Goldman Sachs Roadshow 6-7 December 2012 Gunn Wærsted Executive Vice President, Head of Wealth Management
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
Key messages New Normal plan delivers on cost, capital and income Unchanged costs through 2012, excluding FX effects Cost/income ratio 51% YTD (54% 9m 2011*) Improved RoE to 11.4% YTD (10.6% 9m 2011*) Core Tier 1 ratio improved to 12.2% Loan losses at 27 bps YTD (20bps 9m 2011) Income in Q3 highest ever in a third quarter Operating profit exceeded EUR 3bn YTD, up 14%* Continued strong business momentum, 65 000 new relationship customers in 2012 YTD * Adjusted for restructuring charge in Q3 2011 3
Key messages Progress in building the future bank business model New Normal plan delivers on cost, capital and income Retail Banking: Advice based distribution model, improved capital efficiency Wholesale Banking: Developed relations, focus on adding high value at right price Wealth Management: Increased efficiency and sharper offerings An area with strong financials, well-adjusted to New Normal Growth achieved through well-diversified asset base Nordea is the largest wealth manager in the Nordics 4
Financial highlights, Nordea Group Q3 2012 Wealth Management Building the future bank business model
Financial result Q3/12 EURm Q3/12 Q2/12 Change % Q3 YTD 12 Q3 YTD 11 Change % Net interest income 1,441 1,462-1 4,323 4,029 7 Net fee and commission income 605 611-1 1,812 1,807 0 Net fair value result 377 494-24 1,340 1,011 33 Other income 46 39 18 131 96 36 Total income 2,469 2,606-5 7,606 6,943 10 Staff costs -752-761 -1-2,284-2,399-5 Total expenses -1,293-1,290 0-3,859-3,953-2 Profit before loan losses 1,176 1,316-11 3,747 2,990 25 Net loan losses -254-217 17-689 -472 46 Operating profit 922 1,099-16 3,058 2,518 21 Net profit 688 821-16 2,284 1,848 24 Risk-adjusted profit 749 851-12 2,399 1,899 26 6
Net interest income development Margin pressure on deposits due to low interest rates Total net interest income, EURm 1 310 1 365 1 324 1 326 1 379 1 427 1 420 1 462 1 441 Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 7
Net interest margin under pressure since 2004 Average lending and deposit margin 8
Net commission income remains at high levels Total net fee and commission income, EURm 525 618 602 623 582 588 596 611 605 Down 1% q-o-q Increased asset management and lending commission Decreased commissions on payments, cards and custody Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 9
Assets under Management at all time high Wealth Management AuM, EURbn 0,9 Assets under Management at all-time-high of EUR 210.9bn 187.4 1.2 7.7 Inflow of 2.7bn in Q3 Strong inflow in Retail funds and Institutional Clients Strong investment performance gives added value to our customers 80% of all composites outperforms their benchmark in the quarter Generated added value of EUR 0.8bn 10
Net fair value Total net result from items at fair value, EURm 446 504 544 356 506 469 494 377 Continued high demand in customer areas Negative valuation changes in liabilities accounted for at fair value 111 Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 11
Expenses under solid control Total expenses, EURm Decrease by 2% in local currencies q-o-q Number of FTEs down 1% q-o-q 12
Germany Finland Sweden Netherlands Austria France Nordea Belgium Ireland Italy Spain Portugal Strong access to funding Long-term funding, EURbn 27 Nordea covered bonds spreads vs European governments Spread vs MS (bps) 33 32 2009 2010 2011 Q3/12 YTD 25 EUR 25bn issued in long-term funding Of which 54% senior, 40% covered and 6% Tier two Redemptions for 2012 are EUR 15bn Improved spreads Nordic covered bonds benefiting from being perceived as one of safest jurisdictions in Europe Nordea Aa3/AA-/AA- Source: Goldman Sachs 13
Strong capital generation Core Tier 1 capital, EURm 11 689 12 821 14 313 17 766 19 103 20 677 21 796 Tier 1 capital is up by 86% since 2006 CAGR of 9% after dividend and adjusted for rights issue 2006 2007 2008 2009 2010 2011 Q312YTD Dividend payout Anticipated dividend 14
