Nordea Bank Abp · OMXHEX:NDA_FI
Nordea Bank Abp — Nordea — Q3 2004 Earnings Presentation
186 slides from Nordea Bank Abp's earnings presentation, Oct 27, 2004
Slide 1: Presentation for Investors
Presentation for Investors 27 October 2004
Slide 2: Contents
Contents z Financials Page 3 z Business operations Page 21 z Credit quality Page 46 z Basel II Page 62 z Economic capital Page 66 z Nordea Page 71 z Business areas Page 80 z Balance sheet Page 125 z Market shares Page 128 z Appendix Page 142 2
Slide 3: Financials Q3/04
Financials Q3/04 x Q O Q 0 Z
Slide 4: Income statement summary
Income statement summary EURm, Q3/04 Q2/04 Chg % Total income 1,391 1,404 -1 Total expenses -837 -849 -1 Loan losses, net 2 3 Equity method 15 9 Profit before inv. earnings and 571 567 1 insurance Investment earnings, banking -26 -61 Operating profit, life insurance 42 51 -18 Goodwill amortisation a
Slide 5: Income statement summary
Income statement summary EURm Jan-Sept Jan-Sept Chg % 2004 2003 Total income 4,216 4,240 -1 Total expenses -2,559 -2,700 -5 Loan losses, net -37 -279 Equity method 33 43 Profit before inv. earnings and 1,653 1,304 27 insurance Investment earnings, banking -25 137 Operating profit, life insurance 140
Slide 6: Net interest income
Net interest income QoQ: EURm z Up 2% 1000 z Growth in Retail Banking volumes 868 884 800 838 850 846 z Lending to large corporates decreased following pick-up in Q2 600 z Lending margins decreased as competition intensified 400 z Deposit margins strengthened – active management of non- trading inte
Slide 7: Net commission income
Net commission income EURm 388 397 405 403 QoQ: 500 379 47 49 60 58 47 z Stable payment commissions 35 44 40 35 28 z Asset Mgmt commissions 400 88 90 90 93 88 – mgmt fees developed in line with rise in AuM 300 129 127 124 123 120 – transaction fees reduced 200 z Brokerage declined following 194 200
Slide 8: Trading
Trading EURm QoQ: 160 156 z Decreased by 17% due to: 140 – reduced customer activity 120 130 125 – lower volatility in financial 100 markets 104 80 – fixed income most affected 86 60 YoY: 40 20 z Down 22% on high level last year 0 Q3/03 Q4/03 Q1/04 Q2/04 Q3/04 8
Slide 9: Expenses
Expenses EURm QoQ: 1000 973 z Down 1% 46 881 873 z Staff costs up 2% 416 15 849 837 350 15 15 800 370 378 – higher restructuring and 359 pension costs z Other expenses down 5% 600 z Seasonally lower expenses 531 511 – eg. lower IT and marketing 488 400 456 463 expenditures YoY: 200 z Down 5% z Numbe
Slide 10: Expenses - development
Expenses - development Q3/04 vs. Q2/04 Jan-Sep 04 vs. Jan-Sep 03 Reported Underlying Reported Underlying Staff costs 2% 2% -12% -7% Other -5% -5% 0% -6% expenses Total -1% -1% -5% -7% expenses z Underlying expenses are adjusted for: – restructuring expenses – variable salaries – profit sharing – F/X
Slide 11: Development of FTEs
Development of FTEs z YoY down approx. 3,000 FTEs 35,000 of which 1,100 outsourced 32,140 30,000 30,674 FTEs Q3/04 Q2/04 2003 29,880 29,289 29,140 25,000 Retail 17,557 17,638 18,320 CIB 1,932 1,941 2,102 20,000 AM & Life 1,816 1,796 1,796 15,000 GPT 6,181 6,235 6,772 10,000 Other 1,654 1,679 1,684 5
Slide 12: Loan losses
Loan losses EURm 100 QoQ: 90 z Reversals exceeded new 80 89 84 provisions – 2nd quarter in a row 70 60 z No major problem areas 50 40 42 30 YoY: 20 z Loan loss ratio down to 3bp 10 from 25bp annualised 0 -2 z Overall stable credit quality -3 -10 Q3/03 Q4/03 Q1/04 Q2/04 Q3/04 12
Slide 13: Investment earnings, banking
Investment earnings, banking EURm QoQ: 80 z Negatively influenced by 60 positioning for higher rates 62 40 early in Q3 when interest rates fell 33 20 27 0 YoY: -20 -26 z Reduced to EUR -25m -40 – down from high level last year -61 – mixed market conditions this -60 year -80 – influenced by new inves
Slide 14: Investment Risk Framework
Investment Risk Framework z As outlined in the interim reports Q1 and Q2 a new framework for the Group’s investment risk was implemented in the beginning of 2004 z Purpose of the new framework is to strengthen focus on absolute rather than relative return in the portfolio z New framework more direct
Slide 15: Operating profit, life insurance
Operating profit, life insurance EURm QoQ: 60 z Life continued to contribute with a relatively stable profit 50 51 47 40 42 40 40 30 YoY: 20 z Up 28% z Reflecting the changed 10 business model 0 Q3/03 Q4/03 Q1/04 Q2/04 Q3/04 15
Slide 16: Net profit
Net profit EURm QoQ: 700 z Down from Q2 664 600 628 – up 9% excluding real estate 500 gain of EUR 300m in Q2 400 418 398 YoY: 300 z Up 15% 200 202 z Q4/03: real estate write-downs 100 of EUR 115 0 z Q3/03: deferred tax asset of Q3/03 Q4/03 Q1/04 Q2/04 Q3/04 EUR 300m 16
Slide 17: Key figures
Key figures EUR Earnings per share % Return on equity (excl. goodwill) 0.25 30 0.24 28.1 25 26.5 0.20 0.21 20 0.15 0.15 18.2 0.14 15 17.0 0.10 10 9.7 0.07 0.05 5 0.00 0 Q3/03 Q4/03 Q1/04 Q2/04 Q3/04 Q3/03 Q4/03 Q1/04 Q2/04 Q3/04 EPS Jan-Sep 2004 EUR 0.53 RoE Jan-Sep 2004 21.0% EPS Jan-Sep 2004 adjus
Slide 18: Earnings per share – 12 months rolling
18 Q 1/ 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 20 EUR Q 00 2/ 20 Q 00 3/ 20 Q 00 4/ 20 Q 00 1/ 20 Q 01 2/ 20 Q 01 3/ 20 Q 01 4/ 20 Q 01 1/ 20 Q 02 2/ 20 Q 02 3/ 20 Q 02 4/ 20 Q 02 1/ 20 Q 03 2/ 20 Q 03 3/ 20 Earnings per share – 12 months rolling Q 03 4/ 20 Q 03 1/ 20 Q 04 2/ 20 Q 04 3/ 20 04
Slide 19: Balance sheet - key items
Balance sheet - key items Change, 12 EURbn Q3/04 2003 Q3/03 months % Lending 154 146 149 4 Deposits 97 96 93 5 Shareholders’ equity 12 12 13 -1 Total assets 262 262 261 0 Risk-weighted assets 140 134 135 4 End of period 19
Slide 20: Repurchase of own shares
Repurchase of own shares Tier 1 ratio % ! Board decision to reactivate 10 repurchase programme up to a 9 maximum of 5% of outstanding 8 7.9 shares 7 7.3 7.6 6.7 7.0 – AGM authorisation to repurchase 6 5 10% of outstanding shares 4 ! Tier 1 capital increased 3 – EUR 500m Tier 1 bond launched 2 1 ! Hy
Slide 21: Business operations Q3/04
Business operations Q3/04 21
Slide 22: Total lending
Total lending EURbn 180 160 155.5 154.5 147.3 145.7 147.0 147.0 148.7 145.6 148.0 141.9 143.4 140 120 100 80 60 40 20 0 02 02 02 02 03 03 03 03 04 04 04 1/ 2/ 3/ 4/ 1/ 2/ 3/ 4/ 1/ 2/ 3/ Q Q Q Q Q Q Q Q Q Q Q Corparate lending Retail households mortgages Retail consumer loans Public sector 22 End of
Slide 23: Households mortgages, volumes and margins
Households mortgages, volumes and margins EURbn % 60 1.9 54.5 50 52.6 1.6 48.9 50.0 48.2 45.7 43.6 44.3 40 42.0 41.3 42.4 1.3 30 1.0 20 0.7 10 0.4 0 0.1 02 02 02 02 03 03 03 03 04 04 04 1/ 2/ 3/ 4/ 1/ 2/ 3/ 4/ 1/ 2/ 3/ Q Q Q Q Q Q Q Q Q Q Q 23
Slide 24: Consumer lending to households, volumes and margins
Consumer lending to households, volumes and margins EURbn % 20 4.4 18 4.3 16 16.9 17.0 4.2 16.2 15.8 15.4 14 14.3 14.3 14.5 4.1 13.8 13.9 12 4.0 10 3.9 10.0 8 3.8 6 3.7 4 3.6 2 3.5 0 3.4 / 02 / 02 / 02 / 02 / 03 / 03 / 03 / 03 / 04 / 04 / 04 1 2 3 4 1 2 3 4 1 2 3 Q Q Q Q Q Q Q Q Q Q Q 24
