retail Banking margins
Retail Banking margins % Q2/05 Q1/05 Q4/04 Q3/04 Q2/04 Q1/04 Q4/03 Q3/03 Lending to SME’s 1.09 1.12 1.13 1.13 1.19 1.21 1.19 1.23 Mortgages, households 0.83 0.89 0.90 0.91 0.95 0.99 0.97 1.10 Consumer loans, 3.87 3.97 4.10 4.09 4.18 4.21 4.09 4.13 households Deposits, SME’s 0.89 0.86 0.92 0.94 0.90
Slide 77: E-banking & transactions
E-banking & transactions 77
Slide 78: E-banking customers, all clients
78 Ja n- 0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 5 Ju 00 Mill. ly - Ja 00 n- Ju 01 ly - Ja 01 n- Ju 02 ly - Ja 02 n- 0 Ju 3 l- 0 Ja 3 n- E-banking customers 0 Ju 4 l- 0 Ja 4 n- 05 Ja n- 0 50 100 150 200 250 300 350 400 Ju 00 (1,000) ly- Ja 00 E-banking customers, all clients n- Ju 01 ly- Ja 01 n- Ju 02 ly- Ja
Slide 79: Payments and log-ons, all clients
Payments and log-ons, all clients E-banking payments E-banking log-ons Mill. Mill. 50 50 45 45 40 40 35 35 30 30 25 25 20 20 15 15 10 10 5 5 0 0 Q 00 Q 00 Q 01 Q 01 Q 02 Q 02 Q 03 Q 03 Q 04 Q 04 05 00 00 01 02 03 03 04 05 1/ 3/ 1/ 3/ 1/ 3/ 1/ 3/ 1/ 3/ 1/ 1/ 4/ 3/ 2/ 1/ 4/ 3/ 2/ Q Q Q Q Q Q Q Q Q Den
Slide 80: Cards, all clients
80 Q 0 20 40 60 80 100 120 140 160 1/ Mill. 01 Q 3/ 01 Q 1/ 02 Q 3/ 02 Q 1/ 03 Q 3/ 03 Q 1/ 04 Q Card payments Cards, all clients 3/ 04 Q 1/ 05 Ja n 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 Mill. M -01 ay Se -01 pt - Ja 01 n M -02 ay Se -02 pt - Ja 02 n M -03 ay Se - 03 p- Ja 03 n M -04 ay Se - 0
Slide 81: Payment transactions, households
Payment transactions, households Payments transactions, households Breakdown of transactions Mill. Mill. 300 160 140 275 120 250 100 225 80 60 200 40 175 20 150 0 01 01 02 02 03 03 04 04 05 01 01 02 02 03 03 04 04 05 1/ 3/ 1/ 3/ 1/ 3/ 1/ 3/ 1/ 1/ 3/ 1/ 3/ 1/ 3/ 1/ 3/ 1/ Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q
Slide 82: Payment transactions, households
Payment transactions, households Million Q2/05 Q1/05 2004 2003 2002 2001 Manual transactions 25.1 25.6 103.9 112.5 125.3 141.0 Payterminals 5.0 5.3 23.6 27.1 31.7 34.3 Card payments 151.0 129.1 527.8 459.9 395.5 333.5 Cash withdrawal 47.2 43.1 190.4 197.4 204.4 207.2 ATM Direct debit 24.8 26.1 98.5
Slide 83: Corporate and Institutional Banking (CIB)
Corporate and Institutional Banking (CIB) 83
Slide 84: Corporate and Institutional Banking
Corporate and Institutional Banking EURm H1/05 H1/04 Chg, % Net interest income 214 201 6 Commission income 184 156 18 Net gains/losses 127 124 2 Equity method 10 8 Other income 7 11 Operating income 542 500 8 Staff costs -160 -155 3 Other expenses -123 -128 -4 Depreciations -5 -5 0 Operating expens
Slide 85: CIB lending and deposit volumes and margins
CIB lending and deposit volumes and margins Lending, EURm Q2/05 Q1/05 Q4/04 Q3/04 Q2/04 Q1/04 Q4/03 Q3/03 Corporate Banking Division 12.0 12.8 10.8 11.3 12.1 10.7 11.1 13.5 Financial Institutions Division 2.0 2.0 1.4 1.6 2.1 1.4 1.8 2.4 International and Shipping Division 7.7 6.5 5.9 6.1 6.1 6.0 5.5
Slide 86: Nordea operations in Poland and the Baltic countries
Nordea operations in Poland and the Baltic countries End of Q2/05 Estonia Latvia Lithuania Poland Total Customers 39,500 27,000 13,100 314,500 394,100 Branches/salespoints 10 11 8 36 65 Number of FTEs 217 213 129 861 1,430 Total assets, EURm 836 701 429 1,506 3,472 Lending, EURm 702 592 385 1,166 2,
Slide 87: Asset Management & Life
Asset Management & Life 87