Risk-weighted assets under strict control Risk-weighted assets (RWA), EURbn* 180 183 185 182 181 179 RWA decreases EUR 2bn due to decreased credit risk and market risk Further improved quality in liquidity buffer RWA optimisation reduces RWA by EUR 0.5bn Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 In total limited effect from rating migration * Basel II excluding transition rules 15
Improved Core tier 1 ratio Core tier 1 capital ratio, % (excl. Hybrids)* 10.0 10.4 10.3 10.7 11.0 11.0 11.2 11.6 11.8 12.2 Improved ratio by 40 bps since Q2 2012 due to Strong profit generation Decreased RWA Improved CT1 ratio by 220 bps since Q2 2010 Lending growth of 17% Full dividend to shareholders Q2/10 Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 * Basel II excluding transition rules 16
Credit quality Total net loan losses, EURm 242 207 263 218 217 254 Broadly in line with long-term risk appetite Low loan losses in Norway, Sweden and Finland 166 118 112 Continued elevated levels in Denmark and Shipping Effects from stricter rules in Denmark Lower individual provisions Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Increase in collective provisions 17
Net loan losses quarterly by country excluding Shipping 250 200 150 100 50 0-50 Q3/09 Q3/10 Q3/11 Q3/12 Denmark Finland Norway Sweden EUR 145m EUR 46m EUR 8m EUR -17m Still certain overleveraged Danish household and agriculture customers behind the provisions A limited number of individual provisions in the other countries 18
Underlying stabilisation in Denmark 110 House prices, index = 2006* Forced sales* 500 100 90 80 400 300 200 100 70 2006 2008 2010 2012 Single-family houses Summer houses Flats 0 2006 2008 2010 2012 Single family houses Corp property Forced sales total (seasonally-adj) Number of bankruptcies* Loan losses net, Retail Banking Denmark 600 200 500 150 Collectively assessed 400 100 300 200 100 0 2006 2008 2010 2012 Bankruptcies 50 0-50 -100 Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Portfolio assessed nonsignificant loans Individually assessed * Source: Danmarks Statistik 19
Shipping net loan losses and impaired loans Shipping Net loan losses, EURm Shipping Net impaired loans, EURm EUR 54m 700 600 EUR 558m 500 400 300 200 100 0 Q2/09 Q2/10 Q2/11 Q2/12 Further deterioration of collateral values Gross impaired loans down 4% q-o-q Need for additional loan loss provisions 20
Challenges remained within Shipping Ship values Shipping orderbook as % of existing fleet 180 150 VLCC. 5 year old Cape Bulker. 5 year old Panamax Containership. 5 year old 90% 75% Tanker Bulker Containership 120 60% MUSD 90 60 45% 30% 30 15% 0 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 0% Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Ship values have continued to fall throughout the year Supply is coming down rapidly Source: Clarkson
Financial highlights, Nordea Group Q3 2012 Wealth Management Building the future bank business model
Wealth Management an area with strong financials, well-adjusted to New Normal 2012, Q3 Share of Group total operating income 14% Share of total FTEs 11% Share of Group total operating profit 16% Share of economic capital 16% High margins Capital efficient and funding generating Generating stable income from a feebased model High contribution to economic profit due to low capital consumption (16% of economic capital) Rarocar Q3 2012 17% 23
Growth achieved through well-diversified asset base Assets under Management EURbn, end Q3 2012 Retail funds* Private Banking Institutional sales Life & Pensions** Total 3 year AuM growth Denmark 10 22 19 23 75 33% Finland 4 18 5 10 36 20% Norway 3 4 6 9 21 54% Sweden 21 13 5 8 47 51% International 0 11 16 5 31 83% Total 37 68 3 year AuM growth 51 55 211 36% 32% 70% 36% 42% * All funds targeted at Nordic Retail segment sold through own distribution ** Includes pension pools products 24
