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Goldman Sachs Roadshow
6-7 December 2012
Gunn Wærsted
Executive Vice President, Head of Wealth Management
Disclaimer
2 •
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.
Key messages
3 •
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
Key messages
4 •
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
• Financial highlights, Nordea Group Q3 2012
• Wealth Management
• Building the future bank business model
Financial result – Q3/12
6 •
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
7 •
Net interest income development Margin pressure on deposits due to low interest rates
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
Total net interest income, EURm
Net interest margin under pressure since 2004
8 •
Average lending and deposit margin
9 •
Net commission income remains at high levels
525
618 602
623
582 588 596 611 605
Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12
Total net fee and commission income, EURm
• Down 1% q-o-q
• Increased asset management and
lending commission
• Decreased commissions on
payments, cards and custody
10 •
Assets under Management at all time high
• Assets under Management at
all-time-high of EUR 210.9bn
• 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
187.4
1.2
7.7
0,9
Wealth Management AuM, EURbn
11 •
Net fair value
Total net result from items at fair value, EURm
446
504
544
356
111
506
469 494
377
Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12
• Continued high demand in
customer areas
• Negative valuation changes in
liabilities accounted for at fair value
12 •
Expenses under solid control
Total expenses, EURm
• Decrease by 2% in local
currencies q-o-q
• Number of FTEs down 1% q-o-q
Strong access to funding
13 •
• 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-
Long-term funding, EURbn
Nordea covered bonds spreads vs
European governments
Source: Goldman Sachs
No
rdea
Germ
any
Fin
land
Neth
erlands
Austr
ia
Fra
nce
Belg
ium
Irela
nd
Italy
Spain
Port
ugal
Sw
eden
Spread vs MS (bps)
27
33 32
25
2009 2010 2011 Q3/12 YTD
14 •
Strong capital generation
11 689 12 821
14 313
17 766 19 103
20 677 21 796
2006 2007 2008 2009 2010 2011 Q312YTD
Dividend payout Anticipated dividend
Core Tier 1 capital, EURm
• Tier 1 capital is up by 86% since
2006
• CAGR of 9% after dividend and
adjusted for rights issue
15 •
Risk-weighted assets under strict control
180
183
185
182 181
179
Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12
Risk-weighted assets (RWA), EURbn*
* Basel II excluding transition rules
• 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
• In total limited effect from rating
migration
10.0 10.4 10.3
10.7 11.0 11.0 11.2
11.6 11.8 12.2
Q2/10 Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12
16 •
Improved Core tier 1 ratio
Core tier 1 capital ratio, % (excl. Hybrids)*
* Basel II excluding transition rules
• 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
17 •
Credit quality
Total net loan losses, EURm
207
166
242
118 112
263
218 217
254
Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12
• Broadly in line with long-term risk
appetite
• Low loan losses in Norway,
Sweden and Finland
• Continued elevated levels in
Denmark and Shipping
• Effects from stricter rules in
Denmark
• Lower individual provisions
• Increase in collective provisions
-50
0
50
100
150
200
250
Q3/09 Q3/10 Q3/11 Q3/12
Denmark Finland Norway Sweden
18 •
Net loan losses quarterly by country – excluding Shipping
EUR 145m
EUR 8m
EUR -17m
EUR 46m
• Still certain overleveraged
Danish household and
agriculture customers
behind the provisions
• A limited number of
individual provisions in the
other countries
0
100
200
300
400
500
2006 2008 2010 2012
Single family houses Corp property Forced sales total (seasonally-adj)
19 •
Underlying stabilisation in Denmark
