Hansabank Group Financial Results 2008
Content Highlights Volumes Income Expenses Risk 2
Highlights 2008 Following larger one-off events affected performance: Sale of Russian business unit. On 12 May 2008, AS Hansapank and AS Hansa Capital entered into an agreement with Swedbank AB for the sale of OAO Swedbank and Hansa Leasing Ltd. The transfers were made at market value and the sale resulted in a loss of EUR 3m. Sale of Pankade Kaardikeskus (Banks Cards Center, PKK). In Estonia, Hansapank, SEB Pank and Sampo Pank sold PKK to Northern Europe Transaction Services. Capital gain on the sale of the shares in associated company was EUR 7m. Reversal of bonus reserve. The accumulated bonus reserves were reduced by about EUR 20m during 2008 due to excessive accrual in recent years; as a result performance based staff costs in Hansabank decreased with the same amount. The one-off effects are recorded at the Hansabank group level and not allocated to country business units. Current financial analysis is presented for continued operations (without OAO Swedbank and Hansa Leasing Ltd). All historical ratios have been recalculated for continued operations. 3
Highlights (continued operations) 2008 Net profit EUR 135m in 2008, EUR +20m vs, annual growth 7% The following factors affected Hansabank s performance: Positive net effect of one-off transactions Recovery of trading income to average level Increase in loan losses mainly in real estate sector Hansabank s results without the effect of one-off transactions was the following: net profit EUR 108m (-15% YoY), income EUR 255m (+5% YoY), operating expenses EUR 108 (+14% YoY), ROE 21.1% and cost-income ratio 42.3% 4 Total income EUR 259m, EUR +18m vs, annual growth 7% (normalized +5%) Net interest income almost unchanged on the back of higher funding cost and change in funding mix (see page 16 for more details) Trading income recovered from weak (see page 19 for more details) Other income strong due to gain on the sale of related companies Total expenses EUR 85m, EUR -13m vs, annual decline -10% (normalized +14%) Expenses include a reversal of bonus reserve in the amount of EUR 20m. All countries decreased number of employees (excluding temporary trainees) Growth in administrative is related to the bank s investments to organization Loans EUR +700m QoQ, 20% YoY Deposits EUR +157m QoQ, 10% YoY Net loan losses increased by EUR 8m from to 55bps
Key financials 2008 in millions of EUR 2008 20 % YoY 2008 QoQ norm 2 % YoY Loans 20,341 16,885 20% 19,640 700 Deposits 11,035 10,0 10% 10,877 158 Income 259 241 7% 241 18 5% Expenses 85 94-10% 98-13 14% EBT 148 139 6% 125 23-13% Net profit 135 126 7% 114 21-15% EVA 79 87-10% 59 20-41% Return on equity 1 26.3% 32.1% 23.6% 21.1% Cost-income 32.9% 39.0% 40.7% 42.3% Net interest margin 2.69% 2.91% 2.76% Employees (FTE) 9,242 9,158 9,2 36 5 1 Group ROE based actual equity 2 normalized results - for better comparison, changes in main indicators have been normalized by the effect of disposal of Russian companies, disposal of associated company and reversal of bonus
Quarterly trends 150 Net income 125 100 75 50 25 1 126 125 112 114 135 Normalized EUR 108m 0 Q3 Q4 08 08 50% Cost-income 40% ROE on actual equity 35% 40% 30% 44% 40% 39% 41% 38% 33% Q3 Q4 08 08 N 42% 30% 25% 20% 15% 30% 32% 29% 24% 24% 26% Q3 Q4 08 08 N 21% 6 normalized results - for better comparison, changes in main indicators have been normalized by the effect of disposal of Russian companies, disposal of associated company and reversal of bonus
