Nordea Bank Abp · OMXHEX:NDA_FI
Nordea Bank Abp — Q1 2014 Earnings Presentation
26 slides from Nordea Bank Abp's earnings presentation, Mar 31, 2014
Slide 1: First Quarter Results 2014
First Quarter Results 2014 International telephone conference Christian Clausen, President and Group CEO Christian Clausen, President and Group CEO
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: Highlights
Highlights Nordea delivers stable income and improving cost efficiency Continued stable but low lending demand Pick up in corporate advisory business Continued strong activity in the savings area Loan losses are down 12% q-o-q Operating profit up 6% on Q1/13 Cost/income ratio improved to
Slide 4: Q1 2014 financial results highlights
Q1 2014 financial results highlights 14
Slide 5: Financial result
Financial result EURm Q1/14 Q4/13 Chg % Q1/13 Chg % Net interest income 1 362 1 390 -2 -1 1 358 0 5 Net fee & commission income 704 703 0 0 623 13 16 Net fair value result 411 333 23 24 444 -7 -7 Total income* 2 501 2 469 1 2 2 506 0 3 Staff costs -756 -739 2 2 -754 0 4 Total expenses -1 237 -1 283
Slide 6: Net interest income
Net interest income NET INTEREST INCOME DEVELOPMENT, EURm COMMENTS 1 358 1 391 1 386 1 390 1 362 • NII unchanged vs Q1/13 • Subdued loan demand • Up 5% in local currencies • Up 3% in customer areas in local currencies • Two interest rate days less than Q4/13 Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 6
Slide 7: Net interest margin and volumes
Net interest margin and volumes BLENDED NET INTEREST MARGIN DEVELOPMENT COMMENTS** 1.06% 1.07% 1.08% 1.07% 1.08% • Blended net interest margin up 1 bps • Lending margins up • Deposit margins down • Both corporate and household Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 lending volumes largely unchanged in local
Slide 8: Net fee and commission income
Net fee and commission income NET FEE AND COMMISSION DEVELOPMENT, EURm COMMENTS 703 704 623 664 652 • Up 13% y-o-y 180 194 170 172 Lending commissions • Pick up in corporate advisory 178 145 business 143 147 Payments & cards 150 138 • Leading bank in Debt Capital Markets and Equity Capital 340 383 3
Slide 9: Strong momentum in savings operations
Strong momentum in savings operations AUM DEVELOPMENT, EURbn COMMENTS • All time high AuM at EUR 239bn 238.7 232.1 • Highest quarterly net inflow in 10 years, 226.8 with all segments contributing positively 222.1 217.8 • Record high GWP in Life & Pension up 16% y-o-y • Market Return Products share o
Slide 10: Net fair value
Net fair value NET FAIR VALUE DEVELOPMENT, EURm COMMENTS 444 416 411 • Corporate customer activity still subdued 346 333 166 146 169 • Largely unchanged in other areas vs. 124 82 Q1/13 278 270 251 222 242 Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Other areas Customer areas 10
Slide 11: Expenses under solid control
Expenses under solid control TOTAL EXPENSES, EURm COMMENTS 1 267 1 256 1 283 1 234 1 237 • Improved cost/income ratio to 49% from 51% in Q1/13 Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 11
Slide 12: Improved credit quality
Improved credit quality TOTAL NET LOAN LOSSES*, EURm COMMENTS 236 241 215 203 198 • Loan losses down 12% q-o-q 186 180 171 158 • Impaired loans down 4% q-o-q • Non-performing loans down 9% • Provisioning ratio increased from 43% to 45% Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 • Continue
Slide 13: High Liquidity Coverage Ratio
High Liquidity Coverage Ratio LCR DEVELOPMENTS, % COMMENTS 231 • Issuance of EUR 9bn during Q1 194 • Conservative liquidity management 158 159 154 134 133 134 140 • LCR compliant 130 127 121 117 114 127 • Liquidity buffer EUR 61bn • 76% of the wholesale funding is long-term funded Q1/13 Q2/13 Q3/13
Slide 14: Risk exposure amount
