Nordea Retail Banking. Sampo Analyst Day 29 August 2013 Topi Manner, Head of Banking Finland

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1 Nordea Retail Banking Sampo Analyst Day 29 August 2013 Topi Manner, Head of Banking Finland

2 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.

3 Q financial results highlights Retail Banking Banking Finland General insurances cooperation

4 Key message Nordea delivers on income initiatives, cost efficiency and capital Welcomed new relationship customers Unchanged expenses for 11 consecutive quarters Pro forma Basel III core tier one ratio of at least 14.0% Continued stabilisation of credit quality Uncertain macroeconomic environment Highest ranked Nordic corporate bank in Prospera survey Euromoney awards Best Bank and Best Investment Bank in the Nordic and Baltic regions 4

5 Financial results Q2/13 EURm Q2/13 Q1/13 Change % H1/13 H1/12 Change % Net interest income (1) Net fee and commission income Net fair value result (6) (10) Total income (1) Staff costs (753) (754) 0 (1 507) (1 502) 0 Total expenses (1 256) (1 267) (1) (2 523) (2 503) 1 Cost Income Ratio 50% 51% 51% 50% Profit before loan losses (2) Net loan losses (186) (198) (6) (384) (418) (8) Operating profit Net profit from continuing operations Risk-adjusted profit Return on equity (%) 11.5% 11.1% 11.3% 12.1% Core Tier 1 capital ratio (%) 14.0% 13.2% 14.0% 11.8% Risk-weighted assets (EURbn) Includes Other income 5

6 2015 Financial plan and expectations Nordea financial plan and expectations Income growth CAGR ~4% Including normalised interest rates, CAGR ~6% Cost growth CAGR ~0% (excl. FX and variable salaries) Some cost growth 2015 if supported by income growth Loan loss ratio RWA Approach 16bps during the period Loan loss ratio nearing historical average CAGR ~0% Mitigations compensating regulation CT1 ratio >13% Lending growth CAGR ~2-3% ROE >13% 2015, given expected interest rate development >15% 2015, with normalised interest rates 6

7 Q financial results highlights Retail Banking Banking Finland General insurances cooperation

8 The leading Nordic retail bank 2012 Retail income vs. Nordic peers, EURbn Nordea Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Geographic presence Branches Customers (m) Employees (FTEs) Income (EURm) Market rank Denmark ,934 1,551 2 Norway ,402 1,013 2 Sweden ,306 1, Finland ,996 1, Baltics Total ,437 5,394 8

9 Retail Banking initiatives Coherent business system supporting relationship strategy Key ambitions and initiatives Optimisation of household and SME relationships by a systematic approach to enable further income potential Maintained lead to competitors on customer satisfaction and high retention Group financial plan and expectations, key levers Low volatile income generation and flat costs Optimised distribution model Restructuring of branch network to focus on advice Developing multichannel relationship banking is the next step Income generation and flat costs Share of wallet and re-pricing to drive income Leverage customer relationships to acquire full customer wallet Re-pricing of lending stock to the level of margins on new business Income generation Cost and capital optimisation Maintain flat costs and RWAs All customers are welcome capital and cost optimisation making all customer relationships profitable Flat costs and nearly flat RWAs 9

10 Retail Banking deliveries Financial performance Operating profit up 6% from Q2 last year Income up 1% YoY despite lower interest rates Expenses under control Loan losses continued to decrease Execution on 2015 financial plan Re-pricing of lending book continued according to plan in both household and corporate business Cross-selling activities on track, with particular positive results in the savings area Nordea received Euromoney s award as Best bank in the Nordic and Baltic countries and welcomed 22,200 new Gold and Premium customers during the quarter Key results, EURm Q2/13 Q1/13 Chg % Q2/12 Chg % More than one million customers are now actively using Nordea s mobile offering Cost efficiency initiatives delivering, mainly related to distribution and cash handling RaRoCar, % Total income 1,325 1,353 (2) Total expenses (747) (749) 0 1,308 1 (739) Net loan losses (97) (128) (24) Operating profit (117) (17) RWA 78,468 81,284 (3) 88,027 (11) Q2/12 Q1/13 Q2/13 10

11 Q financial results highlights Retail Banking Banking Finland General insurances cooperation

12 Country highlights: Finland Increasing trend in lending margins, both in Corporate & Household New lending margin higher than stock margin Repricing on the backbook Market shares on lending and deposits stable Market share development in investment products is increasing boosted by good product performance Flat cost development physical branch network will be continuously optimised Macro outlook weak with slow growth however stable trend on loan losses 12

13 Banking Finland: Business operations continued their strong momentum RaRoCar, % Execution on financial plan 16.3 % 13.0 % 11.5 % Q2-12 Q4-12 Q2-13 Key results, EURm Q2/13 Q1/13 Chg Total income % Total expenses % Net loan losses % Operating profit % RWA 14,223 13,962 2% Q2/12 Chg 256 8% % % 92 20% 15,258-7% Operating income grew despite low interest rates Savings area and lending margins major contributors Cost development was under control 16,000 new customers of whom 4,600 Gold and Premium customers welcomed Lending volumes for SMEs began to grow Cooperation with If P&C Insurance was launched 13

14 Q financial results highlights Retail Banking Banking Finland General insurances cooperation

15 The Nordea s bancassurance journey continues Building great Nordea 1999 MeritaNordbanken and Unidanmark merged Nordea brand name introduced Tryg i Danmark buys Nordea's General Insurance business 2002 Co-operation agreement with Tryg New co-operation agreement. General insurances for Nordea s customers offered by If in Sweden, Finland and the Baltics and by Tryg in Denmark and Norway. Tryg + Unibank -> Unidanmark 15

16 Bancassurance increasingly important on the Finnish market Bancassurance penetration rates %* OPP has high penetration and has increased the number of customers having both GI and banking products S group becomes after S- Bank and Tapiola Bank merge a strong player in bancassurance * Of bank customers with insurance Source: Oliver Wyman 2012 Strategic objective to strengthen the customer relationship 16

17 General insurance fits into Nordea s relationship banking strategy 360 coverage of all customer financial needs Higher satisfaction and loyalty for customers having general insurance Source: Nordea CSI 2012/Gold customers, Finland 17

18 Further integration of insurance solutions into Nordea s advisory concept More integrated partnership model Co-branding strategy Improved sales model More integrated Branch office sales model Cross selling with household loan products Fewer and less complex core products in branch offices Increase in remote sales Development of internet sales 18

19 Nordea Retail Banking Sampo Analyst Day 29 August 2013 Topi Manner, Head of Banking Finland