Debt Investor Presentation Q3 2016
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 3
Nordea is the largest financial services group in the Nordics 11 million customers - Approx. 10 million personal customers Strong Nordic distribution platform - 590 000 corporate customers, incl. Nordic Top 500 Distribution power - Leading market position in all four Nordic countries - Approx. 600 branch office locations - Enhanced digitalisation of the business to interact with customers Financial strength - EUR 10.1bn in full year income (2015) - EUR 657bn of assets (Q3 2016) - EUR 31.1bn in equity capital (Q3 2016) - CET1 ratio 17.9% (Q3 2016) AA level credit ratings - Moody’s Aa3 (stable outlook) - S&P AA- (negative outlook) - Fitch AA- (stable outlook) EUR 36bn in market cap - One of the largest Nordic corporations - A top-10 universal bank in Europe 4
Nordea is the most diversified bank in the Nordics A Nordic-centric portfolio (96%) Lending: 46% Corporate and 54% Household Public Sector Russia 1% Other Baltics 1% 13% 3% Denmark 26% Sweden 30% Retail trade 3% Shipping and offshore 3% Household Credit portfolio Credit portfolio Consumer 54% staples by country by sector 4% EUR 307bn* EUR 307bn* Industrial commercial services 4% Other financial institutions Finland 4% 21% Real estate Norway 14% 19% * Excluding repos 5
Q3 2016 Financial Results Highlights 6
Highlights Q3/16 (Q3/16 vs. Q3/15*) Stable environment and low growth NII down 4% YoY but up 1% vs Q2 2016 Strong trend in the corporate advisory services – a leading Income up 10 % European bank in 2016 All-time high inflow to asset management of EUR 9.6bn Cost to income ratio improved 1%-points to 48.1% Costs are following the Full-year cost guidance of 3% growth in 2016 vs 2015 plan, up 8% reiterated Flat costs 2018 vs. 2016 Loan losses at 16 bps, Impaired loans level down 9%, of which 6% relates to the Baltics 9 bps are collective Final SREP requirement is 17.3% CET1 ratio up 110 bps QoQ to 17.9% CET1 ratio in line with Nordea’s capital policy Business and culture Bringing in world-class experts in several key strategic positions transformation journey *In local currencies 7
Nordea Group FINANCIAL RESULT EURm Q3/16 Q2/16 Chg Chg Loc. Jan-Sep Loc. Q3/Q2 Q3/Q3 curr. 2016 curr. % % Chg Chg YoY Q3/Q3 % % Net interest income 1,178 1,172 1 -4 -4 3,518 -4 Net fee & commission income 795 804 -1 4 4 2,371 -1 19 127 123 1,217 -2 Net fair value result 480 405 Total income -4 9 10 7,317 -1 2,466 2,556 Total income* 2,466 2,405 3 9 10 7,166 -3 Total expenses -1,183 -1,206 -2 7 8 -3,567 4 Total expenses* - 1,183 -1,206 -2 7 8 -3,567 4 Net loan losses -135 -127 6 21 23 -373 15 Operating profit 1,148 1,223 -6 11 11 3,377 -7 Operating profit* 7 11 11 3,226 -11 1,148 1,072 Net profit 888 996 -11 14 14 2,666 -4 +20 bps +110 bps n/a 11.1 +50 bps Return on equity* (%) 11.6 11.4 + 110 bps +150 bps n/a 17.9 +150 bps CET1 capital ratio (%) 17.9 16.8 Cost/income ratio* (%) 48 50 -200 bps -100 bps n/a 50 -200 bps *Excluding non-recurring items 8
Net Interest Margin Severe pressure from negatives rates – finally levelling off 1.06% 0.97% 0.96% 0.95% 0.91% 0.89% 0.86% 0.84% Q414 Q115 Q215 Q315 Q415 Q116 Q216 Q316 9
Net Fee and Commission Income, rolling Improved trend, driven by Asset Management 3,230 3,219 3,193 3,192 3,167 3,164 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 10
NFV, 6Q overview Solid underlying trend of EUR 300-400m per quarter 600 500 11 43 94 19 400 65 44 134 129 53 136 300 105 50 43 200 282 277 260 256 247 239 100 0 -10 -53 -55 -92 -42 -100 -200 Q215 Q315 Q415 Q116 Q216 Q316 Customer areas WB Other ex FVA GCC and GF FVA 11
