Shaping the future relationship bank Analyst and investor presentation Casper von Koskull, President and Group CEO
The relationship bank business 14 model has delivered 1
Strong Nordea track record… Strong capital generation and stable returns at low risk 1 Acc. dividend, EURbn Acc. equity, EURbn 39 37 34 31 29 26 20 18 15 12 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 CET 1 5.9 2 15.7 Ratio, % 1) CAGR 2014 vs. 2005, adjusted for EUR 2.5bn rights issue in 2009. Equity columns represents end-of-period equity less dividends for the year. No assumption on reinvestment rate for paid out dividends 2) Calculated as Tier 1 capital excl. hybrid loans 2
… with a low risk profile Nordea ROE track record 1 , % No quarter below 8%, every year above 11% 16.2 15.8 15.0 14.4 14.3 13.9 13.1 12.3 12.8 12.5 12.2 12.1 12.0 12.0 12.0 11.8 11.7 11.7 11.5 11.5 11.4 11.3 10.6 11.2 11.1 10.8 10.5 10.4 10.1 9.5 8.1 2008 2009 2010 2011 2012 2013 2014 Q3 2015 2008 2009 2010 2011 2012 2013 2014 2015 1) ROE adjusted for restructuring costs in 2011 and one-off related items in 2014
The most stable bank in the Nordics Nordea and peers 2006-2015, % Quarterly net profit 150 volatility 83 46 32 25 17 Nordea Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Quarterly CET1 ratio 1.08 0.92 volatility¹ 0.54 0.50 0.36 0.21 Nordea Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Max quarterly 0.38 0.72 1.29 1.42 2.15 3.24 drop 1) Calculated as quarter on quarter volatility in CET1 ratio, adjusted so that the volatility effect of those instances where the CET1 ratio increases between quarters are excluded 4
Management buffer reflects Nordea’s diversified business CET1 ratio build-up, % MDA restriction level¹ Approx.~10.4% 15.4 0.5-1.5 2.0 2.0 2.0 5.9 1.0 4.5 Pillar 2 Pillar 2 (other) CET1 Swe & Nor Pillar 1 Combined Management Systemic level as per buffer 2 Mortgage Risk min buffer Risk Buffer Swedish FSA 3 Weight floors 1) Maximum Distributable Amount, provided for illustrative purposes only. The Swedish FSA does not normally intend to make a for mal decision on the capital requirement under Pillar 2. “Insofar that a formal decision has not been made, the capital requirement under Pillar 2 does not affect the level at which the automatic restrictions on distributions linked to the combined buffer requirement come into effect.” Swedish FSA, Sep 2014 2) The combined buffer consists of 3% systemic risk buffer, 2.5% capital conservation buffer and 0.4% countercyclical buffer. In accordance with Swedish FSA Memorandum on Capital Requirement for Swedish banks (Sept. 2, 2015), the calculation of the countercyclical buffer is based on the Swedish and Norwegian buffer rate of 1%. The buffer rates will increase from 1 to 1.5% when the new buffer rates enter into force in Q2 2016. 3) Capital need Q3 2015 in accordance with SREP, communicated by Nordea October 2, 2015
Nordea as a dividend stock DIVIDENDS, EUR/SHARE 0.62 0.43 0.34 0.29 0.26 0.25 0.20 2008 2009 2010 2011 2012 2013 2014 6 •
Creating the leading 14 Nordic Wholesale bank
Towards the leading Wholesale Bank in the Nordic region Leveraging scale, competences and closeness STRATEGIC POSITIONING CHANGE LEVERS Strategy International competition (Size and competencies) Structure Product dimension: Relevance Management Operating model Local competition Culture Customer dimension: Intensity (Multi-local presence) 8 •
Wholesale Banking 2011-2014 - performance and value drivers GDP growth Interest rates Volatility Capital markets regulation Market characteristics Low Low Low High Income Fair Value Lending NII Cost/Income Top line drivers -15% -5% -7% -15% + 2 pp Pricing Fee & Comm. Cost REA Loan losses Value drivers ± 0% +30 bp +15% -30% -43% Market position Return¹ Value creation Achieved #1 position >+3 pp 1) Assuming constant capital requirement (EC/REA) as for 2014 (~15%) 9
One Nordea 14 10
We have earned the right to invest in the Future Relationship Banking model Future business model Return hurdle Capital hurdle 11 •
Direction and priorities – One Nordea through strengthened culture and relentless execution In place In progress In future Common brand Common systems One - Common way of working delivering the Future Relationship Bank Common values Common vision 12 •
Becoming One Nordea is a continuation of the journey we have already set out… P Future relationship bank P Overall strategic direction and Universal banking targets remain unchanged P Financial targets 2016-18 13 •
Accelerating transformation drivers and the current macro economic environment only adds to this challenge Digitalisation continues to accelerate Compliance requirements No tailwind in support still increasing of transformation Economic environment remains unfavorable 14 •
Execution of four main strategic priorities will be key to delivering the transformation of our business model Risk & compliance Cost & capital Simplification Digital strategy setup efficiency Prerequisites for creating greater shareholder value 15 •
Future operating model of a digital bank – the vision RELEVANT PERSONALISED AGILE TRUST CUSTOMER FACING ANYTHING, ANYTIME, EASY ANYWHERE WELL INNOVATIVE STRUCTURED “DIGITAL FACTORY” One operating model COST EFFECTIVE for product and RELIABLE service delivery END-TO-END SCALABLE AUTOMATED COMMON PROCESSES 16
Truly living up to our values will be critical The safe and trusted partner, acknowledged for its people, creating superior shareholder value The safe and trusted partner, acknowledged for its people, creating superior shareholder value Great customer It’s all about people One Nordea team experiences 17 •
Shaping the future relationship bank Analyst and investor presentation Casper von Koskull, President and Group CEO
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