HQ Bank Get a grip on Russia 2 December 2009

Transcription

1 HQ Bank Get a grip on Russia 2 December 2009 Profitable organic growth in solid segments Nordea - one of few foreign banking partners Thomas Neckmar Head of New European Markets

2 Nordea - the leading bank in the Nordic and Baltic Sea region Sweden Nordea home markets Estonia Poland Branches 329 Customers 3.6 million Employees, FTE s 4,497 Total lending EUR 62.9bn Market rank 2-3 Branches Customers 101,000 Employees, FTE s 362 Total lending EUR 2.4bn Market rank 3 Branches 158 Customers 580,000* Employees, FTE s 1,619 Total lending EUR 4.1bn Market rank Norway Branches 124 Customers 0.8 million Employees, FTE s 1,842 Total lending EUR 41.7bn Market rank 2 Latvia Branches Customers 86,000 Employees, FTE s 454 Total lending EUR 3.0bn Market rank 3 Russia Branches Customers 50,000 Employees, FTE s 1,545 Total lending EUR 3.5bn Market rank Denmark Branches 297 Customers 1.6 million Employees, FTE s 4,960 Total lending EUR 68.8bn Market rank 2 Lithuania Branches Customers 118,000 Employees, FTE s 317 Total lending EUR 2.1bn Market rank 4 Finland Branches 313 Customers 3.1 million Employees, FTE s 5,091 Total lending EUR 50.1bn Market rank 1 2 Incl. Polish Life customers

3 with a solid position in five east European countries NEM account for 6% of Nordea Group revenues New European Markets Total income, EURm Value creation through profitable organic growth maintained moderate risk profile Loyal to long-term strategy and core customers - continued focus on prudent banking and firm credit policies Jan-Sep 2008 Jan-Sep 2009 Baltic Russia Poland 3

4 New European Markets continue to be an important part of Nordea s long-term strategy Great Nordea Despite turbulent times the journey towards Great Nordea continues Profit orientation cost, risk and capital Ambitious vision and targets Cautious speed mirroring prevailing market conditions Focus on cost, risk and capital Clear growth strategy Strong customeroriented values and culture Increase business with existing Nordic customers and attract new customers Exploit global and European business lines Supplement Nordic growth through investments in New European Markets Take Nordea to the next level of operational efficiency to support sustained growth 4

5 with a clear focus in the short-term Pro-active risk management Profitable growth in selected segments Nordic and international corporates Best local corporates in attractive segments Municipalities and state entities High income earners Employees of corporate customers Young people with high potential income Firm cost management and increased operational efficiency Innovative multichannel distribution and high usage of e-services Full product range and standardised customer concepts with successful track record and procedures aligned with the Nordea Group 5

6 6 Russian macroeconomic situation and banking sector trends

7 Severe Russian economic downturn pressure easing Economy still dependent on export of raw materials GDP contraction of around 7% 2009 but positive monthly growth in last three months Inflation falling from high levels, but upward pressure from increasing prices for gas and other utilities and services Central Bank lowering discount rate, supporting banks and the corporate sector Russian Ruble strengthened Positive trend for direct investments from early 2009 GDP Inflation 7 Expected GDP growth of 1.5% in 2010 and 3% in 2011 given current oil price

