Nordea Bank Abp · OMXHEX:NDA_FI
Nordea Bank Abp — Investor Presentation (November 2008)
36 slides from Nordea Bank Abp's investor presentation, Nov 26, 2008
Slide 1: Nordea Shipping Seminar
Nordea Shipping Seminar Nordea - A Proven Business Model Through The Cycles Stockholm, November 26, 2008 Carl E. Steen, Head of Shipping, Oil Services and International Division (SOSID) Ronny Bjørnådal, Head of Syndicated Loans, SOSID Gunnar Negaard, Head of Credit, SOSID
Slide 2: Program & Speakers
Program & Speakers 10.00 – 10.30 Nordea’s strategy and position within shipping Carl E Steen Head of Shipping, Oil Services and International Division (SOSID) 10.30 – 10.50 The market for shipping syndications Ronny Bjørnådal Head of Syndicated Loans (SOSID) 10.50 – 11.10 Coffee break 11.10 – 11.30
Slide 3: Carl E. Steen, Head of Shipping, Oil Services and International Division
Carl E. Steen Head of Shipping, Oil Services and International Division 3
Slide 4: Key Messages
Key Messages Modest exposure to the container ship and the dry bulk markets Well diversified credit portfolio Strong syndication franchise. Successfully syndicated substantially all transactions to target hold level or below Credit portfolio is secured by mortgaged assets generating cash flo
Slide 5: Nordea - Shipping, Offshore and Oil Services Division
Nordea - Shipping, Offshore and Oil Services Division A World Leading Shipping and Offshore Bank One of the leading financial institutions to Ranked by Dealogic the global shipping and offshore industries the leading bookrunner of syndicated loans in Services companies within the 2007 and the
Slide 6: Strategy
Strategy Nordea shall be a leading provider of financial services to the international shipping and offshore industry Engage in active relationships with large, transparent and preferably publicly listed companies Maintain a diversified portfolio with high quality across our core segments and
Slide 7: Background – Market Update
Background – Market Update Massive ordering activity in the past few years has lead to the largest order-book ever in shipping The financial crisis has reduced availability of trade credit and capital to finance new vessels The downturn in the global economy has lead to a significant decline i
Slide 8: Dry Bulk Market (Capesize)
Dry Bulk Market (Capesize) 8 Source: R.S. Platou Economic Research a.s.
Slide 9: Container Ship Market
Container Ship Market 9 Source: R.S. Platou Economic Research a.s.
Slide 10: Tanker Market (Very Large Crude Carriers)
Tanker Market (Very Large Crude Carriers) 10 Source: R.S. Platou Economic Research a.s.
Slide 11: Offshore Market (Drilling Rig and Supply Vessels)
Offshore Market (Drilling Rig and Supply Vessels) Main driver for the drilling rig and supply boat market is E&P spending by oil and gas companies E&P spending has increased significantly during recent years as oil and gas prices have improved Future development in oil and gas prices will dete
Slide 12: World Fleets & Orderbooks
World Fleets & Orderbooks Source: Clarkson Research Studies Biggest orderbook since 1973. 833 Capesize vessels (equal to 155.3 million dwt or 109.8% of the existing fleet) is in order The industry is debating how much will be delivered. Shipowners will walk away from deposits, and part of the or
Slide 13: Well Diversified Portfolio
Well Diversified Portfolio EURm 14,148 distributed across segments and geographical areas Segment Booking Unit Non-Shipping Crude Oil Tankers New York 13 % 9% 9% Ferries London 2% Product Tankers 6% 9% Cruise 4% Oil Services 3% Chemical Tankers Singapore Floating Production 7% 14 % 2% Supply Vessels
Slide 14: Shipping and Oil Services Loan Portfolio (Q3 2008)
Shipping and Oil Services Loan Portfolio (Q3 2008) EURm Segment Utilised exposure In % Crude Oil Tankers 1,307 9.2% Product Tankers 1,288 9.1% Chemical Tankers 1,046 7.4% Dry Cargo 1,665 11.8% LPG Gas Tankers 252 1.8% LNG Gas Tankers 416 2.9% RoRo Vessels 301 2.1% Container Ships 311 2.2% Car Carrie
Slide 15: Well Managed Growth
Well Managed Growth EURm - Drawn/Utilized Amount 16.000 14.148 14.000 11.253 12.000 9.579 10.000 8.317 8.000 6.147 6.166 6.000 4.000 2.000 0 2003 2004 2005 2006 2007 2008 (Q3) Source: Nordea 15
Slide 16: Financial Results – 2003 to 2008 (3Q)
Financial Results – 2003 to 2008 (3Q)* EURm 2003 2004 2005 2006 2007 2008 (3Q) Total income 156 168 182 218 240 214 Total expenses (31) (32) (38) (43) (45) (37) Profit before losses 124 136 144 175 195 177 Loan recoveries / losses (2) 7 7 1 0 2 Operating profit 122 143 151 176 195 179 Loan volumes (
Slide 17: Low Loan Losses in Historical Perspective
Low Loan Losses in Historical Perspective EURm/Basis Points in relation to Total exposure 9.000 10 Loan losses since 7.500 6.000 8 2001 are modest at 4.500 6 3 bps of total 3.000 4 exposure 1.500 2 This is due to a 0 0 -1.500 strong focus on -2 -3.000 credit risk -4 -4.500 -6 During the last 2
Slide 18: Managing the Market Situation