Slide 88: Asset Management
Asset Management EURm H1/05 H1/04 Chg, % Customer responsible units: Net interest income 19 18 6 Commission income 135 118 14 Net gains/losses 7 11 -36 Equity method 0 0 Other income 6 5 Operating income 167 152 10 Staff costs -52 -45 16 Other expenses -44 -44 0 Depreciations -1 -1 0 Operating expen
Slide 89: Break down of AuM by market and channels
Break down of AuM by market and channels Retail Fund sales funds* through Private Institutional Life & AuM, Q2/05, (sold through EURbn third-parties Banking clients Pensions own distribution) Denmark 15.4 - 12.6 9.5 16.8** 54.3 Finland 7.2 - 13.0 4.1 7.5 31.8 Norway 1.7 - 0.6 3.2 3.9 9.4 Sweden 16.6
Slide 90: Asset structure
Asset structure* Q2/05 Q1/05 Int'l. fixed Int'l. fixed income income 13% 13% Nordic Nordic Nordic equities Nordic equities fixed 13% fixed 13% income income 46% 47% Int'l. Int'l. equities equities 28% 27% *Average AuM for Asset Management activities excl. Nordic Private Banking activities, in Q2 thi
Slide 91: European Fund distribution
European Fund distribution EURm 9000 z Net inflow EUR 0.3bn in Q2 8000 z Marketed in 10 major European 7000 markets 6000 5000 z More than 1000 active distribution 4000 agreements 3000 2000 1000 0 Q 00 Q 01 Q 01 Q 02 Q 02 Q 03 Q 03 Q 04 Q 04 05 3/ 1/ 3/ 1/ 3/ 1/ 3/ 1/ 3/ 1/ Q Inflow AUM 91
Slide 92: Life - breaking out profit drivers
Life - breaking out profit drivers z Fee based on size of life provisions in “with profit” companies – DK, FI, SE II Fee contribution z Profit-sharing from the Norwegian business (existing model, change pending) Contribution from cost z 25% of surplus/deficit from cost result in DK, 100% from FI and
Slide 93: Life - profit drivers
Life - profit drivers EURm Q2/05 Q1/05 Q4/04 Q3/04 Q2/04 Traditional insurance Fee contribution/profit sharing 35 30 24 22 39 Contribution from cost result 0 1 1 1 -1 Contribution from risk result 2 5 2 5 5 Inv. return on Shareholders Equity 4 3 2 4 0 Other profits 5 3 15 8 8 Total Profit Traditiona
Slide 94: Life - investments
Life - investments EURbn 30 28.4 27.1 z Equities 26.4 24.8 25.4 25 – predominantly listed equities 20 – 1/3 Nordic, 2/3 international z Bonds 15 – ¾ Nordic issuers 10 – primarily govmn’t & mortgage inst. 5 0 Q2/04 Q3/04 Q4/04 Q1/05 Q2/05 Equities Bonds Real estate Unit linked Alternative investments
Slide 95: Life - asset allocation
Life - asset allocation Total, EURbn Equities, % Q2/05 Q1/05 Q2/05 Q1/05 Denmark 13.5 12.6 19 20 Finland 7.5 7.3 19 20 Norway 3.9 3.7 14 13 Sweden 2.8 2.9 3 3 Total 27.7 26.5 16 16 95
Slide 96: Life - solvency situation
Life - solvency situation End of Q2/05 Required Actual Solvency Solvency in % EURm solvency solvency buffer of requirement Denmark 497 547 50 110 Finland 219 671 452 306 Norway 140 253 114 181 Sweden 66 136 70 205 96
Slide 97: Life – solvency sensitivity
Life – solvency sensitivity End of Q2/05 Denmark Finland Norway Sweden % Solvency in % of requirement 110 306 181 205 Equities drop 12% 111 246 176 199 Interest rates down 50bp 107 339 181 214 Interest rates up 50bp 113 287 181 197 97
Slide 98: Life – financial buffers
Life – financial buffers* EURm % of total provisions Q2/05 Q1/05 Q2/05 Q1/05 Denmark 960 829 8.7 7.9 Finland 297 223 5.8 4.4 Norway 56 42 1.8 1.4 Sweden 75 78 4.5 4.6 Total 1,388 1,172 6.6 5.8 98 * Financial buffers are defined in accordance with local regulations and practices.
