Nordea Bank Abp · OMXHEX:NDA_FI
Nordea Bank Abp — Investor Day (2015)
14 slides from Nordea Bank Abp's investor day presentation, 2015
Slide 1: Risk management
Risk management Ari Kaperi Group CRO 1 Confidential
Slide 2: The least volatile Nordic bank
The least volatile Nordic bank Factors driving risk down Nordea vs. peers 2006-Q1 2015, % Quarterly net profit volatility 150 Large and diversified client base 83 Geographical diversification 46 32 25 Forward looking and holistic risk 17 management Nordea Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 2 Confid
Slide 3: Sound risk profile with low loan losses over the cycle
Sound risk profile with low loan losses over the cycle Nordea loan losses per quarter, bps Loan losses vs. peers, 10yr average, bps 30 20 49 10 0 (10) (20) 22 20 (30) 16 17 (40) 7 (50) (60) Q1/05 2005 Q1/07 2007 Q1/09 2009 Q1/11 2011 Q1/13 2013 Q1/15 2015 Peer 1 Nordea Peer 2 Peer 3 Peer 4 Peer 5 3
Slide 4: Risk management has delivered on its 2015 plan
Risk management has delivered on its 2015 plan Commitments in 2015 plan Nordea has delivered Loan losses has decreased continuously since 2013 P ■ Loan loss situation is expected to improve reflecting improved asset quality ■ Signs of impaired loans levelling off in Denmark Credit quality in Denmark
Slide 5: The credit portfolio is well diversified
The credit portfolio is well diversified Nordea credit portfolio, lending to the public excl. repos Other Public 5% 2% Sweden Denmark 30% 26% (10yr avg. Mortgage (10yr avg. Corporates 32bps) 41% 5bps) 48% (8yr avg. (8yr avg. 4bps) 21bps) Norway Finland 18% 21% (10yr avg. (10yr avg. Consumer 11bps) 1
Slide 6: Nevertheless we have exposure to cyclical areas
Nevertheless we have exposure to cyclical areas Russia LBO Largest loan loss EUR 18m, 6% of total loan losses 2008 Largest loan loss EUR 131m, 9% of total loan losses 2009 Current portfolio ~2% of total lending Current portfolio ~3% of total lending Net loan losses, bps 20 LBO 0 Baltics (20) Russia
Slide 7: Russia
Russia Loan loss and Operating profit, EURm How we manage the risk 200 ■ Managed under same frameworks as Nordic business ■ Specific risk appetite cap on 150 exposure ▪ Country concentration 100 ▪ CRE concentration cap ■ Specific credit instructions for 50 Russia. Dedicated credit team and experts ■
Slide 8: Baltics
Baltics Loan loss and Operating profit, EURm How we manage the risk 150 ■ Managed under same frameworks as Nordic business 100 ■ Sound exposure, business grown organically with strict customer 50 selection 0 ■ Specific credit instructions for Baltics (50) ■ Customers are reviewed annually or semi-an
Slide 9: Leveraged buyout (LBO)
Leveraged buyout (LBO) Loan loss and Operating profit, EURm How we manage the risk 400 ■ Stick to proven model, outlined in the LBO Industry Policy 300 ■ Pro-active monitoring of all companies in the LBO portfolio 200 ■ Close co-operation between all relevant internal stakeholders ■ Diversification
Slide 10: Shipping
Shipping Loan loss and Operating profit, EURm How we manage the risk 400 ■ Risk appetite cap on exposure ■ Extensive in-house shipping 300 expertise ■ Well defined, long-term 200 relationship strategy 100 ■ Business selection ■ Specific industry policy governing 0 shipping ■ Dynamic Credit Parameter
Slide 11: Market risk, no lossmaking quarter
Market risk, no lossmaking quarter Market risk P/L (incl. HtM and AfS portfolios), EURm How we manage the risk 600 ■ Specific risk appetite cap on exposure ▪ Market risk share of EC 500 ▪ Max loss per quarter 400 ■ Nordea Life and Pension is included in market risk framework 300 ■ Dynamic stop loss
Slide 12: Operational risk and Compliance
Operational risk and Compliance Risk levels are stable How we manage the risk Operational risk loss, 4-quarter rolling average EURm ■ Nordea’s operational risk framework is subject to continued 20 enhancements, with the ambition to strengthen the execution and control of risk processes 10 ■ Specific
Slide 13: Risk appetite clearly defines Nordea's risk taking boundaries
Risk appetite clearly defines Nordea’s risk taking boundaries Framework operational since 2011 Current Risk appetite framework ■ Facilitates holistic approach and increased ■ Single customer concentration risk awareness to ensure low earnings ■ Industry concentration Credit risk ■ Geographic concent
Slide 14: Summary
Summary Credit ■ High quality exposure ■ Stable portfolio ■ Strict management Cyclical areas ■ Well defined risk policies Loan losses expected to remain low Forward ■ Holistic risk appetite framework looking ■ Scenario analysis Proactive ■ Deep dives on oil, CRE etc. approach ■ Early warning system