Third quarter 2013 Delivery on income, costs and capital Press and - PowerPoint PPT Presentation

Third quarter 2013 Delivery on income, costs and capital Press and analyst conference 23 October 2013 Christian Clausen, Group CEO

urs Key message  Delivering on income, costs and capital  Income in local currencies is up 3% vs. Q3 2012 (up 1% in reported numbers)  Costs are down somewhat (down 3%)  Loan losses are down 26% (down 28%)  Operating profit is up 15% (up 12%)  Improved Core Tier 1 ratio by 2.2 %-points to 14.4%  13.4% including effects from CRD IV and new Norwegian risk weights  Welcomed 23,600 new relationship customers in Q3  87,000 new relationship customers the past year  Activity is picking up but we expect a low growth environment going forward  Strict volume discipline - focus on serving key customers  Cost initiatives delivering better than expected 2 •

• Q3 2013 financial results highlights • Delivering on our targets

urs Financial results Q3/13 Excl. Fx Excl. Fx EURm Q3/13 Q2/13 Change % Q3/12 Change % 2013 YTD 2012 YTD Change %* Change %* Net interest income 1 386 1 391 0 1 393 (1) 3 4 135 4 181 0 Net fee and commission income 652 664 (2) 595 10 12 1 939 1 786 9 (17) (8) (9) Net fair value result 346 416 377 1 206 1 332 (10) Total income * (3) 1 3 2 426 2 490 2 412 7 422 7 428 0 Staff costs (732) (753) (3) (738) (1) 1 (2 239) (2 240) 0 Total expenses (1 234) (1 256) (2) (1 266) (3) 0 (3 757) (3 769) 0 Cost Income Ratio 51% 50% 52% 51% 51% (3) 4 6 Profit before loan losses 1 192 1 234 1 146 3 665 3 659 1 (8) (28) (26) Net loan losses (171) (186) (236) (555) (654) (15) Operating profit 1 021 1 048 (3) 910 12 15 3 110 3 005 4 Net profit from continuing 764 800 (5) 684 12 14 2 347 2 250 5 operations Risk-adjusted profit 823 853 (4) 768 7 n.a. 2 530 2 446 n.a. Return on equity (%) 10.8 11.5 n.a. 10.3 n.a. n.a. 11.2 11.4 n.a. Core Tier 1 capital ratio (%) 14.4 14.0 +0.4 p.p 12.2 +2.2 p.p n.a. 14.4 12.2 n.a. -1 Risk-weighted assets (EURbn) 160 162 179 -11 n.a. 160 179 n.a. 4 • * Includes Other income

urs Net interest income Net interest income development, EURm Comments  Strict volume discipline 1 393  Blended margin up 2 bps vs. Q2/13 1 386 1 382 1 391 1 358  Increased NII in business areas  Lower net interest income in Group Treasury due to effect of buy backs in Q2  Negative impact from FX, EUR 27m Q3/12 Q4/12 Q1/13 Q2/13 Q3/13 5 •

urs Net interest margin Blended net interest margin development, % Comments  Blended net interest margin up 2 bps in Q3/13 1,5% 109 bps 1,2%  Slightly lower deposit margins 0,9%  Improved lending margins in most areas 0,6%  Lower levels in Retail Banking Sweden 0,3%  Low lending demand but volumes to SMEs up 0,0% Q3/12 Q4/12 Q1/13 Q2/13 Q3/13 1% in the quarter  Household lending volumes up 1% in the quarter Lending and deposit volumes, EURbn* 318 314 313 305 306 183 181 178 176 174 Q3/12 Q4/12 Q1/13 Q2/13 Q3/13 Lending volumes Deposit volumes 6 • * All quarters excluding Repos and divested Polish operations

urs Net fee and commission income Net fee and commission income development, EURm Comments  Continued good trend in savings operations 682  Increase by 18% y-o-y 664 652 623 595  Assets under Management at record high  Seasonally lower transaction fees  Brokerage, securities issues and custody  Cross selling continues to benefit ancillary income Q3/12 Q4/12 Q1/13 Q2/13 Q3/13 7 •

urs Assets under Management Assets under Management development*, EURbn Comments  All time high level of EUR 228bn 227.8 223.8 219.7 218.3 210.9  High net inflow of EUR 2.4bn  Good momentum in the financial markets  Return generates EUR 5.7bn vs. Q2/13 Q3/12 Q4/12 Q1/13 Q2/13 Q3/13 Net inflow*, EURbn 3.1 2.9 2.6 2.4 -0.4 Q3/12 Q4/12 Q1/13 Q2/13 Q3/13 8 • *AuM and Net flow for Q2/13 and Q3/13 regard continuing operations. Older quarters are not restated