Good performance, key driver of Assets under Management Wealth Management AuM, EURbn 199.8 2.7 7.6 0.8 * 210.9 Assets under Management at all-time-high of EUR 210.9bn Decent net inflow of EUR 2.7bn Strong inflow in Institutional and Retail funds Strong investment performance gives added value to our customers AuM end Q2/12 Net inflow Market appreciation Value added investment performance on assets under discretionary management AuM end Q3/12 * EUR 105bn end of Q3/12 In Q3 80% of composites outperformed their benchmarks, 76% YTD and 72% when measured on a 3 year horizon 25
Nordea is the largest wealth manager in the Nordics AuM development (EURbn) Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 Peer 7 Change last 4Q Euro Change last 4Q Local currencies 18,5% 12,5% 22,8% 13,3% 13,1% 25,0% 15,9% 1,6% 2,4% 11,8% 13,5% 5,6% 13,8% 8,3% 1,6% Nordic peers: Danske Bank, DNB, Handelsbanken, Pohjola, SEB, Storebrand, Swedbank End of period EUR exchange rates have been used for peers who do not report in EUR Source: Companies Q3 Interim Reports As per September 30 th, 2012 26
45% of our rated funds in Nordics have 4 or 5 stars Denmark Finland Norway Sweden 14 funds 23% 18 funds 15% 5 funds 9% 7 funds 9% 21 funds 34% 38 funds 32% 15 funds 27% 25 funds 31% 24 funds 39% 50 funds 42% 28 funds 51% 34 funds 43% 2 funds 3% 8 funds 7% 4 funds 7% 10 funds 13% 1 funds 2% 4 funds 3% 3 funds 5% 4 funds 5% Average Rating 3.73 Average Rating 3.49 Average Rating 3.27 Average Rating 3.26 Nordic 44 funds 99 funds 136 funds 24 funds 12 funds 14% 31% 43% 8% 4% Average Rating 3.44 Note: In each category 10 pct. of the best performing funds get 5 stars, 22.5 pct. 4 stars, 35 pct. 3 stars, 22.5 pct. 2 stars and 10 pct. 1 star As of September 2012 27
Stable Net inflow and Assets under Management growth Net inflow EURm 4000 AuM EURm 250 000 3000 2000 1000 200 000 150 000 0-1000 -2000 100 000 50 000-3000 Q1/08 Q3/08 Q1/09 Q3/09 Q1/10 Q3/10 Q1/11 Q3/11 Q1/12 Q3/12 0 Inflow AuM 28
The share of traditional life is reduced over time GWP life & pension products 2008-2012 AuM life & pension products 2008 2012 3500 EURm 60 000 % 45% 3000 41% 40% 2500 50 000 33% 36% 35% 40 000 30% 2000 27% 25% 1500 30 000 22% 20% 1000 20 000 15% 10% 500 10 000 5% 0 2008 2009 2010 2011 Sep 2012*) Trad New trad UL 0 2008 2009 2010 2011 Sep 2012 UL and new trad 0% Share of 40% 48% 59% 56% 66% UL+New trad. *) 12 months rolling Trad. Life UL, new trad and pure risk share of AuM 29
Life & Pensions strategy going forward Cost efficiency Reduce costs and increase correlation with income Review of business lines (segments) Capital efficiency Migration from traditional products ALM & capital consumption focus Optimise product portfolio Capital efficient new sales Next generation product platform Profitable growth Re-allocate resources to the attractive segments Continue to strengthen bancassurance 30
Financial highlights, Nordea Group Q3 2012 Wealth Management Building the future bank business model
Roadmap to Future Bank A convincing equity story and market commitments Future Bank A sustainable business model that delivers a ROE well above cost of capital on a fully loaded balance sheet A strong brand with clear values Roadmap to Future Bank New Normal plan Values and leadership Relationship strategy 32
Roadmap to Future Bank A solid and sustainable business model that generates high and stable earnings over time and thereby also strong capital generation The challenge is to continue improving ROE in the following ways: Continued re-pricing of the lending book, to obtain satisfactory profitability on every customer Maintained solid cost control cost development to be flat Maintained strict RWA control capital-efficient solutions for customers 33