Performance against mid-term financial targets 2008 Group Normalized Group* Target EBT growth 6% -13% >20% ROE on actual equity 26% 21% >20% Cost-income 33% 42% <42% Net loan losses 0.55% <0.35% 2008 Est Lat Lit EBT growth -8% 38% 18% ROE on allocated equity 31.5% 23.7% 24.1% Cost-income 39.9% 42.0% 46.7% Net loan losses** 0.58% 0.75% 0.31% 7 * normalized results - for better comparison, changes in main indicators have been normalized by the effect of disposal of Russian companies, disposal of associated company and reversal of bonus **Net loan losses = (changes in general and special provisions + net write offs) / credit portfolio at the beginning of the year
Contribution to net profit change from 2008 By main P&L items By countries 150 140 7.5 2.4-0.8-2.5-7.5 150 140 EURm 130 120 110 100 114 08 12.9 8.8 Opex Trading Other Inc Net Fees NII Taxes and other 135 NLL 08 EURm 130 120 110 100 29.2 135 114-3.0-7.4 2.0 08 Est Lat Lit Group 08 Main contributors to the change Positive one-off effects of related company disposals and bonus reversal (The financial effect is recorded at the Hansabank Group level and not allocated to country business units) Recovery of trading income Higher net loan losses in all countries All countries decreased number of employees during (excluding temporary trainees) 8
Quarterly trend by business units Estonia 70% 60% 50% 40% 39% 41% 36% Cost-income 39% 36% 38% 34% 43% 38% 40% 45% 40% 35% 30% 25% ROE 43% 42% 42% 41% 41% 37% 39% 28% 33% 32% 30% 70% Q3 Q4 Q3 Q4 08 08 20% Q3 Q4 Q3 Q4 08 08 Latvia 60% 50% 40% 47% 44% 45% 39% 41% 36% 37% 41% 38% 42% 45% 40% 35% 30% 25% 37% 32% 37% 37% 33% 28% 33% 29% 30% 24% 30% 70% Q3 Q4 Q3 Q4 08 08 20% Q3 Q4 Q3 Q4 08 08 Lithuania 60% 50% 40% 60% 51% 48% 52% 47% 44% 43% 47% 47% 47% 45% 40% 35% 30% 25% 31% 34% 30% 33% 26% 28% 28% 25% 22% 24% 9 30% Q3 Q4 Q3 Q4 08 08 20% Q3 Q4 Q3 Q4 08 08
Income Statement and main ratios by BUs EURm 2008 Est Lat Lit Total income Growth YoY 258.7 7% 99.3 0% 79.5 5% 73.8 13% Operating expenses Growth YoY 85.0-10% 39.6 6% 33.4 22% 34.5 21% Operating profit Growth YoY 173.7 18% 59.7-4% 46.1-5% 39.3 6% Net profit Growth YoY 134.6 7% 48.8-19% 28.1-26% 29 3% EVA 1 Growth YoY 78.7-10% 30.4-33% 13.8-50% 14.6-26% Employees 2 (FTE) Growth YoY 9,242 1% 3,346 0% 2,659 6% 3,237-2% 10 1 Starting from January 2008, country EVA is reported under Basel II standardized. Group EVA is calculated on total equity while country EVA on allocated equity. 2 BU number of employees includes IT and Group level employees
Content Highlights Volumes Income Expenses Risk 11
Loan portfolio growth Loan portfolio distribution 08 28% 40% Est Lat Lit 32% 80% 60% 40% 20% 0% 86% Loan portfolio growth 67% 56% 38% 23% 23% 21% 19% Q3 Q4 Q3 Q4 08 08 Mortgage Corporate lending Consumer Finance ABF EURm, 2008 vs 2008 Est Lat* Lit Group** Loans (QoQ abs. growth) - origination fees Corporate Lending Mortgages Consumer Finance Asset Based Finance 255-1 72 98 7 21 210 0 150 27 12 27 203-1 63 65 22 55 700-3 284 190 41 103 Other Deposits (QoQ abs. growth) Demand Time 59 117 13 104-6 50-47 96 0-10 -1-9 85 157-34 191 12 *Latvian corporate portfolio growth includes refinancing of existing loan from Swedbank to Latvian business unit (Nordic real estate group with significant Latvian investments) **Country results do not sum to total group results as eliminations and group units are excluded.
