Fourth Quarter Report 2010 Telephone conference 2 February 2011
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 2 February 2011 Telephone conference
Key messages � 2010 - important milestone on the journey towards Great Nordea � Record level income, operating profit and customer satisfaction � Strengthened position – significant customer inflow � Increased customer activity in all segments 3 2 February 2011 Telephone conference
Result highlights EURm Q4/10 Q3/10 Chg % Q4/09 Chg % FY 10 FY 09 Chg % Net interest income 1,365 1,310 4 1,299 5 5,159 5,281 -2 Net fee and commission income 618 525 18 463 33 2,156 1,693 27 Net result items at fair value 504 446 13 351 44 1,837 1,946 -6 Other income 20 82 45 182 153 Total income 2,507 2,363 6 2,158 16 9,334 9,073 3 Staff costs -675 -721 -6 -702 -4 -2,784 -2,724 2 -1,270 -1,196 6 -1,219 4 -4,816 -4,512 7 Total expenses Profit before loan losses 1,237 1,167 6 939 32 4,518 4,561 -1 Net loan losses -166 -207 -20 -347 -52 -879 -1,486 -41 Operating profit 1,071 960 12 592 81 3,639 3,075 18 Net profit 770 711 8 447 72 2,663 2,318 15 Risk-adjusted profit 721 707 2 533 35 2,622 2,786 -6 4 2 February 2011 Telephone conference
Total income at record level - solid income growth in customer business � Prudent growth strategy delivers Total income, EURm 9,334 � Strong contribution from group 9,073 initiatives 8,697 � Decrease in extraordinarily high 7,933 +10% income from Markets and Group Treasury offset by high customer activity 2009 2010 Customer areas* Other areas 5 2 February 2011 Telephone conference *Nordic Banking, NEM, SOSI, FID, Life and Int’l PB
Ambitious long-term targets remain - no outlook for 2011 Risk-adjusted profit, 2007-2010 Total shareholder return, 2007 - 2011 Ytd 40 48.6% 10.1 20 34.0% 0 -20 -40 Top quartile -60 -80 -100 Allied Irish Banks Bank of Ireland BBVA RBS Commerzbank Lloyds Unicredit Societe Generale Barclays Intesa Sanpaolo Swedbank SEB Danske Bank Erste Bank BNP Paribas Santander DnBNOR Nordea SHB KBC 7 7 7 7 8 8 8 8 9 9 9 9 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Rolling four quarter compared with FY 2006 EUR 1 ,957m Long-term target for average yearly growth Best in class RoE¹ 2007-2010 Nordea has reported the highest average return on equity (RoE) of Nordic peers², 14.1% ¹ Adjusted for one-offs 6 2 February 2011 Telephone conference ² Nordic peers as per Q3: Danske Bank, DnB NOR, SEB, SHB, Swedbank
Fourth quarter results Telephone conference 2 February 2011 7
Net interest income up 4% � Solid trend in customer areas Net interest income, EURm remains 1,365 1,356 1,321 1,305 1,310 1,299 � Deposit volumes and margins 1,249 1,235 continue to increase � Higher average funding costs Q1/09 Q2/09 Q3/09 Q4/09 Q1/10 Q2/10 Q3/10 Q4/10 8 2 February 2011 Telephone conference
Change in net interest income Q4oQ3 YoY Volume-driven Nordic markets in local currencies 10 123 Corporate lending volumes 2 -5 Household lending volumes 7 113 Corporate deposit volumes 1 6 Household deposit volumes 0 9 Margin-driven Nordic markets in local currencies 29 -89 Corporate lending margins 5 145 Household lending margins -6 -49 Corporate deposit margins 9 -59 Household deposit margins 21 -126 Lower return on allocated capital, FX effects and other 4 -70 Nordic Banking 43 -36 New European Markets 4 82 FID 1 -5 Shipping 5 44 Other, incl. Group Treasury 2 -207 Total 55 -122 9 2 February 2011 Telephone conference
