Second Quarter Results 2014 Investor presentation Fourth Quarter - PowerPoint PPT Presentation

Second Quarter Results 2014 Investor presentation Fourth Quarter and Full Year Results 2014 Investor presentation Christian Clausen, President and Group CEO

A robust result in a challenging environment 2014 vs 2013  Revenues are up 2%*  Costs are down 1%*  Loan losses are down 26%*  Operating profit is up 12%*  Improved Common Equity Tier 1 ratio to 15.7% (13.9%)  Proposed dividend of EUR 0.62 (EUR 0.43)  All time high inflow in assets under management of EUR 18.6bn  Consolidated our position as the leading bank for large corporates *Excluding currency effects and non-recurring items 2 •

Q4 2014 financial results highlights 14

Financial results Q4/14 Q3/14 Chg % 2014 2013 Chg % EURm Net interest income 1 356 1 396 -3 5 482 5 525 -1 2 Net fee & commission income 763 667 14 2 842 2 642 8 10 Net fair value result 291 26 367 1 425 1 539 -7 -6 Total income * 2 513 2 754 -9 10 224 9 891 3 6 6 Total income ** 2 513 2 377 9 847 9 891 0 2 Total expenses -1 227 -1 516 -19 -5 366 -5 040 6 9 Total expenses ** -1 227 -1 172 5 -4 832 -5 040 -4 -1 15 Net loan losses -129 -112 -534 -735 -27 -26 Operating profit 1 157 1 126 3 4 324 4 116 5 8 Operating profit ** 1 157 1 093 6 4 481 4 116 9 12 Return on equity (%)** 11.8 11.2 +60 bps 11.6 11.0 +60 bps - CET1 capital ratio (%) 15.7 15.6 +10 bps 15.7 13.9 *** +180 bps - Cost/income ratio (%)** 48.8 49.3 -50 bps 49.1 51.0 -190 bps - *Includes other income 4 • **Excluding non -recurring items *** Previously estimated Basell III CET 1 ratio

Currency impact Q4/Q3 Q4/Q4 FY14/FY13 %- points -3 Income -1 -2 Costs -1 -2 -3 Operating profit -3 -3 -1 -3 Loan and deposit volumes -3 -3 Q4/Q3 Q4/Q4 FY14/FY13 FX effect on CET1 ratio, bps Capital (incl goodwill) -26 0 0 REA 17 0 0 0 CET1 ratio -10 0 5 •

Net interest income NET INTEREST INCOME DEVELOPMENT, EURm COMMENTS • Largely unchanged Net interest 1 390 1 396 1 362 1 368 1 356 margin • Negative FX effect EUR 29m in the quarter • Lower NII in Group Treasury Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 6 •

Net interest margin and volumes BLENDED NET INTEREST MARGIN DEVELOPMENT, BPS COMMENTS 109 109 107 108 108 • Net interest margin largely unchanged at 108bps • Improving lending margins • Lower deposit margins Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 • Lower funding costs LENDING AND DEPOSIT VOLUMES*, EURbn • Lending volumes are up 1% in local currencies on Q3/14 304 300 297 295 292 • Household lending up 2% 173 170 170 171 170 • Corporate lending up 1% • Lending growth 4% YoY Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Lending volumes Deposit volumes * Excluding repos and FX 7 •

Net fee and commission income NET FEE AND COMMISSION DEVELOPMENT, EURm COMMENTS 763 703 704 708 • All time high level in the quarter 667 210 162 180 194 Lending commissions 171 • Strong momentum in savings 142 148 145 147 Payments & cards 160 • High capital markets activity, driven by loan syndications 443 430 411 398 370 Savings & investments State guarantee fees -34 -32 -33 -35 -32 Q2/14 Q3/14 Q4/14 Q4/13 Q1/14 8 •

Continued strong momentum in assets under management AuM DEVELOPMENT, EURbn COMMENTS 262.2 11.5 • All time high AuM at EUR 262bn 18.6 • Record high net flow, EUR 18.6bn 232.1 • Continuous strong and well diversified flow • Net flow corresponds to 8% of Q4 Net Investment Q4 AuM 2013 inflow return 2014 NET FLOW, EURbn • Strong interest among both Nordic 6.8 and International customers Life & Pensions Global Fund 4.8 Distribution 3.8 Institutional Clients 3.2 Private Banking 2.2 Nordic Retail funds Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 9 •

Net fair value NET FAIR VALUE DEVELOPMENT, EURm COMMENTS • Improved trend in customer areas 411 367 356 • Strong result in Life & 333 36 Pensions 176 291 98 88 69 • Challenging market making 331 conditions 258 245 235 222 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Customer areas Other areas 10 •

Expenses under solid control TOTAL EXPENSES*, EURm COMMENTS 1 283 1 237 1 227 • Cost to income ratio improved 0.5% 1 196 1 172 to 48.8%* • Seasonal cost increase in the quarter • Higher provisioning for profit sharing to all employees Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 • Costs are down 4% Q4/Q4** • Costs are down 2% 2014 vs 2013** * Excluding non-recurring items ** Excluding non-recurring items, FX, variable pay and profit sharing 11 •

