Nordea Bank Abp · OMXHEX:NDA_FI
Nordea Bank Abp — Investor Presentation (September 2008)
49 slides from Nordea Bank Abp's investor presentation, Sep 16, 2008
Slide 1: Investor presentation Nordea Markets, Stockholm, 16 September 2008
Investor presentation Nordea Markets, Stockholm, 16 September 2008 Carl-Johan Granvik Member of Group Executive Management, Group Chief Risk Officer
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: Agenda
Agenda Clear growth strategy towards Great Nordea Result summary Q2 2008 Investors’ key considerations Macro economic outlook Credit quality Liquidity and funding Capital position Conclusion and summary 3
Slide 4: Clear growth strategy towards Great Nordea
Clear growth strategy towards Great Nordea 4
Slide 5: Nordea – with an outstanding position to leverage from
Nordea – with an outstanding position to leverage from Global, 9A unique customer base European, Other*) Approx. 10 million personal customers 19% Norway Finland 700.000 corporate customers 9Strong distribution power 11% 21% #2 #1 Sweden 22% # 2-3 Denmark ke t s More than 1,300 branches ar 9Economie
Slide 6: The organic growth strategy – 4 Pillars
The organic growth strategy – 4 Pillars Selected global New European Existing Nordic customers and new customers and European Markets business lines Household strategy Private Banking Corporate strategy Based on strong Selective growth competencies strategy • Migration to • Added advisory • New Corp
Slide 7: Significant potential in migrating household customers to higher segments
Significant potential in migrating household customers to higher segments Income* Customers (Index) (millions) Gold and Private Banking 4,0 1200 customers are the engines for 1200 3.7 3,5 revenue growth 1000 3,0 Approx. 1 million potential Gold 800 4x 2,5 customers in the customer 2.4 2,0 600 ba
Slide 8: High corporate customer activity
High corporate customer activity Total income corporate customers, Income from corporate customers up 21% EURm compared to Q207 1 029 Strong lending growth – margins are improving Improved market position primarily in 847 Corporate Merchant Banking Increased lending market shares especially
Slide 9: Continued high activity in New European Markets
Continued high activity in New European Markets New European Markets total Selective growth strategy on track income, EURm Total lending up 85% - strongest growth in 107 Russia 94 Total income up 67% 83 More than 5% of Group income 64 68 Operating profit doubled to EUR 51m Total number o
Slide 10: Reinforcing and leveraging strong positions in selected Global and European business lines
Reinforcing and leveraging strong positions in selected Global and European business lines Strong position in wealth management # 1 position in Shipping in Luxemburg and Switzerland World-leading provider of shipping Full scale wealth management offering finance to clients in 125 countries Lev
Slide 11: Next level of integration leads to further efficiency gains
Next level of integration leads to further efficiency gains New Operating Model Nordic Banking Banking Group Operations Objectives Products People & Identity Improve customer experience Segment Household & Simpler value chain - further Corporate Account Products efficiency gains and higher Group C
Slide 12: Unified customer and product delivery processes to free up time for sales
Unified customer and product delivery processes to free up times for sales – Future branch 2007 focus on personal customer 2008 focus - expanding initiative segment to corporate customers Reduced administrative work and Increase advisory time with corporate uniformed contact policy customers F
Slide 13: A clear strategy for growth
A clear strategy for growth Target Revenue growth Cost growth Risk-adjusted profit CAGR 7 years 7-10% 4-8% 10% horizon 2007- 2008 Existing Nordic New Global and Volume and Investments Investments Improved Profit business grow th European European salary in New in Nordic efficiency grow th initives M
Slide 14: Result summary Q2 2008
14 Nordea” Result summary Q2 2008
Slide 15: Income growth in Nordea (EURm) – H1/H1
Income growth in Nordea (EURm) – H1/H1 1.1% -2.7% 0.7% 43 1.5% 0.2% 27 -103 9 6.8%* -2.1% 2.6% 57 -81 -1.0% 100 -40 -0.5% 3.2% 3.4% -18 129 3 953 3 830 Inco me Lending New Transactio n Savings Capital Other A sset Listed/No n Interest Ekspo rt- Inco me H1/07 Euro pean acco unts acco unts M arket M g
Slide 16: Nordic household mortgages, volumes and margins
Nordic household mortgages, volumes and margins EURbn % 90 1,0 80 84,0 85,8 81,1 82,8 76,5 78,5 0,8 70 74,6 72,4 67,6 69,4 60 0,6 50 40 0,4 30 20 0,2 10 0 0,0 Q1/06 Q2/06 Q3/06 Q4/06 Q1/07 Q2/07 Q3/07 Q4/07 Q1/08 Q2/08 16
