Nordea Bank Abp · OMXHEX:NDA_FI
Nordea Bank Abp — Q2 2011 Earnings Presentation
34 slides from Nordea Bank Abp's earnings presentation, Jul 19, 2011
Slide 1: Second Quarter Report 2011 Telephone conference
Second Quarter Report 2011 Telephone conference 19 July 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: Key messages
Key messages • Solid business momentum is maintained • Good revenue growth in customer areas • Trading result down from last quarter’s high level • Loan losses are at the lowest level since 2008 • A solid foundation for implementing new normal plan • Ambition: ROE in top league of European banks ~15
Slide 4: Result highlights
Result highlights EURm Q2/11 Q1/11 Chg % Q2/10 Chg % Net interest income 1,326 1,324 0 1,249 6 Net fee and commission income 623 602 3 538 16 Net result items at fair value 356 544 -35 339 5 Other income 37 40 -8 35 6 Total income 2,342 2,510 -7 2,161 8 Staff costs -744 -768 -3 -701 6 Total expenses
Slide 5: Stable total income after strong Q1
Stable total income after strong Q1 Total income monthly average Continued good growth in 825 customer segments, up 5% q-o-q 800 Lower trading result from the very high level in Q1 775 Lower NII in Group Treasury due 750 to increased and prolonged funding. 725 700 jul-09 jul-10 nov-09 jan-10 n
Slide 6: Solid growth in customer areas
Solid growth in customer areas Total income, EURm Income up 5% in customer areas q-o-q and 10% compared to Q210 2 302 2 302 2 126 2 193 Volatility in financial markets has 2 089 lowered the trading result from last quarter’s high level Q2/10 Q3/10 Q4/10 Q1/11 Q2/11 Customer areas 1 Other areas 2
Slide 7: Net interest income – solid trend in customer areas
Net interest income – solid trend in customer areas Net interest income, EURm Deposit margins continue to increase – stable lending margins 1 365 1 305 1 321 1 299 1 310 1 324 1 326 Improved demand from large 1 235 1 249 corporate Household lending up 7% annualised Lower level in Treasury
Slide 8: Change in net interest income
Change in net interest income Q2oQ1 YoY Volume-driven Nordic markets in local currencies 11 58 Corporate lending volumes 8 15 Household lending volumes 2 39 Corporate deposit volumes -1 -3 Household deposit volumes 2 7 Margin-driven Nordic markets in local currencies 23 161 Corporate lending margins
Slide 9: Interest rate sensitivity
Interest rate sensitivity - 3 components Reduced sensitivity to EUR 500m Increased market rates, 100bps Q2/11 (540m) due to reduced SIIR EURm Structural interest income risk (SIIR) Net Interest Income, rolling 12 500 Reflecting the effect on NII from re- months annualised approx pricing gaps¹
Slide 10: Record high net fee and commission income
Record high net fee and commission income Net fee and commission income, EURm Increase of 3% 618 623 Savings commissions remain on a 602 538 high level 525 475 437 463 Good trend in payment 412 commissions Q2/09 Q3/09 Q4/09 Q1/10 Q2/10 Q3/10 Q4/10 Q1/11 Q2/11 10 19 July 2011 Telephone conferen
Slide 11: Fair value result affected by market turmoil
Fair value result affected by market turmoil Net result from items at fair value, EURm Stable trend in customer areas Difficult trading conditions due to financial turmoil Lower risk appetite from investors 414 339 332 296 302 298 297 303 291 Q2/09 Q3/09 Q4/09 Q1/10 Q2/10 Q3/10 Q4/10 Q1/11 Q2/
Slide 12: Expenses largely at the same level as in Q111
