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Nordea efter den finansiella krisen
Falun
2 September 2010
Rodney Alfvén
Head of Investor Relations
1
Nordea – the leading Nordic bank…
A unique customer base
Global
Other
Group¹
10%
Norway
15%
Finland
21%
Sweden
23%
Denmark
25%
Approx. 7.7 mill. household customers in
programmes, 0.7 mill. active corporate customers
Strong distribution power
Approx. 1,400 branches of which 270 in NEM
6%
Financial strength
EUR 20.5bn in tier 1 capital
Tier 1 ratio 11.1% excl transition rules
Market capitalisation
EUR 28bn
Corporate lending %
% Share of Group income (size of bubbles)
Diversification
No single market accounts for more than one
quarter of Nordea’s income
Household lending %
1)
2
Shipping, Oil Services & International, Financial Institutions, International Private
Banking and Group Functions
…and one of the larger banks in Europe
Santander
BNP Paribas
Lloyds
Barclays
Unicredit
BBVA
RBS
Societe Generale
29.7
Nordea
Intesa Sanpaolo
DnBNOR
SHB
Danske Bank
KBC
Erste
SEB
Swedbank
Commerzbank
Bank of Ireland
EURbn
Allied Irish Banks
0
10
20
30
40
50
60
70
80
90
100
3
Source: ThomsonReuters Datastream
Macro economic stabilisation in the Nordic
region
GDP growth, %, y/y
6 % y/y
% y/y
6
4
4
2
2
0
0
-2
-2
-4
Growth rates expected to be solid in the
Nordic countries

In 2010, all Nordic countries are expected
to have:
-4
Finland
Norway
Denmark
Sweden
-6

-6
-8
-8
08
09
10
11
5.0
% of GDP
Norway +12-18%
2.5
0.0
0.0
Finland
-2.5
-2.5
Denmark
-5.0
Euro area
-7.5
-7.5
USA
-10.0
-10.0
08
4
09
10
11

Modest inflation

Relatively strong public finances
2.5
Sweden
-5.0
Positive growth rates
12
Public finances, % of GDP
5.0 % of GDP

12
Source: Nordea Markets

Improvements in labour markets
Continued strong customer business
Income in Corporate
segment
Q2 2009
Q1 2010
Q2 2010
Number of Gold
customers
Q2 2009
5
Q1 2010
Income in Household
segment
Q2 2009
Q1 2010
Q2 2010
Lending volumes
Q2 2010
Q2 2009
Q1 2010
Total income
Q2 2009
Q1 2010
Q2 2010
Impaired loans
Q2 2010
Q2 2009
Q2 2010
Q2 2010
Result highlights
EURm
H1/10
H1/09
Chg %
H2/09
Chg %
Net interest income
2,484
2,661
-7
2,620
-5
Net fee and commission income
1,013
793
28
900
13
887
1,109
-20
837
6
Other income
80
75
7
78
3
Total income
4,464
4,638
-4
4,435
1
Staff costs
-1,388
-1,352
3
-1,372
1
Total expenses
-2,350
-2,206
7
-2,306
2
2,114
2,432
-13
2,129
-1
-506
-781
-35
-705
-28
Operating profit
1,608
1,651
-3
1,424
13
Net profit
1,182
1,245
-5
1,073
10
Risk-adjusted profit
1,194
1,524
-22
1,262
-5
Net result from items at fair value
Profit before loan losses
Net loan losses
6
Net interest income held up well in H1 2010,
despite the low interest rate level