Slide 25: Lending to corporates, SME, volumes and margins
Lending to corporates, SME, volumes and margins EURbn % 70 1.4 60 1.3 58.1 58.9 56.0 56.9 57.3 57.2 57.3 56.0 56.8 55.9 55.9 50 1.2 40 1.1 30 1.0 20 0.9 10 0.8 0 0.7 02 02 02 02 03 03 03 03 04 04 04 1/ 2/ 3/ 4/ 1/ 2/ 3/ 4/ 1/ 2/ 3/ Q Q Q Q Q Q Q Q Q Q Q 25
Slide 26: Lending to corporates, CIB
Lending to corporates, CIB* EURbn 30 25 25.6 25.6 26.1 25.3 25.1 24.2 23.6 24.1 23.3 23.0 20 20.0 15 10 5 0 02 02 02 02 03 03 03 03 04 04 04 1/ 2/ 3/ 4/ 1/ 2/ 3/ 4/ 1/ 2/ 3/ Q Q Q Q Q Q Q Q Q Q Q *From Q1 2004 figures include lending volumes in Markets, previously reported under Group Treasury (EUR
Slide 27: Total deposits
Total deposits EURbn 120 110 100 94.6 95.6 97.7 97.1 92.6 94.2 91.1 92.9 92.1 88.1 89.7 90 80 70 60 50 40 39.2 39.8 39.4 40.0 41.1 41.0 40.9 41.8 42.4 30 37.3 38.1 20 10 0 02 02 02 02 03 03 03 03 04 04 04 1/ 2/ 3/ 4/ 1/ 2/ 3/ 4/ 1/ 2/ 3/ Q Q Q Q Q Q Q Q Q Q Q Of which household deposits 27 End of pe
Slide 28: Retail deposits, households, volumes and margins
Retail deposits, households, volumes and margins EURbn % 50 2.4 45 2.2 40 41.1 41.0 40.9 41.8 42.4 2.0 39.2 39.8 39.4 40.0 38.1 35 37.3 1.8 30 1.6 25 1.4 20 1.2 15 1.0 10 0.8 5 0.6 0 0.4 02 02 02 02 03 03 03 03 04 04 04 1/ 2/ 3/ 4/ 1/ 2/ 3/ 4/ 1/ 2/ 3/ Q Q Q Q Q Q Q Q Q Q Q 28
Slide 29: Active Asset and Liability management
Active Asset and Liability management z Nordea has implemented a new model regarding the risk behaviour of non-maturity deposits z A portion of Nordea’s deposit base redefined – predominantly current accounts – duration of approx. 1.5 years rather than short-term z New hedge on a rolling long-term b
Slide 30: Implementation of new active Asset and Liability management
Implementation of new active Asset and Liability management z Started in Q2 2004 z Achieved through use of derivatives and on-balance sheet items z Hedged volume until end of Q3 is approx. EUR 13bn z Yield gain 50-100bp at the end of Q3, depending on currency z Effect materialises as part of deposit
Slide 31: Structural Interest Income Risk (SIIR)
Structural Interest Income Risk (SIIR) EURm, annualised effect on Nii* Q3/04 Q2/04 Increasing market rates, 100bp 245 294 Decreasing market rates, 100bp -204 -248 *Approx. end of period z Reduced sensitivity following implementation of new ALM strategy z Ambition to gradually decrease interest rate
Slide 32: Retail deposits, SME’s, volumes and margins
Retail deposits, SME’s, volumes and margins EURbn % 40 3.2 35 2.8 30 2.4 28.8 29.0 28.6 28.8 29.0 27.6 27.7 28.2 27.1 25 26.0 26.8 2.0 20 1.6 15 1.2 10 0.8 5 0.4 0 0.0 02 02 02 02 03 03 03 03 04 04 04 1/ 2/ 3/ 4/ 1/ 2/ 3/ 4/ 1/ 2/ 3/ Q Q Q Q Q Q Q Q Q Q Q 32
Slide 33: Deposits, CIB
Deposits, CIB* EURbn 22 20 20.9 19.5 18 16 16.8 14 15.4 15.2 14.2 14.4 12 13.0 13.1 13.3 12.6 10 8 6 4 2 0 02 02 02 02 03 03 03 03 04 04 04 1/ 2/ 3/ 4/ 1/ 2/ 3/ 4/ 1/ 2/ 3/ Q Q Q Q Q Q Q Q Q Q Q 33 *From Q1 2004 figures include deposit volumes in Markets, previously reported under Group Treasury (EU
Slide 34: Assets under management
Assets under management EURbn 140 z Strong distribution capacity 121.9 123.3 125.7 120 113.0 z Leading Nordic position 107.0 100 – AuM up 17% last 12 months 80 – up 2% in Q3 60 z Up EUR 2.4bn in Q3 40 – mainly net inflow 20 0 Q3/03 Q4/03 Q1/04 Q2/04 Q3/04 Nordic retail funds Nordic private banking I
Slide 35: Net inflows
Net inflows EURbn 6 5.7 z High share of net inflows 5 across Nordic markets 4.2 4 z Market share of net inflows in 3 2.4 retail funds 31.6% in Q3 1.4 2.1 2 – market share of AuM 19.3% in Nordic retail fund market 1 0 z Net inflow of EUR 0.5bn in Nordic Private Banking -1 Q3/03 Q4/03 Q1/04 Q2/04 Q3/0
Slide 36: E-banking, household and corporate customers
E-banking, household and corporate customers E-banking customers E-banking log-ons Mill. Mill. 5.0 50 4.5 45 4.0 40 3.5 35 3.0 30 2.5 25 2.0 20 1.5 15 1.0 10 0.5 5 0.0 0 Q 0 Q 0 Q 1 Q 1 Q 2 Q 2 Q 3 Q 3 Q 4 04 Q 0 Q 0 Q 1 Q 1 Q 2 Q 2 Q 3 Q 3 Q 4 04 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1/ 3/ 1/ 3/ 1/ 3
Slide 37: Payment transactions, households
37 Q 150 175 200 225 250 275 300 1 Mill. Q / 01 2 Q / 01 3 Q / 01 4 Q / 01 1 Q / 02 2/ Q 02 3 Q / 02 4 Q / 02 1 Q / 03 2 Q / 03 3 Q / 03 4 Q / 03 1 Q / 04 2/ Payments transactions, total Q 04 3/ 04 Q 0 20 40 60 80 100 120 140 160 Mill. 1 Q / 01 2 Q / 01 3 Q / 01 4 Payment transactions, households Q
Slide 38: Result by business area
Result by business area EURm 500 478 456 400 300 200 100 125 85 58 57 57 47 6 0 -69 -27 -117 -100 -200 Retail CIB Asset Mgmt* Life* Group Group Treasury Functions *Product result for Asset Management and Life and Eliminations Q2/04 Q3/04 38
Slide 39: Retail Banking operating profit
Retail Banking operating profit EURm 500 z Increased volumes 450 478 456 z SME loan demand continued 400 428 433 395 z Positive net loan losses 350 300 z Lending margins sligthly down 250 200 z Deposit margins up 150 z 4 million international cards issued 100 50 Key ratios Q3/04 Q2/04 0 Q3/03 Q4/03
Slide 40: CIB operating profit
CIB operating profit EURm z Higher business activity within 160 Shipping 154 140 z Positive development in 120 125 Corporate Finance 100 z Reduced expenses 100 80 92 85 z Positive net loan losses 60 z Decreased lending volumes 40 following pick-up in Q2 20 Key ratios Q3/04 Q2/04 0 C/I ratio, % 54 64
Slide 41: Asset Management product result
Asset Management product result EURm z Stable result 80 z AuM up EUR 2.4bn to EUR 70 125.7bn 60 – net inflow of EUR 2.1bn in Q3 60 60 58 57 50 – small asset appreciation 48 z Asset Mgmt commissions 40 – mgmt fees developed in line with 30 rise in AuM – transaction fees reduced 20 10 Key ratios Q3/04
Slide 42: Life Insurance, product result
Life Insurance, product result EURm 70 z Firm profit 57 60 53 z Unit-link increasingly 52 50 44 49 47 important 43 41 39 39 40 30 20 10 7 7 8 10 Key ratios 6 Q3/04 Q2/04 0 -3 -3 -3 -3 -2 Inv return, % 1.9 -0.4 -10 Q3/03 Q4/03 Q1/04 Q2/04 Q3/04 Financial 4.4 4.9 buffers*, % Product result before dist
Slide 43: Group Treasury operating profit
Group Treasury operating profit EURm 80 z Improved result 60 z Group Investment negatively 62 55 influenced by positioning for 40 higher rates early in Q3 when 35 interest rates fell 20 z Through favourable positioning 0 6 Group Funding managed to uphold the high income level -20 -27 achieved in Q2
Slide 44: Group Functions and Eliminations
Group Functions and Eliminations QoQ: Q3/04 Q2/04 z Unallocated expenses within Income -29 -16 GPT Expenses -56 -26 z Central provisioning Loan losses -22 -8 General: Equity method 6 2 z Expenses in Group functions not defined as service offered Operating profit, Life 14 11 to business areas z Loan
Slide 45: Outlook 2004
Outlook 2004 z Total income 2004 expected to be in line with that of 2003 z Continued increase in business is expected to largely off-set shortfall in trading volume z Previous outlook statement indicated that total income in 2004 would increase compared to that of 2003 z Costs in 2004 expected to r
