Financial plan and targets Capital Markets Day Christopher Rees, - PowerPoint PPT Presentation

Financial plan and targets Capital Markets Day Christopher Rees, Group CFO 25 October 2019

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

We have a strong financial foundation to build on Solid capital position AA rating AA (CET1 Ratio 15.4% Q319 (AA- by all 3 rating agencies) and RAC¹ ratio 11.6% Q219) Strong liquidity position Solid credit quality (NSFR 110%² and LCR 188% Q319) Proven capital Diversified business and generation capacity funding base 1. Standard & Poor’s 3 2. Based on EU methodology

Weak financial performance in recent years calls for an accelerated financial plan Return on equity vs peers Indexed total shareholder return Nordea Peer average 10.8 91 Nordea, R4Q 8.0 77 Peer average, R4Q Q215 Q216 Q217 Q218 Q219 Q215 Q216 Q217 Q218 Q219 Relative RoE Peers (weighting): DB (30%), DNB (20%), OP (10%), SEB (15%), SHB (15%), SWB (10%) TSR Peers: Equal weighting DB, DNB, SEB, SHB, SWB, Total shareholder return in euros 4

Financial targets Cost/income ratio in FY22 Return on equity in FY22 50% >10% Dividend policy from 2020 Capital policy from 2020 60-70% pay-out of distributable 150-200 bps profits to shareholders.¹ management buffer Excess capital intended to be distributed above the regulatory CET1 requirement to shareholders through buybacks 5 1. For 2019 Nordea targets a dividend of EUR 0.40 per share

Gross cost reductions exceed investments and inflation Cost changes by end 2022 ~-5% CAGR 2-3% CAGR For 2020, we expect to reach a cost base ~4,900 700-800m below EUR 4.7bn C/I We plan to continue 50% delivering annual net cost reductions beyond 2020 Cost 2019 Inflation IT & Investments Gross Gross 2022 Underlying¹ depreciation 2022 savings 6 1. Adjusted for impact of structural transactions, AML provision, intangibles write-down and restructuring

Delivery of 700-800m gross cost reduction 700-800m Fewer people until 2022 ▪ Majority of the planned reductions in head office and central functions ▪ People Reduction in number of external consultants Staff ▪ Nearshoring Reduced IT spend ▪ Outsourcing ▪ Continued decommissioning, automation and cloud solutions IT IT ▪ Pan-Nordic platforms Streamlining of processes Consulting ▪ 40% fewer products Nearshoring ▪ From 48 to 5 payment platforms Processes ▪ Automated and robotised processes freeing up time (FTEs) Gross savings by 2022 7

Intensified business activity and customer focus start to show results Household lending (EURbn) Market share Swedish mortgages 20 % Share of market growth +3-4%¹ Back book 14 % +3% 160 14 % 151 147 146 -5 % 2016 2017 2018 Q319 Jun Sep Dec Mar Jun Sep Dec Mar Jun Aug 17 17 17 18 18 18 18 19 19 19 Corporate lending (EURbn) AuM net flow (EURbn) +2-3% 19.5 +4%² +2% ~132 8.5 131 2.5 130 127 -12.5 2016 2017 2018 YtD 2016 2017 2018 Q319 Q319 8 1. Growth excl Gjensidige Bank 2. Annualised net flow Note: Historical periods adjusted for divestments and items affecting comparability

Increased clarity under the SSM Today: October 2018: 1 January 2020: Further clarity attained Single Supervisory SREP¹ enters into force Mechanism (SSM) entry ▪ Permission for continued use ▪ of internal models Stable foundation, ▪ predictability and level Comprehensive assessment playing field ▪ Finnish systemic risk buffer and local countercyclical buffers 9 1. Supervisory review and evaluation process

New capital policy and uses of capital Capital policy from 2020 150-200 bps management buffer Uses of capital above the regulatory CET1 requirement Organic growth ~15% 150-200 bps 60-70% dividend pay-out ratio 1.3% For 2019 Nordea targets a dividend of EUR 0.40 per share 3.0% Management buffer Maximum distributable amount 2.5% Counter-cyclical buffer M&A bolt-ons Systemic risk buffer ~1.75% Capital conservation buffer Expected Pillar 2 requirement 4.5% Share buybacks Minimum CET1 requirement Pro forma CET1 requirement 10

The path to exceed 10% return on equity in 2022 Expected return on equity development 2019 to 2022 Drivers of profitability Positive momentum on >10% lending volumes Income impact Net flow in AuM Net cost reduction ~8% WB repositioning helping on both profit and capital Stable credit quality Sep 19 Volume AuM growth Costs WB capital FY22E Pressure on margins YtD growth reallocation Underlying ¹ partly offset by margin pressure 11 1. Adjusted for items affecting comparability

Financial targets Cost/income ratio in FY22 Return on equity in FY22 50% >10% Dividend policy from 2020 Capital policy from 2020 60-70% pay-out of distributable 150-200 bps profits to shareholders.¹ management buffer Excess capital intended to be distributed above the regulatory CET1 requirement to shareholders through buybacks 12 1. For 2019 Nordea targets a dividend of EUR 0.40 per share