urs Savings trend supports growing Assets under Management Comments AuM and Net flow Retail funds, EURbn 1,5 45  Growing interest in savings and pension products 1,1 1,0 30 0,9 0,9  Close to 800,000 advisory sessions on savings 82% 69% 0,8 0,8 80% 0,7 75% the past year, all-time high, up 11% y-o-y 75% 0,5 15  Positive net flow in retail funds for seventh 31% 25% 20% 25% 18% consecutive quarter 0,0 0 Q212 Q312 Q412 Q113 Q213 Q313 Net flow AuM (rhs) AuM and Net flow Global Fund Distribution, EURbn  High interest in Nordea funds also outside the 1,5 12 Nordics 1,0 8 82%  Global Fund Distribution increased assets under 0,8 69% 80% 0,7 75% 75% management by 15% YTD and 28% y-o-y 0,5 0,5 0,5 4 0,3 0,2 31% 20% 25% 25% 18% 0,0 0 Q212 Q312 Q412 Q113 Q213 Q313 Net flow AuM (rhs) 9 •

urs Net fair value Net fair value development, EURm Comments  Low volatility generated low activity levels  Very slow activity in July and August – more 444 442 normal levels in September 416 377 132 346 155 128 108 113 310 289 288 269 233 Q3/12 Q4/12 Q1/13 Q2/13 Q3/12 Customer areas Other areas 10 •

urs Flat costs for twelve consecutive quarters Total expenses (excl. FX and variable pay)*, EURm Comments  Expenses under solid control 1 172 1 131 1 170 1 139 1 158 1 128 1 144 1 140 1 157 1 128 1 120 1 132  Flat costs for twelve quarters  Flat costs for an additional five quarters  Cost initiatives are delivering better than expected Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Q3/13 Total expenses, EURm 1 295 1 266 1 267 1 256 1 234 Q3/12 Q4/12 Q1/13 Q2/13 Q3/13 11 • * All quarters excluding divested Polish operations

urs Improved credit quality Total net loan losses * , EURm Comments  Credit quality improving to 20 bps (22 bps) 263 241 236 215 203 198  Losses stable in Denmark and down in Shipping 186 171  Credit quality remains solid in Finland, Norway, 112 Sweden and the Baltics  Solid credit quality in CIB but affected by a few exposures Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Q3/13 * Poland reported as discontinued operations, loan losses restated from Q1/12  Stable level of impaired loans  Provisioning ratio remained stable at 43% Impaired loans ** , EURm 6 827 6 677 6 644 Non-performing Non-performing Non-performing 2 921 2 869 2 863 Performing Performing Performing 3 808 3 781 3 906 Q1/13 Q2/13 Q3/13 ** Impaired loans not restated for Poland 12 •

urs Stable situation in Denmark House price index and Consumer confidence * Loan losses net, EURm, Retail Banking Denmark 110 Single-family houses 200 100 Flats 150 90 80 100 70 2006 2007 2008 2009 2010 2011 2012 2013 50 10 0 Consumer confidence 5 -50 0 2008 2009 2010 2011 2012 2013 -5 -100 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Q3/13 -10 -15 Collectively assessed Individually assessed * Source: Danmarks Statistik -20 Comments Comments  House prices in Denmark show improvement  Loan loss ratio in Banking Denmark remained stable, whilst elevated at 45 bps  Consumer confidence improving 13 •

urs Improved market conditions in Shipping Ship values * Loan losses net, EURm, Shipping 80 70 60 50 40 30 20 10 0 -10 -20 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Q3/13 Collectively assessed Individually assessed * Source: Clarkson Comments Comments  Provisions in shipping were down for the third  Ship values seem to be bottoming out consecutive quarter  Higher investment appetite for shipping assets  Collective provisions have increased in recent years 14 •

urs Strong access to funding Long term funding, EURbn Comments  73% long-term funded 33 32 29  Issuance of EUR 19bn which is more than the redemptions for 2013 19  Conservative liquidity management - LCR compliant - Liquidity buffer EUR 66bn  One of the lowest funding costs of any bank in Europe  Funding cost is expected to decline somewhat from 2014 2010 2011 2012 2013 YTD LCR developments Distribution of long vs. short funding, EURbn 231% 194% 158% 154% 134% 133% 134% 130% 121% 100% Q1/13 Q2/13 Q3/13 Combined USD EUR 15 •

urs Risk weighted assets Risk-weighted assets, EURbn* Comments  RWA decreased EUR 2.0bn 185  RWA efficiency initiatives 183 182 181 179  FX effect of EUR 0.6bn 168 168  Decreased derivative exposures 162 160  Strict volume discipline  Largely unchanged credit quality Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Q3/13 16 • * Basel 2.5 excluding transition rules

Core Tier 1 ratio + 220bps due to profit generation and strict volume discipline Core Tier 1 ratio development, % 0.91% 0.70% 0.02% 0.45% 14.4% 0.20% 12.2% Core Tier 1 ratio Credit Quality Growth FX effects & RWA efficiency Profit net Core Tier 1 ratio Q3 2012 Other dividend Q3 2013 17 •