Post on 15-Sep-2020
Second Quarter Results 2014Investor presentation
Fourth Quarter and Full Year Results 2014Investor presentationChristian Clausen, President and Group CEO
Berenberg European Conference USA 2015 Torsten Hagen Jørgensen, Group CFO
This presentation contains forward-looking statements that reflect management’s currentviews with respect to certain future events and potential financial performance. AlthoughNordea believes that the expectations reflected in such forward-looking statements arereasonable, no assurance can be given that such expectations will prove to have beencorrect. Accordingly, results could differ materially from those set out in the forward-lookingstatements as a result of various factors.
Important factors that may cause such a difference for Nordea include, but are not limitedto: (i) the macroeconomic development, (ii) change in the competitive climate, (iii) changein the regulatory environment and other government actions and (iv) change in interest rateand foreign exchange rate levels.
This presentation does not imply that Nordea has undertaken to revise these forward-looking statements, beyond what is required by applicable law or applicable stockexchange regulations if and when circumstances arise that will lead to changes comparedto the date when these statements were provided.
Disclaimer
2 •
The relationship bank business model has delivered
14
3 •
4
Nordea has a unique position in the Nordics
Note: Illustration excludes, Baltic's (406,700 total customers) and Russia (67,000 total customers)
1: Ranking in Nordic region
Sweden
Norway
Finland
Denmark
Relationships (m)
Market position
Superior customer franchise Global capabilities on par with international peers1
#1-2
TotalNordea
10.2 #1 #1
Capital Markets Asset Management
Life & Pension Private Banking
#1
#1
#1
#1
Retail Customers Corporates & Institutions
4.2 #2-3
0.9 #2
2.9 #1-2
1.8 #2
#1-2
#2
#1
Market position
5
-2%
0%
2%
4%
2012 2013 2014 2015E*
0,6
0,8
1
1,2
1,4
1,6
1,8
Pro-longed period of low growth and interest rates continued
• EU economy lacks drivers, expansionary monetary policy
• Pressure on deposit margins, lower funding costs
• Slow recovery and increasing geopolitical risk
• Limited volume growth and increasing focus on asset quality
• Significant FX impact in 2014 on income and costs
• Current FX-rates indicate similar negative impact also in 2015
GDP Interest rates FX**
Q3 14Q1 14 Q2 14 Q4 14
EUR/SEK(+5%)
EUR/CHF(-15%)
-0,4
-0,2
0
0,2
0,4
0,6
0,8
1
1,2
Euribor 3m
Stibor 3mSweden
Norway
Denmark
Finland
*Nordea estimate**Indexed, 1.1.2014=1
EUR/USD (-18%)
EUR/RUB(+26%)
Q1 15Q3 14Q1 14 Q2 14 Q4 14 Q1 15 Q2 15Q2 15
108 109 109 108 103
Q1/14 Q2/14 Q3/14 Q4/14 Q1/15
302 305 308 309 311
172 172 171 175 172
Q1/14 Q2/14 Q3/14 Q4/14 Q1/15
Lending volumes Deposit volumes
Net interest margin and volumes
• Blended margin down 5 bps to 103 bps
• Slightly improving lending margins
• Pressure on deposit margins
• Lending volumes up 3% y-o-y*
COMMENTS
* Excluding repos and FX
LENDING AND DEPOSIT VOLUMES*, EURbn
6 •
BLENDED NET INTEREST MARGIN DEVELOPMENT, BPS
4429
1738
33
1955
33
23
5328 28
• All time high AuM at EUR 290bn
• Record high net inflow of EUR 7.2bn