Lending and deposit growth by countries Deposit growth vs market (only resident for Latvia)* Market Hansa 1,000 750 500 250 0-250 Q3 Q4 08 08 Q3 Q4 08 08 Q3 Q4 08 08 Estonia Latvia Lithuania 750 QoQ abs growth YoY % growth Loan growth 100% 600 80% 450 60% 300 40% 150 20% 0 Q3 Q4 Q3 Q4 08 08 Q3 Q4 Q3 Q4 08 08 Q3 Q4 Q3 Q4 08 08 0% 13 * Market data from respective country central banks and financial supervision authorities. 08 market information for 2 months only
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Income EURm 300 250 200 150 100 YoY QoQ +7% +7% Change in revenue EURm 265 2.4 255 7.5 245 8.8-0.8 259 50 0 Q3 Q4 08 08 235 241 08 Trading Other Inc Net Fees NII 08 Despite increasing financing cost net interest income decreased only EUR 0.8m compared to Trading income recovered from poor results to an average quarterly level Other income includes gain on the sale of PKK 15
Net interest income EURm 200 160 120 80 137 Net interest income 152 163 174 170 169 Core income item has been under pressure given higher funding costs. Net interest income declined in 08 by EUR 0.8m 40 0 Q3 Q4 08 08 3.5% Net interest margin 20 Change in net interest income QoQ 15 3.0% 2.5% 2.0% 16 2.95% 2.92% 2.84% 2.78% 2.81% 2.76% 2.69% Q3 Q4 08 08 Estonia Latvia Lithuania Group 2.41% EURm 10 5 0-5 -10-15 Q3 Q4 08 08 price volume number of days
Margin development 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2005 Funding structure Q3 2005 Deposits 20 Q3 20 20 Q3 20 2008 Foreign funding 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Time vs demand deposit 2005 Q3 2005 Demand 20 Q3 20 20 Q3 20 2008 Time Main factors affecting NIM: Largest impact - higher cost of foreign funding Higher cost of deposits Change of funding structure towards more expensive foreign funding Change in deposit structure from demand deposits to time deposits 17 3.0% 2.8% 2.6% 2.4% 2.2% 2.0% 1.8% 1.6% 2.77% 2.37% 1.94% Loan margins 2.54% 1.91% 1.68% Q3 Q4 Q3 Q4 08 08 Estonia Latvia Lithuania Deposit margin = (FTP-interest expense)/average deposits Loan margin = (interest income-ftp)/average loans 4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% Deposit margins 2.09% 2.16% 1.94% 1.08% 1.81% 1.08% Q3 Q4 Q3 Q4 08 08 Estonia Latvia Lithuania
EURm Net fee income Net fee income 60 45 30 47 52 51 52 49 51 15 0 Q3 Q4 08 08 Net fee income recovered from, but longer-term trend is flat since at around EUR 52m. Trends in countries differ slightly. The growth of net fee income has suffered due to poor performance on financial markets both because of decreasing trading activity as well as reduced success fees 35 30 25 20 15 10 5 0 18 Fee income 2008 vs 2008 Est Lat Lit Other Securities Custody Cash and settlements Lending and guarantees Card services
Trading income 30 25 20 Total trading income 20 15 Decline in trading income by country -0.3 1.0 2.8 EURm 15 10 5 0 EURm 10 5 8 5.4 17-5 -10 Q3 Q4 08 08 0 08 Est Lat Lit Group 08-15 Client margins Foreign exchange Securities Other Trading income recovered from poor performance in 08 Trading income is affected by the loss on the adjustment of unrealized foreign exchange differences (EUR 4.5m) in relation to the sale of Russian business unit 19
Content Highlights Volumes Income Expenses Risk 20
Expenses EURm 125 100 75 50 25 0 YoY -10% QoQ -13% Q3 Q4 08 08 EURm 110 105 100 95 90 85 80 75 70 Change in operating expenses 98-20.3 1.5 3.1 08 Personnel Admin Data network 2.8 85 Other 08 Operating expenses decreased by 10% YoY to EUR 85m in 08. Expenses include a reversal of bonus reserve. Without this effect operating expenses grew 14% YoY Growth in administrative expenses is to a large extent driven by professional services and related to the bank s investments to longer-term strategic initiatives. 21
