Fourth Quarter Report 2010 Telephone conference 2 February 2011 - - PowerPoint PPT Presentation

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Fourth Quarter Report 2010 Telephone conference 2 February 2011 - - PowerPoint PPT Presentation

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Fourth Quarter Report 2010 Telephone conference 2 February 2011 Disclaimer This presentation contains forward-looking statements that reflect managements current views with respect to certain future events and potential financial

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Fourth Quarter Report 2010 Telephone conference

2 February 2011

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2 February 2011 Telephone conference 2

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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2 February 2011 Telephone conference 3

Key messages

2010 - important milestone on the journey towards Great

Nordea

Record level income, operating profit and customer

satisfaction

Strengthened position – significant customer inflow Increased customer activity in all segments

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2 February 2011 Telephone conference 4

Result highlights

EURm Q4/10 Q3/10 Chg % Q4/09 Chg % FY 10 FY 09 Chg % Net interest income 1,365 1,310 4 1,299 5 5,159 5,281

  • 2

Net fee and commission income 618 525 18 463 33 2,156 1,693 27 Net result items at fair value 504 446 13 351 44 1,837 1,946

  • 6

Other income 20 82 45 182 153 Total income 2,507 2,363 6 2,158 16 9,334 9,073 3 Staff costs

  • 675
  • 721
  • 6
  • 702
  • 4
  • 2,784
  • 2,724

2 Total expenses

  • 1,270
  • 1,196

6

  • 1,219

4

  • 4,816
  • 4,512

7 Profit before loan losses 1,237 1,167 6 939 32 4,518 4,561

  • 1

Net loan losses

  • 166
  • 207
  • 20
  • 347
  • 52
  • 879
  • 1,486
  • 41

Operating profit 1,071 960 12 592 81 3,639 3,075 18 Net profit 770 711 8 447 72 2,663 2,318 15 Risk-adjusted profit 721 707 2 533 35 2,622 2,786

  • 6
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2 February 2011 Telephone conference 5

Total income at record level

  • solid income growth in customer business

7,933 8,697 2009 2010 Customer areas* Other areas

+10% Prudent growth strategy delivers Strong contribution from group

initiatives

Decrease in extraordinarily high

income from Markets and Group Treasury offset by high customer activity

*Nordic Banking, NEM, SOSI, FID, Life and Int’l PB

9,334 9,073

Total income, EURm

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2 February 2011 Telephone conference 6

10.1

  • 100
  • 80
  • 60
  • 40
  • 20

20 40

Allied Irish Banks Bank of Ireland RBS Commerzbank Lloyds KBC Unicredit Societe Generale Barclays Intesa Sanpaolo Swedbank SEB BBVA Danske Bank Erste Bank BNP Paribas Santander DnBNOR Nordea SHB

Q1 7 Q2 7 Q3 7 Q4 7 Q1 8 Q2 8 Q3 8 Q4 8 Q1 9 Q2 9 Q3 9 Q4 9 Q1 1 Q2 1 Q3 1 Q4 1 Rolling four quarter compared with FY 2006 EUR 1 ,957m Long-term target for average yearly growth

Top quartile Risk-adjusted profit, 2007-2010

Best in class RoE¹ 2007-2010

Nordea has reported the highest average return on equity (RoE) of Nordic peers², 14.1%

¹ Adjusted for one-offs ² Nordic peers as per Q3: Danske Bank, DnB NOR, SEB, SHB, Swedbank

48.6% 34.0%

Total shareholder return, 2007 - 2011 Ytd

Ambitious long-term targets remain

  • no outlook for 2011
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Fourth quarter results

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1,299 1,235 1,249 1,310 1,365 1,305 1,321 1,356 Q1/09 Q2/09 Q3/09 Q4/09 Q1/10 Q2/10 Q3/10 Q4/10

Net interest income up 4%

Solid trend in customer areas

remains

Deposit volumes and margins

continue to increase

Higher average funding costs

Net interest income, EURm

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2 February 2011 Telephone conference 9