EURm
1,305
1,321
1,299
1,235
1,249
Solid trend in customer operations
continues

Lending and deposit volumes up

Margins stable

Remains subdued by the low
interest rate levels

Lower contribution from Group
Treasury

Q2/09
7
Q3/09
Q4/09
Q1/10
Q2/10
Slight increase in average funding cost
when maturing long-term funding was
prolonged at higher market rates
Underlying volume trends
% change in unchanged currency
June 2010 /
June 2009
Total Lending, excl. reversed repurchase agreements
2
4
–
Nordic household mortgages
2
9
–
Nordic consumer lending
1
7
–
Nordic corporates
2
0
–
New European Markets
4
1
–
FID and Shipping
3
-3
-1
-1
Total Deposits, excl. repurchase agreements
8
Q2oQ1
–
Nordic households
2
3
–
Nordic corporates
1
1
–
New European Markets
-2
-6
–
FID and Shipping
4
-19
Interest rate sensitivity
- 3 components

Structural interest income risk (SIIR)


Q1/10
430
450
-230
-100
EURm
Annualised positive impact on
Net interest income, approx.
Changes in deposit margins – mainly
transaction accounts
Non-recurring negative impact on
Net result from items at fair value,
approx.
Market risk in the interest-bearing
investment portfolios

9
Q2/10
Dynamic effects on net interest income


Reflecting the effect on NII from repricing gaps*
Increased market rates, 100 bps
Market risk has an immediate effect on
the net result from items at fair value
* Accumulated mismatch between assets and liabilities with an interest rate duration
of less than 12 months, with the assumptions that non-maturity accounts are repriced immediately following a interest rate change, without effecting margins
Strong net fee and commission income
538
EURm
463
412
Q2/09
10

Higher income contribution from
corporate advice

Continued strong performance in
the savings area

High activity in capital markets
475
437
Q3/09
Q4/09
Q1/10
Q2/10
Credit quality improving during 2010
EURm
48
29
27

58
468
425 413
-82
-91
Q2/09
358
Q3/09
452
346 358
261 316
-97
-135
Q4/09
Q1/10
245
-128
Q2/10
Gross loan losses
Danish guarantee scheme
Reversals
Net loan losses

6 bps collective (13 bps)

140 bps in the Baltic countries (166 bps)

Decreased loan losses in most
areas

Impaired loans gross down 1% in Q2
DK, 42%
SE, 0%
NO, 4%
30 bps individual (42 bps)
Excluding guarantee scheme
provisions, net loan loss ratio down
to 32 bps (51 bps)
OTHER,
2%
SOSI, 6%


Loan losses by area Q2 2010
NEM, 17%
Net loan losses down to 36 bps in
H1 2010 (55 bps last year)
FI, 29%

11
52% of impaired loans performing
Strong capital position maintained –
and strong funding despite challenging quarter
Core tier 1 capital ratio (excl. hybrids), %
10.3
9.2
9.2
Q2/09
10.1
10.0

High volume increase but stabilising
rating migration affect RWA

EUR 20.9bn of long-term funding
issued in H1 2010

In June, after several weeks of no
market supply, Nordea reopened
the senior unsecured market
Q2/10
Fully implemented Basel II
Total long-term funding issued, EURbn
31
12
Core tier 1 ratio 10.0%
9.0
Q1/10
Transition rules

22
23
2007
2008
20.9
2009
H1 2010
Basel III – the answer to the financial crises
13
The crises was built up during a long time period
Construction as a % of GDP and weight of
mortgage debt in the US
New home sales and 30-year mortgage rates
10
7.4
95
42%
New home sales (in log)
right scale
9
7.2
8
7
7
6.8
6
6.6
Construction spending as % of GDP
left scale
90
40%
85
38%
80
36%
75
34%
Mortgage Bankers FRM 30y
5
6.4
Share of Home mortage debt
in total non federal debt
4
6.2
96
98
00
02
04
06
08
70
32%
93
95
97
99
01
03
05
07
Source: Bloomberg
14
Total Issuance of Structured Finance by Region
(US$bn)
2500
U.S
Euro Area
Asia
2000
1500
1000
500
0
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
Source: BIS
15
Total leveraged loans – including Finance
Leveraged Buyouts
250
US$ bn by quarter
Total Leveraged Loans
Loans to Finance Leveraged Buy-outs
200
150
100
50
0
T1 99
T1 00
T1 01
T1 02
T1 03
T1 04
T1 05
T1 06
T1 07
Source: Datastream
16
Leading to “super-profit” in financials
Profits relative to nominal GDP in Europe
(base 100 = Q1 1973)
300
Financials' super-profits
250
200
Financials
All
150
100
50
0
1973
1977
1981
1985
1989
1993
1997
2001
2005
2009
Source : Datastream
17
The financial crisis – impact and response
2008
2007
Losses and
write-downs
2009
Funding
problems
Capital
problems
2010
Regulatory
initiatives
for ”Never
again”
Some clarity
Response


