Debt Investor Presentation Q2 2015 Disclaimer This presentation - PowerPoint PPT Presentation

Investor presentation Debt Investor Presentation Q2 2015

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. 2 •

Nordea in brief 14

Nordea is the largest financial services group in the Nordics Nordea = Nordic ideas 11 million customers - Approx. 10 million personal customers - 590 000 corporate customers, incl. Nordic Top 500 Distribution power - Approx. 650 branch office locations - Approx. 7 million Netbank customers Financial strength - EUR 10.2bn in full year income (2014) - EUR 682.7bn of assets (Q2 2015) - EUR 29.8bn in equity capital (Q2 2015) - AA credit rating - Common equity tier 1 capital ratio of 16.0% (Q2 2015) EUR ~45bn in market cap - One of the largest Nordic corporations - A top-10 European retail bank 4 •

Nordea is the most diversified bank in the Nordics… Q2 2015 A Nordic centric portfolio (96 %) Lending: 55% Corporate and 44% Household Public Sector Russia Repos Baltics 1% 1% 3% 13% Denmark 26% Sweden 31% Other 12% Household 44% Credit portfolio Credit portfolio Retail trade by country by sector 3% EUR 311bn* EUR 358bn Shipping and offshore 3% Consumer staples Finland 4% 21% Industrial commercial Norway Real estate Other financial services 18% 12% institutions 4% 4% * Excluding repos 5 •

Q1 2015 financial results highlights 14

Highlights of first half year 2015 First half year 2015 vs first half year 2014*  Revenues are up 7%  Negative interest rates put pressure on NII  Continued strong trend in savings and investment operations  Costs are down 1%**, delivering according to plan  C/I ratio improved more than 4 %-points to 45.3%**  Loan losses are down 22% to 13 bps  Operating profit is up 21%**  RoE improved 2.1%-points to 13.7%**  Improved common equity tier 1 ratio 80 bps to 16.0% *All P&L items in local currencies 7 • **Excluding restructuring cost of EUR 190m in Q2/14

Financial results Local Local Q2/15 Q1/15 Chg % H1/15 H1/14 Chg % EURm currencies currencies Chg % Chg % Net interest income 2 0 1 309 1 288 2 597 2 730 -5 -3 Net fee & commission 783 757 3 3 1 540 1 412 9 10 income Net fair value result 401 644 -38 -37 1 045 767 36 37 -7 -8 Total income * 2 523 2 719 5 242 4 964 6 7 Total expenses** -1 185 -1 188 0 -1 -2 373 -2 457 -3 -1 Net loan losses -103 -122 -16 -16 -225 -293 -23 -22 Operating profit** 1 235 1 409 -12 -13 2 644 2 214 19 21 -12 -13 Net profit from cont. op 952 1 082 2 034 1 542 32 33 Return on equity** (%) 13.1 14.3 -120 bps - 13.7 11.6 210 bps - CET1 capital ratio (%) 16.0 15.6 40 bps - 16.0 15.2 80 bps - 330 bps - Cost/income ratio** (%) 47.0 43.7 45.3 49.5 -420 bps - *Includes other income 8 • **Excluding restructuring cost of EUR 190m in Q2/14

Net interest income NET INTEREST INCOME DEVELOPMENT, EURm COMMENTS • NII holds up despite pressure on margins 1 396 1 368 1 356 1 309 1 288 • Negative interest rates in Denmark, Finland and Sweden • Strong result in Treasury due to positioning for lower rates • One additional interest day adds EUR 15m Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 • Positive impact from currencies 9 •

Net interest margin and volumes BLENDED NET INTEREST MARGIN DEVELOPMENT, BPS COMMENTS • Blended margin down 3 bps to 109 109 108 100 bps 103 100 • Lending margins are slightly down driven by Norwegian mortgages • Pressure on deposit margins Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 • Lending volumes are up 3% y-o-y* LENDING AND DEPOSIT VOLUMES*, EURbn 312 311 308 305 302 173 176 176 172 172 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Lending volumes Deposit volumes 10 • * Excluding repos and FX