Change in net interest income

Q4oQ3 YoY

Volume-driven Nordic markets in local currencies 10 123 Corporate lending volumes 2

  • 5

Household lending volumes 7 113 Corporate deposit volumes 1 6 Household deposit volumes 9 Margin-driven Nordic markets in local currencies 29

  • 89

Corporate lending margins 5 145 Household lending margins

  • 6
  • 49

Corporate deposit margins 9

  • 59

Household deposit margins 21

  • 126

Lower return on allocated capital, FX effects and other 4

  • 70

Nordic Banking 43

  • 36

New European Markets 4 82 FID 1

  • 5

Shipping 5 44 Other, incl. Group Treasury 2

  • 207

Total 55

  • 122
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2 February 2011 Telephone conference 10

Structural interest income risk (SIIR)

Reflecting the effect on NII from re-

pricing gaps¹

Increased buffer and central bank

deposits increases effect

Dynamic effects on net interest

income

Changes in deposit margins – mainly

transaction accounts

Market risk in the interest-bearing

investment portfolios

Market risk has an immediate effect

  • n the line net result from items at fair

value

Interest rate sensitivity

  • 3 components

Increased market rates, 100bps Q4/10 EURm Net Interest Income, rolling 12 months annualised approx 500

¹ Accumulated mismatch between assets and liabilities with an interest rate duration of less than 12 months, with the assumptions that non-maturity accounts are re-priced immediately following a interest rate change, without effecting margins

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2 February 2011 Telephone conference 11

Net fee and commission up 18%

Strong asset management

commissions

Increased AuM volumes

Higher lending and brokerage fees Danish guarantee scheme expired Positive seasonal effects from

performance fees

463 475 538 525 618 381 437 412 Q1/09 Q2/09 Q3/09 Q4/09 Q1/10 Q2/10 Q3/10 Q4/10

Net fee and commission income, EURm

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2 February 2011 Telephone conference 12

Fair value result up 13%

Strong income in customer areas

Record level in Nordic Banking Continued strong Life & Pensions results

Lower volatility in Group Treasury

¹ Nordic Banking, SOSI, NEM, FID, Life and Int’l PB ² Group Treasury and Capital Markets unallocated 302 301 339 331 408 283 291 296 Q1/09 Q2/09 Q3/09 Q4/09 Q1/10 Q2/10 Q3/10 Q4/10

Customer areas Other areas

Net result from items at fair value, EURm

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2 February 2011 Telephone conference 13

Expenses well in line with outlook

Total expenses 2010 up 7% Excluding FX effects cost

growth 3.1%

Including investment costs from

strategic initiatives Negative seasonal effects in

Q4

2009 2010 Group initiatives FX effect

+3.1% 4,512 4,816 Total expenses, EURm

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2 February 2011 Telephone conference 14

Risk-Weighted Assets

192 207 215 182 185 172 Q4/09 Q3/10 Q4/10 Transition rules Fully implemented Basel II

RWA excl. transition rules up 1.9%

in Q4

Growth in all customer areas –

changes in standardised approach for

  • ff-balance-sheet items

Positive rating migration Improved collateral sourcing

Risk-Weighted Assets (RWA), EURbn

185.1 181.7

  • 2.5

+0.2 +4.4

  • 0.1

+1.1 +0.3 RWA Q3/10 Credit quality Growth FX Stand. Appr. Market risk Other RWA Q4/10

RWA Q4 change, EURbn

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Capital position

9.3 9.1 8.9 10.3 10.4 10.3

Q4/09 Q3/10 Q4/10 Transition rules Fully implemented Basel II

Core Tier 1 capital ratio (excl. Hybrids), %

Unchanged core tier 1 ratio YoY High net profit support:

Increased volumes – lending up 11% Dividend payout ratio 44%

Q4 - largely unchanged Core Tier 1

ratio

High profit generation Improved risk parameters

10.42 10.32

  • 0.23
  • 0.01

+0.06

  • 0.07

+0.15 Q3/10 Credit quality Growth FX RWA Market risk Stand. Appr. Other Q4/10

Core Tier 1 change Q4, %

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Credit quality

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Nordic economies show strength