Slide 46: Credit quality
x Q O Q 0 Z Credit quality 46
Slide 47: Loan portfolio by customer category
Loan portfolio by customer category* EURbn 100 87 85 88 85 85 83 82 84 84 82 83 80 78 79 80 80 77 60 53 55 48 49 50 44 44 46 39 42 41 42 40 35 36 37 37 20 14 14 14 14 15 15 16 16 17 17 13 13 12 12 12 10 0 00 01 01 01 01 02 02 02 02 03 03 03 03 04 04 04 4/ 1/ 2/ 3/ 4/ 1/ 2/ 3/ 4/ 1/ 2/ 3/ 4/ 1/ 2/ 3/
Slide 48: Loan portfolio by customer group
Loan portfolio by customer group Q3/04, EUR 154.5bn Q3/03, EUR 148.7bn Public Public sector sector 2% 2% Household Household customers Companies customers 52% Companies 46% 43% 55% 48
Slide 49: Lending to household customers
Lending to household customers End of Q3/04 EUR 71.5bn Other loans z Continued strong growth in 24% mortgage lending z Other loans comprise – consumer credits – investment credits – car financing – overdraft facilities – credit cards Housing loans 76% 49
Slide 50: Lending to companies by industry
Lending to companies by industry End of Q3/04 EUR 79.8 bn Shipping & Offshore Construction Transport and 5% 3% communication 5% Real estate 28% Agriculture & Fishing 6% Renting, consulting and other services 8% Other companies 9% Manufacturing Finance 16% 9% Commerce and services 11% 50
Slide 51: Loan portfolio in figures
Loan portfolio in figures EURbn Q3/04 Q2/04 Q1/04 Q4/03 Q3/03 Household customers 71.5 69.5 66.3 64.7 63.5 Real estate 22.6 22.4 20.9 21.2 22.0 Construction 2.8 2.8 2.7 2.6 2.5 Transport, communication 4.4 4.3 4.3 4.4 4.6 Trade and services 8.5 9.3 8.8 8.7 9.1 Manufacturing 12.5 12.9 11.9 12.5 13.2
Slide 52: Lending by geographical area
Lending by geographical area End of Q3/04 EUR 154.5bn Latin America Other non OECD USA 0.5% 0.6% Nordic countries 1.1% Other OECD and P&B 0.5% 93.7% Other Asia 6.3% 0.5% Other EU countries 3.1% Nordic countries and P&B z Denmark 40.8 z Finland 33.5 z Norway 23.3 z Sweden 45.1 z P&B 2.0 52
Slide 53: Country risk exposure
Country risk exposure EURm. End of Q3/04 Asia 504 Latin America 257 -of which China 167 -of which Brazil 180 South Korea 148 Mexico 37 Indonesia 21 Chile 7 Panama 13 Argentina 1 Middle East 380 -of which Iran 186 Turkey 65 53
Slide 54: Nordea fisheries financing
Nordea fisheries financing End of Q3/04 Total exposure approx. EUR 1.8 bn Fish processing/ export z Total outstanding EUR 1.6bn 21% Fish z Mainly Norwegian exposure farming 43% z Fish farming – represents approx. 0.5% of total loan book – no provisions in 2004 Fishing vessels 36% 54
Slide 55: Nordea shipping portfolio
Nordea shipping portfolio Distribution by type of vessel End of Q3/04 Total exposure approx. EUR 6.1bn Reefers Combined 4% vessels Other dry cargo 1% 4% Bulkers 15% z Outstanding, EUR 5.4bn Pure car carries 5% Ferries z Well diversified portfolio by 5% Misc. loans type of vessel 13% Cruise 6% z Focu
Slide 56: Nordea real estate financing portfolio
Nordea real estate financing portfolio End of Q3/04 Total exposure approx. EUR 22.6bn Denmark 8.9% Sweden z Largest industry exposure Norway 49.3% 19.1% z Relatively large and financially strong companies z High level of collateral coverage z Lending to residential real estate companies approx 50% F
Slide 57: Impaired loans
Impaired loans EURm. End of period Q3/04 Q2/04 Q1/04 Q4/03 Q3/03 Impaired loans, gross 2,420 2,563 2,615 2,649 2,916 Provisions 1,824 1,898 1,929 -1,936 -2,072 Of which: Specific provisions -1,335 -1,406 -1,449 -1,468 -1,624 Appraised by category -55 -55 -60 -62 -64 General provisions -434 -436 -420
Slide 58: Impaired loans
Impaired loans EURm. End of Q3/04 Gross Provisons Net Household customers 529 337 192 Real estate 193 145 48 Construction 69 61 8 Transport, communication 208 165 43 Trade and services 209 172 37 Manufacturing 300 257 43 Finance 78 67 11 Renting, Consulting and other services 187 145 42 Other compan
Slide 59: Loan losses
Loan losses EURm 300 QoQ: 221 229 z Reversals exceeded new provisions 200 – 2nd quarter in a row 128 129 127 100 89 84 z No major problem areas 42 0 -3 -2 YoY: -100 -86 z Loan loss ratio down to 3bp -132 -132 -129 from 25bp annualised -145 -200 z Overall stable credit quality Q3/03 Q4/03 Q1/04 Q2/04
Slide 60: Comments on certain industries
Comments on certain industries Real estate z Vacancy rates for office buildings high particularly in the Stockholm region z Rent levels down from peak but still higher than original levels 3-5 years ago z Low interest rates help secure cash flow and secondary market values z New construction volumes
Slide 61: Comments on certain industries
Comments on certain industries Shipping and Offshore industry z China the driving force for shipping boom z Bulk market particularly strong z Tanker market strong but volatile z Crusing market recovering from global uncertainties z Nordea´s exposure well diversified with modern ships and globally co
Slide 62: Basel II
Basel II 62
Slide 63: Benefits for Nordea in Basel II
Benefits for Nordea in Basel II z Business case for Basel II can be drawn from the reduction in risk weighted assets and hence capital needed under the chosen implementation plan z Equally important are the indirect benefits; – improved risk management standards – improved efficiency in the credit p
Slide 64: Implementation plan with regards to Basel II
Implementation plan with regards to Basel II z Nordea has the ambition as regards credit risk to move towards IRB approach starting with foundation approach 2007 and moving gradually towards advanced approach z With regards to operational risk Nordea intends to implement a standardised approach, alr
Slide 65: Expected effects on capital requirements
Expected effects on capital requirements z For Nordea, as for most Nordic banks, the new Accord is expected to have a positive effect on minimum required capital z The main reason is the Groups lending portfolio mix; – household lending portfolio, representing 45% of the Groups total lending, where
Slide 66: Economic capital
Economic capital 66
Slide 67: Economic capital (EC)
Economic capital (EC) z EC is the capital required by Nordea to cover unexpected losses z 5 different risk categories are incorporated z The measurement period is one year z The confidence level is 99.97% z The economic capital may change over time due to: – composition of risk exposures – changes i
Slide 68: Economic capital
Economic capital EURbn 10.0 z Largely unchanged level 9.0 of Economic Capital 9.0 8.9 8.7 8.0 8.4 8.4 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 Q3/03 Q4/03 Q1/04 Q2/04 Q3/04 68
Slide 69: Economic capital per business area
Economic capital per business area End of Q3/04 Treasury Other EC per business area, Q2/04 5% 6% Asset Mgmt EURbn & Life Retail Banking 4.9 11% CIB 1.7 Asset Mgmt 0.1 Retail Life 0.8 CIB 58% 20% Treasury 0.4 Other 0.5 Total 8.4 69
Slide 70: Distribution of economic capital - by risk category
