Sampo Capital Markets Day London, 07 September 2017 · The most stable bank in the Nordics Nordea...
Transcript of Sampo Capital Markets Day London, 07 September 2017 · The most stable bank in the Nordics Nordea...
Nordea in brief The largest financial services group in the Nordics
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Household market
position
Corporate & Institutional
market position Business position - Leading market position in all four Nordic countries
- Universal bank with strong position in household, corporate and wealth management
- Well diversified business mix between net interest income, net commission income and capital
markets income
11 million customers and strong distribution power - Approx. 10 million personal customers
- 700 000 corporate customers, incl. Nordic Top 500
- Approx. 600 branch office locations
- Enhanced digitalisation of the business for customers
Financial strength - EUR 10bn in full year income (2016)
- EUR 643bn of assets (Q2 2017)
- EUR 31.4bn in equity capital (Q2 2017)
- CET1 ratio 19.2% (Q2 2017)
AA level credit ratings - Moody’s Aa3 (stable outlook)
- S&P AA- (stable outlook)
- Fitch AA- (stable outlook)
EUR 45bn in market cap - One of the largest Nordic corporations
- A top-10 universal bank in Europe
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Well mixed profit generation Business Area contribution in H1 2017
5%
22%
21% 20%
32%
Operating Income
4%
28%
21% 18%
29%
Operating Profit Economic Capital
Group Functions & Other
Wealth Management
Wholesale Banking
Commercial & Business Banking
Personal Banking
9%
31%
23%
27%
10%
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Combining Nordic scale with local presence
Centre of excellences
• Compliance
• Financial crime prevention
• Operations
• Robotics
• Finance
Decentralised
• Customer facing activities
• Product development
• Credit decisions
• Marketing
• Efficient
• Scalable
• Agile
• Personalised
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Strong capital generation and stable returns at low risk 13% CAGR in capital generation and CET1-ratio up 12.5 pp in 11 years
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2007 2008
20
15
2005
12
2012 2011
35 31
29
2009 2010 2006
18
CAGR 13%1
2016
37
47
2013 2015 2014
39
43
Acc. dividend EURbn
Acc. equity EURbn
5.92 18.4 CET1 Ratio %
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26
34
43 62
64
65
DPS (Euro cents)
1) CAGR 2015 vs. 2005, adjusted for EUR 2.5bn rights issue in 2009. Equity columns represents end-of-period equity less dividends for the year. No assumption on reinvestment rate for paid out dividends 2) Calculated as Tier 1 capital excl. hybrid loans
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The most stable bank in the Nordics Nordea and peers 2006 – 2016, %
131
7455
362417
Peer 5 Peer 4 Peer 3 Peer 2 Peer 1 Nordea
1,010,90
0,520,40
0,34
0,20
Peer 5 Peer 4 Peer 3 Peer 2 Peer 1 Nordea
Quarterly net profit volatility
Quarterly CET1 ratio volatility¹
1) Calculated as quarter on quarter volatility in CET1 ratio, adjusted so that the volatility effect of those instances where the CET1 ratio increases between
quarters are excluded
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ROE vs. Risk Spread Calculated at CET1 ratio of 18%, Nordea’s RoE and the return over government bonds are at 10-year highs
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3
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5
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8
9
10
11
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2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Return (ROE-5Y Gvmt bond yld) ROE, at 18% CET1 ratio
RoE & Return over gvmt bonds %
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Nordea’s P&L has changed over the last 10 years Reliance on NII is decreasing, as ancillary income grows
5,000
6,000
7,000
8,000
9,000
10,000
0
11,000
4,000
3,000
2,000
1,000
Ancillary income:
+44% over 10 years
Net interest income:
+10% over 10 years
2016
9,930
2014 2013 2012 2011 2015
4,727
(48%)
4,282
(54%)
2010
3,607
(46%)
5,203
(52%)
2009 2008 2007
7,889
Total Income:
+26% over 10 years
Baltics Russia Poland Equities Fund
distribution
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Q2 2017 Group financial highlights Stable environment and low growth
Income
Costs
Credit quality
Capital
Q2/17 vs. Q2/16* Q2/17 vs. Q1/17*
• Total revenues
• Net Interest Income • Fee and commission
income
• +1%
• +1%
• +7%
• -1%
• Flat
• -1%
• Total costs
• 2017 vs. 2016
• +8%
• + 3 to 5%
• +5%
• Loan loss level
• Credit quality outlook
• 13 (15) bps • 13 (14) bps
• CET 1 ratio • 19.2% (16.8%)
• 2018 vs. 2016 • Unchanged
• < long-term aver.