Solid growth rates Modest inflation Strong public finances Improvements in labour markets

GDP growth, %, y/y

Source: Nordea Markets

Public finances, % of GDP

Q 4 Q 2 Q 4 Q 2 Q 4 Q 2 Q 4 Q 2 Q 4 Q 2 0 7 0 8 0 9 1 0 1 1 1 2

  • 1 0 . 0
  • 7 . 5
  • 5 . 0
  • 2 . 5

0 . 0 2 . 5 5 . 0 7 . 5

  • 1 0 . 0
  • 7 . 5
  • 5 . 0
  • 2 . 5

0 . 0 2 . 5 5 . 0 7 . 5 D e n m a r k N o r w a y Fin la n d S w e d e n 0 8 0 9 1 0 1 1 1 2

  • 1 0 . 0
  • 7 . 5
  • 5 . 0
  • 2 . 5

0 . 0 2 . 5 5 . 0

  • 1 0 . 0
  • 7 . 5
  • 5 . 0
  • 2 . 5

0 . 0 2 . 5 5 . 0 Pu b lic fin a n ce s, % o f G D P U SA Eu r o a r e a D e n m a r k Fin la n d Sw e d e n

Norway 13-16% surplus

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2 February 2011 Telephone conference 18

Net loan losses, EURm

318 166 157 Q4 2009 Q3 2010 Q4 2010 Danish guarantee scheme provisions

Credit quality improving

23bps 29bps 52bps

No provisions related to

expired Danish guarantee scheme

Losses in line with expected

losses over a business cycle

Q4 23bps (29bps) Full year 2010 31bps (56bps)

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452

  • 135

347 321

  • 164

207 397

  • 231

166 29 50 Q4 2009 Q3 2010 Q4 2010 Gross loan losses Danish guarantee scheme

Decreased net loan losses

Q4 2009 Q3 2010 Q4 2010 DK FI NO SE NEM SOSI Other

Net loan losses per area, EURm

Positive rating migration

Reversals of collective provisions EUR

108m Provisions up from low levels in

Sweden and Norway

Large provisions in corporate segment

Norway Baltic improvements 26bps (88bps)

Denmark: 44bps (44bps) Finland: 22bps (42bps) NEM: 15bps (36bps) Reversals Net loan losses

Loan losses, EURm

Norway: 24bps (6pbs) Sweden: 12bps (0bps)

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2 February 2011 Telephone conference 20

Performing: Allowance established, payments made Non-performing: Allowance established, full payments not made on due date

2,372 2,570 1,868 2,838 2,081 2,011

Q4 2009 Q3 2010 Q4 2010

Performing Non-performing 1,385 1,637 838 887 1,752 782

Q4 2009 Q3 2010 Q4 2010

Individual allowances Collective allowances

Impaired loans, EURm Total allowances, EURm

Impaired loans

Impaired loans gross up 4% - main part

performing loans

EUR 4,849m or 146bps (139bps in Q3) 59% performing (55% in Q3)

Provisioning ratio down to 52% (54%)

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0% 5% 10% 15% 20%

6+ 6 6- 5+ 5 5- 4+ 4 4- 3+ 3 3- 2+ 2 2- 1+ 1 1-

Q4 2009 Q4 2010

Improved credit quality

Rating distribution Increased Decreased

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The new regulatory framework

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The regulatory framework is becoming gradually more concrete

Revised business models

Capital requirements Pressure on return on equity

Industry challenges

Short-term liquidity Long-term funding

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Nordea # 3 among European peers in Standard&Poor’s Risk-adjusted capital (RAC) analysis

9.1

Commerzbank Danske Bank KBC Erste Bank Lloyds Credit Agricole Societe Generale BBVA Intesa Sanpaolo BNP Paribas Barclays Swedbank SHB RBS SEB Santander. UniCredit Nordea DnBNOR Dexia

