BofAML 21st Annual Financials CEO Conference Investor presentation - - PowerPoint PPT Presentation

BofAML 21st Annual Financials CEO Conference

Investor presentation

Casper von Koskull, President and Group CEO

London 29th September

13% CAGR in capital generation and CET1-ratio up 10.6 pp in 10 years

Strong capital generation and stable returns at low risk1

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

2 •

2012 2015 43 2014 39 2013 37 35 20 15 31 2008 2006 12 2005 2011 2010 19 29 26 2007 2009 5.92 16.5

• Acc. dividend, EURbn
• Acc. equity, EURbn

CET1 Ratio %

The most stable bank in the Nordics

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

Nordea and peers 2006 – 2015, %

3 •

146 77 47 38 24 17 Peer 5 Nordea Peer 4 Peer 2 Peer 3 Peer 1 1,04 0,88 0,52 0,35 0,33 0,21 Peer 3 Peer 2 Peer 1 Nordea Peer 4 Peer 5

Quarterly net profit volatility Quarterly CET1 ratio volatility¹

Our focus on ancillary income has offset pressure on NII margins

2008 2015 Change Net Interest Income (EURm) 5 093 4 963

• 3%

Lending and deposit volumes (EURbn) 414 530 +28% Net Fee and Commission Income (EURm) 1 883 3 230 +72% Net Fair Value (EURm) 1 028 1 645 +60% Total Income (EURm) 8 200 10 140 +24%

4 •

Recent Trends

Q2/16 vs. Q2/15*

• Income down 3%

 Despite low growth and turbulent financial markets – stabilising trend in the quarter  Ancillary income holding up well

• Costs +3% in local currencies

 Developing as expected  Flat 18 vs. 16, down after 18

• Loan loss provisions at 15bps

 Expected level for full year approximately 16bps  Overall, solid asset quality with strongly rated customers

• CET 1 ratio improved 10bps from previous quarter to 16.8% (Pro forma 17.2%)

 SREP finalised end-September, early October – current requirement of approx. 17%  Project Archean closed successfully end-August

• Simplification programme is delivering according to plan

5 •

*In local currencies

Retail Banking - strong financial development

1) Lending margins 2) Adjusted for insourcing of IT and compliance build up

Income (EURbn) Profitability (%) Cost (EURbn)

■ Non interest income +9% ■ Margins1 +43 bps ■ Relationship customers +6% ■ FTEs down by ~2,000 (~10%)2 ■ 35% fewer branch locations RoCaR Cost / income

13 13 11 9 7

2013 2012 2011 2014 2015 65 59 59 56 54 2011 3.2 2015 2.7 4.9 2011 2015 5.0

6 •

Wholesale Banking – a leading Nordic platform

2015 - Tier 1 – Nordea Nordic #1

• No. 1

positions

• No. 2

positions

• No. 3

positions #1 Nordea 22 12 8 #2 Nordic Peer 14 12 13 #3 Nordic Peer 5 14 13

Greenwich Prospera

7 •

288 2015 2011 2014 1,929 2013 2012 2014 1,127 2011 2015 2012 2013 2013 2012 2011 2014 2015

Wealth Management - 20% profit CAGR since 2011

Operating income (EURm) Operating profit (EURm) AuM (EURbn)

8 •

Banking: an industry in transition – and more disruption lurks around the corner

Big Data – relevance & personalisation Cloud – profitability at lower scale

A digital revolution

Mobile – always accessible Social Media – networks redefined

KEY TECHNOLOGIES IMPACTING BANKING MORE DISRUPTION COMING

E.g. Blockchain

9 •

Banking customers: Same needs as before but changing behavior

Co-creation Network building Personalisation

 Impatient & empowered - 24/7 availability and immediate delivery  Knowledgeable - Specialised and tailored advise that complements the research we have done ourselves  Integrated & connected – Integrated into my process and connected/compared with peers  Require relevance - Personalised products, services and interaction  Are becoming less loyal  Use several channels in combination  Use digital channels more intensively  Use digital channels to enforce:

CHANGING CUSTOMER EXPECTATIONS… …AND CHANGING CUSTOMER BEHAVIOR

10 •

Also Nordea’s customers are changing their behavior

22 Mobile Branches

■ Digital response required ■ Front-end solutions will not suffice ■ Automated end-to-end processes across the full value chain is a must ■ Consistency and endurance in execution to unlock benefits

Transactions Millions Q3/10 Q3/15

Ability to execute Level of digital response

60

End-to-end digital response required Relationship banking is turning digital fast

3 Netbank Q2 2015 10% Q4 2014 3% Q4 2016 17% Q4 2015 Q4 2017 Share of Remote Meetings (Percent)

11 •

Surge in new operational regulations

& OUR CUSTOMERS

Machinery room

Recovery and resolution Solvency 2 TLAC Structural reforms for banking Investor compensation Living wills Leverage ratio NSFR Shadow banking Banking union

Products

Short selling CSD regulations AIFMD UCITS Long-term financing Prospectus Directive Bank account IORP II SFT transparency Margin for derivatives Mortgage Directive Securities legislation MMFs Capital requirements Deposit guarantee MAD AML EMIR PRIPs MiFID II FTT FATCA Data protection SEPA Dodd-Frank Payment package Corporate governance Benchmark regulations Transparency Directive

Balance sheet regulations

Fundamental review of the trading book

Operational regulations

PSD II

12 •

IT complexity in large legacy banks Complex, risky, expensive & slow – hinders compelling customer experience

Source: BCG

13 •

For Nordea the strategic response to the industry transformation is “Simplification” – the corner stone of our transformation

Digital offering Compliance One operating model Cost and capital efficiency Simplification

14 •

2015 2020 Milestones Key activities

High-level delivery and migration plan for Core Banking Platform

Country migrations done

1 2 3 4

SV / SI selected Contract signed CBP implementation done Decommissioning done

Prep.

Pilot

Deposits Loans Mortgages

• Trans. accounts

Complex Customers Data cleansing and decommissioning

Business case + migration strategy agreed First version of model bank implemented Pilot Implemented

15 •

Digitalisation is at the heart of the future business/operating model New great customer experiences Robust platforms as foundation

COMPETENT RELEVANT SAFE ANYTIME, ANYWHERE EFFICIENT COMPLIANT CONFIGURABLE RESILIENT

Four strategic capabilities  Agility  Competence  Resilience  Scale

16 •

True end to end process

• ptimisation

Cost efficiency & capital management Retail Banking transformation Group Simplification Programme Risk & compliance 2015 2018 Legal Structure Programme

Other business decisions

2016

Delivering on financial targets while transforming the bank

Transformational change agenda a cornerstone in achieving best-in-class C/I ratio

17 •

Nordea FinTech start-up accelerator program

BofAML 21st Annual Financials CEO Conference

Investor presentation

Casper von Koskull, President and Group CEO

London 29th September