8 Clear signs of recovery in banking industry Lending growth close to zero in H1, positive trend in Q3 High activity in solid sectors (oil and gas, telecom, electric energy industry and some others) Growing NPL in H1, declining NPL growth rate in Q3 Share of retail lending declined since September 2008 State banks obliged to increase lending at refinancing rate + 3% Increasing deposits from state-owned companies EURbn Jun-Aug 2009 TOTAL ASSETS (LIABILITIES) 376,9 543,3 756, % GDP 51,9 60,8 67,5 EQUITY % GDP 6,3 8,1 9,2 % to assets of the banking sector 12,1 13,3 13,6 CORPORATE LOANS 170,0 252,1 337, % GDP 29,8 37,1 39,8 % to assets of the banking sector 57,5 61, GDP (bln.eur) T otal Assets (Liabilities) of banks (bln.eur) Corporate Loans (bln.eur) Individuals Loans (bln.eur) GDP forecast (EUR) Total Assets (Liabilities) of banks forecast (bln.eur) Corporate Loans forecast (bln.eur) Individuals Loans forecast (bln.eur) 2011 INDIVIDUALS LOANS 50,8 80,2 108, % GDP 7 9 9,7 % to assets of the banking sector 13,5 14,8 14,3 DEPOSITS FROM INDIVIDUALS 102,8 139,3 159, % GDP 14,2 15,6 14,2

9 backed by massive state support none of the major banks has collapsed Capital injections in the form of subordinated loans and guarantees of unsecured loans Changed regulations - decreasing banks mandatory reserves Guarantees issued by Central bank to compensate possible losses on interbank market Raised turnover of REPO-operations with the Central Bank - list of underlying securities extended State guarantees for selected corporates Deposit Insurance Agency capitalised EUR 4bn 9

10 with a clear consolidation trend Number of banks continues to decline Increasing asset concentration in the banking sector, mostly because of larger share of state-owned banks Number of banks TOP-50 share in total assets, % 80,6% 81,7% 81,3% 81,4% 81,6% 73,3% 73,8% 75,0% 76,5% ,0% 80,0% 75,0% 70,0% 65,0% ,0% 10

11 11 Nordea Russian operations

12 Nordea Bank Russia a full service bank The Bank possesses all the necessary banking licenses and provide a full range of financial products and services to corporate customers, households, and financial institutions. Corporate customers Household customers Financial institutions Account services Cash management Payments Net Bank Lending Leasing Factoring Arrangement of bond issues Trade and Project finance Capital Markets Products Mortgage Car loans Consumer lending Deposits Cards Net Bank Internet trading Brokerage Payments Private banking Correspondent accounts Syndications FX-trading Custody services Bond issues Deposits

13 with an attractive position in 15 regions Currently the Bank s sales network comprises 49 full-service branches and mini-offices in 15 regions of Russia. Sankt-Petersburg Arkhangelsk Moscow Yaroslavl Belgorod Stary Oscol Rostov Lipetsk Penza Voronezh Saratov Volgograd Samara Ekaterinburg Chelyabinsk Novosibirsk

14 Highly integrated part of Nordea group Nov 2006 Agreement signed to purchase 75.01% of JSB Orgresbank 2006 March 2007 May 2009 Deal finalized JSB Orgresbank remaining part 100% owned by top consolidated managers and increased equity 2007 EBRD June 2009 Changed name to OJSC Nordea Bank transfer of bank licenses Priority areas for integration since acquisition in November 2006 Coordination of all activities with NEM Management, through steering committee, ExCom and Board of Directors Setting up information flows and reporting routines Integration of credit processes: Credit memo Powers to act Coordination of operations with Group Treasury Nordic team transferred from IMB, product line updated and integration continues at high speed Finance Credit Market and operational risks Treasury IT HR Capital Markets Products