Strong capital position

– compliant with proposed regulations

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Prudent liquidity risk management

38 23 56 61

Short-term funding Liquidity buffer End 2007 End 2010

+18 +38

Liquidity buffer, EURbn

Increased liquidity buffer, EUR 61bn High quality assets with

characteristics similar to Basel III liquid assets

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Well matched average behavioural maturities

Average behavioural maturity, years

2.7 2.3

Assets Liabilities

Prudent match fund of behavioural

maturities

Same liquidity risk as NSFR

intends to address

Secures a sustainable

lending/deposit mix

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2 February 2011 Telephone conference 27 27

Further development of business model

Return on Equity (RoE)

Mitigate the effects on capital,

liquidity and funding

Objective to increase return on

equity from today’s levels

8.1 12.2 12.8 Q4 2009 Q3 2010 Q4 2010

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Strong customer business momentum

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2,444 2,549 2,700 2,900 2007 2008 2009 2010

Award-winning value proposition

continue to attracts customers in all segments

Customer acquisition trend

accelerated in 2010 – especially in relationship segments

Nordea Asset Management is

  • utgrowing peers both relatively

and in absolute numbers

Strengthened market position…

Number of Gold customers¹, 000

21 17 14 12 12 10 9 4 12 Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 Peer 7

Q3/09 – Q3/10 Nordic market AuM development, %

¹Nordic Banking and New European Markets

CAGR 6%

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Despite economic recession Strong focus on relationship

banking

…with an all-time-high customer satisfaction level

70.6 71.7 71.5 71.8 2007 2008 2009 2010

Customer Satisfaction Index¹ (CSI), aggregate

¹ Equal weight from the four Nordic countries

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…increases business activity in all segments

Solid growth trends

in relationship segments¹

Customer business

gaining speed

¹ Corporate Merchant Banking, Corporate Large, Nordic Private Banking and Gold customers

Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Rolling 3 months Rolling 12 months Rolling 24 months

Total income monthly average

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2 February 2011 Telephone conference 32

Group initiatives are on track in all areas

Household relationship strategy New European Markets Efficiency initiatives Corporate relationship strategy

  • 1. Future distribution
  • 2. New customer

acquisition

  • 3. Growth plan Finland
  • 4. Growth plan CMB
  • 5. Customer-driven

Markets business

  • 6. Growth plan Poland
  • 7. Top-league IT and
  • perations
  • 8. Product platforms
  • 9. Infrastructure

upgrade

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2 February 2011 Telephone conference 33

Increased customer satisfaction,

sales and lower cost to serve

82 branches operating in new

formats

Significant increase in number of

proactive customer meetings

Up 48% compared to Q4 2009

Further improved Private Netbank

Specialising and focusing our branches

Future distribution

Lending Insurance Savings and investments Daily banking Ensure all services provided by Nordea The 3600 meeting

Focused branches supports the 360- degree meeting

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119.5 136.7

Q4/09 Q1/10 Q2/10 Q3/10 Q4/10 68.3 74.5 36.4 30.7

Record inflow of new customers

200,000 Gold and Private Banking of

which 65% new customers to Nordea Improved service level in Finnish

high growth areas

170 new advisers and specialists

recruited

Relocation and refurbishment of

branches

Continued strong demand in household segment

Household¹ volumes increase 2010, EURbn

Lending up 14% Deposits up 7% Nordic Retail Funds up 19% Growth plan Finland New customer acquisition

¹Nordic Banking volumes

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Growth plan CMB Sweden proceeds

as planned

Total income up 19% Improved customer relations – several new

mandates won Strategy to build house-bank relations

proven successful

Solid income growth in all segments

Strong income growth within CMB

Income growth 2007-2010, CAGR %

Large NEM SOSI FID Other CMB

21 34 8 21 15

  • 3

307 378 436

Q4 2009 Q3 2010 Q4 2010

Total income CMB, EURm

Growth plan CMB

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2 February 2011 Telephone conference 36