Personnel expenses EURm Salaries & Taxes Bonus Training Total FTE 08 46.4-11.5 1.9 36.8 9,242 37.5 14.9 2.2 53.6 9,158 +/- 27% -177% -14% -31% 1% Group s personnel expenses decreased by 31% YoY. Annual decrease is a result of the reduction of accumulated bonus reserves by EUR 20m during 2008. Without this effect, personnel expenses grew 11% YoY Employee growth during 2008 Total growth, QoQ Incl trainees Local business units Other local operations IT units Group units 22 Est* 83 150 34 49 Lat* 10 38-3 12 Lit* -81 22-104 23 Group 36 221-73 84 7 18 *BU number of employees does not include IT and Group level employees 30% 25% 20% 15% 10% 5% 0% -5% -10% FTE growth YoY Q3 Q4 Q3 Q4 08 08 Estonia Latvia Lithuania Total HBG
Content Highlights Volumes Income Expenses Risk 23
Asset quality and provisioning costs Net loan losses Net loan losses by country 250% 200% 150% 100% 50% 30 25 20 15 10 5 EURm Estonia Latvia Lithuania Group 08 0.58% 0.75% 0.31% 0.55% 08 0.38% 0.54% 0.25% 0.39% 20 0.39% 0.56% 0.23% 0.40% 0% 0 Q3 Q4 08 08 Net loan losses NLL YoY % growth Net loan losses = (changes in general and special provisions + net write offs) / credit portfolio at the beginning of the year 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% -0.5% -1.0% Net loan losses 1999 2000 2001 2002 2003 2004 2005 20 20 08 08 Net loan losses Corporate incl real estate incl industry Private incl home loans Group 08 0.71% 0.98% 0.83% 0.32% 0.% 0.55% 08 0.43% 0.86% 0.09% 0.32% 0.16% 0.39% 20 0.42% 0.57% 0.31% 0.33% N/A 0.40% -1.5% -2.0% Estonia Latvia Lithuania Group 24
Asset quality overdue more than 60 days 2.0% 1.6% Overdue more than 60-days/12m old portfolio 2.0% 1.6% By country* 1.2% 1.2% 0.8% 0.8% 0.4% 0.4% 0.0% 1999 2000 2001 2002 2003 2004 2005 20 20 08 Group 08 0.0% Q3 Q4 08 08 Est Lat Lit Group 1.2% By client type* 2.5% By sector 0.8% 2.0% 1.5% 0.4% 0.0% Q3 Q4 08 08 Private Corporate 25 * Overdues over 60 days / 12 months old portfolio 1.0% 0.5% 0.0% 20 20 Q3 20 Q4 20 2008 2008 Real estate, rent Retail and wholesale Construction Industry Logistics and comm Other business services
Hansabank Group companies overdues vs market Estonia - overdue over 30 days / current portfolio Estonia - overdue over 60 days / current portfolio 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% 2.0% 1.5% 1.0% 0.5% 0.0% 31.12.05 31.03. 30.. 30.09. 31.12. 31.03. 30.. 30.09. 31.12. 31.03.08 30.04.08 31.05.08 31.12.05 31.03. 30.. 30.09. 31.12. 31.03. 30.. 30.09. 31.12. 31.03.08 30.04.08 31.05.08 Rest of the bank market Hansapank (bank only) Rest of the bank market Hansapank (bank only) Latvia - overdue over 30 days / current portfolio Latvia - overdue over 90 days / current portfolio 5% 4% 3% 2% 1% 0% 3% 3% 2% 2% 1% 1% 0% 31.12.04 31.03.05 30..05 30.09.05 31.12.05 31.03. 30.. 30.09. 31.12. 31.03. 30.. 30.09. 31.12. 31.03.08 31.12.04 31.03.05 30..05 30.09.05 31.12.05 31.03. 30.. 30.09. 31.12. 31.03. 30.. 30.09. 31.12. 31.03.08 Rest of the bank market Hansabanka (bank only) Rest of the bank market Hansabanka (bank only) 26
Group lending by sectors Portfolio, June 2008 Portfolio growth, 08 Individuals Mortgage Other 43% 249 42% Real-estate mgmt 3,110 15% 176 29%** Retail & Wholesale 1,803 9% 2 0% EURm Industry 1,801 9% 21 4% Transport 1,050 5% -26-4% Construction580 3% -13-2% Other* 3,276 16% 188 31% 0 2,000 4,000 6,000 8,000 10,000 xx% - share of portfolio and portfolio growth -200 0 200 400 27 *Other loans includes loan amount granted to Hansa Leasing Ltd (Russia). As Russian subsidiaries were sold during this loan no longer is eliminated as intra-group loan. **Real estate management related portfolio growth includes refinancing of existing loan from Swedbank to Latvian business unit (Nordic real estate group with significant Latvian investments)
Estonian lending by sectors Portfolio (EURm), June 2008 Portfolio growth (EURm), 08 Individuals 3,685 45% 116 120% Real-estate mgmt 1,158 14% 28 29% Retail & Wholesale 694 9% -5-6% Industry 513 6% 18 19% Transport 308 4% -40-41% Construction 201 2% -4-4% Other 1,570 19% -17-17% 0 1,000 2,000 3,000 4,000-50 0 50 100 150 xx% - share of portfolio and portfolio growth 28
Latvian lending by sectors Portfolio (EURm), June 2008 Portfolio growth (EURm), 08 Individuals 2,739 43% 38 18% Real-estate mgmt 1,052 17% 114 55%* Retail & Wholesale 536 8% 0 0% Industry 653 10% 28 13% Transport 287 5% 11 5% Construction 262 4% 6 3% Other 838 13% 13 6% 0 1,000 2,000 3,000 4,000-50 0 50 100 150 xx% - share of portfolio and portfolio growth *Real estate management related portfolio growth includes refinancing of existing loan from Swedbank to Latvian business unit (Nordic real estate group with significant Latvian investments) 29