Expenses largely at the same level as in Q111 Total expenses, EURm Staff cost decreased by 3% 1 270 1 265 1 275 1 219 1 186 1 196 1 164 1 116 1 087 Q2/09 Q3/09 Q4/09 Q1/10 Q2/10 Q3/10 Q4/10 Q1/11 Q2/11 12 19 July 2011 Telephone conference - Second Quarter Report 2011
Slide 13: Net loan losses on low levels
Net loan losses on low levels Net loan losses, EURm 12bps¹ – the lowest level since Q208 425 Denmark shows clear signs of 358 347 improvement 261 245 EUR 20m from Danish deposit 207 175 system provision 166 118 12bps¹ Q2/09 Q3/09 Q4/09 Q1/10 Q2/10 Q3/10 Q4/10 Q1/11 Q2/11 Provision related to D
Slide 14: Lower net loan losses
Lower net loan losses Improvements in the Danish Loan losses, EURm operation 67 33 397 Very low losses in other Nordic 325 302 242 166 118 banking and New European -231 -150 -183 Markets Q4 2010 Q1 2011 Q2 2011 Higher level within Shipping due Gross loan losses Reversals Danish guarantee schem
Slide 15: Impaired loans down
Impaired loans down Impaired loans, EURm Impaired loans ratio down to 136bps 2 011 2 137 1 980 (141bps) Impaired loans gross down 4% 2 838 2 938 2 897 59% performing Q4 2010 Q1 2011 Q2 2011 Provisioning ratio down to 50% (51%) Performing Non-performing Total allowances, EURm 782 733 674 1 75
Slide 16: Total lending is up 10% vs. Q2 2010
Total lending is up 10% vs. Q2 2010 Total lending, EURbn Corporate and household lending is up 2% q-o-q in local 331 332 303 314 314 currencies 293 278 283 282 Increased demand from largest corporate Q2/09 Q3/09 Q4/09 Q1/10 Q2/10 Q3/10 Q4/10 Q1/11 Q2/11 16 19 July 2011 Telephone conference - Sec
Slide 17: Improved credit quality
Improved credit quality Corporate rating distribution In Q2 2011 72% (70% in EAD 20% Increased Decreased Q1) of the exposure a high 15% rating of 4- or higher 10% 5% Rating 0% 6+ 5+ 4+ 3+ 2+ 1+ 6 5 4 3 2 1 6- 5- 4- 3- 2- 1- Q2 2010 Q2 2011 17 19 July 2011 Telephone conference - Second Quarter Repo
Slide 18: Solid capital position
Solid capital position Risk-weighted Assets (RWA), EURbn Core Tier 1 ratio increased 70 bps in H1 2011 215 214 213 185 182 180 Reduction in Risk Weighted Assets Continue positive rating Q4/10 Q1/11 Q2/11 migration in corporate portfolio Transition rules Fully implemented Basel II (2,4% vs 0,7%
Slide 19: Risk-Weighted Assets and Core Tier 1 ratio
Risk-Weighted Assets and Core Tier 1 ratio RWA Q2 change, EURbn RWA excl. transition rules down 1.0% driven by 1,4 0,7 0,9 2,1 IRB approval of the Fionia portfolio 181,7 179,9 Increased collateral coverage Q1/11 Credit Growth Stand. RWA Q2/11 Improved credit quality quality Appr. efficiency
Slide 20: Strong capital generation
Strong capital generation Core Tier 1 capital, EURm CAGR in core equity of 9.1% since 2006 19 103 19 846 High profitability in our capital 17 766 position 14 313 12 821 A key to maintaining high rating and 11 689 low funding costs 2006 2007 2008 2009 2010 Q2 2011 Dividend payout Dividend accru
Slide 21: Continuous improvements in net migration
Continuous improvements in net migration Corporate rating migration Q211 / Q111 Reduction in Risk Weighted 90.5% Assets Continue positive rating Down-rated Up-rated migration in corporate portfolio (2,4% vs 0,7% in 5.1% 11.3% Q1) 6% 4% 3% 1% Improved risk weights 0% 0% 0% 1% 1% 0% > -4 -4 -3 -
Slide 22: Development per customer segment
Development per customer segment 22 19 July 2011 Telephone conference - Second Quarter Report 2011
Slide 23: Corporate customers