Risk exposure amount RISK EXPOSURE AMOUNT, EURbn* COMMENTS 182 181 • CRD IV increases REA by EUR 9bn 179 • REA efficiencies EUR 10bn in the 168 168 quarter of which EUR 6bn from A-IRB 162 160 159 • Norwegian LGD-floors impact 155 EUR 1bn • REA up following market- and operational risk Q1/12 Q2/12 Q3
Slide 15: Fully loaded Basel III CET 1 ratio up 70 bps
Fully loaded Basel III CET 1 ratio up 70 bps COMMON EQUITY TIER 1 RATIO DEVELOPMENT, % 14.9% 0.93% 0.41% 0.18% 0.35% 0.24% 14.6% 0.65% 0.09% 13.9% Core Tier 1 CRD IV Norwegian Fully loaded A-IRB approval Efficiencies FX, credit Other Profit net Fully loaded ratio Q4 2013 LGD floors Basel III CET 1 q
Slide 16: Improved return
Improved return RETURN DEVELOPMENT, GROUP AND BUSINESS AREAS GROUP RETAIL BANKING WHOLESALE BANKING WEALTH MANAGEMENT RaRoCaR RaRoCaR RaRoCaR RaRoCaR 15% 14% 15% 29% 14% 13% 13% 24% Q1/13 Q1/14 Q1/13 Q1/14 Q1/13 Q1/14 Q1/13 Q1/14 INCOME 0% INCOME -2% INCOME 4% INCOME 8% COSTS -2% COSTS -4% COSTS -7%
Slide 17: 2015 plan update
2015 plan update 14
Slide 18: The 2015 plan – an update
The 2015 plan – an update Nordea market commitments Key initiatives and levers Strong capital generation and Capital initiative to improve the CET1 ratio increased payout ratio in 2014 and 2015 while maintaining a strong capital base Initiatives for income generation To reach a ROE of 13% at the req
Slide 19: Nordea capital policy
Nordea capital policy BASEL III CAPITAL RATIO TARGETS* ~4.0p.p. >17% >13% 6.8 p.p. 11.3% 4.5% Min CET1 Additional regulatory Blended CET1 ratio P2, Ccyb, CET1 policy Sub debt min Total capital ratio requirements CET1 requirements Management buffer requirements * Fully phased in 19
Slide 20: Strong capability to generate capital
Strong capability to generate capital COMMON EQUITY TIER 1 CAPITAL*, EURm COMMENTS Dividend payout (accrued dividend for Q1/14) CET 1 capital 20 677 21 961 23 112 23 271 • Doubled the capital base in 7 years 19 103 17 766 14 313 • Increased CET 1 capital ratio from 11 689 12 821 6.8% to 14.6% 2006 2
Slide 21: Income holding up
Income holding up Re-pricing New customers Ancillary income • Lending margins up11 bps • Continued strong inflow of • Strengthened capital markets y-o-y (RB) household customers ~ position 24,000 new (externally • Lending margins up15 bps • High volumes in ECM & DCM recruited) Gold and Premium y-o-y
Slide 22: The accelerated cost efficiency programme on track
The accelerated cost efficiency programme on track Total deliveries amounting to EUR 255m* of which EUR 45m in Q1/14 Reducing activity-related expenses Adjusting the distribution to meet (e.g. travelling and consultants) changed customer behaviour P P Increasing efficiency within IT, Reducing intern
Slide 23: RoE – strong underlying business performance
RoE – strong underlying business performance +1.6% 12.7% -1.3% Re-pricing Capital increase Ancillary income FX Lower Other loan losses 11.4% 11.1% Volumes Q1 2013 Business External Q1 2014 performance factors 23
Slide 24: Embarking on the process of simplification
Embarking on the process of simplification Banking sector and customer demands are changing Digitalisation a key driver Nordea to become more agile and responsive to changing customer needs Simplification process is ongoing in all parts of the bank Reviewing processes, products and IT-syst
Slide 25: Progress in summary
Progress in summary PROGRESS ON NORDEA FINANCIAL PLAN 2015 IN Q1/14 CET1 capital ratio • Fully loaded Basel III CET1 capital ratio up 70 bps to 14.6% P • Risk Exposure Amount Total efficiencies of EUR 18bn of which 10bn in the quarter P Income growth • Income holding up (P) Costs • Improved cost eff
Slide 26: First Quarter Results 2014
First Quarter Results 2014 International telephone conference Christian Clausen, President and Group CEO Christian Clausen, President and Group CEO