Slide 1: Year-end Report 2008 Press and analyst conference
Year-end Report 2008 Press and analyst conference 10 February
Slide 2: Financial result 2008
Financial result 2008 Strengthening of capital position “Middle of the road” approach to our organic growth strategy 2
Slide 3: 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 4: Highlights from 2008
Highlights from 2008 Nordea continues to deliver despite extreme market turbulence and economic downturn Income up 4% - driven by strong growth in net interest income and robust income from the customer-driven capital markets operations Lending volumes up 17% in local currency. Strong increase
Slide 5: Full year result 2008
Full year result 2008 EURm FY 2007 FY 2008 Chg % Net interest income 4,282 5,093 19 Net fee and commission income 2,140 1,883 -12 Net gains/losses on items at fair value 1,209 1,028 -15 Equity method 41 24 -41 Other income 214 172 -20 Total operating income 7,886 8,200 4 Staff costs -2,388 -2,568 8
Slide 6: Net interest income up 19%
Net interest income up 19% YoY Strong increase in lending and deposit Net interest income, EURm volumes 5 093 Lending to public up 8% - 17% in local currency 4 282 Deposit volumes up 4% - 12% in local currency Corporate lending up 11% reflecting strong demand across sectors – up 19% adjusted
Slide 7: Support to corporate customers - strengthened market position
Support to corporate customers - strengthened market position Total income corporate customers, Income from corporate customers up 22% EURm compared to last year 3 973 Income from CMB and Large corporate customers 3 249 increased 26% - 35% in the fourth quarter adjusted for currency depreciation
Slide 8: High activity among household customers
High activity among household customers Income growth 1% - continued volume Total income household customers, growth EURm Income growth dampened by: 3 406 3 428 Lower margins on savings and transaction accounts Lower assets under management in the savings area Improved margins on mortgage
Slide 9: Net fee and commission income down 12%
Net fee and commission income down 12% YoY Net fee and commission, EURm Savings-related commission down 18% - 2 140 affected by weak equity markets 1 883 AuM down 20% compared to one year ago Lending-related commission up 12% Corporate Merchant Banking and Shipping and Oil services Q4oQ3 D
Slide 10: Net gains/losses – unchanged in customer areas
Net gains/losses – unchanged in customer areas YoY Net gains/losses down 15% Net gains/losses, EURm Solid result in customer areas driven by 1 048 1 043 strong activity within capital markets products Limited impact from market turmoil Risk management products in the fixed income and FX area
Slide 11: Cost in line with target
Cost in line with target Total operating expenses, EURm Up 7% - in line with target 4 338 Approx half of the increase related to 4 066 investments in growth areas FTE’s up 8% including acquisition of branches from Roskilde Bank and Svensk Kassaservice 1060 1150 FY 2007 FY 2008 Q3/08 Q4/08 11
Slide 12: Economic slowdown affecting the loan portfolio – loan losses on an expected rise
Economic slowdown affecting the loan portfolio – loan losses on an expected rise Net loan losses, EURm Net loan losses EUR 466m for full year 320 2008, of which EUR 320m or 52bps in Q4 Increase in loan losses stem from a large number of smaller and medium-sized 89 exposures 21 36 Large part of
Slide 13: Profit before loan losses up 1%
Profit before loan losses up 1% 3 820 3 862 3 883 Profit before loan losses up 1% from 3 396 high level Operating profit down 13% Net loan losses of EUR 466m compared to net recoveries of EUR 66m in the same period last year Profit before loan losses Operating profit FY 2007 FY 2008 13
Slide 14: Ambitious targets
Ambitious targets Long term financial targets Target 2007 2008 TSR (%) In the top quartile of # 3 of 20 # 2 of 20 European peer group Risk adjusted profit (EUR m)¹ Double in 7 years² 15% 16.7%³ RoE (%) In line with top Nordic peers 19.7% 15.3% Capital structure policy Policy Dividend payout-ratio >
Slide 15: Total shareholder return (TSR)
15 -100 -90 -80 -70 -60 -50 -40 -30 -20 -10 0% Bank of Ireland HBOS Allied Irish Banks RBS KBC Swedbank Commerzbank Danske Bank Lloyds TSB 1/1 2008 – 31/12 2008 Unicredit Erste Bank Barclays Total shareholder return (TSR) DnBNOR SEB Societe Generale BNP Paribas Intesa Sanpaolo Santander Top quartile
Slide 16: Risk-adjusted profit
Risk-adjusted profit Accumulated risk-adjusted profit Accumulated Risk-adjusted profit 16.7% since target introduced January 1 2007 16,7% 14,7% 15,1% 14,6% 18.5% excluding Danish State guarantee 12,3% fee 14,1% 8,3% Up 2% in 2008 – 7% in Q4/Q4 2,8% Q107 Q207 Q307 Q407 Q108 Q208 Q308 Q4/08 Roll
