Nomura Annual Financials Conference · 2011. 9. 2. · This presentation does not imply that Nordea...
Transcript of Nomura Annual Financials Conference · 2011. 9. 2. · This presentation does not imply that Nordea...
Nomura Annual Financials Conference 31 August 2011 Fredrik Rystedt Group CFO / EVP
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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 can be given that such expectations will prove to have been correct. Accordingly, results could differ materially from those set out in the forward-looking statements as a result of various factors.
Important factors that may cause such a difference for Nordea include, but are not limited to: (i) the macroeconomic development, (ii) change in the competitive climate, (iii) change in the regulatory environment and other government actions and (iv) change in interest rate and 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 stock exchange regulations if and when circumstances arise that will lead to changes compared to the date when these statements were provided.
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The Nordic economy
Sovereign mistrust accelerates…
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…however the Nordics are still doing fine
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Stable macroeconomics in the Nordic region
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Nordic GDP growth, %, y/y
Source: Nordea Markets
Covered bond market continues to be solid
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24
28
32
36
40
44
48
okt-10 dec-10 feb-11 apr-11 jun-11 aug-11
Z-spread (bps)
Peer Nordea Peer Peer Peer Peer
20
30
40
50
60
70
80
90
okt-10 dec-10 feb-11 apr-11 jun-11 aug-11
Z-spread (bps)
Peer Peer Nordea Peer Peer Peer Peer
Nordic banks’ Euro covered bond development Nordic banks’ US$ covered bond development
Source data: Barclays Capital and Bloomberg, 11 August 7
The Riksbank is now expected to cut rates
8 Source: Nordea Markets
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H1 2011 results
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Summary of H1 2011 • Solid business momentum is maintained
• Strong inflow of new customers • Good revenue growth in customer areas • Maintained high level of business volume
• Credit quality continues to improve
• Reduction of impaired loans • Positive credit migration • Loan losses are at the lowest level since 2008
• Result impacted by volatile markets
• Trading result down from last quarter’s high level • Higher funding costs through reduced risk exposure
• Continued strengthening of the capital position
• Core Tier 1 reaching 11% (10.7%)
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Result highlights
EURm H1/11 H1/10 Chg %
Net interest income 2,650 2,484 7
Net fee and commission income 1,225 1,013 21
Net result items at fair value 900 887 1
Other income 77 80 -4
Total income 4,852 4.464 9
Staff costs -1,512 -1,388 9
Total expenses -2,540 -2,350 8
Profit before loan losses 2,312 2,114 9
Net loan losses -360 -506 -29
Operating profit 1,952 1,608 21
Net profit 1,442 1,182 22
Risk-adjusted profit 1,414 1,194 18
Christian Clausen President and Group
CEO
Ari Kaperi Group Risk Management
Group CRO
Casper von Koskull Wholesale Banking
Peter Nyegaard (COO)
Michael Rasmussen Retail Banking
Torsten H. Jørgensen Group Operations & Other
Lines of Business
Fredrik Rystedt Group Corporate Centre,
Group CFO
New Group organisation as of June 1st
Gunn Wærsted Wealth Management
Group Human Resources
Henrik Priergaard
Group Internal Audit Eva-Lotta Rosenqvist
Group Identity & Communications
Jan Larsson
• Three main Business Areas: Retail Banking, Wholesale Banking, Wealth Management
• Organised in the value chain
• Objective to improve efficiency, increase RoE and deepen customer relationships
• Financial reporting will be changed in accordance with the new organisation from Q3 2011
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Nordea has delivered
0
1 000
2 000
3 000
4 000
5 000
2006 2010
0
2 000
4 000
6 000
8 000
10 000
2006 20100
1 000
2 000
3 000
4 000
5 000
2006 2010
Five year trends
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Income, EUR millions Cost, EUR millions
Pre-provision profit, EUR millions Net income, EUR millions
0
1 000
2 000
3 000
4 000
2006 2010
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Increased customer acknowledgement
Absolute Group CSI CSI gap to peers (points) Position in Prospera equity ranking (Nordic average)
71 72
2007 2010
3,0
-0,6
2007 2010
12
5
2007 2010
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Improved market position
Household lending market share Nordic avg.
17.6%
18.5%
2006 2010
Private Banking, market share
15%
13%
2007 2010
AuM, growth 2007-2010*
21%
11%
Peers Nordea
Corporate lending market share Nordic avg.
