Second Quarter Results 2014 Investor presentation

Fourth Quarter and Presentation at Sampo Analyst Day Second Quarter Results 2015 Full Year Results 2014

Rodney Head of Investor Relations Press Alfvén, conference Christian President and Group CEO InvestorClausen, presentation Christian Clausen, President and Group CEO

Disclaimer 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 forwardlooking 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.

2•

Strong Nordea track record… Strong capital generation and stable returns at low risk1 Acc. dividend, EURbn

Acc. equity, EURbn

34

37

39

31 29 26 18

20

15 12

2005 CET 1 2 Ratio, % 5.9

2006

2007

2008

2009

2010

2011

2012

2013

2014 15.7

1) CAGR 2014 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

… with a low risk profile Priorities ■ Sustain forward looking and holistic risk appetite framework

12.2 12.8 12.0 11.5 10.6 12.3 11.7 12.5 10.1 12.1 11.1 11.5 10.8 10.5 11.4 12.0 11.2 11.8 14.3

9.5

8.1

11.3

No quarter below 8%, every year above 11%

15.8 16.2 15.0 14.4 13.9 12.0 11.7

19.1 18.1

21.5

23.6 18.0

20.0

22.4

Nordea ROE track record1, %



16 risk boundaries across all risk types



Close monitoring of leading indicators



Deep dives on specific risk areas for appropriate action



Active use of stresstesting and scenario analyses

■ Maintain relationship strategy and sustain a large, well diversified client base 2006 2007 2007 2008 2008 2009 2009 2010 2010 2011 2011 2012 2012 2013 20132014 Q1 2015 2006 2015

■ Broad set of diversified products

1) ROE adjusted for restructuring costs in 2011 and one-off related items in 2014

The most stable bank in the Nordics

Quarterly CET1 ratio volatility¹

Quarterly net profit volatility

Nordea and peers 2006-2015, % 150

83

17

25

32

Nordea

Peer 1

Peer 2

46

Peer 3

Peer 4

Peer 5 1.08

0.92 0.50

0.54

Peer 1

Peer 2

Peer 3

Peer 4

0.72

1.29

1.42

2.15

0.36 0.21

Nordea Max quarterly 0.38 drop

Peer 5 3.24

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

5

Highlights of first half year 2015 First half year 2015 vs first half year 2014*  Revenues are up 7%  Negative interest rates put pressure on NII  Continued strong trend in savings and investment operations  Costs are down 1%**, delivering according to plan  C/I ratio improved more than 4 %-points to 45.3%**  Loan losses are down 22% to 13 bps  Operating profit is up 21%**  RoE improved 2.1%-points to 13.7%**  Improved common equity tier 1 ratio 80 bps to 16.0%  New CEO from November 1

*All P&L items in local currencies **Excluding restructuring cost of EUR 190m in Q2/14

6•

Q2 2015 financial results highlights

14

Financial results Local currencies Chg %

Chg %

Local currencies Chg %

2 730

-5

-3

1 540

1 412

9

10

-37

1 045

767

36

37

-7

-8

5 242

4 964

6

7

-1 188

0

-1

-2 373

-2 457

-3

-1

-103

-122

-16

-16

-225

-293

-23

-22

1 235

1 409

-12

-13

2 644

2 214

19

21

Net profit from cont. op

952

1 082

-12

-13

2 034

1 542

32

33

Return on equity** (%)

13.1

14.3

-120 bps

-

13.7

11.6

210 bps

-

CET1 capital ratio (%)

16.0

15.6

40 bps

-

16.0

15.2

80 bps

-

Cost/income ratio** (%)