Slide 17: Outlook for 2009
Outlook for 2009 Sharp macroeconomic slowdown in the Nordic countries during the latter part of the autumn – GDP expected to be negative in 2009 Nordea is preparing for a challenging year – firm attention on cost, risk and capital Focus on doing more business with existing customers and on sel
Slide 18: Middle of the road approach
Nordea ” Middle of the road approach
Slide 19: Business environment is uncertain
Business environment is uncertain Long-term funding has become more expensive… Capital requirements have increased… Interest rates are declining… The economy is in recession – confidence and demand amongst customers are declining… Probability of default amongst customers has increased… 19
Slide 20: By applying the “middle of the road” we aim to maintain the high business momentum
By applying the “middle of the road” we aim to maintain the high business momentum Not reacting to the Over-reacting to the Middle of the road downturn situation 9 Unchanged lending 9 Focus on core customers – selected 9 Closing down growth growth new business opportunities initiatives 9 Unchanged g
Slide 21: By applying a “middle of the road approach” balancing growth opportunities and risk
By applying a “middle of the road approach” balancing growth opportunities and risk Top priorities… …in the context of Great Nordea • Maintain strong AA rating as Profit orientation – 9 Will take the competitive advantage cost, risk and capital lead Ambitious vision and targets 9 The strategy • Cont
Slide 22: Cost-, risk- and capital management takes the lead
Cost-, risk- and capital management takes the lead Costs 9 Accelerate ongoing efficiency programs – not least in branch offices 9 General right-sizing of staff – staff reduction during 2009 Profit orientation Risk Ambitious vision 9 Step up risk management – emphasising pro-activity and targets 9 Ad
Slide 23: The EUR 3bn capital raise is a pro-active step to best position the bank
The EUR 3bn capital raise is a pro-active step to best position the bank – middle of the road approach Rationale Maintain position as one of the stronger banks in Europe Pro-actively establish an additional capital cushion in light of reduced visibility in the market and economic outlook Provide fle
Slide 24: Capital raising allows us to maintain our organic growth strategy
Capital raising allows us to maintain our organic growth strategy – however we will adjust the speed Increase business with existing Exploit global and Supplement Nordic Nordic customers and attract new European growth through customers business lines investments in New European Markets Manage risk
Slide 25: More customers and more income per customer - relationship-driven growth strategy
More customers and more income per customer - our relationship-driven growth strategy is successful… 9 113,000 new gold customers in 2008 – up 5% 9 100% more customer meetings per PBA Nordic Banking 9 Growth Plan Sweden: 35,000 new gold customers and 68 new branches in 2008 Private 9 5,000 new Priva
Slide 26: Strong increase in customer satisfaction
…showing strong increase in customer satisfaction - by bringing our customer oriented values to work Customer satisfaction CSI index (aggregate) 2007-2008 2007 2008 + 1.1 71.7 70.6 Nordea - 1.4 Peers 71.2 69.8 GAP - 0.6 + 1.9 26
Slide 27: Also in New European Markets the strategy remains, with reduced speed
Also in New European Markets the strategy remains, however with significantly reduced speed Russia – significantly reduce speed − Lending growth down from high levels in 2007 and 2008 − Focus on enhancement of risk management procedures − No branch openings - household and SME expansion on hold − La
Slide 28: By applying the “middle of the road” we trust we can maintain the high business momentum
Growth strategy By applying the “middle of the road” we trust we can maintain the high business momentum 2009 priorities Nordea Group income development, EURm Existing relationships 2251 1996 2022 1934 1899 1959 1914 1961 1992 1996 Grow share of wallet through 1873 1759 1785 less capital-consuming 1
Slide 29: CRO Presentation
Nordea ” : - ENE = ee CRO Presentation
Slide 30: Broad economic slowdown affect most sectors
Broad economic slowdown affect most sectors Unprecedented drop in GDP growth Major drop in GDP-growth and 7,0% 6,0% business and consumer confidence 5,0% will affect most markets and 4,0% industries 3,0% 2,0% Despite a well-diversified lending 1,0% portfolio spread over four largely 0,0% equally
Slide 31: Increased loan losses following economic slowdown in all markets
