Debt investor presentation Q3 2018
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
Table of contents 1. Nordea in brief 4 2. Financial results highlights 16 3. Capital 29 4. Macro 34 5. Funding 38 3
1. Nordea in brief 4
The largest financial services group in the Nordics Household market Corporate & Institutional position* market position** Business position #1 #1 - Leading market position in all four Nordic countries - Universal bank with strong position in household, corporate and wealth management - Well diversified business mix between net interest income, net commission income and capital markets income 11 million customers and strong distribution power #1 - Approx. 10 million household customers #2 - 700 000 corporate customers, including Nordic Top 500 - Approx. 450 branch office locations #1-2 #2 #2-3 - Enhanced digitalisation of the business for customers #2-3 Financial strength #2-3 - EUR 9.5bn in full year income (2017) - EUR 573bn of assets (Q3 2018) - EUR 32.6bn in equity capital (Q3 2018) #2 - CET1 ratio 20.3% (Q3 2018) – forecasted CET1 ratio 15.4% (Q4 2018) AA level credit ratings - Moody’s Aa3 (stable outlook) - S&P AA- (stable outlook) - Fitch AA- (stable outlook) EUR ~38bn in market cap (Q3 2018) - One of the largest Nordic corporations - A top-10 universal bank in Europe 5 * Combined market shares in lending, savings and investments ** Combined market position from Corporate & Investment Banking, Markets and Commercial & Business Banking
Nordea is the most diversified bank in the Nordics A Nordic-centric portfolio (97%) Lending: 45% Corporate and 55% Household Public Sector Other Russia Other 1% Household (Denmark) 1% 2% 12% 14% Shipping and offshore Sweden Denmark 3% 29% 27% Retail trade 3% Consumer staples Household (Finland) (food, agriculture etc) 13% 3% Credit portfolio Credit portfolio Industrial commercial by country by sector services etc 4% EUR 292bn* EUR 292bn* Other financial institutions 4% Household (Norway) 10% Real estate (residential) Finland 6% 21% Real estate Norway (commercial) 20% Household (Sweden) 9% 18% 6 * Excluding repos
Strong Nordea track record 50 47 43 39 Acc. dividend EURbn 37 12.7%* Acc. equity EURbn 35 31 29 26 20 18 15 12 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2005 Q3 2018 CET1 CET1 ratio (%) 5.9** ratio (%) 20.3 Leverage Ratio (%) 4.9 7 * CAGR 2017 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 ** Calculated as Tier 1 capital excl. hybrid loans
Changed revenue structure Nordea’s focus on ancillary income offset pressure on net interest income 11,000 Total income: +20% over 10 years 10,000 9,469 9,000 7,889 8,000 4,666 Net interest income: 7,000 (49%) +9% over 10 years 6,000 4,282 (54%) 5,000 4,000 3,000 4,803 Ancillary income: (51%) +33% over 10 years 3,607 2,000 (46%) 1,000 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 8
Well mixed profit generation Business Area contribution in FY 2017 Operating Income Operating Profit Economic Capital 8% 9% 12% 26% 28% 30% 10% 22% 29% 16% 29% 22% 20% 20% 19% Personal Banking Commercial & Business Banking Wholesale Banking Asset & Wealth Management Group Functions & Other 9
Re-domiciliation of the parent company to Finland • The re-domiciliation was carried out on 1 October 2018 by way of a cross-border reversed merger through which Nordea Bank AB (publ) was merged into a newly established Finnish subsidiary • The merger plan was signed by the Nordea Board of Directors on 25 October 2017 • Nordea AGM approved the proposal to re-domicile on 15 March 2018 • ECB grants Nordea temporary permission for continued use of internal models Old: Nordea Bank AB New: Nordea Bank Abp Cross-border reversed merger Cross-border reversed merger Nordea Bank AB Nordea Bank Abp (publ) (Sweden) (Finland) Branches: Denmark Intl. branches (incl. Branches: Denmark Intl. branches (incl. Finland Norway New York, Singapore) Sweden Norway New York, Singapore) Nordea Nordea Nordea Kredit Nordea Nordea Nordea Nordea Kredit Nordea Hypotek AB Eiendoms- Realkredit- Mortgage Hypotek AB Eiendoms- Realkredit- Mortgage Various Nordea Bank Various kreditt AS aktieselskab kreditt AS aktieselskab (publ) Bank Plc (publ) Bank Plc subsidiaries Abp (Finland) 1 subsidiaries Norway Denmark Norway Denmark Sweden Finland Sweden Finland Legal entity New entity Legal entity Changes Branch Branch 10 Note 1: Nordea Holding Abp changed name to Nordea Bank Abp during Q2 2018 following that the banking license was granted by the ECB
Nordea has further enhanced its Nordic focus with a simplified structure in a new domicile Simplified Jan 1, 2017 Oct 1, 2018 structure Re-domiciliation , Change of legal in a new structure move to banking union domicile 2017 Q2 2013 2018 Q1 Q3 2013-2017 2018 Q2 Russian exposure reduced Planned acquisition of by 63% Gjensidige Bank Enhanced Nordic focus 2018 Q3 2013 2018 Q1 Divestment of Polish Divestment of Luxembourg - Announcement of divestment operations based private banking business of Baltic operations (Luminor)* 11 * Luminor established in Q3 2017 as a joint venture with DNB
Nordea’s stand on anti -money laundering (AML) • Combatting financial crime is part of our daily operations • We don’t accept to be used as a platform for money laundering • We collaborate closely with the authorities • Banks may earlier have underestimated the complexity of preventing money laundering • Significantly strengthened our transaction monitoring and investigation capabilities • 1.8bn transactions on annual basis subject to hundreds of different monitoring scenarios, resulting in hundreds of thousands of alerts which lead to thousands of Suspicious Activity Reports (SARs) filed with the relevant authorities • More than 1,500 employees working within prevention of financial crime, and 12,000 employees in direct contact with our customers who are trained regularly to identify signs of financial crime • In the last 12 months 110,000 hours of financial crime training to employees • AML is a societal issue. Increased cooperation between banks and authorities is needed 12
Nordea in the Baltics • Nordea owns 56% of the capital in Luminor, DNB other key shareholder • When Luminor was created in 2017 it was a mutual due diligence process between DNB and Nordea • Blackstone will acquire 80% of the shares in Luminor, transaction was announced 13 September • Blackstone has finalised the due diligence • Luminor has 0.6-1.6% of non-resident deposit volumes from Russia, Latvia, Estonia, Ukraine and Cyprus • Nordea is not aware of any whistleblowing cases • Nordea’s Baltic operation and Luminor have not been subject to any AML/Sanctions regulatory fines • As far as we are aware, Luminor is not currently the subject of an AML/Sanctions regulatory investigation 13
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