House prices, index = 2006* Forced sales*
Number of bankruptcies*
-100
-50
0
50
100
150
200
Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12
Collectivelyassessed
Portfolioassessed non-significantloans
Individuallyassessed
Loan losses net, Retail Banking Denmark
70
80
90
100
110
2006 2008 2010 2012
Single-family houses Summer houses Flats
0
100
200
300
400
500
600
2006 2008 2010 2012
Bankruptcies
* Source: Danmarks Statistik
0
100
200
300
400
500
600
700
Q2/09 Q2/10 Q2/11 Q2/12
20 •
Shipping net loan losses and impaired loans
Shipping Net loan losses, EURm Shipping Net impaired loans, EURm
EUR 54m EUR 558m
• Further deterioration of collateral
values
• Need for additional loan loss
provisions
• Gross impaired loans down 4% q-o-q
0%
15%
30%
45%
60%
75%
90%
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
Tanker
Bulker
Containership
Challenges remained within Shipping
Source: Clarkson
0
30
60
90
120
150
180
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
MUSD
VLCC. 5 year old
Cape Bulker. 5 year old
Panamax Containership.5 year old
• Ship values have continued to fall
throughout the year
• Supply is coming down rapidly
Ship values Shipping orderbook as % of existing fleet
• Financial highlights, Nordea Group Q3 2012
• Wealth Management
• Building the future bank business model
16%
Share of economic capital
11%
Share of total FTEs
16%
Share of Group total operating profit
14%
Share of Group total operating income
High margins
Capital efficient and
funding generating
Generating stable
income from a fee-
based model
High contribution to
economic profit due to
low capital consumption
(16% of economic
capital)
Rarocar Q3 2012 17%
2012, Q3
23 •
Wealth Management – an area with strong financials,
well-adjusted to “New Normal”
* All funds targeted at Nordic Retail segment sold through own distribution
** Includes pension pools products
Assets under Management EURbn, end Q3 2012
Denmark
Finland
Norway
Sweden
International
Retail funds* Private
Banking
Institutional
sales Total
211 55
10
4
3
21
0
22
18
4
13
11
19
5
6
16
5
23
10
9
8
5
75
36
21
47
31
51 37
Life &
Pensions**
Total 68
3 year AuM
growth
36% 32% 70% 36% 42%
33%
20%
54%
51%
83%
3 year AuM
growth
24
Growth achieved through well-diversified asset base
• 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
• In Q3 80% of composites
outperformed their
benchmarks, 76% YTD and
72% when measured on a 3
year horizon
25 •
AuM end Q3/12
210.9 0.8
Market
appreciation
7.6
Net inflow
2.7
AuM end Q2/12
199.8
Wealth Management AuM, EURbn
Good performance, key driver of Assets under Management
Value added
investment
performance on
assets under
discretionary
management
* EUR 105bn end of Q3/12
*
Nordea is the largest wealth manager in the Nordics
AuM development (EURbn)
26
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 30th, 2012
Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 Peer 7
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% Change last 4Q
Local currencies
Change last 4Q
Euro
45% of our rated funds in Nordics have 4 or 5 stars
14 funds
Average Rating 3.73
Denmark
21 funds
24 funds
2 funds
1 funds
18 funds
Average Rating 3.49
Finland
38 funds
50 funds
8 funds
4 funds
5 funds
Average Rating 3.27
Norway
15 funds
28 funds
4 funds
3 funds
7 funds
Average Rating 3.26
Sweden
25 funds
34 funds
10 funds
4 funds
44 funds
Average Rating 3.44
Nordic
99 funds
136 funds
24 funds
12 funds
23%
34%
39%
3%
2%
15%
32%
42%
7%
3%
9%
27%
51%
7%
5%
9%
31%
43%
13%
5%
14%
31%
43%
8%
4%
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
28
0
50 000
100 000
150 000
200 000
250 000
-3000
-2000
-1000
0
1000
2000
3000
4000
Q1/08 Q3/08 Q1/09 Q3/09 Q1/10 Q3/10 Q1/11 Q3/11 Q1/12 Q3/12
Inflow AuM
AuM
EURm
Net inflow
EURm
The share of traditional life is reduced over time
GWP life & pension products 2008 - 2012
40% 48% 59% 56% 66% Share of
UL+New trad.