• Continuous strong and well diversified inflow
• High customer interest in balancedfunds – 53% of net sales
• Nordea Stable Return Fund has been the best-selling fund in Europe in the beginning of 2015
• 72% of composites outperformed benchmark over a 3-year period
Strong AuM growth with balanced risk levels in customer savings
AUM DEVELOPMENT, EURbn COMMENTS
238.7248.3 254.5 262.2
290.0
Q1/14 Q2/14 Q3/14 Q4/14 Q1/15
AUM FUNDS SPLIT, %
Funds AuMQ1/14
Funds AuMQ1/15
Net sales Performance
Balanced
Equities
Fixed incomeand MM
7 •
EUR 96.5bn EUR 132.1bn
237 262 225335 340
174 9466
32
304411
356291
367
644
Q1/14 Q2/14 Q3/14 Q4/14 Q1/15
Net fair value
NET FAIR VALUE DEVELOPMENT, EURm
• Supporting corporate and institutional customers to manage their risks
• Customer areas up from strong previous quarter
• High activity in capital markets
Customer areas Other areas
COMMENTS
8 •
Expenses under solid control
TOTAL EXPENSES*, EURm COMMENTS
* Excluding non-recurring items
• Cost/income ratio improved 520 bps to 43.6%
• Costs are down 3.4% in local currencies and excluding variable pay
• Staff costs up 3% in local currencies
• Higher variable pay and pension expenses
• Other expenses down 12%
• Cost programme delivering according to plan
9 •
756 749 728 758 777
426 390 378 416 363
55 57 6653 44
1 237 1 196 1 1721 227 1 184
Q1/14 Q2/14 Q3/14 Q4/14 Q1/15
Staff costs
Depreciations
Other expenses
10 *Portfolio of total loans to the public, excluding reverse repurchase agreements
Finland Russia
Oil Danish agriculture
• Slight improvement in household and corporate PD’s
• Loan losses at moderate level of 16 bps, down from 17 bps
• Slow growth but underlying macro conditions are stable
• Credit exposure mainly towards large int’l Russian, and Nordic, corporates
• 89% of credit portfolio in USD or EUR - financing large Russian corporates’ international operations
• Loan losses are at low levels – limited risk on increased loan losses
• Limited risk of increased loan losses, stress tests performed on customer level
• Likely negative effect on Norwegian economy, mitigated by lower interest rates, weaker NOK and sovereign oil fund spending
• Agriculture sector affected by world market price pressure; negative effect on crop, milk and pork prices
• Polarisation between strong and weak farmers
21% of portfolio* 2% of portfolio
2% of portfolio 2% of portfolio
Special attention areas
11
CET1 ratio build-up, %
Nordea capital considerations
* Countercyclical buffer only applied for Sweden, in accordance with Swedish FSA Memorandum on Capital Requirement for Swedish banks (Feb 17, 2015)** In the Swedish FSA Memorandum on May 11, 2015 (Adjusted requirement on the assessment of capital requirements from three significant risk types), the
Swedish FSA published the final methods for assessing requirements for three different risk types. The CET1 requirement for Nordea based on these methods is estimated to 0.7%. Note that individual Pillar 2 CET1 requirements for other risks are estimated and agreed bilaterally with the Swedish FSA in the SREP and can vary over time. In the Swedish FSA Memorandum on Capital Requirements for Swedish Banks (Feb 17, 2015) a standardised CET1 value of 1.5% was used for other Pillar 2 risks.