of 16 bps in H2
• Impaired loans • 172 bps (+10 bps) • Unchanged
• 19.2% (18.8%)
*In local currencies and excluding non-recurring items
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We are transforming the bank to meet future customer expectations
DIGITAL
ENGINE
CUSTOMER
FACING
Trust Agile
Relevant
Well
structured Innovative
Anything,
Anytime,
Anywhere
Easy
Personalised
End-to-end automated
common processes Scalable
Reliable Cost
effective
One operating model for product
and service delivery
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Key Milestone in the Core Banking Programme A common, Nordic Core Banking Platform supporting the core functions of banking
Customer satisfaction
Profita-bility
Preferred employer
Will enable Nordea to launch the new deposits
and savings product portfolio
in Finland
Key software release to the
product environment
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Strategic partnerships with FinTech incubators
Active engagement in the wider financial ecosystem Collaborations
that speed up time to market for new, relevant and valuable customer
solutions Great market reception to our Open Banking pilot with hundreds of developers
signing up and activity now underway
Partnered with FinTech Hubs in Stockholm, Copenhagen, Oslo
We take customer service to the next level through artificial
intelligence (AI)
Using AI, we can analyse hundreds of
messages per second
Speeding up response time to customers with AI
Nordea re-domiciliation
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• Overall goal for Nordea has been to domicile where we grow and develop our business further to offer customer friendly
solutions • A thorough review of implications from an operational, regulatory and supervisory standpoint has been undertaken • Decision is to initiate a redomiciliation of the parent company to Finland • Nordea’s pan-Nordic structure gives us special needs • Logical move to be supervised within the banking union given our size and business model • Nordea’s four home markets are all part of the single European market
Banking union
Why is Nordea re-domiciling ?
Being domiciled within the banking union is in the best interest of our customers, shareholders and employees
Impact of re-domiciliation
• Nordea’s focus is to maintain its AA rating and continue to develop our customer offering • Nordea will still have four home markets – we will remain strongly committed to all of them
• Nordea intends to maintain its capital and dividend policy
• Nordea will continue to be one of the major tax payers in all four countries
• Nordea will focus on delivering value for all our customers
The Board decided to initiate a process to re-domicile to Finland Tentatively by 1 October 2018
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Decision background:
• Decision is the outcome of six months of careful study and analysis weighing in all relevant
factors
• Focus has been on where to best grow and develop our business further by offering
customer friendly solutions, contribute to the Nordic economies and develop our people
• The domiciliation is an important strategic step to ensure level playing field with our
European competitors.
Finland:
• Is in the Banking Union
• Is one of Nordea’s strongest home markets
• Provides a regulatory environment on par with our European competitors.
What happens now
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• The re-domiciliation is intended to be carried out by way of a “downstream cross-border” merger through which Nordea
Bank AB (publ) will be merged into a newly established Finnish subsidiary
• The merger is planned to be effected during the second half of 2018 and will be subject to e.g. necessary regulatory
approvals and the shareholders’ approval at a general meeting requiring a 2/3 majority. Tentatively in the annual General
Meeting on 15 March 2018
• We will in cooperation with the relevant authorities agree a detailed timeline
• The re-domiciliation will tentatively be effective as of 1 October 2018
• The Nordea share will remain listed at the stock exchanges of Stockholm, Helsinki and Copenhagen