Slide 99: Life – buffer sensitivity
Life – buffer sensitivity End of Q2/05 Denmark Finland Norway Sweden EURm Financial buffers* 960 297 56 75 Equities drop 12% 792 164 0 71 Interest rates down 50bp 1,162 368 63 81 Interest rates up 50bp 752 254 53 69 * Financial buffers are defined in accordance with local regulations and practices.
Slide 100: Group Treasury
Group Treasury 100
Slide 101: Group Treasury
Group Treasury EURm H1/05 H1/04 Chg, % Net interest income 57 36 58 Commission income -3 -4 -25 Net gains/losses 53 3 Equity method 0 0 Other income 17 16 Operating income 124 51 143 Staff costs -7 -4 75 Other expenses -14 -19 -26 Depreciations 0 0 Operating expenses -21 -23 -9 Loan losses 0 0 Opera
Slide 102: Balance sheet
Balance sheet 102
Slide 103: Balance sheet
Balance sheet EURm End of Q2/05 End of 2004 End of Q2/04 Treasury bills and other eligible bills 12,456 12,758 9,282 Loans and receivables to credit institutions 21,891 20,628 22,947 Loans and receivables to the public 175,144 161,295 155,653 Derivatives 35,080 26,697 15,606 Other assets 66,714 56,2
Slide 104: Capital base
Capital base EURm Q2/05 Q1/05 Q4/04 Q3/04 Q2/04 Core equity 12,344 12,474 12,549 12,449 12,041 Deductions insurance companies and other -828 -1,245 -1,004 -817 -657 Core equity in the capital base 11,516 11,229 11,545 11,632 11,384 Hybrid capital 1,387 914 757 782 287 Minority interests 12 14 4 3 3
Slide 105: Market shares
Market shares * Statistics as June 2005 105
Slide 106: Market position in Nordic markets
Market position in Nordic markets Market shares Denmark Finland Norway Sweden Personal customers - mortgage lending 14.9% 32.0% 11.5% 15.9% - consumer lending 15.9% 30.4% 11.2% 9.4% - deposits 21.6% 33.5% 8.5% 18.5% Corporate customers - lending 22.2% 37.0% 16.8% 14,3% - deposits 21.2% 38.4% 16.0% 2
Slide 107: Personal customer deposits - market volume & share
107 Ju n Ju n 0 100 200 300 400 500 Se -02 0 100 200 300 400 500 600 p Se -02 p D - 02 DKKbn NOKbn ec D - 02 - ec M 03 M - 03 ar - ar Ju 03 Ju -05 n n Se -03 S -05 p ep D - 03 D - 05 ec - ec M 03 M - 05 ar ar Ju -04 Ju -05 Norway n Denmark Se -04 n Se -05 p p D - 04 D - 05 ec ec M - 04 M - 05 ar ar
Slide 108: Corporate deposits - market volume & share
108 Ju Ju n n 0 100 200 300 400 0 50 100 150 200 250 300 350 S -02 Se -02 ep p DKKbn NOKbn D - 02 D - 02 ec ec - - M 03 M 03 ar ar Ju -03 Ju -03 n n S -03 Se -03 ep p D - 03 D - 03 ec ec - - M 03 M 03 ar ar Ju -04 Ju -04 Norway Denmark n n S -04 S -04 ep ep D - 04 D - 04 ec ec - - M 04 M 04 ar ar Ju
Slide 109: Personal customer lending - market volume & share
109 Ju Ju n n 0 200 400 600 800 1000 0 100 200 300 400 S -02 S -02 ep ep DKKbn NOKbn D - 02 D - 02 ec ec - - M 03 M 03 ar ar Ju -03 Ju -03 n n S -03 S -03 ep ep D - 03 D - 03 ec ec M - 03 - ar M 03 ar - J u 04 Ju -04 Norway Denmark n n S -04 S -04 ep ep D - 04 D - 04 ec ec M - 04 - ar M 04 - ar J u
