Building for the future

Transcription

1 Building for the future Sanford C. Bernstein Pan-European Strategic Decisions Conference 18 September 2014 Christian Clausen, President and Group CEO

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 forwardlooking 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. 2

3 Nordic ideas Nordea has established a pan-nordic platform Nordea was created with the vision that the Nordic region was one market and to establish a pan-nordic platform and is the largest financial services group in the region Today, Nordea is the largest financial services group in the Nordic and Baltic Sea region 11 million customers Distribution power through 800 locations and over 7 million Netbank customers Financially strong with a CET1 capital ratio of 15.2% AA credit rating EUR 41bn in market cap and a top-10 European retail bank 3

4 The relationship bank business model has delivered 14

5 Nordea has a unique position in the Nordics Superior customer franchise Global capabilities on par with international peers 1 Retail Customers Corporates & Institutions Sweden Norway Relationships (m) Market position 4.1 # #2 Relationships ( 000s) Market position 238 # #2 Capital Markets #1 Asset Management #1 Finland 3.2 # #1 Denmark 1.8 #2 52 #1-2 Life & Pension #1 Private Banking #1 Total Nordea 10.5 #1 540 #1 Note: Illustration excludes, Baltic's (406,700 total customers) and Russia (67,000 total customers) 1: Ranking in Nordic region 5

6 with a resiliant relationship bank business model Nordea is the most diversified Nordic bank with low-volatility earnings growth and low funding costs Largest market contribution 1 Earnings volatility 2 Funding cost 3 Nordea Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Nordea Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Nordea Peer 1-18 Notes: 1) Credit portfolio by geographical area 2) Net income volatility Compared to Nordic peers 3) Five year Senior CDS spread. Compared to European peers 6

7 2015 plan update 14

8 The 2015 plan an update Nordea market commitments Key initiatives and levers Strong capital generation and increased payout ratio in 2014 and 2015 while maintaining a strong capital base Capital initiative to improve the CET1 ratio To reach a ROE of 13% at the required CET1 ratio taking prevailing low interest rates into account Delivering low-volatility results based on a well diversified and resilient business model Initiatives for income generation Efficiency initiatives of ~EUR 900m 5% lower cost base 2015 vs Low-risk profile and low volatility 8

9 Strong capability to generate capital COMMON EQUITY TIER 1 CAPITAL*, EURm COMMENTS Dividend payout (accrued dividend for H1/14) CET 1 capital Doubled the capital base in 7 years Increased CET 1 ratio from 6.8% to 15.2% H1/14 CAPITAL GENERATION**, EURm Acc. Dividend incl. accrued dividend, EUR 850m***, for H1/ Acc. retained equity H1/14 * Basel 2.5 until FY Basel 3 from 2014 ** Dividend included in the year profit was generated. Excluding rights issue (EUR 2 495m in 2009). *** Assumes a 56% payout ratio 9

10 Income holding up Re-pricing New customers Ancillary income Lending margins up 7 bps YoY (RB) Lending margins up 16 bps YoY (WB) Continued strong inflow of household customers ~ 45,600 new (externally recruited) Gold and Premium customers (RB) Further strengthened customer service model with enhanced focus on business potential, crossselling and ancillary income (WB) Strengthened capital markets position Strong performance in Equities, with increasing market shares Participated in three IPOs and a number of capital raisings Continued growth in AuM, up 14% YoY LENDING RE-PRICING DEVELOPMENT 29 bps PB AND GOLD CUSTOMERS, thousands CAGR +3% 3,240 2,860 NCI DEVELOPMENT, EURm CAGR +7% Q2/10 Q2/14 Q2/10 Q2/14 Q2/10 Q2/14 10

11 Efficiency iniatives are in place to achieve the 5% cost reduction by end-2015 Branch closures and reduced cash handling 25% Insourcing of IT services Reduced external spend 15% 17% Capital Markets savings 10% Increased Offshoring Streamlining & automation HQ programme Moderated expansion plans in Wealth area Reductions in Nordea Life & Pension 6% 6% 4% 4% 3% % of total cost efficiency iniatives Other 10% 11

12 Improved credit quality TOTAL NET LOAN LOSSES, bps COMMENTS bps Ten year average of 16 bps reached for first time since Q3/11 Continued improvement in Denmark Net reversals in Shipping Stable credit quality in other areas Q2/14 12

13 RoE strong underlying business performance 13.0% +1.4% -1.0% Re-pricing Ancillary income Capital increase Interest rates Lower costs Volumes Other 12.0% 11.6% Lower loan losses Q Business performance External factors Q Excluding restructuring charge in Q2/14 13