Lithuanian lending by sectors Portfolio (EURm), June 2008 Portfolio growth (EURm), 08 Individuals 2,197 38% 95 48% Real-estate mgmt 899 16% 34 17% Retail & Wholesale 573 10% 8 4% Industry 636 11% -25-13% Transport 455 8% 3 1% Construction 116 2% -16-8% Other 867 15% 97 49%* 0 1,000 2,000 3,000 4,000-50 0 50 100 150 xx% - share of portfolio and portfolio growth * Other - largest increase in Energy, gas and water supply sector 30
Mortgages Standard mortgage product allows to issue new loans with maximum LTV below 85% and loan-service ratio below 50%. Portfolio, June 2008 Average portfolio LTV Estonia 59% Latvia 74% Lithuania 61% Mortgage portfolio LTV ratios have remained solid at 59% in Estonia, 74% in Latvia and 61% in Lithuania. Average maturity 21y 23y 22y Quality of existing portfolio and each new customer/transaction are evaluated using automated scoring tools. Decision making process, product conditions, and pricing are adjusted based on creditworthiness of the clients. Sub-prime type of mortgage lending is not practiced in Baltics 31
Real estate portfolio As indicated by internal stress-tests and portfolio analyses, real estate and in particular residential real estate development is the most sensitive sector in HBG portfolio. Sensitivity has started to appear in overdue and default figures of corporate portfolio. 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% -0.5% Real estate management overdues* 20 20 Q3 20 Q4 20 2008 2008 Around 2/3 from total Real Estate Estonia Latvia Lithuania portfolio are cash flow generating * Overdues over 60 days / 12 months old portfolio properties with good tenant mix. Properties under development process (1/3 from portfolio) are currently affected the most by decreasing prices and liquidity in the market. Hansabank has always strictly restrained from financing speculative type of properties. Additional defaults in residential real estate development sector are anticipated in the second half of 2008, but no major surprises are expected due to previously implemented portfolio limitations and individual level monitoring. Restructuring capacity has been put in place. 32
Group lending by sectors real estate 15% Estonia 6% 22% Portfolio, June 2008 5% 9% 6% 9% 25% 15% Latvia 2% 13% 43% 15% 26% 10% 3% 16% 22% Construction Individuals Industry Real-estate mgmt Other Transport Retail & Wholesale Lithuania 4% 4% 13% 5% Office 38% Production&Warehouse Residential 41% Retail 33 34% Land plots Other
Sectors under close watch 34 Transportation Trucking companies are facing problems due to increasing fuel prices and lagging freight rates. This global problem has started to reflect in Hansabank s provisions (especially in SME segments) since the beginning of the year. Transportation overdues* Retail & wholesale Trade volumes growth rates have slowed down and started to decrease in Estonia and Latvia in 2008 (still growing in Lithuania). There is no substantial impact on portfolio quality yet, but worsening is expected along with decrease in consumption. Wood processing Raw material price increase coupled with sales price downwards pressure are having a negative impact on Baltic wood processing industry. Current portfolio quality is around average with only few problem cases observed. Additional problems may occur after export duties will be imposed on Russian round wood as there is dependence on imported round wood in Estonia. 2.0% 1.5% 1.0% 0.5% 0.0% 20 20 Q3 20 Q4 20 2008 2008 Estonia Latvia Lithuania * Overdues over 60 days / 12 months old portfolio
Group lending by sectors retail & wholesale Estonia Portfolio, June 2008 32% 34% 5% 9% Latvia 43% 9% 26% 31% 15% 35% 16% 3% Construction Individuals Industry Real-estate mgmt Other Transport Retail & Wholesale 12% Lithuania 43% 19% Distributors Specialty retail Other 69% 35