47.0

43.7

330 bps

-

45.3

49.5

-420 bps

-

Q2/15

Q1/15

Chg %

1 309

1 288

2

0

2 597

Net fee & commission income

783

757

3

3

Net fair value result

401

644

-38

2 523

2 719

-1 185

EURm

Net interest income

Total income* Total expenses** Net loan losses Operating profit**

H1/15

H1/14

*Includes other income **Excluding restructuring cost of EUR 190m in Q2/14

8•

Net interest income NET INTEREST INCOME DEVELOPMENT, EURm

COMMENTS

• 1 368

1 396

1 356

1 288

1 309

NII holds up despite pressure on margins •

Q2/14

Q3/14

Q4/14

Q1/15

Negative interest rates in Denmark, Finland and Sweden

•

Strong result in Treasury due to positioning for lower rates

•

One additional interest day adds EUR 15m

•

Positive impact from currencies

Q2/15

9•

Net interest margin and volumes BLENDED NET INTEREST MARGIN DEVELOPMENT, BPS

COMMENTS

• 109

Q2/14

109

Q3/14

108

103

Q4/14

Q1/15

100

Q2/15

•

Blended margin down 3 bps to 100 bps •

Lending margins are slightly down driven by Norwegian mortgages

•

Pressure on deposit margins

Lending volumes are up 3% y-o-y*

LENDING AND DEPOSIT VOLUMES*, EURbn

173

Q2/14

312

308

305

302

176

172

Q3/14

Q4/14

Lending volumes

311

172

Q1/15

176

Q2/15

Deposit volumes * Excluding repos and FX

10 •

Net fee and commission income NET FEE AND COMMISSION DEVELOPMENT, EURm

708 162

763

757

210

171

667 171 142

148

144

COMMENTS

•

783 160 148

Lending commissions

Fee and commission income up on a strong previous quarter •

Payments & cards

Main driver Savings and Investment operations

160

430

-32 Q2/14

370

-34 Q3/14

443

477

510

-32

-35

-35

Q4/14

Q1/15

Q2/15

Savings & investments

• Somewhat slower corporate advisory activities

State guarantee fees

11 •

Strong demand for our savings and investment offering AUM DEVELOPMENT, EURbn

COMMENTS 290.0

248.3

Q2/14

254.5

Q3/14

286.1

•

Slight decrease in AuM caused by negative market development

•

Net inflow of EUR 3.1bn in the quarter

262.2

Q4/14

Q1/15

Q2/15

•

All segments contributed positively

•

Continued good net inflow in Global Fund Distribution, EUR 1.1bn

NET INFLOW SPLIT BY SEGMENT, EURbn 6.8

7.2

• Life & Pensions

4.8

Inst. sales 3.2

3.1

Private Banking Nordic Retail funds

Q2/14

Q3/14

Q4/14

Q1/15

Q2/15

Market turmoil caused reduced net inflow in asset management funds and stronger growth in deposits •

Retail Banking Household deposits up 3%*

•

Private Banking deposits up 13%* * In local currencies and compared to previous quarter

12 •

Net fair value NET FAIR VALUE DEVELOPMENT, EURm

COMMENTS

644 95

207 356 116

Lower customer activity from a high level in Q1/15

•

Negative one-off effect of EUR 31m in Denmark

367 291

37

78

117

89

83

78

149 91 105

90 60 94

75

-22

-11

Q2/14

401

•

Q3/14

134

146

-4 Q4/14

87

Wealth Management

84

Wholesale Banking

89

Retail Banking

-8 Q1/15

Wholesale Banking Other

Other

Q2/15

13 •

Long term improvement in cost efficiency TOTAL EXPENSES*, EURm 1 213 58

1 177 66

403

380

752

Q2/14

COMMENTS 1 232 54

•

Costs are down 1% in local currencies from previous quarter

Other expenses

•

Costs are down 2% in local currencies and excluding performance related salaries y-o-y

Staff costs

772

•

Cost target full year 2015 of EUR 4.7bn reiterated

Q2/15

•

Increased costs from simplification initiatives

•

Solid improvement of C/I ratio

1 188 45

1 185 50

418

364

363

731

760

779

Q3/14

Q4/14

Q1/15

Depreciations

C/I RATIO DEVELOPMENT**, %

50.8%

47.2%

•

Improved 3.6%-points since beginning of 2013

•

C/I ratio at 45.3% H1/15

Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 * Excluding non-recurring items **Rolling four quarters

14 •

Strong asset quality TOTAL NET LOAN LOSSES, EURm 186

171

COMMENTS

180

•

Loan losses down to 12 bps – the lowest level since Q3/08

•

Stable or improved credit quality in all units

158 135

129 112

122 103

• Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15

• Impaired loans ratio down from 159bps to 152bps

IMPAIRED LOANS, EURm

6 425

6 166

2 310

2 339

5 811 2 211

4 115

3 827

3 600

Q4/14

Q1/15

Q2/15

Performing

Collective provisions in Russia, EUR 10m, and for Danish agriculture, EUR 11m

• Provisioning ratio increased to 46% (45%) • Largely unchanged credit quality in the coming quarters expected

Non-performing 15 •

Risk exposure amount RISK EXPOSURE AMOUNT, EURbn*

COMMENTS

162 160

•

159

REA down EUR 2bn in the quarter

155 152

153

152 150 145

Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 RISK EXPOSURE AMOUNT DEVELOPMENT, EURbn

1.7 2.5

151.5

Q1/15

2.9 1.1

FX

Credit quality

Growth

0.5

Trading Stand. & book Other**

149.8

Q2/15 * Basel 2.5 excluding Basel I transition rules until Q4/13. Basel 3 from Q1/14 **REA reservation incl. in Other, EUR 4.6bn

16 •

CET 1 ratio up 40 bps COMMON EQUITY TIER 1 RATIO DEVELOPMENT, %

0.1% 0.2%

0.1% 0.4%

0.4%

0.2%

16.0% 15.6%

Q1/15

FX

Credit Quality

Growth

Trading book, Stand. and Other*

Profit & Eligible CET1 deductions reserves

Q2/15

*REA reservation incl. in Other, 50bps

17 •

Management buffer reflects Nordea’s diversified business CET1 RATIO BUILD-UP, %

1.5

0.5-1.5 14.7 0.8

0.7 2.0 10.0

0.2

1.1

Pillar 1

Countercyclical Buffer1

Swe & Nor Mortgage Risk Weight floors

(0-2.5%)