15 with continued strong performance 5 star top rating as most reliable bank in Russia Forbes 20 March 2009 Strong inflow of solid new customers 60 49,3 50,2 50, ,2 48,3 44,4 6,7 6,7 6,6 6,5 40,4 6, ,1 6,4 6,3 6, ,0 39,5 41,6 42,6 43,6 43, ,1 30,8 10 # 8 in rating of most profitable banks Operating profit, meur 45 39, , , , , ,5 11,1 9,8 10 7,9 5,7 6, Q2008 2Q2008 3Q2008 Personal Customers 000' Corporate Customers 000' *** - Total Customers 4Q2008 1Q2009 # 18 in rating Corporate lending # 27 in terms of total assets up from # 77 Loan portfolio, beur 2Q2009 3Q Q2007 2Q2007 3Q2007 4Q2007 1Q2008 2Q2008 3Q2008 Assets, beur 4Q2008 1Q2009 2Q2009 3Q ,4 0,5 0,4 0,5 1Q2007 2Q2007 0,8 0,8 3Q2007 1,2 1,1 4Q2007 1,7 0,1 1,6 1Q2008 2,2 0,2 2,1 2Q2008 3,3 0,3 3,0 3Q2008 3,8 4,0 0,3 0,3 3,6 3,7 4Q2008 1Q2009 3,7 3,7 0,3 0,3 3,4 3,5 2Q2009 3Q2009 5,0 4,0 3,0 2,0 1,0 0,0 1Q2007 0,8 0,9 2Q2007 1,2 3Q2007 2,0 4Q2007 2,3 1Q2008 2,9 2Q2008 3,8 3Q2008 4,6 4Q2008 4,4 1Q2009 4,1 2Q2009 4,2 3Q2009 Corporate Loans, beur Retail Loans, beur

16 16 Credit portfolio

17 Unchanged thorough credit approval process lending volumes largely unchanged 2009 New European Markets Total lending, EURbn Credit assessment principles, credit policies, credit organisation as well as top management largely unchanged for the last 9 years Main lending principles 9.8 Cash flow based Corporate customer target lists, households with medium and above income level Max 10 years for corporate customers, up to 40 years for housing loans (18 years average) Transparency (ownership, finances, operations) End Sep 2009 Poland Russia Latvia Estonia Lithuania Specific requirements for debt servicing and repayment levels Buffers or hedging required for interest rate fluctuations and FX risks Unified Nordea Group rating system 17

18 Strengthened Russian position Market share corporate lending Bank Sberbank 29.73% 27.39% 30.77% 30.35% 30.07% 31.22% 31.76% Alfa bank 3.76% 3.67% 3.44% 3.48% 3.33% 2.87% 2.67% UniCredit bank (former IMB) 1.95% 1.95% 2.02% 2.30% 2.40% 2.18% 2.09% Promsvyaz bank 1.68% 1.87% 1.87% 2.05% 1.92% 1.83% 1.81% Raiffeisenbank 1.82% 2.33% 2.27% 1.97% 2.00% 1.66% 1.62% MDM-bank 1.84% 1.86% 1.36% 1.32% 1.18% 1.07% 1.45% Uralsib 1.94% 1.83% 1.56% 1.56% 1.38% 1.02% 1.02% Nordea Bank (Orgresbank) 0.20% 0.23% 0.41% 0.67% 0.99% 0.93% 0.98% Absolut Bank 0.54% 0.58% 0.65% 0.67% 0.63% 0.53% 0.51% Swedbank 0.18% 0.25% 0.27% 0.28% 0.34% 0.33% 0.33% Citibank 0.50% 0.47% 0.26% 0.29% 0.23% 0.22% 0.26% Market share retail lending Bank Sberbank 36.90% 35.14% 31.89% 31.77% 31.29% 31.23% 31.74% 32.01% Raiffeisenbank 1.46% 1.17% 2.19% 2.13% 2.34% 2.37% 2.29% 2.23% Uralsib 1.90% 1.97% 2.08% 2.10% 2.06% 2.12% 2.10% 2.20% UniCredit bank (former IMB) 1.19% 1.38% 1.58% 1.77% 1.96% 1.98% 1.86% 2.04% Alfa bank 1.13% 1.41% 1.61% 1.74% 1.88% 1.92% 1.94% 1.94% Promsvyaz bank 0.66% 0.84% 1.08% 1.32% 1.34% 1.31% 1.30% 1.80% Absolut Bank 0.43% 0.55% 0.80% 1.06% 1.25% 1.31% 1.27% 1.27% MDM-bank 0.93% 1.21% 1.15% 1.05% 1.00% 0.99% 0.94% 1.25% Citibank 0.83% 0.81% 0.74% 0.76% 0.86% 0.92% 0.96% 0.97% Nordea Bank (Orgresbank) 0.04% 0.10% 0.18% 0.22% 0.26% 0.27% 0.27% 0.27% Swedbank 0.02% 0.02% 0.04% 0.07% 0.13% 0.15% 0.15% 0.15%