High ranking in equity and bond markets

Markets business

Nordic Primary Equity Market league table 2010 Nordic Primary Equity Market league table 2010

  • Pos. Bank name

Deal value EURm No. 1 Goldman Sachs 6,433 6 2 SEB 5,475 23 3 JPMorgan 4,218 4 4 Morgan Stanley 3,880 4 5 Nordea Markets 3,112 11 6 DnB NOR Bank ASA 3,112 11 7 Bank of America Merrill Lynch 2,005 2 8 ABG Sundal Collier 1,932 16 9 Citi 1,910 2 10 Deutsche Bank 1,819 2

Bookrunner

Note: The full deal value for a transaction is included in the figures for every bank involved in the deal. The table includes all Nordic primary transactions, including FIs. Source: Dialogic Nordic Corporate Eurobond benchmark league table 2009 – 2010

  • Pos. Bank name

Deal value EURm No. % share 1 Deutsche Bank 3,792 19 16% 2 BNP Paribas 3,371 18 14% 3 Nordea Markets 2,667 16 11% 4 RBS 2,004 11 8% 5 Barclays Capital 1,900 11 8% 6 Citi 1,879 10 8% 7 Soc Gen 1,875 8 8% 8 JPMorgan 1,600 10 7% 9 Calyon 900 5 4% 10 Danske Bank 850 6 4%

Bookrunner

Note: The table includes Nordic IG syndicated corporate non-financial

  • issues. Tranche value >= EUR 300mn, maturity >1yr, active bookrunners.

Source: Dialogic

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New European Markets – a growth area

265 492 553 664

2007 2008 2009 2010

Total income NEM, EURm

Solid income growth continues

Increased lending and deposit volumes Improved credit quality

25,000 new Gold customers welcomed 45 new branches in Poland opened

2010

Strengthened position in both Household and

Corporate segments

Number of branches Poland

45 85 144 158 203

2006 2007 2008 2009 2010

CAGR 36%

Growth plan Poland

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2 February 2011 Telephone conference 38

Strong efficiency improvements in customer areas

* Excl. Roskilde & Fionia

Q4 2009 Q3 2010 Q4 2010 Q4 2009 Q3 2010 Q4 2010

# customers per FTE

Nordic Banking

Q4 2009 Q3 2010 Q4 2010

# 360 meetings/PBA

Nordic Banking

# gold customers in NEM

Q4 2009 Q3 2010 Q4 2010

New customer acquisition from outside Nordea*

Nordic Banking

+2% +27% +14% +7%

Income per FTE

Nordic Banking

Business volumes per FTE

Nordic Banking

Q4 2009 Q3 2010 Q4 2010 Q4 2009 Q3 2010 Q4 2010

+13% +4%

Based on FTEs in Branches

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2 February 2011 Telephone conference 39

Solid productivity improvements

+2%

IT production costs

1 /

production volumes

2008 2009 2010

#contracts/loans/cards/ invoices / FTE

Nordea Finance

2008 2009 2010

  • 19%

+25%

2 In multiuser buildings

AM costs / portfolio

2008 2009 2010

  • 13%

Square meters / workplace

2

2008 2009 2010

  • 5%

1 Nordic Processor

2008 2009 2010

# manual transactions in branch network

Household customers

  • 23%

Corporate payment transactions / FTEs

Transaction Products

2008 2009 2010

+28%

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2 February 2011 Telephone conference 40

Financial impact from Group initiatives

Income benefits and efficiency gains above full-year expectations

Income generation 2010, approx. EUR 300m Efficiency gains 2010, approx. EUR 70m

Investment costs lower than planned for 2010 – expected to be higher

2011

Prolonged execution period for some of the initiatives – unchanged long-term plans Total investment cost in 2010 approx. EUR 200m of which EUR 74m accounted for

as expenses in income statement

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Fourth Quarter Report 2010 Telephone conference

2 February 2011