Second Quarter Results 2014 Investor presentation Debt Investor Presentation Q1 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. 700 branch office locations - Approx. 7 million Netbank customers Financial strength - EUR 10.2bn in full year income (2014) - EUR 725.9bn of assets (Q1 2015) - EUR 28.5bn in equity capital (Q1 2015) - AA credit rating - Common equity tier 1 capital ratio of 15.6% (Q1 2015) EUR ~46bn 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… Q1 2015 A Nordic centric portfolio (95 %) Lending: 55% Corporate and 44% Household Public Sector Russia Repos Baltics 1% 2% 3% 13% Denmark 26% Sweden 30% 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 Norway commercial Real estate Other financial 18% services 12% institutions 4% 4% * Excluding repos 5 •
…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 result of a well diversified credit (40) portfolio, a rigid risk management (60) 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 Q1/15 amounted to 14 bps, below ten year average 6 •
Q1 2015 financial results highlights 14
Highlights of first quarter 2015 First quarter 2015 vs first quarter 2014* Revenues are up 11% Negative interest rates put pressure on Net interest income Record high Assets under Management Increased activity in the capital markets Costs are down 2%, delivering according to plan Loan losses are down 21% to 14 bps Operating profit is up 29% Improved common equity tier 1 ratio 100 bps to 15.6% Our customers usage of digital solutions continue to increase *All P&L items in local currencies 8 •
Financial results Local Q1/15 Q4/14 Chg % Q1/14 Chg % EURm currencies Chg % Net interest income 1 288 1 356 -5 1 362 -5 -3 -1 Net fee & commission income 757 763 704 8 9 Net fair value result 644 367 75 411 57 58 Total income * 2 714 2 513 8 2 501 9 11 Total expenses -4 -1 184 -1 227 -1 237 -4 -2 Profit before loan losses 1 530 1 286 19 1 264 21 23 -5 Net loan losses -122 -129 -158 -23 -21 Operating profit 1 408 1 157 22 1 106 27 29 Net profit from cont. op 23 1 082 877 840 29 31 Return on equity (%) 14.3 11.8 250 bps 11.4 290 bps - -10 bps CET1 capital ratio (%) 15.6 15.7 14.6 100 bps - Cost/income ratio (%) 43.6 48.8 -520 bps 49.5 -590 bps - *Includes other income 9 •
Net interest income NET INTEREST INCOME DEVELOPMENT, EURm COMMENTS • NII affected by pressure on 1 396 1 362 1 368 1 356 1 288 deposit rates • Negative interest rates in Denmark and Sweden • Two fewer interest days and negative FX, reduces NII by EUR 43m • Deposit margin reduces NII by Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 EUR 39m 10 •
Net interest margin and volumes BLENDED NET INTEREST MARGIN DEVELOPMENT, BPS COMMENTS 109 109 • 108 108 Blended margin down 5 bps to 103 103 bps • Slightly improving lending margins • Pressure on deposit margins Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 • Lending volumes up 3% y-o-y* LENDING AND DEPOSIT VOLUMES*, EURbn 311 308 309 305 302 175 172 172 171 172 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Lending volumes Deposit volumes 11 • * Excluding repos and FX
Net fee and commission income NET FEE AND COMMISSION DEVELOPMENT, EURm COMMENTS 763 757 • 708 704 High net inflow and good performance 667 171 Lending commissions in asset management 210 163 193 171 • High activity in corporate finance and 144 Payments & cards 142 148 brokerage 147 160 • Lending commission down from strong level in previous quarter 477 Savings & investments 443 430 398 370 State guarantee fees -32 -32 -35 -34 -35 Q2/14 Q3/14 Q4/14 Q1/15 Q1/14 12 •