Corporate customers Corporate customer income, EURm Up 6% vs. Q111 and 8% vs. Q210 1 229 Improved relationships in CMB 1 140 1 163 segment – driver for ancillary income Q2/10 Q1/11 Q2/11 23 19 July 2011 Telephone conference - Second Quarter Report 2011
Slide 24: Household customers
Household customers Household customer income, EURm Up 2.5% vs. Q111 and 14% vs. 2Q10 928 905 Increase in Gold customers by 814 41,000 in Q211 and by 183,000 since Q210 Improved deposit margins Q2/10 Q1/11 Q2/11 24 19 July 2011 Telephone conference - Second Quarter Report 2011
Slide 25: Increase in relationship channels
Increase in relationship channels New applications for smart phones and tablets 6.4 million e-banking customers 250,000 mobile banking customers Growing presence on Facebook 25 19 July 2011 Telephone conference - Second Quarter Report 2011
Slide 26: Adapting to the New Normal
Adapting to the New Normal 26 19 July 2011 Telephone conference - Second Quarter Report 2011
Slide 27: New organisation from 1st June - focusing on momentum and efficiency
New organisation from 1st June - focusing on momentum and efficiency Three main Business Areas: Retail Banking Wholesale Banking Wealth Management Builds on the value chain thinking Objective to improve efficiency, increase RoE and deepen customer relationship Financial reporting will
Slide 28: Nordea's ambition is to be top-league
Nordea’s ambition is to be top-league European banks ROE 2012 20% 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% Retail Wholesale Global banks banks banks 15% is top- 28 28league April 2011 19 July 2011 Telephone conference - Second Quarter Report 2011
Slide 29: Efficiency initiatives: Cost efficiency
Efficiency initiatives: Cost efficiency Total operating expenses. EURm 1 270 1 265 1 275 Cost growth will be reduced until end of 2011 1 186 1 196 1 164 Costs will kept largely unchanged from start of 2012 Q1/10 Q2/10 Q3/10 Q4/10 Q1/11 Q2/11 29 19 July 2011 Telephone conference - Second Quarter
Slide 30: Efficiency initiatives: Asset efficiency
Efficiency initiatives: Asset efficiency Risk-weighted assets excl. transition rules. vs Low growth of risk-weighted total lending assets 120 A decrease of 1% q-o-q 115 RWA optimization and 110 improved credit quality 105 100 95 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Lending RWA
Slide 31: Improved productivity and efficiency ratios
Improved productivity and efficiency ratios Business volumes / FTE Netbank transactions % +10% +25 Q2 2009 Q2 2011 Q2 2009 Q2 2011 Income per customer Manual branch transactions -25 +10% % Q2 2009 Q2 2011 Q2 2009 Q2 2011 31 19 July 2011 Telephone conference - Second Quarter Report 2011
Slide 32: Top-league risk-adjusted profit and shareholder return
Top-league risk-adjusted profit and shareholder return Risk-adjusted profit, 2007- 2011 Total shareholder return, 2007 - 2011 Ytd Ytd 40 56.1% 20 4% 45.1% 0 -20 -40 Top quartile -60 -80 -100 Ro lling fo ur quarter co mpared with FY 2006 EUR 1,957m Nordea Peer Peer Peer Peer Peer Peer Peer Peer Peer
Slide 33: Key messages
Key messages • Solid business momentum is maintained • Good revenue growth in customer areas • Trading result down from last quarter’s high level • Loan losses are at the lowest level since 2008 • A solid foundation for implementing new normal plan • Ambition: ROE in top league of European banks ~15
Slide 34: Second Quarter Report 2011 Telephone conference
Second Quarter Report 2011 Telephone conference 19 July 2011