Costs TOTAL EXPENSES*, EURm COMMENTS • Cost to income ratio: 1,213 1,206 • 1,178 1,183 Improved 100bps YoY and 1,108 54 54 52 51 Depreciations 200bps QoQ 49 408 396 386 389 303 Other expenses • Costs in local currencies: • Down 1% QoQ and up 8% YoY • Number of staff: 756 751 740 756 743 Staff costs • Up 1% QoQ and 5% YoY • Mainly relates to compliance and insourcing of IT Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 • Cost growth of approximately 3% in local currencies for 2016 compared to 2015** • Largely unchanged cost base 2018 vs. 2016 • Continued high activity level in 2017 *Excluding restructuring charge of EUR 263m in Q4/15 ** Including a gain of EUR 80-85m from a changed pension agreement in Norway 12
Solid asset quality TOTAL NET LOAN LOSSES, EURm COMMENTS • Loan losses at 16 bps for Q3 142 135 (Q2: 15 bps) 129 127 122 112 112 111 103 • 53% from increased collective provisions related to the oil and offshore related portfolios • Individual losses were at low level of 7 bps Q3/14Q4/14Q1/15Q2/15Q3/15Q4/15Q1/16Q2/16Q3/16 • Impaired loans ratio down 9 IMPAIRED LOANS, EURm bps to 163 bps and Performing Non-performing provisioning ratio increased 6,309 6,084 to 44% (Q2: 42%) 5,733 2,526 2,580 2,241 • The full year loan losses are expected to be at around 16bps 3,783 3,504 3,492 Q1/16 Q2/16 Q3/16 *EUR 6122m, including operations in Baltics, expected finalised Q2 2017 13
Oil & gas, oil services and offshore is 1.4% of Nordea’s EAD Total exposure Exposure at Default (EAD) EUR 516bn • Credit quality in the oil and offshore related portfolios is still 1,4% deteriorating • Exploration & production spending Oil-price sensitive EUR in the oil & gas industry is expected exposure 516bn to fall more than 20% in 2016 (↓0,2%) Other exposure • Collective provisions related to oil 98,6% and offshore increased in Q3 with EUR 53m. Total collective provision for oil and offshore is now EUR Oil-related portfolio 157m Oil, gas and oil • 11% In Q3, EUR 58m of the loan loss services provisions related to Offshore 47% Offshore EUR • During Q3, a handful of large 7.2bn 42% restructurings have been (↓11%) Oil&Gas in Russia successfully completed in the and Estonia offshore portfolio 14
Q3 2016 Capital 15
REA development Q3 16 142.9 0.0 1.0 1.5 1.9 0.3 136.2 2.7 Q2 16 FX effect Credit Volumes Market risk Securitisation Other Q3 16 quality incl. and CVA derivatives 16
Common Equity Tier 1 ratio development Q316 vs. Q2 proforma 0.04% 17.9% 0.13% 0.28% 0.17% 0.12% 17.2% Q2 16 Credit Volumes NLP Profit net Other Q3 16 quality incl. dividend dividend derivatives 17
Strong capitalisation and strong capability to generate capital CAPITAL GENERATION 1 , EURbn COMMENTS 29,8 Acc. Dividend • Strong Group CET1 ratio – 17.9% in 26,1 Acc. retained equity 22,8 Q3 2016 14,5 19,7 • 11,9 CET1 capital ratio up 400bps since 16,6 9,4 Q4 2013 3 7,7 13,9 6,3 11,3 5,3 9,0 4,1 6,3 15,3 3,1 14,2 13,4 12,0 10,3 3,2 2,6 8,7 7,2 5,9 1,3 3,7 1,9 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 GROUP CET1 CAPITAL RATIO 2 , % 17,9% 16,5% 15.7% 14.9% 13.1% 11.2% 10.3% 10.3% 8.5% 1 Dividend included in the year profit was generated. Excluding rights issue (EUR 2,495m in 2009) 2 CET1 capital ratio excluding Basel 1 transition rules 2008-2013. From 2014, CET1 capital is calculated in 2008 2009 2010 2011 2012 2013 2014 2015 Q3/16 accordance with Basel 3 (CRR/CRDIV) framework 3 Estimated Basel 3 CET1 ratio 13.9% Q4 2013 18
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