21.1% 21.3%
2006 2010
Capital Markets income relative to best peer
2007 2010
Unit Link premiums (EURbn***)
1.2
2.8
2007 2010
2X 3X
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Improved productivity ratios
65 6664 64 65 67
71 71 69
Q2/09 Q3/09 Q4/09 Q1/10 Q2/10 Q3/10 Q4/10 Q1/11 Q2/11
207 205 201 200 200207
221 219212
Q2/09 Q3/09 Q4/09 Q1/10 Q2/10 Q3/10 Q4/10 Q1/11 Q2/11
3,4 3,23,7
5,5 5,24,6
5,8
7,1
6,0
Q2/09 Q3/09 Q4/09 Q1/10 Q2/10 Q3/10 Q4/10 Q1/11 Q2/11
314 320 318 319 324 323 324 323 325
Q2/09 Q3/09 Q4/09 Q1/10 Q2/10 Q3/10 Q4/10 Q1/11 Q2/11
Income/FTE, EURt Income/customer, EUR
360° meetings and new customers/ week/PBA # customers per FTE
Income excl. Treasury
10,1%
10,0%
10,4%
10,3%
10,7%
11,0%
9,5%
9,8%
10,0%
10,3%
10,5%
10,8%
11,0%
11,3%
Q1 10 Q2 10 Q310 Q3410 Q1 11 Q2 11
A solid capital position
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Development of Core Tier 1-ratio
Low volatility in operating profit
3254
227
285
1415
Peer Nordea Peer Peer Peer Peer
Quarterly variation operating profit*, %
19
20
RAP: We are well on track
Risk-adjusted profit, 2007-2011 Q2
Q10
7Q
207
Q30
7Q
407
Q10
8Q
208
Q30
8Q
408
Q10
9Q
209
Q30
9Q
409
Q11
0Q
210
Q31
0Q
410
Q11
1
Rolling four quarter compared with FY 2006 EUR 1,957m
Long-term target for average yearly growth
56.1%
45.1%
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ROE: In line with top peers
19.1
14.8
11.3 11.3
14.1
17.6
9.7
2.2
7.6
9.3
2007 2008 2009 2010 Average 2007-2010
Nordea Average Nordic peers
Adjusted¹ Return on Equity 2007-2010
¹ To be comparable RoE is adjusted for one-offs ² Nordic peers as per Q3: Danske Bank, DnB NOR, SEB, SHB, Swedbank
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-19,0
-100
-80
-60
-40
-20
0
RB
S
Dex
ia
Com
mer
zban
k
Lloy
ds
Uni
cred
it
Soc
iete
Gen
eral
e
KB
C
Bar
clay
s
Inte
sa S
anpa
olo
Cre
dit A
gric
ole
Dan
ske
Ban
k
SE
B
BB
VA
Sw
edba
nk
Ers
te B
ank
BN
P P
arib
as
San
tand
er
Nor
dea
DnB
NO
R
SH
B
% Top quartile
Source: ThomsonReuters Datastream
TSR: Top quartile performance Total shareholder return vs. European peer group, 2007 - 2011 YTD (as of August 26)
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Adapting to New Normal
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Nordea’s ambition is to be top-league in ROE
Retail banks
Wholesale banks
Global banks
European banks ROE
Note: Peers according to BoAML, April 12 2011
15% is top-league
0%2%4%6%8%
10%12%14%16%18%20%
A superior ROE will differentiate Nordea
A continued high credit rating (AA)
Low relative funding costs
Flexibility on management of capital levels
Opportunity to continue to invest in Great customer experience
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Our communicated ambitions
Communicated ambition
Income Continued focus on business momentum
Costs Contain cost growth, largely unchanged for a prolonged period of time Reduce number of employees by circa 2,000
Capital RWA efficiency
ROE To be top-league in Europe, ~15%
Income momentum
Continued focus on customer relationships
• Great customer experience
• Larger share of wallet with the large customers
• Increased share of ancillary income
Improved margins
• Higher deposit margins following higher interest rates
• Announced margin increases in Denmark
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Efficiency initiatives: asset efficiency
Risk-weighted assets excl. transition rules vs. total lending, EURbn
• Low growth of risk-weighted assets
• A decrease of 1% q-o-q
• RWA optimisation and improved credit quality
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100
105
110
115
120
Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11
Lending RWA excl.transition rules
Efficiency initiatives: cost efficiency
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• Implement plans to contain cost growth
• Thereafter keep costs largely unchanged for a prolonged period of time
Q2 2009 Q2 2011
Total operating expenses, EURm
We will reduce employee numbers by circa 2,000
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• Reduction of employees by the end of 2012:
• Denmark 500 - 650 employees
• Finland 500 - 650 employees
• Norway 200 - 300 employees
• Sweden 500 - 650 employees
• Acting early from a position of strength to increase profitability, safeguard our good rating and our competitive funding
• Large share of staff reduction natural turn-over and voluntary agreements
• Trade union negotiations expected to be finalised by November 2011
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Key messages
• First half year result continues to be solid
• Nordea’s relationship strategy has delivered strong business momentum…
• …and is a solid foundation for implementing the new normal plan • Ambition: ROE in top league of European banks ~15% • Cost efficiency: implement plans to contain cost growth and
thereafter keep costs largely unchanged for a prolonged period of time
• Capital efficiency: Ensure moderate RWA increases, despite continued income growth
Nomura Annual Financials Conference 31 August 2011 Fredrik Rystedt Group CFO / EVP