Distribution of economic capital - by risk category End of Q3/04 Life risk Operational risk 1% 9% Business risk 11% Market risk 17% Credit risk 62% 70
Slide 71: Nordea
Nordea 71
Slide 72: Developing Nordea
Benefiting from Developing Nordea the Nordic vision One bank Adjusting to changed market conditions Resuming top-line growth 2003 Focus, speed and performance Changes of business models Divestment of non-core assets Shaping the new reality 2002 Reduction of complexity Customer organisation, customer
Slide 73: Mission Vision Corporate values and key words
Mission Making it possible Vision We will be valued as the leading financial services group in the Nordic and Baltic markets with a substantial growth potential. We will be in the top league or show superior profitable growth in every market and product area in which we choose to compete. We will ha
Slide 74: Strategic themes 2004
Strategic themes 2004 Sustainable growth of economic profit Ensure stable and Ensure operational Ensure capital profitable growth of excellence, strict cost efficiency and high income management and credit portfolio quality reduced complexity Attract, develop and retain highly motivated, competent a
Slide 75: Strategic themes firmly anchored throughout the Group
Strategic themes firmly anchored throughout the Group Retail Banking Corp. and Inst. Banking Asset Management & Life Group / Group functions • Increase sales to all existing • Increase share of wallet • Capture share of growth in customers • Further enhance position the long-term savings and Ensure
Slide 76: Group financial targets
Group financial targets Jan- Key performance indicator 2002 2003 Sept 04 Target Total shareholder return, % # 15 #3 #4 In the top five of the peer group of 20 banks 1) 2) RoE, excluding goodwill, % 11.3 16.7 21.0 > 15% Costs, EURm 3,745 3,673 2,559 Same cost level as in 2003 Loan losses ratio, % 0.1
Slide 77: Peer group by market cap, EURbn
Peer group* by market cap, EURbn 8 October 2004 RBOS BARCLAYS BNP HBOS LLOYDS TSB SOCIETE GENERALE ABN AMRO NORDEA KBC DANSKE BANK ABBEY NATIONAL SHB HYPOVEREINSBANK ALLIED IRISH BANK BANK OF IRELAND COMMERZBANK SEB SWEDBANK DnBNOR 0 10 20 30 40 50 60 70 80 77 *As defined by Nordea
Slide 78: Strong distribution network throughout the Nordic and Baltic Sea region
Strong distribution network throughout the Nordic and Baltic Sea region Finland Branch offices 416 Personnel 8,457 Sweden Branch offices 252 Helsinki Personnel 7,199 Stockholm St Petersburg Norway Oslo Tallinn Branch offices 130 Copenhagen Riga Personnel 3,493 Vilnius Moscow Denmark Warzaw Branch of
Slide 79: Large customer base with high penetration in e-banking
Large customer base with high penetration in e-banking Baltic Sea Total DK FI NO SE Region Banking customers (1,000) Personal customers 1,610 2,970 640 4,100 300 9,620 Corporate customers 70 320 60 440 40 930 Life insurance customers (1,000) 618 324 245 517 53 1,757 E-banking customers (1,000) 641 1
Slide 80: Business areas
Business areas 80
Slide 81: Retail Banking
x Q O Q 0 Z Retail Banking 81
Slide 82: Retail Banking operating profit
Retail Banking operating profit EURm 500 z Increased volumes 450 478 456 z SME loan demand continued 400 428 433 395 z Positive net loan losses 350 300 z Lending margins sligthly down 250 200 z Deposit margins up 150 z 4 million international cards issued 100 50 Key ratios Q3/04 Q2/04 0 Q3/03 Q4/03
Slide 83: Retail Banking operating profit by markets
Retail Banking operating profit by markets Retail DK FI NO SE P&B EURm Q3 Q2 Q3 Q2 Q3 Q2 Q3 Q2 Q3 Q2 Q3 Q2 Net interest income 730 721 207 205 192 188 108 112 205 196 14 14 Non-interest income 348 374 91 90 86 103 37 35 123 134 8 7 Total income 1,078 1,095 298 295 278 291 145 147 328 330 22 21 Total
Slide 84: Retail Banking lending
Retail Banking lending EURbn 40 40.3 35 38.4 38.3 36.0 30 32.7 33.1 29.8 25 26.6 26.9 20 19.5 18.9 20.3 15 10 5 0 Denmark Finland Norway Sweden Q3/03 Q4/03 Q3/04 End of period 84
Slide 85: Retail Banking deposits
Retail Banking deposits EURbn 25 22.7 20 21.9 22.6 20.7 21.2 20.8 15 15.3 15.3 16.0 10 10.4 10.0 10.5 5 0 Denmark Finland Norway Sweden Q3/03 Q4/03 Q3/04 End of period 85
Slide 86: Retail Banking deposits
Retail Banking deposits EURbn. End of Q3/04 25 9.6 20 4.4 15 2.7 7.0 6.9 6.3 10 1.4 3.6 9.3 5 6.6 6.8 5.5 0 Denmark Finland Norway Sweden Corporate Household customer - saving accounts 86 Household customer - current accounts
Slide 87: Retail margins
Retail margins % Q1/03 Q2/03 Q3/03 Q4/03 Q1/04 Q2/04 Q3/04 Lending to SME’s 1.20 1.19 1.23 1.20 1.21 1.18 1.13 Mortgages, households 1.03 1.01 1.07 0.94 0.97 0.94 0.90 Consumer loans, 3.89 3.97 4.04 4.00 4.01 3.98 3.91 households Deposits, SME’s 1.27 1.19 1.02 1.02 0.96 0.90 0.93 Deposits, household
Slide 88: Nordea operations in Poland and Balticum
Nordea operations in Poland and Balticum End Sept 2004 Estonia Latvia Lithuania Poland Total Customers 34,200 20,250 8,675 284,300 347,425 Branches/salespoints 10 11 7 39 67 Number of FTEs 196 174 112 849 1,331 Total assets, EURm 722 509 351 1,158 2,740 Lending, EURm 608 430 271 1,000 2,309 Deposits
Slide 89: E-banking & transactions
E-banking & transactions 89
Slide 90: E-banking customers, all clients
90 Ja n 0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 5 Ju -00 Mill. ne - N o 00 v Ap -00 ri Se l-01 pt - Fe 01 b- Ju 02 ly - De 02 c M -02 ay -0 E-banking customers O 3 ct - M 03 ar - A u 04 g- 04 Ja n 0 50 100 150 200 250 300 350 400 Ju -00 ne (1,000) E-banking customers, all clients No -00 v Ap -00 ri Se l -01 p
Slide 91: Payments and log-ons, all clients
Payments and log-ons, all clients E-banking payments E-banking log-ons Mill. Mill. 50 50 45 45 40 40 35 35 30 30 25 25 20 20 15 15 10 10 5 5 0 0 Q 1 Q 2 Q 2 Q 3 Q 3 Q 4 04 Q 0 Q 0 Q 1 Q 1 Q 2 Q 2 Q 3 Q 3 Q 4 04 Q 0 Q 0 Q 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1/ 3/ 1/ 3/ 1/ 3/ 1/ 3/ 1/ 3/ 1/ 3/ 1/ 3/
Slide 92: Penetration on the net, all clients
92 Ja n 0 5 10 15 20 25 30 35 % -0 M 1 ay - S e 01 pt -0 Ja 1 n- 0 M 2 ay -0 Se 2 p- 0 Ja 2 n- 0 M 3 ay -0 Se 3 p- 0 Ja 3 n- 0 M 4 Mutual funds penetration rate ay -0 Se 4 p- 04 Ja 0 10 20 30 40 50 60 70 80 n- % M 00 ay Se -00 pt -0 Ja 0 n- Penetration on the net, all clients M 01 ay Se -01 pt -0 Ja
Slide 93: Cards, all clients
93 Q 0 20 40 60 80 100 120 140 160 1 Mill. Q / 01 2 Q / 01 3 Q / 01 4 Q / 01 1 Q / 02 2 Q / 02 3 Q / 02 4 Q / 02 1 Q / 03 2 Q / 03 3 Q / 03 Cards, all clients 4 Card payments Q / 03 1 Q / 04 2 Q / 04 3/ 04 Ja n 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 -0 Mill. M 1 ay - S e 01 pt -0 Ja 1 n- 0 M 2
Slide 94: Payment transactions, households
Payment transactions, households Payments transactions, households Breakdown of transactions Mill. Mill. 300 140 275 120 100 250 80 225 60 200 40 175 20 150 0 Q / 01 Q / 01 Q / 01 Q / 01 Q / 02 Q 02 Q / 02 Q / 02 Q / 03 Q / 03 Q / 03 Q / 03 Q / 04 Q 04 04 01 01 02 02 03 03 04 04 2/ 2/ 3/ 1 2 3 4 1 3
Slide 95: Payment transactions, households