Interest rate sensitivity - 3 components � Structural interest income risk (SIIR) Increased market rates, 100bps Q4/10 � Reflecting the effect on NII from re- EURm pricing gaps¹ Net Interest Income, rolling 12 500 � Increased buffer and central bank months annualised approx deposits increases effect � Dynamic effects on net interest income � Changes in deposit margins – mainly transaction accounts � Market risk in the interest-bearing investment portfolios � Market risk has an immediate effect on the line net result from items at fair value ¹ Accumulated mismatch between assets and liabilities with an interest rate duration of less than 12 months, with the assumptions that non-maturity accounts are re-priced immediately following a interest rate change, without effecting margins 10 2 February 2011 Telephone conference
Net fee and commission up 18% Net fee and commission income, EURm � Strong asset management commissions 618 � Increased AuM volumes 538 525 475 463 � Higher lending and brokerage fees 437 412 381 � Danish guarantee scheme expired � Positive seasonal effects from performance fees Q1/09 Q2/09 Q3/09 Q4/09 Q1/10 Q2/10 Q3/10 Q4/10 11 2 February 2011 Telephone conference
Fair value result up 13% Net result from items at fair value, EURm � Strong income in customer areas � Record level in Nordic Banking � Continued strong Life & Pensions results � Lower volatility in Group Treasury 408 339 331 302 301 296 291 283 Q1/09 Q2/09 Q3/09 Q4/09 Q1/10 Q2/10 Q3/10 Q4/10 Customer areas Other areas ¹ Nordic Banking, SOSI, NEM, FID, Life and Int’l PB ² Group Treasury and Capital Markets unallocated 12 2 February 2011 Telephone conference
Expenses well in line with outlook Total expenses, EURm � Total expenses 2010 up 7% � Excluding FX effects cost 4,816 growth 3.1% +3.1% 4,512 � Including investment costs from strategic initiatives � Negative seasonal effects in Q4 2009 2010 Group initiatives FX effect 13 2 February 2011 Telephone conference
Risk-Weighted Assets � RWA excl. transition rules up 1.9% Risk-Weighted Assets (RWA), EURbn in Q4 215 207 � Growth in all customer areas – 192 185 182 changes in standardised approach for 172 off-balance-sheet items � Positive rating migration � Improved collateral sourcing Q4/09 Q3/10 Q4/10 Transition rules Fully implemented Basel II RWA Q4 change, EURbn 185.1 +0.3 +0.2 181.7 +4.4 +1.1 -2.5 -0.1 RWA Credit Growth FX Stand. Market Other RWA Q3/10 quality Appr. risk Q4/10 14 2 February 2011 Telephone conference
Capital position Core Tier 1 capital ratio (excl. Hybrids ), % � Unchanged core tier 1 ratio YoY � High net profit support: 10.4 10.3 10.3 9.3 9.1 8.9 � Increased volumes – lending up 11% � Dividend payout ratio 44% Q4/09 Q3/10 Q4/10 � Q4 - largely unchanged Core Tier 1 Transition rules Fully implemented Basel II ratio Core Tier 1 change Q4, % � High profit generation 0 -0.07 10.42 +0.15 � Improved risk parameters -0.01 10.32 -0.23 +0.06 Q3/10 Credit Growth FX Market Stand. Other Q4/10 quality RWA risk Appr. 15 2 February 2011 Telephone conference
Credit quality Telephone conference 2 February 2011 16
Nordic economies show strength GDP growth, %, y/y � Solid growth rates 7 . 5 7 . 5 D e n m a r k N o r w a y Fin la n d 5 . 0 5 . 0 S w e d e n � Modest inflation 2 . 5 2 . 5 0 . 0 0 . 0 � Strong public finances - 2 . 5 - 2 . 5 - 5 . 0 - 5 . 0 � Improvements in labour markets - 7 . 5 - 7 . 5 - 1 0 . 0 - 1 0 . 0 Q 4 Q 2 Q 4 Q 2 Q 4 Q 2 Q 4 Q 2 Q 4 Q 2 0 7 0 8 0 9 1 0 1 1 1 2 Public finances, % of GDP 5 . 0 5 . 0 Pu b lic fin a n ce s, % o f G D P Norway 13-16% surplus 2 . 5 2 . 5 Sw e d e n 0 . 0 0 . 0 Fin la n d - 2 . 5 - 2 . 5 D e n m a r k - 5 . 0 - 5 . 0 Eu r o a r e a - 7 . 5 - 7 . 5 U SA - 1 0 . 0 - 1 0 . 0 0 8 0 9 1 0 1 1 1 2 Source: Nordea Markets 17 2 February 2011 Telephone conference
Credit quality improving � No provisions related to Net loan losses, EURm expired Danish guarantee 52bps scheme 318 � Losses in line with expected 29bps losses over a business cycle 23bps � Q4 23bps (29bps) 166 157 � Full year 2010 31bps (56bps) Q4 2009 Q3 2010 Q4 2010 Danish guarantee scheme provisions 18 2 February 2011 Telephone conference
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