18
Rescue
packages

Funding
guarantees
Bail-outs

Rate cuts

Liquidity injections

Capital injections

Capital

State-sponsored
hybrid capital

Liquidity

Systemic risk

Remuneration

Fiscal stimulus
packages
Broad agreement in July 2010 on Basel III
changes and implementation plan

Nordea anticipates final details towards the end of the year –
including new proposal on NSFR and capital buffers

Uncertainty remains high – questions around NSFR and leverage ratio

Increased cost of capital expected, likely to impact pricing to customers
Basel Oversight
body, broad
agreement
July 2010
19
Basel Committee
meeting
G20 meeting
Basel release of details
for 2012 and new
proposals for 2018
Oct 2010
Dec 2010
?
Implementation
Implementation
capital regulation
leverage ratio +
+ LCR
NSFR
Test/observation phase
for leverage ratio +
NSFR 2013-2017
Dec 2012
Jan 2018
Capital position strong, for regulations and growth

Limited impact from capital base adjustments

Tier 1 hybrids assumed to be replaced by new tier 1 capital types

Uncertainty on capital buffers

Nordea assessed to be in a good position
Capital ratios H1 2010, %


13.2
Leverage ratio

Netting approach for derivatives

Nordea assessed to be above threshold of 3%
10.0
11.1
11.8
Nordea’s capital ratios well above
targets and current regulatory threshold
Transition rules
Tier 1 ratio
11.5
9.0
8.0
10.0
9.0
Core Tier 1 ratio
(excl. hybrids)
20
Targets
Threshold
Capital ratio
Fully implemented Basel II
Liquidity – changes in right direction, but proposal
still conservative and challenging for the industry


21
Changed parameters for Liquidity Coverage Ratio, LCR

Broader definition of qualifying assets in liquidity buffer

Milder stress scenarios

But internal covered bonds still not eligible, despite high quality and central bank eligibility
Prolonged observation phase for Net Stable Funding Ratio, NSFR

Observation phase 2013-2017, final version from 2018

Still challenging for the industry given the size of the funding gap relative to funding
market capacity

Uncertainty remains high around the final regulation and the implementation
Journey to Great Nordea
22
Great Nordea framework
Rationale
Profit orientation &
prudence
Ambitious vision &
targets
Strong customeroriented values &
culture