19 Majority of corporate lending towards solid segments 19 Telecom 3% Transport 9% Retail trade 5% Other 15% Metals/Mining 18% Bps Sector split Russia Total lending EUR 3.5bn Household 7% Real estate 12% 115 Energy 20% Other materials 11% 123 Q3 08 Q4 08 Q1 09 Q2 09 Q Gross impaired loans 73 Total allowances 92 Large share of exposure towards companies on the Russian government s list of 295 strategically important entities Limited Household lending - insignificant exposure towards car leasing and consumer credits Gross impaired loans in Russia increased 10% to EUR 44m in Q3 growth rate in Q2 43% and Q1 42% Majority of impaired loans refer to Retail trade, Consumer staples, Construction and Household lending Total allowances EUR 33m Coverage ratio 75% Solid collateral position covering the non-provisioned exposures

20 Key trends Russian credit market Loan interest rates* (according to the methodology of the Central Bank of Russia "loans granted to non-financial organizations) Currency denominations of the loans and deposits in the sector 100% 80% local currency (RUR) 26% 30% 47% 47% foreign currency 12% 12% 24% 31% 60% 40% 20% 74% 70% 53% 53% 88% 88% 76% 69% 0% Retail deposits Corporate deposits Retail credits Corporate credits 7% NPL dynamics by sectors Corporate Retail Total,% 120,0 Corporate loan repayment schedule (as of September 1) 6% 5% 4% 3% 2% 1,4% 1,3% 1,4% 1,4% 1,3% 1,3% 1,5% 2,1% 4,2% 4,5% 4,8% beur 80,0 40,0 1% 0% ,0 <1 month 1-3 month 3-6 month 6-12 month 1-3 years >3 years Foreign currency Local currency

21 21 Clear direction for Russian operations

22 Nordea short term focus cost, risk and capital Monitoring and supporting existing customers New lending customers - only well-known names with strong credit rating Nordea has relationships with a number of strong companies; world-leading in their respective field Pro-active risk management Strict control of capital usage Streamline organizational structure align with the rest of the group Development of the IT infrastructure and system support Strengthen Nordea brand targeted marketing campaign and retail promotion 22

23 Strong emphasis on corporate business Further develop relations with 295 companies from the governments list of strategically important entities - ensure good quality of credit portfolio Prioritized industries: Oil and Gas Energy and Telecoms REMI All industries of targeted Nordic customers Implement ambitious business plan for Nordic and International companies Increase cross-selling of non-credit product and services Intensify ECA-covered financing Average margins high in a European comparison

24 Retail Business low banking product penetration Full service bank core products in place Improved processes Retail credit processes redesigned in line with Nordea procedures Segmentation principles 360 degree meetings further development of CRM technology 1-1 contact policy Multichannel distribution Active usage of Contact Centre and Net Bank Training system for retail staff Knowledge transfer on branch network is completed, new concept is under development Preparing for Retail expansion if and when visibility clears

25 25 Concluding remarks

26 Concluding remarks Strengthened position in Russia operating profit up more 70% Firm cost management and increased operational efficiency Pro-active risk management prudent credit approval process High quality Russian portfolio focus on top-tier 295 local companies and Nordic entities Macro pressure easing - still a long way to recovery Unchanged long-term strategy short-term focus on cost, risk and capital New European Markets an important part of the journey towards Great Nordea 26

27 The leading Nordic bank, acknowledged for its people, creating superior value for customers and shareholders.