Increased loan losses following economic slowdown in all markets Net loan losses EUR 466m full year 2008 Loan losses, EURm 476 Loan loss ratio of 19 basis points - excluding 320 Danish scheme 17bps (EUR 44m) 151 140 152 Fourth quarter 52bps – 45 bps excluding Danish 121 89 scheme 21 36 -6 Sh
Slide 32: Impaired loans up from low levels – increased focus on risk management
Impaired loans up from low levels – increased focus on risk management Impaired loans and recivables, EURm Impaired loans up 55% from low levels 841 680 Individual allowances increased in several 508 515 576 1 394 sectors 923 928 902 1 007 Net collective allowances of EUR 54m were made in 2008
Slide 33: Largely secured lower risk real estate portfolio
Largely secured lower risk real estate portfolio Lending to real estate management per country Approximately 1/3 of the EURbn End 2008 Commercial Residential End 2007 Sweden 13,5 44% 56% 14,9 portfolio towards low risk Norway 7,7 72% 28% 8,6 counterparties - municipalities, Finland 7,1 49% 51% 7,0
Slide 34: Shipping – increased focus on risk and capital
Shipping – increased focus on risk and capital Focus on listed companies with Total exposure, EURbn 12.9 13.4 strong track record Other 10.5 10.8 9.8 Liners Increased risks in certain sectors Gas tankers Chemical tankers (dry bulk and container) where Crude tankers Nordea has underweight exposur
Slide 35: Well structured exposure towards companies owned by private-equity funds
Well structured exposure towards companies owned by private-equity funds Portfolio well diversified between Outstanding loans industries and the Nordic markets – more EURbn 7,4 than 100 portfolio companies 6,7 High quality growth in 2008 with low leverage and to solid sectors Mainly senior deb
Slide 36: New European Markets affected by sharp economic slowdown
New European Markets affected by sharp economic slowdown Total lending NEM, EUR 15.3bn • Specific loan losses increased in the Baltic countries and Russia - net loan losses 47bps in Lithuania 2008 16% Poland 26% • Collective allowances for the Baltic countries Estonia 14% EUR 109m or 134bps of total
Slide 37: CFO Presentation
Nordea ” a 43 —— CFO Presentation
Slide 38: A fair, transparent market solution to existing share holders
A fair, transparent market solution to existing share holders Capital strengthening will be executed through; Underwritten rights offering to raise approximately EUR 2.5bn - representing ~20% of market capitalisation Proposal to halve the dividend payment to 19% of net profit which will increa
Slide 39: Main rationale - keep position as one of the strongest banks in Europe
Main rationale - keep position as one of the strongest banks in Europe Core Tier 1 capital ratio excluding transition rules Nordea compared with its European peer group, % 10,4 10,0 9,2 8,9 8,7 8,2 8,0 7,8 7,8 7,8 7,4 7,2 7,2 6,9 6,8 6,5 6,5 6,4 6,2 Nordea Tier 1 capital ratio excluding transition r
Slide 40: Proposal to reduce dividend
Proposal to reduce dividend Dividend payout, EURm 2008 dividend to be paid in 2009 proposed to be reduced to 19% of 1 297 ~ 42% net profit as part of capital strengthening No change to long-term dividend policy (>40% of net profit) Proposal will strengthen core Tier 1 519 ~ 19% capital through
Slide 41: Timetable for the rights offering
Timetable for the rights offering 11 March: Last day to determine and announce the exact terms of the rights offering 12 March: EGM to approve the Board of Directors’ resolution regarding the rights offering 13 March: First day of trading in the Nordea share after detachment of subscription rights 1
Slide 42: Improved capital position following capital measures of EUR 3bn
Improved capital position following capital measures of EUR 3bn Capital ratios pro forma end 2008 Sizeable improvement in core excl. transition rules, % 13.5 New targets capital 10.8 11.5 Tier 1 above new capital 10.0 targets to create financial 9.0 flexibility 11,7 Nordea’s capital position w
Slide 43: Reported capital position - revised capital targets
Reported capital position - revised capital targets Tier I ratio excl. transition rules Tier 1 ratios 9.3% 9,3 8,3 As part of entering the new Basel II 7,4 7,0 regime new targets for Tier 1 and total capital have been established The new policy is that Tier 1 and total capital should be 9% and
Slide 44: Concluding remarks
Concluding remarks Solid performance despite financial turmoil and economic recession Strong income momentum also in the fourth quarter Cost, risk and capital management takes the lead Continuation of the successful organic growth strategy – reducing the growth rate with strong focus on exec
Slide 45: The leading Nordic bank, acknowledged for its people
The leading Nordic bank, acknowledged for its people, creating superior value for customers and shareholders. 45