Pillar 2 Systemic Risk Buffer

Pillar 2

Pillar 2

(IRRBB, pension, conc. risk)2

(other)2

CET1 level as per Swedish FSA1

Management buffer

1) Countercyclical buffer only applied for Sweden in accordance with Swedish FSA Memorandum on Capital Requirement for Swedish banks (Feb 17, 2015) 2) In the Swedish FSA Memorandum on May 11, 2015 (adjusted requirement on the assessment of capital requirements from three significant risk types), the Swedish FSA published the final methods for assessing requirements for three different risk types. The CET1 requirement for Nordea based on these methods is estimated to 0.7%. Note that individual Pillar 2 CET1 requirements for other risks are estimated and agreed bilaterally with the Swedish FSA in the SREP and can vary over time. In the Swedish FSA Memorandum on Capital Requirements for Swedish Banks (Feb 17, 2015) a standardised CET1 value of 1.5% was used for other Pillar 2 risks

18 

SREP/pillar 2 process and REA provision •

This year’s annual SREP (pillar 2) process started in July 2015 • 0.8 %-point of possible pillar 2 add-on already included in Nordea’s capital requirement estimate (from CMD in May) • Seemingly formalistic and tougher SREP/pillar 2 process • Add-on outcome will be known at the end of September 2015 – may come out higher or around the 0.8 %-point

•

REA down EUR 2bn in the quarter • Includes a REA reservation of EUR 4.6bn, in pillar 1

•

Capital policy reiterated – with management buffer of 50-150 bps above the requirement

•

For 2016-2018, the dividend ambition is unchanged – to have an increase rate (CAGR) of dividends of 10%

19 •

Higher return across the board ROCAR DEVELOPMENT YTD, GROUP AND BUSINESS AREAS RETAIL BANKING

GROUP

WHOLESALE BANKING

WEALTH MANAGEMENT

39.0% 30.4% 14.2%

16.6%

H1 14

H1 15

13.0%

14.3%

14.8%

15.8%

H1 14

H1 15

H1 14

H1 15

IMPACT FROM

IMPACT FROM

H1 14

IMPACT FROM

H1 15

IMPACT FROM

INCOME

1.8%

INCOME

-0.3%

INCOME

0.8%

INCOME

10.8%

COSTS

0.5%

COSTS

1.4%

COSTS

-0.4%

COSTS

-0.4%

ECONOMIC CAPITAL

-1.7%

ECONOMIC CAPITAL

-0.5%

ECONOMIC CAPITAL

LOAN LOSSES

+0.4%

LOAN LOSSES

OTHER

+0.2%

OTHER

-0.7% +1.0% -0.1%

ECONOMIC CAPITAL

LOAN LOSSES

OTHER

0.7% -0.1% 0.0%

LOAN LOSSES

OTHER

0.0% -0.1% 20 •

Casper von Koskull new CEO in Nordea and Torsten Hagen Jørgensen new COO and Deputy CEO from November 1  Business plans and financial targets as presented at Capital Markets Day still valid  Intention with new leadership team and the creation of a COO organisation  Better capable of focusing on strong customer relations  Build efficient and common processes across the bank  Prerequisite to build a more digital, fully compliant and more efficient bank  Casper von Koskull previously Head of Wholesale Banking  Torsten Hagen Jørgensen continue as Head of Group Corporate Centre

*All P&L items in local currencies **Excluding restructuring cost of EUR 190m in Q2/14

21 •

Wholesale Banking 2011-2014 - performance and value drivers

Market characteristics

Top line drivers

Value drivers

Value creation

GDP growth

Interest rates

Volatility

Capital markets regulation

Low

Low

Low

High

Lending

Income

NII

Fair Value

Cost/Income

-15%

-5%

-7%

-15%

+2 pp

Pricing

Fee & Comm.

Cost

REA

Loan losses

+30 bp

+15%

±0%

-30%

-43%

Market position

Return¹

Achieved #1 position

>+3 pp

1) Assuming constant capital requirement (EC/REA) as for 2014 (~15%)

22 

Financial summary

14

Financial highlights KEY FINANCIAL DEVELOPMENT H1/15 vs H1/14*

Income

•

up 7%

Costs**

•

down 1%

C/I ratio**

•

improved 420 bps to 45.3%

Loan losses

•

down 22% to 13 bps

Operating profit**

•

up 21%

RoE**

•

Improved 210 bps to 13.7%

CET1 ratio

•

up 80 bps to 16.0% *In local currencies **Excluding restructuring cost of EUR 190m in Q2/14

24 •

Second Quarter Results 2014 Investor presentation

Fourth Quarter and Presentation at Sampo Analyst Day Second Quarter Results 2015 Full Year Results 2014

Rodney Head of Investor Relations Press Alfvén, conference Christian President and Group CEO InvestorClausen, presentation Christian Clausen, President and Group CEO