Slide 17: Nordic corporate lending, volumes and margins
Nordic corporate lending, volumes and margins EURbn % 120 1,4 100 111,1 1,2 106,3 101,9 94,7 97,5 92,1 1,0 80 88,0 83,5 84,1 80,4 0,8 60 0,6 40 0,4 20 0,2 0 0,0 Q1/06 Q2/06 Q3/06 Q4/06 Q1/07 Q2/07 Q3/07 Q4/07 Q1/08 Q2/08 17
Slide 18: Nordic household deposits, volumes and margins
Nordic household deposits, volumes and margins EURbn % 70 2,4 60 64,8 2,0 61,2 62,1 57,9 59,8 50 53,3 54,2 54,7 55,2 51,4 1,6 40 1,2 30 0,8 20 10 0,4 0 0,0 Q1/06 Q2/06 Q3/06 Q4/06 Q1/07 Q2/07 Q3/07 Q4/07 Q1/08 Q2/08 18
Slide 19: Expense growth in Nordea (EURm) H1/H1
Expense growth in Nordea (EURm) H1/H1 1.5% -2.5% 3.0% 30 -50 6.4% 60 4.7% -0.3% -5 93 2128 2 000 Expenses H1 Wage increases Variable salaries Investments in Volume driven Efficiency gains Expenses H1 2007 grow th areas production costs 2008 incl. Russia 19
Slide 20: Risk-adjusted profit
Risk-adjusted profit Accumulated risk-adjusted profit Accumulated risk-adjusted profit 14.1% 14,7% 15,1% since target was introduced 1 January 14,1% 12,3% 2007 Growth in risk-adjusted H108/H107 down 1% 8,3% Growth in risk-adjusted profit in customer areas up 5% H108/H107 2,8% Target to doubl
Slide 21: Vision and financial targets
Vision, values and strategy Vision and financial targets The targets reflect the ambitious vision on value creation to be reached through a continued high profitability and strong growth of business and income Long term financial targets Target 2007 H108 TSR (%) In the top quartile of # 3 of 20 # 5
Slide 22: Investors' key considerations
Investors’ key considerations 22
Slide 23: Macro economic outlook
23 Nordea” Macro economic outlook
Slide 24: Nordic manufacturing confidence melting
Nordic manufacturing confidence melting 24
Slide 25: Nordic Consumer confidence turns down - hit by the global turmoil
Nordic Consumer confidence turns down - hit by the global turmoil 25
Slide 26: Normal business cycle in the Nordics
Normal business cycle in the Nordics Business cycle bottoms out 2009 Risk for a longer downturn House prices will decline Construction weakens GDP-forecasts 2007 2008 2009 2010 Norway 6,2 2,9 1,4 2,1 Finland 4,5 2.3 1,3 2,0 Denmark 1,7 0,9 0,6 1,0 Sweden 2,7 1,5 1,0 1,9 Source: Nordea Market
Slide 27: Macroeconomic imbalances causes falling GDP growth in the Baltic economies
Macroeconomic imbalances causes falling GDP growth in the Baltic economies % Inflation 18 16 14 Baltic economies clearly overheated – and a 12 slowdown has started 10 8 Falling house prices 6 4 Decelerating import growth 2 0 Decelerating growth in private consumption -2 01 2002 07 01 2003 07
Slide 28: Credit quality
Nordea” Credit quality
Slide 29: Well diversified credit portfolio
Well diversified credit portfolio Share of total lending, EUR 270bn Other NEM Strong diversification: Total lending 8% 5% DK spread over four largely equally sized 25% markets SE 26% Well diversified corporate lending FI NO 19% portfolio 17% Other 10% Real estate Renting, 26% Consulting Other se
Slide 30: The corporate lending portfolio is well diversified…
The corporate lending portfolio is well diversified… Share of total lending, EUR 270bn Well-diversified lending mix measured by customer segments and industry Mortgage 32% Corporate portfolio – stable industry split over time Corporate 56% Total corporate lending per industry, EURbn Household Ch
Slide 31: …also in the Baltic countries
…also in the Baltic countries Share of total lending, EUR 270bn Baltics Other Total lending in the Baltic countries 2% 8% DK accounts for 2.5% of Nordea’s loan 25% portfolio SE 26% FI Nordic related lending accounts for approx. 19% 25% of corporate portfolio NO 17% Well diverisified Baltic lendi
Slide 32: Small changes seen in the up- and downgrading of corporate customer exposure
Small changes seen in the up- and downgrading of corporate customer exposure Larger rating upgrades than downgrades during the last 12 months Somewhat more rating downgrades than upgrades during Q2 2008 Exposure (EURm) Q2 2007 Q1 2008 Q2 2008 35 000 30 000 25 000 20 000 15 000 10 000 5 000 - S 6
Slide 33: Limited loan losses
Limited loan losses Loan losses, EURm 151 140 121 Net loan losses EUR 57m recorded in the 101 98 first half year 36 Loan loss ratio of 5 basis points 21 Both reversals and new provisions lower -13 -6 than last quarters -28 Credit quality in the well diversified lending -85 portfolio remains
Slide 34: Exposure to financial institutions