Group lending by sectors transport Estonia 24% 23% Portfolio, June 2008 43% Latvia 16% 9% 5% 25% 28% 35% 41% 3% 15% 9% Construction Individuals Industry Real-estate mgmt Other Transport Retail & Wholesale 4% 1% 10% Lithuania 13% 11% Trucking Marine Terminals&Ports Other 36 85%
Collateral breakdown Hansabank s loan portfolio is adequately secured. Private mortgage portfolio is fully covered with family houses and apartments (as a rule owner occupied). Baltic Collateral (EURm) State Private real-estate June 2008 270 7,172 % 1% 35% Dec 20 273 6,660 % 1% 33% Full asset pledge, including tangible assets and current assets, is most common case for Corporate portfolio. Collateral position enhancement with owner guarantees and additional collateral is used for more risky customers and SME segments. Corporate real-estate Guarantees Other collateral* Unsecured Unsecured corporate Unsecured private Total 7,927 316 3,810 1,172 852 320 20,667 38% 2% 18% 6% 4% 2% 100% 7,960 668 3,621 985 7 279 20,167 39% 3% 18% 5% 4% 1% 100% The share of unsecured loans is insignificant (used for top ratings in corporate segment and consumer products in private). *Other collateral is deposits, customer payments, vehicles, etc 37
Regular process of outstanding loan review Portfolio quality improvement measures introduced already at the end of 20 Real estate sector growth under control, existing portfolio regularly scrutinized Strengthened risk units Increased number of people dealing with problem loans Strengthened workout team Improved the quality and increased frequency of portfolio quality reporting Set targets for new origination quality Regular loan review process includes Overall portfolio stress test once a year Portfolio review 2x per year Quarterly watch list report IRB portfolio scoring 1x per month On the individual loan basis: Client rating review minimum 1x per year Rating classes 5 and higher are subject to more frequent assessment Quarterly financials/covenants assessment For SME/SSE and private portfolio weekly overdue report (with client names identified) 38
Credit quality management process 39 Proactive management of watch list clients Private clients - communication on step-by-step actions to take before falling into overdues. Development of standard proactive solutions to ensure serviceability of the credit Corporate clients - proactive communication, frequent client meetings and positive attitude to find solutions Overdue management - concentrates on time horizon from occurrence of distress situation (either through late payment or on the bases of client information) to moving credit over to restructuring or workout phase. The primary focuses in overdue management is: Process design for fast and prudent management of overdues, clear process ownership Prudent tactics to handle overdue payments. Constant re-evaluation of the tactics on their effectiveness and adequacy Clearly set timing and means of client contacts Build capacity to work with distressed clients and adequate training of employees Internal target setting and incentives to reach targets Up to time reporting and follow up on taken activities Distressed debt restructuring Defined tactics of restructuring. Solutions to ensure client serviceability of the debt Extended capacity to work with distressed clients Effective solutions for collected collaterals handling
Capital adequacy Capital base (in millions of euros) According to Basel II rules 30..08 According to Basel 1 rules 30..08 31.12. 2,100 Capital requirement Total Tier 1 1,815.3 1,838.9 1,853.7 1,900 Supplementary capital (Tier 2) Own funds, total Deductions from own funds Own funds, net 500.0 2,315.3 28.6 2,286.7 500.0 2,338.9-2,338.9 500.0 2,353.7-2,353.7 EURm 1,700 1,500 1,300 08 Credit risk Market risk Operational risk Capital ratios According to Basel II rules According to Basel 1 rules (per cent, unaudited) 30..08 30..08 31.12. Tier 1 capital ratio 9.84% 8.71% 8.60% Tier 2 capital ratio 2.54% 2.37% 2.32% Total capital adequacy ratio 12.37% 11.08% 10.92% 40 * 20 Basel I, 2008 standardized Basel II
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