New Standards update on initiatives

Transcription

1 New Standards update on initiatives Elisabeth Toftmann Klintholm Chief IR Officer Nordea Large Cap Seminar Stockholm, 28 May 2013

2 Vision Recognised as the most trusted financial partner Customer satisfaction 2015 We want to be in the top two in customer satisfaction in our prioritised customer segments Financial results 2015 We want to be in the top three of our Nordic peer group as measured by return on equity (ROE) 2

3 Financial results: Lower impairments key driver for profit improvement, however Q1 profit lower than expected Income statement & key figures (DKK m) Q1 13 Q1 12 Index Q4 12 Index Net interest income 5,452 5, , Net fee income 2,265 2, , Net trading income 1,775 3, , Other income Net income from insurance business Total income 10,129 11, , Expenses 5,905 6, , Profit before loan impairment charges 4,224 5, , Loan impairment charges 1,459 2, , Profit before tax, core 2,765 2, , Profit before tax, Non-core ,179 - Profit before tax 2,216 1, , Tax , Profit 1, , Return on avg. shareholders' equity (%) Cost/income ratio Core tier 1 capital ratio (%) Key messages in Q1 13 Net profit improved 29% from Q4 12 Expenses 10% below Q4 12 and cost programme on track Total impairments down compared with Q4 12 Total income lower than expected and below our ambitions Strong capital and liquidity levels CT1 of 15.1% and LCR of 126% ROE improved from 3.7% in 2012 to 4.3% Outlook for net profit in 2013 of DKK bn 3

4 Personal Banking Income statement & key figures (DKK m) Customer satisfaction, Q Q1 13 Q1 12 Index Net interest income 2,772 2, Net fee income Net trading income Other income Total income 4,113 4, Expenses 2,956 2, Profit before loan impairment charges 1,157 1, Loan impairment charges 589 1, Profit before tax Lending 860, , Deposits 370, , FTE 7,713 8, ROE Income distribution, Q1 13 (%) Main target is to be ranked No. 1 or 2 among key peers in focus segments Additional target is to have a score above the average for all peers in focus segments Rank is based on 6-month moving average in survey conducted by Ennova on a monthly basis Initiatives Northern Ireland Norway 10 Sweden 5 Ireland 5 1 Customer loyalty programme implemented in Denmark, to be followed in the other countries. Next in line: Finland Further investments in digitalisation to increase customer satisfaction and efficiency in delivery and distribution. Finland Denmark Repricing of lending products continues in order to offset the adverse effects of lower interest rates 4

5 New customer programme is well on track and customer satisfaction score is high New customer programme Satisfaction score at branch meetings (%) 650,000 customers have registered and the market share in Denmark improved in Q ,000 customers has left, primarily customers with a low business volume The programme has advantages for all customers the benefits depend on the customer s business volume The new prices in the programme will take effect on 1 September 2013 Scale Average 9 53 Simple & transparent More benefits 41 Fair 6 5

6 Integrated multi-channel distribution reduces branch footprint Our new mobile payment tool enables money transfer between smartphones Number of transactions and branches Cashier transactions Branches -52% Integrated multi-channel distribution -50% Electronic wallet Instant transfer Uses contacts Target Branch density per 100,000 adults

7 Business Banking Income statement & key figures (DKK m) Customer satisfaction, Q Q1 13 Q1 12 Index Net interest income 2,206 2, Net fee income Net trading income Other income Total income 3,019 2, Expenses 1,361 1, Profit before loan impairment charges 1,658 1, Loan impairment charges 579 1, Profit before tax 1, Lending 644, , Deposits 257, , FTE 3,769 3, ROE Main target is to be ranked No. 1 or 2 among key peers in focus segments Additional target is to have a score above the average for all peers in focus segments Rank is based on 6-month moving average in survey conducted by Ennova on a monthly basis Income distribution, Q1 13 (%) Ireland Baltics Northern Ireland Norway Sweden 10 Finland 53 Denmark Initiatives Development of Business Direct into an attractive new service channel with additional expertise, technology and resources Fee leakage initiatives have been identified across markets, and relevant actions have been planned or initiated Launch of large SME teams to increase product offerings and quality New unit for property customers that uses internal knowledge to benefit both customers and the Bank 7