Slide 110: Mortgage lending households - market volume & share
110 Ju Q n 2/ 0 200 400 600 800 1000 0 200 400 600 800 S -02 ep Q 02 3/ DKKbn NOKbn D - 02 ec Q 02 - 4/ M 02 ar Q 02 1/ Ju -03 Q 03 n 2/ S -03 ep Q 03 3/ D - 03 Q 03 ec 4/ M - 03 Q 03 ar 1/ - J u 04 Q 04 Norway Denmark n 2/ S -04 Q 04 ep 3/ D - 04 Q 04 ec 4/ M - 04 Q 04 ar - 1/ J u 05 n- Q 05 2/ 05
Slide 111: Corporate lending - market volume & share
111 Ju Ju n n 0 100 200 300 400 500 0 100 200 300 400 500 Se -02 Se -02 p p DKKbn NOKbn D - 02 D - 02 ec ec - - M 03 M 03 ar ar Ju -03 Ju -03 n n Se -03 S -03 p ep D - 03 D - 03 ec ec - - M 03 M 03 ar ar Ju -04 Norway Ju -04 Denmark n n Se -04 S -04 p ep D - 04 D - 04 ec ec - - M 04 M 04 ar ar Ju -0
Slide 112: Investment funds - market volume & share
Investment funds - market volume & share DKKbn Denmark EURbn Finland 700 28% 40 34% 600 26% 32% 500 30 30% 400 24% 28% 300 20 22% 26% 200 24% 20% 10 100 22% 0 18% 0 20% 3 4 5 3 4 04 05 03 04 05 4 5 4 5 3 03 4 04 l- 0 l- 0 l- 0 -0 -0 -0 -0 -0 -0 0 0 n- n- n- n- n- p- - p- - ct ct pr pr ar ar Ju Ju Ju
Slide 113: Appendix
Appendix 113
Slide 114: Total shareholder return (TSR) 2005
Total shareholder return (TSR) 2005 Nordea peer group* COMMERZBANK 31.8 HYPOVEREINSBANK 31.7 SOCIETE GEN 23.8 KBC 23.1 DANSKE BANK 20.5 DnB NOR 20.2 ALLIED IRISH BANK 17.8 BNP PARIBAS 16.5 SWEDBANK 15.4 ERSTE BANK 15.3 SEB 13.6 NORDEA 13.6 BANK OF IRELAND 13.2 HBOS 10.4 UNICREDITO 9.5 LLOYDS TSB 6.9
Slide 115: Largest registered shareholders, end of Q2 2005
Largest registered shareholders, end of Q2 2005 Shareholder Number of shares % Swedish state 515.6 19.5 Nordea Danmark fund 102.5 3.9 Robur Funds 74.5 2.8 Alecta 69.7 2.6 SBH/SPP Funds 64.8 2.5 SEB Funds 42.7 1.6 AMF Pension 39.9 1.5 Nordea Funds 39.6 1.5 Skandia Life Insurance 33.3 1.3 Fourth Swedi
Slide 116: Market development – interest rates
Market development – interest rates Change 31-03-05 30-06-05 % Q2/05 Short, EUR (one week) 2.08 2.07 -0.01 Long, EUR (5 years) 3.07 2.71 -0.36 Short, DK 2.13 2.15 0.02 Long, DK 3.00 2.73 -0.27 Short, NO 1.80 1.87 0.07 Long, NO 3.46 3.45 -0.01 Short, SE 2.00 1.83 -0.17 Long, SE 3.13 2.74 -0.39 116
Slide 117: Macro data – Nordic market
Macro data – Nordic market % 2005e 2006e 2007e Gross domestic product DK 2.6 2.2 1.8 FI 3.2 3.4 3.0 NO 3.6 2.4 1.6 SE 3.2 3.3 2.6 Inflation DK 1.6 1.8 2.0 FI 0.2 1.5 1.8 NO 1.4 1.7 2.2 SE 0.4 1.5 2.5 Private consumption DK 4.1 2.4 2.0 FI 3.0 2.8 1.8 NO 4.0 2.3 2.0 SE 2.8 3.3 2.4 Unemployment DK 5.7
Slide 118: Financial calendar 2005
Financial calendar 2005 z Q3 report 2005 will be published on 26 October www.nordea.com/ir 118