Strong growth with balanced risk levels in customer savings AUM DEVELOPMENT, EURbn COMMENTS 290.0 • All time high AuM at EUR 290bn 262.2 254.5 248.3 • Record high net inflow of EUR 7.2bn 238.7 • Continuous strong and well diversified inflow • High customer interest in balanced Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 funds – 53% of net sales • Nordea Stable Return Fund has been AUM FUNDS SPLIT, % the best-selling fund in Europe in the EUR 96.5bn EUR 132.1bn beginning of 2015 23 Balanced 28 28 • 72% of composites outperformed 53 33 benchmark over a 3-year period 33 Equities 55 19 Fixed income 44 38 and MM 29 17 Net sales Performance Funds AuM Funds AuM Q1/15 Q1/14 13 •
Net fair value NET FAIR VALUE DEVELOPMENT, EURm COMMENTS 644 • Supporting corporate and institutional customers to manage 304 411 their risks 367 356 32 • 291 Customer areas up from 174 94 66 strong previous quarter 335 340 • High activity in capital markets 262 237 225 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Customer areas Other areas 14 •
Expenses under solid control TOTAL EXPENSES*, EURm COMMENTS 1 237 1 227 1 196 1 184 1 172 55 53 • 57 44 Cost/income ratio improved 520 66 Depreciations bps to 43.6% 426 416 363 Other expenses 390 378 • Costs are down 3.4% in local currencies and excluding variable Staff costs pay 777 756 758 749 728 • Staff costs up 3% in local currencies Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 • Higher variable pay and pension expenses • Other expenses down 12% • Cost programme delivering according to plan 15 • * Excluding non-recurring items
Solid credit quality TOTAL NET LOAN LOSSES, EURm COMMENTS 198 • Loan losses at 14 bps 186 180 171 158 135 • 129 Stable or improving credit quality in 122 112 all areas • Impaired loans ratio down from 174bps to 159bps Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 • Provisioning ratio increased to 45% (43%) IMPAIRED LOANS, EURm 6 538 6 425 6 166 2 371 2 310 2 339 4 168 4 115 3 827 Q3/14 Q4/14 Q1/15 Performing Non-performing 16 •
Risk exposure amount RISK EXPOSURE AMOUNT, EURbn* COMMENTS 168 162 • REA up EUR 6bn in the quarter 160 159 155 • Positive impact from capital 153 152 152 management EUR 1bn 146 • Stable credit quality • FX effect mainly related to Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 USD, NOK and Swiss franc RISK EXPOSURE AMOUNT DEVELOPMENT, EURbn 151.5 2.5 0.5 3.0 145.5 Q4/14 FX Credit quality, Other Q1/15 growth 17 • * Basel 2.5 excluding transition rules until Q4/13. Basel 3 from Q1/14
CET 1 ratio down 10 bps COMMON EQUITY TIER 1 RATIO DEVELOPMENT, % 15.7% -0.20% 0.7% 15.6% -0.1% -0.5% Q4/14 FX Credit quality and Other Profit Q1/15 growth 18 •
Capital 14
Strong capitalisation and strong capability to generate capital CAPITAL GENERATION 1 , EURbn COMMENTS 26,1 Acc. Dividend 22,8 Acc. retained equity • Strong Group CET1 ratio - 15.6% in 19,7 11,9 16,6 9,4 Q1 2015 7,7 13,9 • CET 1 capital ratio up 170bps since 6,3 11,3 5,3 9,0 Q4 2013 3 4,1 6,3 3,1 14,2 13,4 12,0 2,6 10,3 3,2 8,7 7,2 5,9 1,3 3,7 1,9 2006 2007 2008 2009 2010 2011 2012 2013 2014 GROUP CET1 CAPITAL RATIO 2 , % 15.7% 15,6% 14.9% 13.1% 11.2% 10.3% 10.3% 8.5% 1 Dividend included in the year profit was generated. Excluding rights issue 2008 2009 2010 2011 2012 2013 2014 Q1/15 (EUR 2 495m in 2009) 2 CET1 capital ratio excluding Basel 1 transition rules 2008-2013. From 2014, CET1 capital is calculated in accordance with Basel 3 (CRR/CRDIV) framework 20 • 3 Estimated Basel 3 CET1 ratio 13.9% Q4 2013
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