Payment transactions, households Jan-Sep Million 1999 2000 2001 2002 2003 2004 Manual transactions 184.9 163.9 141.0 125.3 112.5 77.3 Payterminals 35.5 35.6 34.3 31.7 27.1 18.1 Card payments 234.3 263.1 333.5 395.5 459.9 385.2 Cash withdrawal 197.9 202.5 207.2 204.4 197.4 142.7 ATM Direct debit 69.0
Slide 96: Corporate and Institutional Banking (CIB)
Corporate and Institutional Banking (CIB) 96
Slide 97: CIB operating profit
CIB operating profit EURm z Higher business activity within 160 Shipping 154 140 z Positive development in 120 125 Corporate Finance 100 z Reduced expenses 100 80 92 85 z Positive net loan losses 60 z Decreased lending volumes 40 following pick-up in Q2 20 Key ratios Q3/04 Q2/04 0 C/I ratio, % 54 64
Slide 98: Stock market development
Stock market development Market Volume Market index Q3 2004, Chg Q3 vs Q2, % Q3 2004, % EURbn Denmark 18.4 -9 5 Finland 36.3 -19 -1 Norway 27.2 31 7 Sweden 83.4 -8 1 Source: Nordea Markets 98
Slide 99: CIB operating profit by main area
CIB operating profit by main area Corporate Financial International CIB Banking Instititutions and Shipping Other Markets Division Division Division EURm Q3 Q2 Q3 Q2 Q3 Q2 Q3 Q2 Q3 Q2 Q3 Q2 Total income 230 208 109 104 29 40 47 40 45 23 113 124 Total expenses -128 -134 -38 -39 -29 -31 -11 -12 -50 -5
Slide 100: CIB lending volume
CIB lending volume* EURbn 25 23.0 20 20.0 20.6 15 14.2 10 11.9 12.6 5 6.4 6.4 6.5 1.4 2.3 1.7 0 Corporate Banking Financial International and Total Division Institutions Division Shipping Division End of period Q3/03 Q4/03 Q3/04 *Excluding Markets volumes 100
Slide 101: Asset Management & Life
Nordea” Asset Management & Life 101
Slide 102: Asset Management product result
Asset Management product result EURm z Stable result 80 z AuM up EUR 2.4bn to EUR 70 125.7bn 60 – net inflow of EUR 2.1bn in Q3 60 60 58 57 50 – small asset appreciation 48 z Asset Mgmt commissions 40 – mgmt fees developed in line with 30 rise in AuM – transaction fees reduced 20 10 Key ratios Q3/04
Slide 103: Assets under management
Assets under management EURbn 140 z Strong distribution capacity 121.9 123.3 125.7 120 113.0 z Leading Nordic position 107.0 100 – AuM up 17% last 12 months 80 – up 2% in Q3 60 z Up EUR 2.4bn in Q3 40 – mainly net inflow 20 0 Q3/03 Q4/03 Q1/04 Q2/04 Q3/04 Nordic retail funds Nordic private banking I
Slide 104: Net inflows
Net inflows EURbn 6 5.7 z High share of net inflows 5 across Nordic markets 4.2 4 z Market share of net inflows in 3 2.4 retail funds 31.6% in Q3 1.4 2.1 2 – market share of AuM 19.3% in Nordic retail fund market 1 0 z Net inflow of EUR 0.5bn in Nordic Private Banking in Q3 -1 Q3/03 Q4/03 Q1/04 Q2/0
Slide 105: Assets under management - breakdown
Assets under management - breakdown EURbn Q3/04 Net inflow 2.1 Change in value * 0.3 Total change +2.4 Assets under management end of Q2/04 123.3 Assets under management end of Q3/04 125.7 Breakdown of AuM: Nordic retail funds** 38.7 Nordic private banking 26.3 International wealth mgmt & funds 12.8
Slide 106: Asset structure – Investment Management
Asset structure – Investment Management* Q3/04 Q2/04 EUR 79.8bn EUR 78.1bn Int'l. fixed Int'l. fixed income income 12% 11% Nordic Nordic equities equities 14% 14% Nordic Nordic fixed fixed income income 54% 53% Int'l. Int'l. equities equities 20% 22% 106 *Including mgmt of own investment funds
Slide 107: Asset structure – Investment Funds
Asset structure – Investment Funds Q3/04 Q2/04 EUR 48.2bn EUR 46.9bn Balanced Balanced funds funds 10% 10% Fixed Fixed income income funds funds 46% 45% Equity Equity funds funds 44% 45% 107
Slide 108: Investment Funds, volumes and margins
Investment Funds, volumes and margins EURbn % Margins 20 1.4 18 1.2 16 16.8 16.9 1.15 14 15.0 1.0 1.08 1.08 1.06 14.4 12 0.8 0.82 10 0.73 8 0.6 6 7.4 6.9 0.4 0.48 0.45 4 0.2 2 1.8 1.9 0 0.0 DK FI NO SE DK* FI NO SE Q2/04 Q3/04 Q2/04 Q3/04 End of period * Net margin 108
Slide 109: European Fund distribution
European Fund distribution EURm 7000 z Net inflow of EUR 0.4bn in Q3 6000 z More than 1000 active distribution agreements 5000 z Assets by country of source: 4000 – 25% from Switzerland 3000 – 25% from Germany – 15% from Spain 2000 – 8% from Austria 1000 – 8% from France 0 – 6% from UK – 4% from Lux
Slide 110: Life Insurance, product result
Life Insurance, product result EURm 70 z Firm profit 57 60 53 z Unit-link increasingly 52 50 44 49 47 important 43 41 39 39 40 30 20 10 7 7 8 10 Key ratios 6 Q3/04 Q2/04 0 -3 -3 -3 -3 -2 Inv return, % 1.9 -0.4 -10 Q3/03 Q4/03 Q1/04 Q2/04 Q3/04 Financial 4.4 4.9 buffers*, % Product result before dist
Slide 111: Life - breakdown of product result
Life - breakdown of product result EURm Q3/04 Q2/04 Normalised operating margin 56 72 Fluctuations compared to normalised investment return 97 -280 Change in discount rate for life provisions -172 159 Allocation to policy-holders -17 -26 Allocation to/from financial buffers 73 124 Net profit from ot
Slide 112: Life
Life EURm Q3/04 Q2/04 Q1/04 Q4/03 Q3/03 TRADITIONAL LIFE Premiums written net 391 422 491 533 370 Normalised investment. return 235 236 234 244 236 Benefits paid and change in provision -547 -560 -655 -687 -532 Insurance operating expenses -23 -26 -25 -28 -24 Normalised operating margin 56 72 45 62
Slide 113: Life Q3/04
Life Q3/04 EURm Denmark Finland Norway Sweden Other Total TRADITIONAL LIFE Premiums written net 167 97 89 28 10 391 Normalised investment return 116 63 37 17 3 235 Benefits paid and change in provision -265 -134 -103 -35 -10 -547 Insurance operating expenses -11 -1 -7 -2 -2 -23 Normalised operating
Slide 114: Life - investments
Life - investments EURbn 30 z Equities 24.8 24.8 25.4 25 23.4 23.9 – predominantly listed equities 20 – 1/3 Nordic, 2/3 international z Bonds 15 – ¾ Nordic issuers 10 – primarily govmn’t & mortgage inst. 5 0 Q3/03 Q4/03 Q1/04 Q2/04 Q3/04 Equities Bonds Real estate Unit linked 114 End of period
Slide 115: Life - asset allocation
Life - asset allocation Total, EURbn Equities, % Q3/04 Q2/04 Q3/04 Q2/04 Denmark 11.8 11.6 19 19 Finland 6.8 6.6 15 15 Norway 3.3 3.2 12 12 Sweden 2.9 2.8 4 4 Total 24.8 24.2 15 15 115
Slide 116: Life - solvency situation
Life - solvency situation End of Q3/04 Required Actual Solvency Solvency in % EURm solvency solvency buffer of requirement Denmark 456 534 77 117 Finland 212 484 272 228 Norway 124 204 80 165 Sweden 69 128 59 186 116
Slide 117: Life – solvency sensitivity, end of Q3/04
Life – solvency sensitivity, end of Q3/04 Denmark Finland Norway Sweden % Solvency in % of requirement 117 228 165 186 Equities drop 12% 116 194 161 171 Interest rates down 50bp 115 239 165 234 Interest rates up 50bp 118 211 165 146 117
Slide 118: Life – financial buffers
Life – financial buffers* EURm % of total provisions Q3/04 Q2/04 Q3/04 Q2/04 Denmark 612 688 6.1 7.1 Finland 158 158 3.2 3.3 Norway 22 30 0.8 1.1 Sweden 64 57 3.8 3.5 Total 856 933 4.4 4.9 118 * Financial buffers are defined in accordance with local regulations and practices.