14 Progress in summary PROGRESS ON NORDEA FINANCIAL PLAN 2015 IN Q2/14 CET1 capital ratio CET 1 capital ratio up 60 bps to 15.2% P Risk Exposure Amount Income growth Costs Loan losses Total efficiencies of EUR 24bn of which 6bn in the quarter Income holding up Cost programme delivering according to plan Loan loss ratio down to 16 bps P (P) P P RoE RoE up 60 bps to 12.0%* P *Excluding restructuring charge in Q2/14 14

15 Banking Russia and Finland 14

16 Banking Russia operations BANKING RUSSIA OPERATIONS FY 2013, EUR MILLION Nordea Bank Russia Total % of Group Total Total income Operating profit Q2 2014, EUR BILLION Nordea Bank Russia Total % of Group Total Lending corporates Lending households Total lending Impaired loans gross COMMENTS Limited share of Group operations 3% of income 2% of credit exposure Majority of lending is towards large Russian corporates 600 Nordic customers Largest sector exposure towards materials, real estate, utilities, energy and construction Largest currency exposure towards USD (66%) RUB exposure funded locally via deposits, USD and EUR exposure funded via the Group Maturity of USD and EUR funding has been prolonged 16

17 Nordea actions regarding sanctions Task force in place since March 2014 We monitor the development closely As of mid July, sanctions were extended from individuals and entities to specific sectors adding complexity Nordea follows OFAC (US), EU sanctions and Sectoral sanctions in all entities For non-sanction entities, business continues with existing customers No intention to increase business or market share Nordea is fully compliant with all regulatory requirements that apply to our operations 17

18 Macroeconomic view in Finland Longest downturn in 150 years COMMENTS Finnish economy in undergoing the longest downturn in 150 years Central and local government deficits are large challenges Decline in the exports to Russia might prolong the downturn, as Russia is one of the largest export partners (10% of exports) Positive trends emerging Index 2007=100 There are however some positive trends which could have a positive impact on exports 18

19 2011 Q Q Q Q Q Q Q Q Q Q Q Q Q Q2 Finnish credit portfolio remains stable PD development Corporate Household COMMENTS 22% of Nordea's total loan portfolio Average Corporate PD has gone down as new lending is increasingly to better rating classes Household average PD has increased slightly over the last two years Loan losses, Banking Finland, EURm Loan losses are not showing an increased trend despite the macroeconomic situation The direct effect of Russian sanctions and counter sanctions are hitting only a few industries whose share of Nordea s lending book is very limited. The expected direct impact on the loan portfolio is minor 19

20 Banking business model undergoing change 14

21 The banking sector is currently affected by 48 new regulations Living Wills Insurance Guarantee Scheme Deposit Guarantee Schemes Shadow Banking Investor Compensation schemes Mortgage Directive PRIPs Solvency II FTT Liikanen Structural Reform ELTIF Banking Union MMFs Basel III CRD IV / CRR Securities Law Directive Coherence of legislation MiFID II / MiFIR & OUR CUSTOMERS Corporate IMD 2 Governance Credit Rating EMIR Data Protection Agencies Regulation Short Selling SEPA End-date Remuneration FATCA Payments package MAD Dodd-Frank Act IORP II (PSD II) 4 th AML Volcker Rule Bank Account Directive Recovery & Resolution for FMIs Banking Recovery & Resolution Directive AIFMD Transparency Directive CSD regulation UCITS V Leverage Ratio Fundamental Review of the Trading Book Prospectus Directive EU FATCA Benchmarks Regulation NSFR Long-term Financing UCITS VI 21

22 Technology-driven development of banking business Transactions at branches, million Transactions in the mobile bank, million

23 We change everything we do... Balance sheet More capital More liquidity Longer funding Products and services Capital-light products Customer data for tailored services Mobile bank Production More efficient More flexible Adapted to regulations and stable Customer contacts Online 24/7 More digital, less physical 23

24 ...to shape the future relationship bank Convincing message to the capital market Future relationship bank A sustainable business model in the framework of the new regulations ROE clearly above cost of capital Fully loaded balance sheet Strong brand with clear customer commitments 2015 plan Values & leadership Relationship strategy 24

25 Simplification also enhances our strengths and supports great customer experiences GREAT CUSTOMER EXPERIENCES More value to customers Easier to deal with, more competent, more relevant, more innovative... Customer centricity Scale Agility Simplification Key enabler for Nordea enhancing our strengths 25

26 Building for the future Sanford C. Bernstein Pan-European Strategic Decisions Conference 18 September 2014 Christian Clausen, President and Group CEO