Nordea s strategic direction Morgan Stanley European Financials Conference 28 March, Christian Clausen, President and Group CEO

Transcription

1 Nordea s strategic direction Morgan Stanley European Financials Conference 28 March, 2012 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 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. 2

3 The New Normal plan The New Normal plan is delivering 20 update Regulations Conclusion

4 What New Normal is Execution of a focused relationship strategy Creating a sustainable business model Generating top league ROE Target: 15% ROE in a normalised macroeconomic environment 4

5 New Normal is execution of a Focused relationship strategy Themes Units Michael Rasmussen Retail Banking Casper von Koskull Wholesale Banking Peter Nyegaard (COO) CEO Gunn Wærsted Wealth Management Christian Clausen President and Group Torsten H. Jørgensen Group Operations & Other Lines of Business Fredrik Rystedt Group Corporate Centre, Group CFO Ari Kaperi Group Risk Management Group CRO 1. Disciplined ROE focus 2. Cost efficiency Segments 5x 4x 2.5x 3. Capital efficiency 4. Liquidity efficiency Customers 5

6 Sustainability (cost, capital and funding) 1. Disciplined ROE focus in adapting the business model High Low Exit or fundamentally change Improve resource allocation / mix Sustainability Support of relationship strategy Attractive long term trends Balanced in funding and capital consumption Prudent risk level Opportunities for profitable growth Can stand alone as part of the Group in the New Normal Low Return on equity High 6

7 1. Implications on different levels Units Michael Rasmussen Retail Banking Casper von Koskull Wholesale Banking Peter Nyegaard (COO) Christian Clausen President and Group CEO Torsten H. Gunn Wærsted Jørgensen Wealth Group Operations Management & Other Lines of Business Fredrik Rystedt Group Corporate Centre, Group CFO Ari Kaperi Group Risk Management Group CRO Group targets and caps cascaded to Business Units Business and portfolio reviews RaRoCar key measure per Business Unit Segments 5x 4x 2.5x Segment strategies revisited and calibrated Reallocation of resources between segments More capital and funding efficient concepts and products Customers New behavior and advice Fair pricing (true cost of capital, liquidity and funding) New frontline customer profitability tools Low RaRoCar customers repriced or exited over time 7

8 2. Move to more cost efficient distribution Key initiatives in Retail Banking Branch Customer Contact center centre Monthly spend Netbank Online & mobile & Focus resources on key segments Reallocation of resources between Gold and Premium segments Adjusted contact policy/number of meetings per advisor Reduced number of branch locations in Nordic countries (-200) Reduced cash handling in Nordic branches (-250) migration to self-service channels Improved proportion of advisory branches targeting key relationship customers (40%) Continued development of mobile banking service 8

9 2. Cost efficiency in staff, support and IT & operations Staff & support Lowered use of resources in all units especially in staff and central functions Improved efficiency in central processes, e.g. Finance process, HR, etc. Outsourcing to external service providers IT & operations Administrative tasks moved to Nordea Operations Center in Lodz Premises reduced sqm and review of locations IT cost reduction IT service company Savings in sourcing and supply supporting a flat cost development for a prolonged period of time 9

10 3. Significant potential from all levers on capital efficiency Credit portfolio management New front office Customer profitability tools improving transparency on capital use and funding cost Move to capital light products and solutions Portfolio composition review Models and process refinement Advanced IRB for Corporate portfolio Internal model for Counterparty credit risk In some markets, move from standardised to IRB Collateral agreements Registration Data sourcing supporting a modest increase of RWA

11 Roadmap to 15% ROE target Illustrative 15% % Starting point Operational efficiency Capital efficiency Normalised macroeconomic environment Top league

12 Positive spiral for customers, investors and society Great Customer Experiences Return on Equity > Cost of Equity Secure customers can finance their plans Build capital Low funding cost Ability to lend 12

13 The New Normal plan The New Normal plan is delivering 20 update Regulations Conclusion

14 All-time high total income, despite lower central bank rates Total income , EURm Total income up 37% since 2007 Strengthened customer relationships Household relationship customers increased by ca 30% Clear #1 Nordic corporate bank in Prospera Large Corporates and Institutions Survey 14

15 New Normal has delivered on cost efficiency Total Group FTE s Number of staff down by ca 1,0 since / Total reduction of ca 2,000 by 2012 we are ahead of plan Staff cost down by ca EUR 80m annualised In addition, IT costs are down by ca EUR 20m / / / Flat costs for a prolonged period of time 15

16 Expenses under strict control Total expenses, EURm Flat cost development Underlying expenses up 3% q-o-q due to seasonal effects Underlying staff expenses down 3% q-o-q FTE s down 776 on prior quarter (-2.3%) / / / / / One-off restructuring charge Improved C/I ratio to 49% (55% in /) 16

17 New Normal has improved our productivity Total income / FTE (EURt) Total assets / FTE (EURm) % +26% Rolling four quarters Rolling four quarters Business volumes / FTE (EURm) # customers / FTE Nordea Group % +8% Rolling four quarters Rolling four quarters Lending, deposits & AuM Income excl. Treasury & CMB Other. # of Customer excl. bronze customers in Retail Banking 17

18 New Normal has improved our productivity Cost to serve a customer (cost/customer) (EUR) % +5% # Manual transactions in branch network 8,300 8,467 8,331 8,347 7,469 7,639 7,381 7,228-13% Rolling four quarters Rolling four quarters # Square meters / workplace in multiuser buildings Income / customer (EUR) Retail Banking % +4% Rolling four quarters 18

19 New Normal has delivered on capital efficiency RWA development during 20 1,7 3,9 5,4 7,7 7, ,2 Review of asset class and product segmentation leading to improved data quality Collateral agreements Registration Data sourcing 20 Credit quality Growth FX effects & other Basel 2.5 RWA efficiency 20 Developed capital light products 19

20 Strong capital generation Core Tier 1 capital, EURm Annual growth of 9.2% since 2006 Adjusted for rights issue and after dividend Will enable us to increase our Core Tier Dividend payout Dividend proposed for 20 20

21 Strengthened capital position Core Tier 1 capital ratio, % (excl. Hybrids),3,0,2 8,9 9,2 9,2 Strong earnings capacity enabled us to grow Core Tier 1 ratio by 90 bps over the last year Stable level of RWA despite adoption to Basel 2.5 and growth / / / Transistion rules Fully implemented Basel II 21

22 France Belgium Nordea Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 Peer 7 Peer 8 Peer 9 Peer Peer Peer 12 Peer 13 Italy Spain Peer 14 Peer 15 Peer 16 Peer 17 Peer 18 Peer 19 Peer 20 Excellent access to funding Long-term senior unsecured funding, European banks compared to governments (5-year bonds, bps) , ,5 7,5 7,52, , March 2012 Source: Goldman Sachs 22

23 High focus on Return on Equity Quarterly ROE, % 8,1,3 9,5 12,2 12,8 12,0,5 8,5 12,3 Strong focus on ROE 15% ROE target remains under normalised conditions and a Core Tier 1 ratio of % /09 / / / / / / / / 23

24 Key messages The best banks will be the strongest banks Lower cost of capital and funding to support customers Strategic flexibility Top league returns Nordea delivers on its New Normal plan Focused relationship strategy has delivered Increased efficiency in cost, capital, liquidity and funding Good business momentum Solid profit development Strengthened capital position to.2% Ambition to mitigate the regulatory effects for the customers New regulations increase the cost for running a bank Nordea develops our products, services and advice even further Realise efficiency gains 24