Slide 119: Life – buffer sensitivity, end of Q3/04
Life – buffer sensitivity, end of Q3/04 Denmark Finland Norway Sweden EURm Financial buffers* 612 158 22 64 Equities drop 12% -169 -72 -3 -10 Interest rates down 50bp 28 24 5 33 Interest rates up 50bp 32 -35 -3 -27 * Financial buffers are defined in accordance with local regulations and practices. 1
Slide 120: Group Treasury
Group Treasury 120
Slide 121: Group Treasury operating profit
Group Treasury operating profit EURm 80 z Improved result 60 z Group Investment negatively 62 55 influenced by positioning for 40 higher rates early in Q3 when 35 interest rates fell 20 z Through favourable positioning 0 6 Group Funding managed to uphold the high income level -20 -27 achieved in Q2
Slide 122: Group Treasury operating profit by main areas
Group Treasury operating profit by main areas Group Investment Group Funding Total Fixed income Equity portfolios portfolios EURm Q3/04 Q2/04 Q3/04 Q2/04 Q3/04 Q2/04 Q3/04 Q2/04 Income -16 -43 -6 -15 40 42 Expenses -3 -3 -1 0 -8 -8 Profit excl. Investment earnings 32 34 32 34 Investment earnings -26
Slide 123: Group Treasury - investments
Group Treasury - investments EURbn 20 z Equities 16.8 – listed, unlisted & private equity 15.9 16.2 16.0 14.8 funds 15 z Bonds 10 – ¾ Nordic issuers – primarily government and mortgage inst. 5 0 Q3/03 Q4/03 Q1/04 Q2/04 Q3/04 Fixed income Equities End of period 123
Slide 124: Treasury – risk management
Treasury – risk management End of Q3/04 z Interest rate risk (VaR) – risk related to interest rate positions, calculated as VaR z Equity risk (VaR) – risk related to equities, calculated as VaR, comprise all equities including listed, unlisted and private equity EURm, end of period Q3/04 Q2/04 Inter
Slide 125: Balance sheet
x Q O Q 0 Z Balance sheet 125
Slide 126: Balance sheet
Balance sheet EURm End of Q3/04 End of 2003 End of Q3/03 Loans and advances to credit institutions 22,761 29,037 24,900 Lending 154,451 145,644 148,688 Bonds and other interest-bearing securites 29,968 32,017 30,185 Shares and participations 611 648 658 Shares in associated and group undertakings 35
Slide 127: Capital base
Capital base EURm End of Q3/04 Shareholders’ equity 12,449 Deductions insurance companies and other -817 Shareholders’ equity in the capital base 11,632 Hybrid capital 782 Minority interests 3 Group goodwill -1,670 Other deductions -53 TIER 1 Capital 10,694 TIER 2 Capital (subordinated debt) 5,249 D
Slide 128: Market shares
Market shares * Statistics as of Aug-Sept 2004 128
Slide 129: Market shares, personal customer deposits
Market shares, personal customer deposits % 40 35 34.6 34.0 30 25 20 22.1 21.9 19.5 19.0 15 10 5 8.6 8.5 0 Denmark Finland Norway Sweden Aug 2003 Aug 2004 129
Slide 130: Personal customer deposits - market volume & share
130 Au 01 g -A 0 100 200 300 400 500 0 100 200 300 400 500 N - 01 01 ug ov -N DKKbn NOKbn F e - 01 02 ov b -F M -02 02 eb ay -m Au -02 02 ay g -A N - 02 02 ug ov -N F e - 02 03 ov b -F M -03 03 eb ay -M Au - 03 03 ay Norway g Denmark -A N - 03 03 ug ov -N F e - 03 04 ov b -F M -04 04 eb ay -M Au - 0
Slide 131: Market shares, corporate deposits
Market shares, corporate deposits % 45 40 35 38.9 39.2 30 25 20 21.6 22.6 22.5 22.2 15 16.3 16.2 10 5 0 Denmark Finland Norway Sweden Aug 2003 Aug 2004 131
Slide 132: Corporate deposits - market volume & share
132 A A ug ug 0 100 200 300 400 0 50 100 150 200 250 300 350 N - 01 N - 01 ov ov DKKbn NOKbn F e - 01 Fe - 01 b b M -02 M - 02 ay ay A -02 A -02 ug ug N - 02 N - 02 ov ov F e - 02 Fe - 02 b b M -03 M -03 ay ay A -03 A -03 Norway Denmark ug ug N - 03 N - 03 ov ov F e - 03 Fe - 03 b b M -04 M -04 ay a
Slide 133: Market shares, personal customer lending
Market shares, personal customer lending % 35 30 32.1 32.0 25 20 18.4 15 16.6 14.1 14.2 10 11.0 10.8 5 0 Denmark Finland Norway Sweden Aug 2003 Aug 2004 133
Slide 134: Personal customer lending - market volume & share
134 A A ug ug 0 200 400 600 800 0 50 100 150 200 250 300 N - 01 N - 01 DKKbn ov ov NOKbn F e - 01 F e - 01 b b M -02 M -02 ay ay A -02 A -02 ug ug N - 02 N - 02 ov ov F e - 02 F e - 02 b b M -03 M -03 ay ay Au -03 A -03 Norway Denmark g ug N - 03 N - 03 ov ov F e - 03 F e - 03 b b M -04 M -04 ay ay
Slide 135: Mortgage lending households - market volume & share
135 A Q ug 1/ 0 200 400 600 800 1000 0 100 200 300 400 500 600 700 N - 01 Q 01 ov 2/ DKKbn Q 01 NOKbn F e - 01 b 3/ M -02 Q 01 ay 4/ A -02 Q 01 ug 1/ N - 02 Q 02 ov 2/ F e - 02 Q 02 3/ b Q 02 M -03 4/ ay Q 02 A -03 1/ Norway Denmark ug Q 03 N - 03 2/ ov Q 03 F e - 03 3/ b Q 03 M -04 4/ ay Q 03 1/ A
Slide 136: Corporate lending - market volume & share
136 A A ug ug 0 100 200 300 400 500 0 100 200 300 400 500 N - 02 N - 01 ov ov DKKbn NOKbn F e - 02 F e - 01 b b M -02 M -02 ay ay Au -02 Au -02 g g N - 02 N - 02 ov ov F e - 02 F e - 02 b b M -03 M -03 ay ay Au -03 A -03 Norway Denmark g ug N - 03 N - 03 ov ov F e - 03 F e - 03 b b M -04 M -04 ay ay
Slide 137: Investment funds - market volume & share
Investment funds - market volume & share DKKbn Denmark EURbn Finland 500 32% 30 34% 400 30% 32% 25 28% 30% 300 20 26% 28% 15 200 26% 24% 10 100 24% 22% 5 22% 0 20% 0 20% S 3 S 4 3 3 D 2 2 D 3 3 4 S 3 S 4 3 4 D 2 2 D 3 3 4 0 0 -0 -0 -0 -0 -0 -0 -0 0 0 -0 -0 n- n- -0 -0 -0 -0 -0 n- n- ar ar ep ep ep e
Slide 138: Investment funds, net inflow, Norway
Investment funds, net inflow, Norway Market volume, Nordea volume, and accumulated market share ytd NOKm % 3,000 60 50 2,000 40 30 1,000 20 10 0 0 -10 -1,000 -20 -30 -2,000 -40 -50 -3,000 -60 3 4 2 3 2 3 4 03 04 3 4 2 3 -0 -0 -0 -0 0 0 0 r-0 r-0 -0 -0 g- b- g- b- g- n n ct ct ec ec Ap Ap Ju Ju Au Au
Slide 139: Investment funds, net inflow, Finland
Investment funds, net inflow, Finland Market volume, Nordea volume, and accumulated market share ytd EURm % 1400 70 1200 60 1000 50 800 40 600 30 400 20 200 10 0 0 -200 -10 -400 -20 D - 02 D - 03 Ju 3 Ju 4 Au 0 3 Au 0 4 N 02 A p 03 N 03 A p 04 Fe -03 S e 03 Fe 04 S e 04 Ju 03 Ju 04 M 03 M 04 M 03 M
Slide 140: Investment funds, net inflow, Sweden
Investment funds, net inflow, Sweden Market volume, Nordea volume, and accumulated market share ytd SEKm % 14000 19bn 19bn 28 12000 24 10000 20 8000 16 6000 12 4000 8 2000 4 0 0 -2000 -4 2 2 2 2 3 3 3 3 3 3 3 3 3 3 3 3 4 4 4 4 4 4 4 4 4 p-0 ct-0 v-0 c- 0 n-0 b-0 r-0 r-0 y- 0 n-0 ul- 0 g-0 p-0 ct-0 v
Slide 141: Market share, equity dealing - Nordea Securities