Net fee and commission income NET FEE AND COMMISSION DEVELOPMENT, EURm COMMENTS • Fee and commission income up on a 783 763 757 strong previous quarter 708 667 160 Lending commissions 171 210 • 162 Main driver Savings and 171 148 Payments & cards Investment operations 144 142 148 160 • Somewhat slower corporate advisory 510 activities 477 Savings & investments 443 430 370 -35 -32 -34 -32 -35 State guarantee fees Q3/14 Q4/14 Q1/15 Q2/15 Q2/14 11 •

Strong demand for our savings and investment offering AUM DEVELOPMENT, EURbn COMMENTS • Slight decrease in AuM caused by 290.0 286.1 negative market development 262.2 254.5 248.3 • Net inflow of EUR 3.1bn in the quarter • All segments contributed positively • Continued good net inflow in Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Global Fund Distribution, EUR 1.1bn NET INFLOW SPLIT BY SEGMENT, EURbn 7.2 • 6.8 Market turmoil caused reduced net inflow in asset management funds Life & Pensions 4.8 and stronger growth in deposits Inst. sales Private Banking 3.2 3.1 • Retail Banking Household Nordic Retail funds deposits up 3%* • Private Banking deposits up Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 13%* 12 • * In local currencies and compared to previous quarter

Net fair value NET FAIR VALUE DEVELOPMENT, EURm COMMENTS • Lower customer activity from a high 644 level in Q1/15 95 • Negative one-off effect of EUR 31m in Denmark 207 401 356 367 37 291 149 Wholesale Banking 116 Other 91 117 78 78 87 Wealth Management 105 89 83 90 84 Wholesale Banking 60 146 134 94 Retail Banking 89 75 -22 -11 -4 -8 Other Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 13 •

Long term improvement in cost efficiency TOTAL EXPENSES*, EURm COMMENTS • 1 232 Costs are down 1% in local 1 213 1 188 1 185 1 177 54 58 45 currencies from previous quarter 50 66 Depreciations 418 364 • 403 363 Other expenses Costs are down 2% in local 380 currencies and excluding performance related salaries y-o-y Staff costs • Cost target full year 2015 of EUR 779 772 760 752 731 4.7bn reiterated • Increased costs from simplification Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 initiatives C/I RATIO DEVELOPMENT**, % • Solid improvement of C/I ratio 50.8% • Improved 3.6%-points since beginning of 2013 • 47.2% C/I ratio at 45.3% H1/15 Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 14 • * Excluding non-recurring items **Rolling four quarters

Risk exposure amount RISK EXPOSURE AMOUNT, EURbn* COMMENTS • 162 REA down EUR 2bn in the quarter 160 159 155 153 152 152 150 145 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 RISK EXPOSURE AMOUNT DEVELOPMENT, EURbn 1.7 2.5 2.9 151.5 1.1 0.5 149.8 Credit Trading Growth Stand. & FX Q2/15 Q1/15 quality book Other** * Basel 2.5 excluding Basel I transition rules until Q4/13. Basel 3 from Q1/14 15 • **REA reservation incl. in Other, EUR 4.6bn

Strong asset quality TOTAL NET LOAN LOSSES, EURm COMMENTS • Loan losses down to 12 bps – the 186 180 171 158 lowest level since Q3/08 135 129 122 112 • Stable or improved credit quality in 103 all units • Collective provisions in Russia, EUR 10m, and for Danish Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 agriculture, EUR 11m • Impaired loans ratio down from IMPAIRED LOANS, EURm 159bps to 152bps 6 425 • 6 166 Provisioning ratio increased to 46% 5 811 (45%) 2 310 2 339 2 211 • Largely unchanged credit quality in the coming quarters expected 4 115 3 827 3 600 Q4/14 Q1/15 Q2/15 Performing Non-performing 16 •

…generating low credit losses over a business cycle LOAN LOSSES, BPS COMMENTS 40 • Since 2002, Nordea’s loan losses 20 have averaged 16 bps of total 0 lending 16 bps (20) • Historically low credit losses are the (40) result of a well diversified credit (60) portfolio, a rigid risk management process as well as low risk appetite (80) 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 • Loan loss ratio Q2/15 amounted to 12 bps, below ten year average 17 •