8 Business Banking s customer centric strategy is on track; building a more attractive bank while de-risking Initiatives, Q Ambition & objectives Ambition The reliable and preferred bank for SMEs with advanced needs Strategy Create clear customer segmentation Leverage product strength Selective expansion of Realkredit Danmark products to Norway and Sweden has been successful due to customer demand for this attractive loan type First successful corporate bond issue in the Danish SME segment Launch of Mobile Business, a market-leading app that lets customers do business banking on the go Financial objectives improve ROE to above12% while rebalancing lending and building ancillary income Align distribution channels Ensure credit quality Upgrade organisation 8

9 Corporates & Institutions Income statement & key figures (DKK m) Customer satisfaction, Q Q1 13 Q1 12 Index Net interest income Net fee income Net trading income 1,581 3, Other income Total income 2,382 4, Expenses 1,100 1, Profit before loan impairment charges 1,282 2, Loan impairment charges Profit before tax 991 2, Lending 167, , Deposits 168, , FTE 1,531 1, ROE Income distribution, Q1 13 (%) Initiatives All four areas are on target Areas measured: Sales & Trading, Capital markets, Relationship Management and Transaction Banking Main target is to be ranked No. 1, 2 or 3 in selected customer surveys Rank is based on 24 selected surveys from Prospera covering the strategically prioritised fields within the four areas Min. 75% of rankings in each area should be on target Market Making General Banking Investments in Transaction Banking to expand our role in our customers' everyday business and to continue to increase market share Continued investments in capital markets activities to further increase the scope of our already strong DCM franchise and improve the corporate finance franchise Sales & Research 30 7 Capital Markets Continue work to mitigate and in some instances take advantage of changes in the markets caused by new regulation 9

10 C&I is executing a range of strategic initiatives to drive income growth Strategy Ambitions & initiatives Client focus Further integrate client value chain to improve cross sale Target advisory activities on key clients Markets operations Increase share of stable client driven income Retain leadership position and expand product suite Adapt product offering to new regulation Protect the franchise Debt capital markets Increase income from growing corporate client issuance Proactively grow new markets (e.g., DKK bond market) Transaction banking Maintain superior product quality Increase focus on sales and client needs Acquisition leveraged finance Concentrate on Tier 1 Nordic focused P/E funds Implement cautious, stable and transparent credit policy Selective growth 10

11 Management actions announced with our Q results and status at end-q Pre-tax P/L effect (DKK bn) Elements Planned actions, 2012 to 2015 Initiated actions, Q1 12 to Q1 13 Pricing Sales Costs E DKK 6 8 bn DKK 0.9 bn Pricing Margins, including ongoing reprising of lending products Fee s, including customer programme in Personal Banking Sales Product offerings to increase business with prioritised segments Increase customer penetration, particularly within Transaction Banking and DCM Selective increase of list prices and initiatives to reduce fee leakage Costs Distribution revamp, branch, teller and FTE reductions More efficient processes and backoffice automation (lean, credit scoring models) Investments in IT & employee skills 11

12 CRD 4 and recommended SIFI capital requirements for Danske Bank Danske Bank capital composition, 2022 (% of RWA) CET1 CET1/AT1/T2 COCO AT1/T2 COCO Total capital CRD 4 Crisis mgt. buffer (CRD 4) Crisis mgt. buffer (SIFI) Pillar 2, excl. Basel 1 floor SIFI Capital conservation Total capital 12

13 Strong capital ratio, well above recommended target for Danish SIFIs and funding spread coming down Capital ratios, under CRD/Basel II (%) Total DB SIFI requirement* Tier 2 Tier 1 (including state hybrid) Core tier 1 5Y senior spread to 6M swap rate (bp) 200 Danske Bank Nordea Handelsbanken Swedbank Q412 Q Sep 2012 Oct Nov Dec Jan 2013 Feb Mar * Based on Q1 13 individual solvency need of 11.4%. 13

14 Financial targets: Four targets already reached Financial target End-Q1 13 (adj.) Ambitions Status ROE 4.3% Above 12% In progress Ratings S&P/Moody s/fitch A-/Baa1/A Pos./Stable/Neg. Improve ratings by at least one notch In progress Improved SACP* from S&P Core tier 1 ratio Total capital ratio LCR compliance 15.1% 21.6% 126% Min. 13% by end of 2013 Min. 17% by end of 2013 Meet EU 2015 requirement by end-2012 Above Above Above Nominal costs DKK 5.9 bn Below DKK 24 bn in 2015 In progress C/I ratio FTE target 2012 FTE target % 20,184 Below 46% in 2015 Reduced by 1,000 in 2012 Reduced by 2,000 in In progress Reached In progress Dividend payment About 40% of annual profit, although lower until capital and rating targets are reached In progress * Stand Alone Credit Profile. 14

15 Q&A session 15