Market share, equity dealing - Nordea Securities Equity market turnover EURbn % 9 8 8.5 Q3/04 Q2/04 7 Denmark 18.4 20.1 7.2 6 Finland 36.3 44.7 6.1 6.3 5 Norway 27.2 19.9 4.9 5.1 Sweden 83.4 88.6 4 3 3.6 3.6 2 1 0 ki o m en sl sin ol ag O kh el h oc H en St op C Q2/04 Q3/04 141 End of period
Slide 142: Appendix
Appendix z Financials Page 143 z Nordea share Page 154 z Other Page 160 z Macro statistics Page 165 142
Slide 143: Appendix: Financials
Appendix e Financials 143 ‘
Slide 144: Operational income statement
Operational income statement EURm Q3/04 Q2/04 Q1/04 Q4/03 Q3/03 Net interest income 884 868 846 850 838 Net commission income 403 405 397 388 379 Trading income 86 104 156 125 130 Other income 18 27 22 36 56 Total income 1,391 1,404 1,421 1,399 1,403 Personnel expenses -463 -456 -488 -511 -531 Profi
Slide 145: Statutory income statement
Statutory income statement EURm Q3/04 Q3/03 Interest income 1,953 2,361 Interest expenses -1,065 -1,462 Net interest income 888 899 Dividends received 0 6 Net commission income 415 393 Net result from financial operations 48 101 Other income 27 33 Total income 1,378 1,432 General administrative expe
Slide 146: Reconciliation of operational and statutory accounts
Reconciliation of operational and statutory accounts Operational Investment Other Statutory EURm Jan-Sep 04 Trading income activities Insurance adjustment Jan-Sep 04 Net interest income 2,598 13 1) -30 6) 30 16) 2,611 Dividend income 9 4) 6 8) 15 Net commission income 1,205 39 2) -1 1,243 Trading in
Slide 147: Reconciliation of operational and statutory accounts
Reconciliation of operational and statutory acounts 1. Net interest income from trading transactions in Nordea 10. Amortisation of goodwill related to insurance included in Markets (for example interest related to swaps etc.), one-line consolidation of insurance activities (Operating reclassified as
Slide 148: Expenses - breakdown
Expenses - breakdown EURm Q3/04 Q2/04 Q1/04 Q4/03 Q3/03 Staff 1) 463 457 489 512 532 Profit sharing 15 15 15 46 - Information technology 2) 105 108 112 136 88 Marketing 18 23 14 27 14 Postage, telephone and office expenses 46 50 52 56 53 Rents, premises and real estate expenses 83 89 75 87 74 Other
Slide 149: Total IT-related expenses
Total IT-related expenses* EURm 250 z Approx. 20% of total costs 200 208 150 166 165 166 161 100 50 0 Q3/03 Q4/03 Q1/04 Q2/04 Q3/04 *Refers to IT operations, service expenses and consultant fees including personnel etc, but 149 excluding IT expenses in insurance operations
Slide 150: Cost/income ratio
Cost/income ratio C/I ratio, banking C/I ratio, banking % % 70 70 67 60 63 60 64 63 61 59 61 58 50 50 40 40 30 30 20 20 10 10 0 0 Q3/03 Q4/03 Q1/04 Q2/04 Q3/04 2001 2002 2003 150
Slide 151: Gains and losses on various disposals etc
Gains and losses on various disposals etc P&L P&L EURm Q3/04 Q2/04 Q1/04 Q4/03 Q3/03 BA Operational Statutory Real estate sales and 300 Own line Other Other write downs Real estate sales and -115 Own line Own line Other write downs Retail Finland 10 Other Other Retail Net result OM/HEX shares 27 Oth
Slide 152: Real estate divestment process completed
Real estate divestment process completed z A gain of EUR 300m is reflected in Q2 accounts below operating profit – write-down of EUR 115m in Q4 2003 z Reduced EC by EUR 260m and improved capital effiency z Lower RWA’s and improved Tier 1 capital z Nordea owns no major properties Î Going forward the
Slide 153: Pension obligations
Pension obligations z RR29/IAS19 implemented 1 January 2004 – defined benefit plans reflected on balance sheet Pension Obligation, national GAAP, net liability EUR 298m Effect of implementation of RR29/IAS19 EUR 256m* Net liability 1 January 2004 EUR 554m *EUR 183m adjustment of equity (after tax) z
Slide 154: Appendix: Nordea share
Nordea” Appendix e Nordea share 154
Slide 155: Total shareholder return (TSR) Ytd 2004
H 155 YP O VE R C EI N O % -10 0 10 20 30 40 50 60 S BA MM BA N ER N K K O Z BA F IR NK EL AN D R *As defined by Nordea AB BO N S SO LL AM C R IE OY Source: Bloomberg 9/10-2004 TE DS O G T EN SB ER AL E SH B SW B ED N P BA N K AL SE LI ED B H IR BO IS S H BA AB N Nordea peer group* BE O N K Y RD N E
Slide 156: Shareholder structure, end of Q3/04
Shareholder structure, end of Q3/04 3.9% 2.4% 5.5% 29.5% 6.3% International institutions Swedish institutions 7.1% Swedish state Finnish institutions Finnish public Danish institutions Danish public 19.5% Swedish public 25.8% Number of shareholders approx. 493,000 156
Slide 157: Largest registered shareholders, end of Q3/04
Largest registered shareholders, end of Q3/04 Shareholder Number of shares % Swedish state 542.0 19.5 Nordea Danmark fonden 102.5 3.7 Alecta 93.4 3.4 Robur fonder 70.0 2.5 Nordea fonder 52.8 1.9 SHB/SPP fonder 47.0 1.7 SEB fonder 45.6 1.6 Fjärde AP-fonden 45.0 1.6 Skandia 33.1 1.2 Första AP-fonden 3
Slide 158: Number of shares
Number of shares Type of Number of Outstanding Date transaction Subject shares issued shares Jan, 2000 New issue Merita 815,800,287 2,091,067,728 April, 2000 New issue Unidanmark 869,776,488 2,960,844,216 June, 2000 New issue Unidanmark 18,348,501 2,979,192,717 2000-2001 New issue Conversions* 3,473
Slide 159: Data per share
Data per share Q3/04 2003 2002 2001 2000 EUR EUR EUR SEK Dividend n.a 0.25 0.23 0.23 2.00 Shareholders’ equity per share, EUR 4.47 4.28 4.06 4.00 3.74 Earnings per share, EUR 0.14 0.51 0.30 0.53 0.58 Share price, end of period, 59.5 54.0 38.4 55.5 71.5 SEK P/E ratio1) 11.0 11.7 14.0 11.3 14.0 1)) Sh
Slide 160: Appendix: Other
x Q O Q 0 Z Appendix e Other (o) ce) =
Slide 161: Ratings
Ratings Moody’s S&P Fitch BFSR Short Long Short Long Short Long Individ. Nordea Bank D B P-1 Aa3 A-1 A+ F1+ AA- B Nordea Bank F B P-1 Aa3 A-1 A+ F1+ AA- B Nordea Bank N B- P-1 Aa3 A-1 A+ F1+ AA- B Nordea Bank AB B P-1 Aa3 A-1 A+ F1+ AA- B Nordea Hypotek P-1 Aa3 A-1 Nordea Kredit Aaa AAA Norgeskredit
Slide 162: Business structure
Business structure Board of Directors Internal Audit Activity CEO Lars G Nordström Group Management Secretariat Corporate and Asset Management Group Processing Group Corporate Retail Banking Group Staffs Institutional Banking & Life and Technology Centre Kari Jordan Peter Schütze Tom Ruud Christian
Slide 163: Legal structure