Managing the Market Situation Nordea has been anticipating a softer market environment during the past 18 months thus we have applied a more rigorous risk assessment when determining which transactions to finance Lending activities are mainly focused on large, transparent and primarily publicly
Slide 19: Managing the Market Situation (cont’d)
Managing the Market Situation (cont’d) Our shipping and offshore loan books constitute only 3.0% and 1.2%, respectively, of Nordea’s total lending The vast majority of loans to the shipping and offshore industries are secured by mortgages in vessels and drilling rigs, often supported by contract
Slide 20: Ronny Bjørnådal, Head of Syndicated Loans, SOSID
Ronny Bjørnådal Head of Syndicated Loans, SOSID 20
Slide 21: Trends in the Syndicated Loan Market
Trends in the Syndicated Loan Market Volume off from 2007 levels due to reduced M&A and refinancing activities Significant tightening of credit standards and desire to use capital strategically reduce availability of credit dramatically Improved pricing and structure to adopt to new market rea
Slide 22: Trends in the Syndicated Loan Market (cont’d)
Trends in the Syndicated Loan Market (cont’d) Unique opportunity for new entrants Increased interest from private equity and distressed funds to invest in shipping companies 22
Slide 23: Spreads Back Up From Year End 2007 Levels
Spreads Back Up From Year End 2007 Levels Source: Reuters Loan Pricing Corporation / DealScan 23
Slide 24: Average Deal Size
Average Deal Size Nordea Lead Arranged Transactions (In million) $400 $388 $370 $375 $350 $325 $291 $300 $275 $260 $256 $250 $236 $225 $200 $175 $150 $125 $100 $75 $50 $25 $0 2003 2004 2005 2006 2007 2008 Source: Nordea 24
Slide 25: Global Loan Issuance Halved in 3Q08 from 3Q07
Global Loan Issuance Halved in 3Q08 from 3Q07 • Global lending plummets 54% to $475bn in 3Q08 from 3Q07 • A pattern of shorter tenors, with loans maturing within 1- 3 years accounting for 49% of total volume compared with 29% in 2007 • Average pricing has increased substantially across all rated bor
Slide 26: Nordea Lead Arranged Loan Volume 2002 – 2008
Nordea Lead Arranged Loan Volume 2002 – 2008 Loan volume lead arranged by In billion Nordea increased steady from 2002 – 2006 Shipping and Offshore Since 2H2007 loan volume has $30 $26,3 come down due to the credit crunch/financial crisis $25 $22,1 $22,9 Less transactions in 2008 but an $19,2
Slide 27: Dealogic Shipping League Tables (YTD 3Q2008)
Dealogic Shipping League Tables (YTD 3Q2008) Nordea tops Dealogic’s Shipping League Table for the first 9 months in 2008 as a Bookrunner 27
Slide 28: Gunnar Negaard, Head of Credit, SOSID
Gunnar Negaard Head of Credit, SOSID 28
Slide 29: Customers
Customers Nordic and international Good business reputation and credit profile Qualities of: management, ownership and group structure, market expertise, operational experience and environmental issues Leading market operators 29
Slide 30: Credit Parameters
Credit Parameters Target to operate anti cyclical in core segments Normally, loans shall be collateralised. Unsecured loans shall only be granted to the financially strongest customers, and then to companies that are substantially financed on a negative pledge basis Choice of covenants depends
Slide 31: Risk Management of the Portfolio
Risk Management of the Portfolio Consistent and prudent credit risk management over a long time period Integrated in the Nordea Group’s credit decision-making structure The overall exposure is limited by caps set each year by Nordea’s Board of Directors Aim at maintaining a significant and d
Slide 32: Distribution of Exposures by Booking Unit
Distribution of Exposures by Booking Unit New York 9% London 6% Singapore 14 % Norway Sweden 57 % 4% Finland Denmark 2 % 8% New York London Singapore Sweden Finland Denmark Norway 32
Slide 33: Average Credit Rating
33 20 0 3,2 3,4 3,6 3,8 4,0 4,2 4,4 20 2- 0 Q 20 2- 2 0 Q 20 2- 3 0 Q 20 3- 4 0 Q 20 3- 1 0 Q 20 3- 2 0 Q 20 3- 3 0 Q 20 4- 4 0 Q 20 4- 1 0 Q 20 4- 2 0 Q 20 4- 3 Average Credit Rating 0 Q 20 5- 4 0 Q 20 5- 1 0 Q 20 5- 2 0 Q 20 5- 3 0 Q 20 6- 4 0 Q Average rating 20 6- 1 0 Q 20 6- 2 0 Q 20 6- 3 0 Q 2
Slide 34: Development in loan loss provisions
Development in loan loss provisions 1,00 % 0,80 % 0,60 % 0,40 % 0,20 % 0,00 % -0,20 % -0,40 % 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Loan provisions Average loan provisions 34
Slide 35: Carl E. Steen, Head of Shipping, Oil Services and International Division
Carl E. Steen Head of Shipping, Oil Services and International Division 35
Slide 36: Key Messages
Key Messages Modest exposure to the container ship and the dry bulk markets Well diversified credit portfolio Strong syndication franchise. Successfully syndicated substantially all transactions to target hold level or below Credit portfolio is secured by mortgaged assets generating cash flo
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