Exposure to financial institutions Limited effects from Lehman Brothers Holdings Inc’s chapter 11 filing No bond or credit facility exposure Insignificant net counterparty risk exposure in derivative transactions, net of collateral Limited replacement costs for derivative contracts The eff
Slide 35: Increased loan losses in the Baltic countries – from exceptionally low levels
Increased loan losses in the Baltic countries – from exceptionally low levels Loan losses in basis points of total Baltic lending Insignificant individual loan losses in H1 Impaired loans of EUR 80m - increased from very low levels, EUR 29m 10 Impaired loans in relation to total lending 1.01%
Slide 36: Largely stable impaired loans
Largely stable impaired loans Impaired loans and recivables, The overall credit quality remains strong EURm Modest increase in impaired loans Increase in impaired loans explained by increases in 488 524 515 576 in the Baltic countries – from very low levels 542 Majority of impaired loans are
Slide 37: Continued reduction in impaired loans gross – minor increase in personal customers
Continued reduction in impaired loans gross – minor increase in impaired loans personal customers 1.20% Impaired loans gross as per cent of lending to each segment and total 1.00% 0.80% Corporate customers 0.60% Personal customers Nordea 0.40% 0.20% 0.00% Q406 Q107 Q207 Q307 Q407 Q108 Q208 37
Slide 38: Continued reduction in impaired loans gross in most industries
Continued reduction in impaired loans gross in most industries – slight increases in some industries 3.00% Impaired loans gross as per cent of lending to each industry 2.50% 2.00% Trade & services Construction Manufacturing 1.50% Agriculture & fishing Transp & communication Real estate 1.00% 0.50% 0
Slide 39: Baltic countries impaired loans, gross
Baltic countries impaired loans, gross 39
Slide 40: Impaired loans and total allowances
Impaired loans and total allowances EURm Q2 2008 Q1 2008 Q4 2007 Q3 2007 Q2 2007 Q1 2007 Impaired loans, gross, individually 1,478 1,443 1,432 1,459 1,468 1,465 assessed Allowances for individually assessed 547 562 603 632 659 668 loans Impaired loans, net, individually assessed 931 882 830 827 809
Slide 41: Liquidity and funding
Nordea” Liquidity and funding
Slide 42: Strong balance sheet – reflecting the business profile
Strong balance sheet – reflecting the business profile Loans to the public financed by deposits from the public and EUR 129 bn in wholesale funding, including covered bonds Wholesale funding approximately 64% long term financed and 36% short term Equity EUR 17.5bn end July Total Assets, EURbn
Slide 43: Strong and broad funding base in Nordea
Strong and broad funding base in Nordea Total external funding EUR 278bn Europe CD/CP Fin. Inst. Net Competitive edge from leading 7% 3% Nordic market position and strong US CD/CP and broad deposit base 7% 40% of wholesale funding is from Domestic CD's 3% covered bonds (20% of total Nordea exter
Slide 44: Focus on securing attractive funding
Focus on securing attractive funding Total issuance of short and long term funding, Total wholesale funding approx. EUR 129bn EURm 150,000 (approx. EUR 60bn covered bonds) – 64% 120,000 long-term financed 90,000 • Nordea benefiting from well recognized name with high stable rating (Aa1/AA- 60,000
Slide 45: Capital position
45 Nordea” Capital position
Slide 46: Higher RWA due to volume growth
Higher RWA due to volume growth EURbn 214 205 201 194 189 176 176 190 RWA incl. transition rules EUR 177 171 214bn, up 6,4% since Q1 Strong corporate lending Market risk slightly higher Approval of IRB Retail will reduce RWA with 10-12% Q2/07 Q3/07 Q4/07 Q1/08 Q2/08 RWA incl transitionrules
Slide 47: Stable capital position
Stable capital position Reported Tier I ratio 7.0% Tier I ratio Tier I ratio excl. transition rules 8,3 7,9 7.9% 7,0 7,0 Strong capital position based on stable profit generation and expected approval of the IRB Retail portfolio as well as considering Pillar II regulations. New capital targe
Slide 48: Conclusions
Conclusions 9 Strategy to leverage on strong platform and create organic growth 9 Strong delivery from growth initiatives – execution according to plan 9 Impact from volatile and weakened financial markets 9 Credit quality remains solid 9 Strong and well diversified funding base 9 Maintained long te
Slide 49: Investor presentation Nordea Markets, Stockholm, 16 September 2008
Investor presentation Nordea Markets, Stockholm, 16 September 2008 Carl-Johan Granvik Member of Group Executive Management, Group Chief Risk Officer
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