10.0
Pillar1 Swedish & Norwegian Mortgage
Risk Weight floor
1.1
Counter-cyclical Buffer*
(0-2.5%)
0.2
14.80.8
CET1 level as per
Swedish FSA*
Current Manage-
mentbuffer
Pillar 2 (IRRBB, pension,
conc risk)**
0.7
Pillar 2Systemic
Risk Buffer
2.0
0.8
Pillar 2 (other)**
1.5 15.6
NordeaQ1/15
Delivering on the 2015 plan - Progress in summary
• CET 1 capital ratio up 100 bps to 15.6%
PROGRESS ON NORDEA FINANCIAL PLAN 2015 IN Q1/15 VS Q1/14
CET1 capital ratio
Risk exposure amount
Income growth
Costs
Loan losses
RoE
• Impact from capital management of EUR
31bn since 2013 of which 1bn in the quarter
• Income up 11%
• Cost programme delivering according to plan
• Loan loss ratio 14 bps
• RoE up 290 bps to 14.3%
12 •
Simplification • Progressing according to plan
Strategic priorities 14
14 •
SIMPLIFICATION
Three transforming drivers for the banking industry
Balance sheetregulations
Operational regulations Digitalisation
Not over yet More to come Behaviour changing
Fewer, more flexible core products
Simplification of customer data
Simplification will be the lever in our transformation
15 •
Investment in new IT platforms
16
Nordea strategic priorities
Improved income mix and growth
Continued cost efficiency
Disciplined capital management
Stringent risk management
Strategic priorities
Build on global product capabilities and superior Nordic
distribution power
Sustain actively managedportfolio with low volatility
1
2
3
Leverage on Pan-Nordic platforms and scale
opportunities
Retail Banking – Household
Branch optimisation and cash removal
695
238
992
718
Cash locationsBranch locations
-30%
-67%
17 •
Improved income mix and growth
Continued cost efficiency
• Increase share of wallet
• Mortgage growth with stable margins
• Strengthen online service, sales and advice
• Branch optimisation andcash removal
• Product and service clean-up and simplification
• Process automation/consolidation
• IT simplification/develop future platforms for full economies of scale
* Year-end 2011 compared to year-end 2014
Retail Banking – Corporate
Volume development 2012-2014*
Lending REA
-10%
-23%
18 •
Improved income mix and growth
• Increase share of wallet
• Active customer selection to shift business mix
• Mitigation of negative interest rates through actions towards “Professional depositors”
Disciplined capital management
• Improved quality of existing customers (financial strength, collateralisation)
• Continued improvements of capital management
• Strengthened risk management models
• Cross-sales of capital light products
SOO = Shipping, Oil and Offshore* Share of important relationships (%, y-axis) vs. Quality index score (x-axis)
Wholesale Banking – CIB and SOO
0
25
50
75
100
(40) 0 40 80
Gre
enw
ich
Surv
ey* Nordea
Peer 2
Peer 1
Peer 3
Peer 4
Peer 5
Strong large corporate franchise
2012 2014
Fee
&
com
mis
sion
inco
me +15%
19 •
Improved income mix and growth
• Increase share of wallet, customer selection to shift business mix
• Accelerated shift from lending to capital market financing/syndications
• Strengthening of advisoryvalue propositions
Disciplined capital management
• Active business selection withfocus on profitability
• Management of low yielding relationships
• Agency/intermediation role,optimised rating models/AIRB
Improved income mix and growth
• Selective strengthening of international distribution • New York equities distribution
• Improve competence pool in select markets and products
Continued cost efficiency
• Highly cost-efficient operation
• Acceleration to e-markets
• New simplified payment platform
• Further long term efficiencies expected in line with Group Simplification deliveries
C/I ratio of Capital Markets, FY2014*
36
48
67 6868 68 72 72 7579 80 83
88
Nordea Nordic and International peers
*Best proxy to Nordea CMP used as benchmark. All ratios calculated in local currencies.
WB – Capital Markets & Transaction Services
20 •
*External principles
Wealth Management
62 60 5650
2011 2012 2013 2014
39 38 3632
2011 2012 2013 2014
% C
ost /
Inco
me
in P
BB
p C
ost /
AuM
-19%
-18%
Pursuit of scale and profitable growth
RO
E* in
L&
P
2013 2014
12.5%16.7%
+4.2
21 •
Improved income mix and growth
• Strengthen sales, advisory and service excellence
• Grow internationally through Distribution Partners
• Develop digital offerings
• Leading retirement offering
Continued cost efficiency
• Benchmarking with global best practices
• Scalable and reliable IT platforms
• Performance culture
Second Quarter Results 2014Investor presentation
Fourth Quarter and Full Year Results 2014Investor presentationChristian Clausen, President and Group CEO
Berenberg European Conference USA 2015 Torsten Hagen Jørgensen, Group CFO