Stable credit quality TOTAL NET LOAN LOSSES, EURm COMMENTS 241 • Loan losses at 15bp – below 10 year 198 186 180 average 171 158 135 129 112 • Slight increase in Denmark • Collective provision in Denmark related to agriculture sector Q4/12 Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 • Offset by reversals in other IMPAIRED LOANS, EURm areas 6 538 6 425 6 409 • Increase from low levels in Russia 2 371 2 336 2 310 • Impaired loans down 2% 4 168 4 073 4 115 Q2/14 Q3/14 Q4/14 Performing Non-performing 12 •

Special attention area 1(4) - Finland Stable underlying fundamentals PD DEVELOPMENT, BANKING FINLAND COMMENTS • Slight improvement in household and corporate PD’s • Loan losses at moderate level of 17 bps, down from 20 bps • Slow growth but underlying macro Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 11 11 11 11 12 12 12 12 13 13 13 13 14 14 14 14 conditions are stable Corporate Household SLIGHT INCREASE IN EXPORTS EXCL. RUSSIA STABLE HOUSEPRICE DEVELOPMENT, indexed 13 •

Special attention area 2(4) - Russia Strong international customer base KEY FINANCIALS, EURm COMMENTS • Credit exposure mainly towards large FY 2014 Share of international Russian corporates and Group, % Nordic corporates Total income 274 3 • 86% of credit portfolio in USD or Net loan losses -15 3 EUR- financing large Russian corporates’ international operations Operating profit 165 4 • Loan losses are at low levels Total lending 6 200 2 • Increase in the quarter mainly Loan loss ratio 24 bps 15 bps* relates to collective provisions and one individual exposure * Loan loss ratio for the group • Limited risk of increased loan losses • Stress tests performed on customer level 14 •

Special attention area 3(4) - Oil Oil and Gas, Oil services and Off-shore DEVELOPMENT OF BRENT OIL PRICE COMMENTS • Nordea’s direct exposure is limited 160 • Approx. 2% of total group 140 exposure 120 100 • Limited risk of increased loan losses 80 • Stress tests performed on 60 customer level 40 • Likely negative effect on Norwegian 20 economy 0 jan. 05 jan. 07 jan. 09 jan. 11 jan. 13 jan. 15 • Mitigated by lower interest rates, weaker NOK and sovereign oil fund spending • A lower oil price provides stimuli on Finnish and Swedish economies 15 •

Special attention area 4(4) – Danish agriculture Sector affected by world market price pressure GROSS MARGIN INDEX (crop, milk, pork) COMMENTS 130 • Agriculture sector affected by world market price pressure 120 • Negative effect on crop, milk and pork prices 110 • Exposure towards agriculture 2% of 100 total group lending portfolio 90 • Polarisation between strong and weak farmers 80 • Collective provision of EUR 2000 2002 2004 2006 2008 2010 2012 2014 2016 23m in the quarter 16 •

Risk exposure amount RISK EXPOSURE AMOUNT, EURbn* COMMENTS 168 168 162 160 • REA down EUR 7bn in the quarter 159 155 153 152 • Impact from capital management EUR 4.4bn 145 • Stable credit quality • FX effect mainly related to NOK Q4/12 Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 RISK EXPOSURE AMOUNT DEVELOPMENT, EURbn 152.5 -1.7 0.3 -1.2 -4.4 145.5 Q3/14 FX Credit Other Capital Q4/14 quality, management growth * Basel 2.5 excluding transition rules until Q4/13. Basel 3 from Q1/14 17 •

CET 1 ratio up 10 bps COMMON EQUITY TIER 1 RATIO DEVELOPMENT, % 0.5% -0.1% 15.7% 0.1% 15.6% -0.10% -0.3% 0% Q3/14 FX Credit quality and Stand., market Capital Profit Other CET1 Q4/14 growth risk and other management and changes dividend 18 •

Proposed dividend DIVIDENDS, EUR/SHARE COMMENTS 0.62 • Proposed dividend per share of EUR 0.62 0.50 • Representing a payout ratio of 0.43 70% of net profit* 0.34 0.29 0.26 0.25 0.20 2007 2008 2009 2010 2011 2012 2013 2014 * Adjusted for impairment charge in Q3/14 19 •

Return coming from improved efficiency RETURN DEVELOPMENT YTD, GROUP AND BUSINESS AREAS GROUP RETAIL BANKING WHOLESALE BANKING WEALTH MANAGEMENT RaRoCaR RaRoCaR RaRoCaR RaRoCaR 32.4% 14.4% 14.4% 25.5% 14.0% 13.7% 13.7% 12.8% YTD/13 YTD/14 YTD/13 YTD/14 YTD/13 YTD/14 YTD/13 YTD/14 IMPACT ON… IMPACT ON… IMPACT ON… IMPACT ON… -0.1% +0.3% -1.5% 5.6% INCOME INCOME INCOME INCOME 0.7% 0.8% 0.5% 0.5% COSTS COSTS COSTS COSTS 0.5% 0.8% 0.1% 0.6% ECONOMIC CAPITAL ECONOMIC CAPITAL ECONOMIC CAPITAL ECONOMIC CAPITAL 0.0% 0.0% 0.1% 0.0% OTHER OTHER OTHER OTHER 20 •

2015 plan update 14