Legal structure Nordea Bank AB (Publ) Sweden Nordea Bank Nordea Bank Nordea Bank Nordea Bank Nordea Asset Nordea Life Nordea Life Danmark A/S Finland Plc Norge ASA Polska SA Management Holding A/S Holding Denmark Finland Norway Poland AB Sweden Denmark Finland Various Nordea Various Various Various
Slide 164: Group Executive Management as of 1 Nov 2004
Group Executive Management as of 1 Nov 2004 Lars G Nordström President and Group CEO Christian Clausen Head of Asset Management & Life Lena Eriksson Head of Group Legal and Compliance Carl-Johan Granvik Head of Group Credit and Risk Control, Group CRO Arne Liljedahl Head of Group Corporate Centre, G
Slide 165: Appendix: Macro statistics and estimates
Appendix z Macro statistics and estimates Source: Nordea Markets Economic Research Estimates mainly from September 2004 165
Slide 166: Market development - GDP
Market development - GDP % 4.0 3.5 3.5 3.4 3.0 3.2 3.2 3.1 3.0 3.0 2.5 2.5 2.5 2.4 2.3 2.0 2.0 1.8 1.5 1.6 1.0 0.5 0.7 0.5 0.0 Denmark Finland Norway Sweden 2003 2004(e) 2005(e) 2006(e) Source: Nordea Markets. In Norway, forecasts are for mainland GDP 166
Slide 167: Market development – interest rates
Market development – interest rates z Long-term interest rates down in Q3 z Short-term interest rates stable Change 30-06-04 30-09-04 % Q2/04 Short, EUR (one week) 2.05 2.06 +0.01 Long, EUR (5 years) 3.57 3.31 -0.26 Short, DK 2.17 2.18 -0.01 Long, DK 3.87 3.48 -0.39 Short, NO 1.71 1.91 +0.20 Long, N
Slide 168: Short interest rates - average (one week)
Short interest rates - average (one week) z Short interest rates likely to have bottomed out % 4.0 3.5 3.42 3.0 2.86 2.81 2.5 2.57 2.52 2.0 2.09 2.07 2.03 2.04 2.05 2.10 2.11 2.15 2.16 2.16 2.07 2.06 1.99 1.75 1.83 1.5 1.0 0.5 0.0 EUR DKK SEK NOK Q3/03 Q4/03 Q1/04 Q2/04 Q3/04 168
Slide 169: Market development Q3 – stock market
Market development Q3 – stock market z Mixed index development z Reduced turnover volumes % % 10 40 7 30 5 31 5 20 1 0 10 -1 -3 0 -5 -7 -9 -8 -10 -19 -10 -20 m n ow d aq i oc lo s m n i o nk nk e ne e sl ol s ol ag si ag O si O kh as Jo kh el el h h N en H oc H en St op St op D C C 169
Slide 170: Macro data
Macro data % 2003e 2004e 2005e Gross domestic product DK 0.5 2.5 2.4 FI 2.0 3.2 3.5 NO 0.6 3.1 3.0 SE 1.6 3.4 3.2 Inflation DK 2.1 1.3 1.9 FI 1.3 0.3 1.6 NO 2.5 0.6 1.6 SE 2.0 0.6 1.4 Private consumption DK 2.1 1.3 1.9 FI 0.9 0.2 1.6 NO 2.5 0.6 1.6 SE 2.0 0.6 1.4 Unemployment DK 5.9 6.3 5.6 FI 9.0 8
Slide 171: Gross domestic product
Gross domestic product Change in % YoY 10 8 6 4 2 0 -2 -4 -6 -8 -10 Q1/90 Q1/93 Q1/96 Q1/99 Q1/02 Denmark Finland Norway Sweden 171
Slide 172: Inflation
Inflation % 14 12 10 8 6 4 2 0 -2 1990 1992 1994 1996 1998 2000 2002 2004 Denmark Finland Norway Sweden 172
Slide 173: Private consumption
Private consumption Change in % YoY 10 8 6 4 2 0 -2 -4 -6 -8 Q1/90 Q1/93 Q1/96 Q1/99 Q1/02 Denmark Finland Norway Sweden 173
Slide 174: Household saving rates
Household saving rates % 12 10 8 6 4 2 0 -2 -4 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Denmark Finland Norway Sweden 174
Slide 175: Unemployment
Unemployment % of labour force 20 15 10 5 0 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 199 199 199 199 199 199 199 199 199 199 200 200 200 200 200 Denmark Finland Norway Sweden 175
Slide 176: Credit growth total lending to non-bank sector
Credit growth total lending to non-bank sector Change in % YoY 15 10 5 0 -5 -10 ch ch ar n ne ne pt pt ec ec p ec u e -M Se Se ar ar Ju Ju -J D D -D -S M M 04 02 96 99 02 03 00 97 01 98 96 99 Denmark Finland Norway Sweden 176
Slide 177: Bankruptcies
Bankruptcies Number of bankruptcies per month 1800 1600 1400 1200 1000 800 600 400 200 0 94 95 96 97 98 99 00 01 02 03 04 n- n- n- n- n- n- n- n- n- n- n- Ja Ja Ja Ja Ja Ja Ja Ja Ja Ja Ja Denmark Finland Norway Sweden 177
Slide 178: Exchange rate, EUR/USD
178 2/ 1 / 0.8 0.85 0.9 0.95 1 1.05 1.1 1.15 1.2 1.25 1.3 2/ 9 8 4 USD / 2/ 9 8 7 2/ /9 8 10 / 2/ 98 1 / 2/ 9 9 4 / 2/ 9 9 7 2/ /9 9 10 / 2/ 99 1 / 2/ 0 0 4 / 2/ 0 0 7 2/ /0 0 10 / 2/ 00 1 / 2/ 0 1 4 / 2/ 0 1 7 2/ /0 1 10 Exchange rate, EUR/USD / 2/ 01 1 / 2/ 0 2 4 /0 2/ 2 7 2/ /0 2 10 / 2/ 02 1 / 2
Slide 179: Exchange rate, EUR/SEK
179 1/ 1 / 8 8.4 8.8 9.2 9.6 10 SEK 1/ 98 5 /9 1/ 8 9 / 1/ 98 1 / 1/ 99 5 /9 1/ 9 9 /9 1/ 9 1 / 1/ 00 5 /0 1/ 0 9 / 1/ 00 1 / 1/ 01 5 /0 1/ 1 9 / Exchange rate, EUR/SEK 1/ 01 1 / 1/ 02 5 /0 1/ 2 9 /0 1/ 2 1 / 1/ 03 5 / 1/ 03 9 /0 1/ 3 1 / 1/ 04 5 /0 1/ 4 9 /0 4
Slide 180: Exchange rate, EUR/NOK
180 1/ 1 / 7 7.5 8 8.5 9 9.5 10 1/ 98 NOK 5 /9 1/ 8 9 / 1/ 98 1 / 1/ 99 5 /9 1/ 9 9 / 1/ 99 1 /0 1/ 0 5 / 1/ 00 9 /0 1/ 0 1 / 1/ 01 5 / 1/ 01 9 /0 1/ 1 1 Exchange rate, EUR/NOK / 1/ 02 5 /0 1/ 2 9 / 1/ 02 1 / 1/ 03 5 /0 1/ 3 9 / 1/ 03 1 / 1/ 04 5 /0 1/ 4 9 /0 4
Slide 181: Oil price development, Brent, USD/Barrel
181 1/ 1 /9 0 5 10 15 20 25 30 35 40 45 50 55 60 0 Dollar 1/ 1 /9 1 1/ 1 /9 2 1/ 1 /9 3 1/ 1 /9 4 1/ 1 /9 5 1/ 1 /9 6 1/ 1 /9 7 1/ 1 /9 8 1/ 1 /9 9 1/ 1 /0 0 1/ 1 /0 1 1/ 1 /0 2 1/ 1 /0 3 Oil price development, Brent, USD/Barrel 1/ 1 /0 4
Slide 182: Stock exchange indices
Stock exchange indices Index 100 = 1997 800 700 600 500 400 300 200 100 0 7 7 8 8 9 9 0 0 1 1 2 2 3 3 4 4 /9 /9 /9 /9 /9 /9 /0 /0 /0 /0 /0 /0 /0 /0 /0 /0 1 7 1 7 1 7 1 7 1 7 1 7 1 7 1 7 2/ 2/ 2/ 2/ 2/ 2/ 2/ 2/ 2/ 2/ 2/ 2/ 2/ 2/ 2/ 2/ KAX Index HEX Index Oslo Total Index AFGX Index 182
Slide 183: Money market, 3 month rates
183 1/ 1 /9 0 1 2 3 4 5 6 7 8 9 10 % 1/ 8 4 /9 1/ 8 7 1 / /9 8 10 /9 1/ 8 1 /9 1/ 9 4 /9 1/ 9 7 1 / /9 9 Denmark 10 /9 1/ 9 1 /0 1/ 0 4 /0 1/ 0 7 Finland 1 / /0 0 10 /0 1/ 0 1 / 1/ 01 4 /0 1/ 1 7 Norway 1 / /0 1 10 /0 1/ 1 1 /0 1/ 2 4 /0 Money market, 3 month rates 1/ 2 7 1 / /0 2 Sweden 10 /0 1/ 2
Slide 184: Government bond, 10 year
184 1/ 1 / % 3.0 3.5 4.0 4.5 5.0 5.5 6.0 6.5 7.0 7.5 1/ 98 5 /9 1/ 8 9 / 1/ 98 1 / 1/ 99 5 /9 1/ 9 9 / Denmark 1/ 99 1 /0 1/ 0 5 / 1/ 00 9 /0 Finland 1/ 0 1 / 1/ 01 5 / 1/ 01 9 /0 Norway 1/ 1 1 Government bond, 10 year / 1/ 02 5 /0 1/ 2 9 / 1/ 02 Sweden 1 / 1/ 03 5 /0 1/ 3 9 / 1/ 03 1 / 1/ 04 5 /0 1
Slide 185: Financial calendar 2004/2005
Financial calendar 2004/2005 2004 z Capital Markets Day will be held in London on 30 Nov 2005 z Q4 report 2004 will be published on 23 February z AGM will be held on 8 April 2005 www.nordea.com/ir 185
Slide 186: Capital Markets Day
Capital Markets Day z Capital Markets Day on 30th November 2004 z Venue: River Court, 120 Fleet Street, London EC4A 2BB z Time: 12.30-16.30 local time 186