Without this as the foundation,
there is no bank – through the cycle

Need to set targets to be able to reach
the goals

Motivation to perform extraordinarily

Nine countries, and everything
different

Common values and platform to form
one team

Growth to free up resources to
improve customer satisfaction

Growth to create value to our
shareholders
Clear growth strategy
23
Profit orientation
and prudence
Strong credit management – moderate credit
risk appetite over the cycle
Bps
Loan loss ratio
20
10
0
-10
Credit risk appetite 25 bps
-20
-30
-40
-50
2002
24
2003
2004
2005
2006
2007
2008
2009
H1 2010
H2 2009
H1 2009
H2 2008
H1 2008
H2 2007
H1 2007
H2 2006
H1 2006
H2 2005
H1 2005
H2 2004
H1 2004
H2 2003
H1 2003
H2 2002
H1 2002
-60
2010
Profit orientation
and prudence
Strongest capital position among a selected
group of major international banks
%
10
9
Risk-adjusted capital ratios
8
7
6
5
4
3
2
25
Citigroup
UBS
Bayerische LB
AIB
BNP Paribas
Deutsche Bank
Danske Bank
Intesa Sanpaolo
UniCredit
LBBW
Société Générale
Credit Agricole
Credit Suisse
Barclays
Santander
KBC
SHB
Swedbank
SEB
Dexia
DnB NOR
HSBC
0
Nordea
1
Source: Swedish Riksbank, Standard & Poor’s
Profit orientation
and prudence
One of the most stable profit development
among banks in Europe
Profit before tax development through the financial crisis (Indexed)
Index = 100
140
120
100
Nordea
80
European peers
60
Nordic peers
40
20
Q
1
10
Q
4
09
Q
3
09
Q
2
09
Q
1
09
Q
4
08
Q
3
08
Q
2
08
Q
1
08
Q
4
07
Q
3
07
Q
2
07
07
-20
Q
1
0
-40
26
* Calculation based on covariance of 13 quarters operating profits 2007 – Q2 2010
** Nordic peers: Danske Bank, DnB NOR, SEB, SHB, Swedbank
Ambitious vision
& targets
Delivery on long-term targets
Risk-adjusted profit
rolling 4 quarters development
2007 – Q2 2010
Total shareholder return
1 Jan 2007- 16 Aug 2010
20
0.0
0
-20
41.4%
-40
-60
-80
Q4/ 08 Q1/ 09 Q2/ 09 Q3/ 09 Q4/ 09 Q1/ 10
Q2/ 10
SHB
Nordea
DnBNOR
BBVA
Erste
Barclays
SEB
Unicredit
KBC
Lloyds
RBS
Santander
Q308
BNP Paribas
Q208
Danske Bank
Q108
Rolling four quarters compared with FY 2006 EUR 1,957m
Long-term target for average yearly growth
Intesa Sanpaolo
Q407
Swedbank
Q307
Societe Generale
Q207
Commerzbank
Q107
Top quartile
Bank of Ireland
-100
Allied Irish Banks
25.5%
RoE 2007 – Q2 2010
Nordea has reported one of the highest average return on equity (RoE) of Nordic
peers¹, 14.4%
27
¹Nordic peers: Danske Bank, DnB NOR, SEB, SHB, Swedbank
Values
Strong customer-oriented values and culture –
become part of DNA
A Great European Bank,
acknowledged for its people, creating
superior value for customers and shareholders
Great customer
experiences
It’s all about people
One Nordea team
Foundation:
Profit orientation and
prudent cost, risk and capital management
28
Values
Customer satisfaction improving versus
competitors
CSI index (aggregate) 2007-2009*
2007
Nordea
Peers
70.6
71.2
+0.9
71.5
- 3.6
67.6
-0.6
29
2009
3.9
*Corporate and high involvement customers, corresponding to Gold
and Silver segment customers
Prudent growth strategy – Group initiatives and
strong business development
30
We continue on the journey to Great and to
deliver on our long-term target
Middle of the
road
Profitable organic growth
07
08
Prudent growth
10
09
11
Next level strategy based
on stronger position
Organic growth strategy
 Keep income
growth
momentum
Group initiatives
launched to support
the strategy
 Cost, risk and
capital take the
lead
 Enable us to
accelerate out
of the crisis
31
Next generation of
initiatives launched
12
Great
Nordea
Growth strategy
Benefits of universal relationship banking –
clearly in focus for the growth
Why relationship banking?
Satisfying customer needs …
• Safety and stability
• “Someone who cares”
• Full range of advice
• Customer needs driven
innovation
Capital efficiency through full
customer wallet …
• Balanced and diversified
business mix, e.g., lending
and deposits
• Complemented by, e.g.,
capital-efficient asset
management products
32
… while focusing on the most
attractive customer groups
• Most profitable
• Highest potential
• Most satisfied and loyal
• High efficiency in service
… at a low risk
• Low losses, eg, Gold
customers with automated
credit scoring
• Knowing and being close to
Corporate customers
• Diversification from Corporate
and Household mix
Growth strategy
You need the right platform
Quality of
people
Proximity
One value chain
Customer
base
Customer-oriented values
A great European bank,
acknowledged for its people, creating superior
value for customers and shareholders
Great customer experiences
It’s all about people
One Nordea team
Foundation: Profit orientation and prudent cost, risk and capital
management
Demand-driven
products
One customer team
Trustworthy
brand name
33
Capital
position
Growth strategy
Nordea has built the platform
Quality of
people
Proximity
1400 branches (160
Corporate), contact
centres and netbank
~6,000 PBAs, SRMs and
RMs trained in -09
One value chain
Customer-oriented values
A great European bank,
acknowledged for its people, creating superior
value for customers and shareholders
Great customer experiences
It’s all about people
E.g., top Morningstar
ratings, No 1
Greenwich rating
34
~ 8 m household
customers in programmes,
0.5 m corporate
One Nordea team
Foundation: Profit orientation and prudent cost, risk and capital
management
Demand-driven
products
Customer
base
One customer team
Trustworthy
brand name
Nordea brand
stronger than ever
Capital
position
One of strongest
capital and funding
positions in Europe
Growth strategy
Prudent growth strategy supported by next
generation of Group initiatives
Increase business with
existing Nordic customers
and attract new customers
Exploit global
and European
business lines
1. Future distribution
Supplement Nordic
growth through
investments in New
European Markets
6. Growth plan Poland
2. New customer acquisition
3. Growth plan Finland
4. Growth plan CMB Sweden
5. Customer-driven Markets business
7. Top league IT and operations
8. Product platforms
9. Infrastructure upgrade
Take Nordea to the next level of operational efficiency,
support sustained growth
35
Household strategy delivery: Value proposition
attracts customers in premium segments