29
AuM life & pension products 2008 – 2012
22%
27%
33%
36%
41%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
0
10 000
20 000
30 000
40 000
50 000
60 000
2008 2009 2010 2011 Sep 2012
UL and new trad
Trad. Life
UL, new trad and pure risk share of AuM
% EURm
0
500
1000
1500
2000
2500
3000
3500
2008 2009 2010 2011 Sep 2012*)
Trad New trad UL
*) 12 months rolling
Life & Pensions’ strategy going forward
• Reduce costs and increase correlation with income
• Review of business lines (segments) Cost efficiency
• Migration from traditional products
• ALM & capital consumption focus Capital efficiency
• Capital efficient new sales
• Next generation product platform Optimise product
portfolio
• Re-allocate resources to the attractive segments
• Continue to strengthen bancassurance Profitable growth
30 •
• Financial highlights, Nordea Group Q3 2012
• Wealth Management
• Building the future bank business model
32 •
Roadmap to Future Bank
Future Bank
A sustainable business model
that delivers a ROE well above cost of capital
on a fully loaded balance sheet
New Normal plan
Roadmap to Future Bank
Relationship
strategy
Values and
leadership
A convincing
equity story
and market
commitments
A strong
brand with
clear values
Roadmap to Future Bank
33 •
• 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
Key messages
34 •
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
Key messages
35 •
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
Goldman Sachs Roadshow
6-7 December 2012
Gunn Wærsted
Executive Vice President, Head of Wealth Management
• Appendix, Q3 2012
Change in net interest income
38 •
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
Household Corporate
Banking Denmark
Banking Finland
Banking Norway
Banking Sweden
Corp & Inst Banking
Shipping
65.8
45.4
50.2
66.5
45.3
13.4
BankingDenmark
BankingFinland
BankningNorway
BankingSweden
CIB Shipping
Lending, volumes and margins
39 •
Lending volumes EURbn Q3/12 and development q-o-q
Change in local currencies
0% 0% 0% 0% -5%
-3%
Margin* development q-o-q
*Excluding full liquidity premia
30.0 32.7
20.0
33.5
42.8
4.8
BankingDenmark
BankingFinland
BankningNorway
BankingSweden
CIB Shipping
Deposits, volumes and margins
40 •
Deposit volumes EURbn Q3/12 and development q-o-q
Change in local currencies
0% 1% -4% -1% 11%
3%
Margin* development q-o-q
*Excluding full liquidity premia
Household Corporate
Banking Denmark
Banking Finland
Banking Norway
Banking Sweden
Corp & Inst Banking
Shipping
41 •
• 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
Impairment rate gross1, basis points
24 21 21 24 24
13 13 14 14 15
27 27 27 28 32
10 11 19 22 21
56 59 66
76 89
Q3/11 Q4/11 Q1/12 Q2/12 Q3/12
Denmark
Shipping
Finland
Baltics
Others
Highest increase of impaired loans in ”collaterised” loan books
42 •
75
100
125
150
175
200
225
250
Q3/11 Q4/11 Q1/12 Q2/12 Q3/12
Change in impaired loans %, Index 100 = Q3 2011
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%
43 •
The New Normal plan continues to deliver
34 138 34 169 33 844
33 068 32 557
31 988 31 692
Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12
1 265 1 275 1 242 1 266 1 276 1 290 1 293
171
Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12
One-off restructuring charge
In terms of cost efficiency
Group FTE development Total expenses, EUR million
44 •
The New Normal plan continues to deliver In terms of capital efficiency
• Reduced RWA by more than
EUR 9bn since beginning of 2011
due to improved efficiency
185.1
5.9
3.5
3.7
179.0
9.9
9.3
Q4/10 CreditQuality
Growth FX & other Basel 2.5 RWAoptimization
Q3/12
Risk Weighted Assets development, EURbn*
* Basel II excluding transition rules
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