Key messages New Normal plan delivers on cost, capital and income Unchanged costs through 2012, excluding FX effects Cost/income ratio 51% YTD (54% 9m 2011*) Improved RoE to 11.4% YTD (10.6% 9m 2011*) Core Tier 1 ratio improved to 12.2% Loan losses at 27 bps YTD (20bps 9m 2011) Income in Q3 highest ever in a third quarter Operating profit exceeded EUR 3bn YTD, up 14%* Continued strong business momentum, 65 000 new relationship customers in 2012 YTD * Adjusted for restructuring charge in Q3 2011 34
Key messages Progress in building the future bank business model New Normal plan delivers on cost, capital and income Retail Banking: Advice based distribution model, improved capital efficiency Wholesale Banking: Developed relations, focus on adding high value at right price Wealth Management: Increased efficiency and sharper offerings An area with strong financials, well-adjusted to New Normal Growth achieved through well-diversified asset base Nordea is the largest wealth manager in the Nordics 35
Goldman Sachs Roadshow 6-7 December 2012 Gunn Wærsted Executive Vice President, Head of Wealth Management
Appendix, Q3 2012
Change in net interest income Change, EURm Q-o-Q Y-o-Y Volume-driven NII 0 172 Lending -2 146 Deposits 2 26 Spread-driven NII -14 233 Lending 17 492 Deposits -31-259 Spread costs -12-130 GCC, including Treasury -5 47 Other 10-28 Total -21 294 38
Lending, volumes and margins Lending volumes EURbn Q3/12 and development q-o-q Margin* development q-o-q 65.8 66.5 Banking Denmark Household Corporate 45.4 50.2 45.3 Banking Finland Banking Norway 0% 0% 0% 0% -5% Banking Sweden 13.4-3% Corp & Inst Banking Shipping Banking Denmark Banking Finland Bankning Norway Banking Sweden CIB Shipping Change in local currencies *Excluding full liquidity premia 39
Deposits, volumes and margins Deposit volumes EURbn Q3/12 and development q-o-q Margin* development q-o-q 42.8 Banking Denmark Household Corporate 30.0 32.7 33.5 Banking Finland Banking Norway 20.0 0% 1% -4% -1% 11% Banking Sweden 4.8 3% Corp & Inst Banking Shipping Banking Denmark Banking Finland Bankning Norway Change in local currencies Banking Sweden CIB Shipping *Excluding full liquidity premia 40
Impairment rate gross 1, basis points 89 76 66 56 59 10 11 19 22 21 27 27 27 28 32 13 13 14 14 15 24 21 21 24 24 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Denmark Shipping Finland Baltics Others Impairment rate gross increased to 181bps. Still Danish household and agriculture customers behind the increases (new impaired volume approx. EUR 410m), to a large extent explained by the clarified and stricter impairment rules introduced by the Danish FSA. A couple of larger Finnish corporates were reported as impaired this quarter (new impaired volume approx. EUR 100m). The development in shipping was slightly positive, as the exposure to already impaired customers decreased. 1 Impairment rate gross: Individually assessed impaired loans before allowances divided by total loans before allowances 41
Highest increase of impaired loans in collaterised loan books 250 225 200 175 150 125 100 75 Change in impaired loans %, Index 100 = Q3 2011 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Nordea total, provisioning ratio 41% Shipping, provisioning ratio 35% Agriculture, provisioning ratio 30% Real estate, provisioning ratio 36% Household, provisioning ratio 41% Other industries, provisioning ratio 51% 42
The New Normal plan continues to deliver In terms of cost efficiency Group FTE development Total expenses, EUR million 34 138 34 169 33 844 33 068 32 557 31 988 31 692 171 1 265 1 275 1 242 1 266 1 276 1 290 1 293 Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 One-off restructuring charge 43
The New Normal plan continues to deliver In terms of capital efficiency Risk Weighted Assets development, EURbn* 9.9 3.5 3.7 9.3 Reduced RWA by more than EUR 9bn since beginning of 2011 due to improved efficiency 5.9 185.1 179.0 Q4/10 Credit Quality Growth FX & other Basel 2.5 RWA optimization Q3/12 * Basel II excluding transition rules 44