Solid trend accelerated in 2010 – up
7.2% from one year ago


110,000 new Gold and Private Banking
customers in H1 2010 – more than 70% new
customers in Nordea
Number of Gold customers, ‘000
2,690
Improved market share in all countries
Q2 2009

2,885
2,812
Significant increase of number of proactive customer meetings
Q1 2010
Q2 2010
Lending market share increase, %
0.3

Continued strong customer demand in
household segment – increased volumes
with stable margins

36
Total income in household segment up 5%
0.2
DK
0.1
0.1
FI
NO
SE
Corporate strategy delivery: High activity –
income up 7% in H1

Increased business confidence - lending
volumes up 4% in H1 2010

Continued strong demand for risk
management products

Improved market share in Corporate
Banking - strategy to build house-bank
relations proven successful
Corporate lending, EURbn
144
136
139
Q2 2009
Q1 2010
Q2 2010
Lending market share increase, %
0.1
0.1
0.1
-0.1
DK
37
FI
NO
SE
Nordea’s relationship banking approach further
strengthened


Strengthened market position – increased
share of wallet

Improved position in capital markets

38
Strong income growth in Corporate Merchant
Banking (CMB)

Leading arranger of Nordic syndicated loans

Participation in execution of main Nordic transactions
New area established – Corporate Merchant
Banking and Capital Markets

Ensure that all service and product competences of
Nordea reach the large corporate customers

Headed by newly recruited – Casper von Koskull
Total income CMB, EURm
372
342
315
Q2 2009
Q1 2010
Q2 2010
Concluding remarks
39
Key messages

We are delivering according to our plan

Credit quality improving – impaired loans decreased in second quarter

More clarity with the agreement around Basel III, but some uncertainty
remains

Continued strong customer business


Income from corporate customers up 7% and from household customers up 5% in H1

Increased lending, deposits and AuM volumes

Solid inflow of new customers – increased market shares in all markets

Positive development in corporate finance business – relationship banking approach
further strengthened
Focus on prudent growth and the execution of the Group initiatives

40
On track in all areas