Dias nummer 1
Fact book March 2009
Financial result in detail
Income statement summary EURm Net interest income
Q4/08 1 386
Q3/08 1 296
Chg % 7
390 325
480 221
-19 47
45
-25
105 2 251
24 1 996
13
Staff costs
-655
-635
3
Other expenses
-461
-395
17
-34
-30
13
Total operating expenses
-1 150
-1 060
8
Profit before loan losses Loan losses Operating profit
1 101 -320 781
936 -89 847
18
637
655
-3
Net fee and commission income Net gains/losses on items at fair value Equity method Other income Total operating income
Depreciation
Net profit 3
-8
Adjusted for FX effects volume growth continues % Total Lending
excl. repurchase agreements
Q4oQ3
7% (15%)
-3% (4%)
–
Nordic household mortgages
-1% (7%)
-5% (1%)
–
Nordic consumer lending
6% (14%)
-2% (5%)
–
Nordic corporates
6% (15%)
-3% (3%)
–
New European Markets
56%
4%
5% (11%)
-2% (3%)
Total Deposits
excl. repurchase agreements
–
Nordic households
3% (11%)
-3% (3%)
–
Nordic corporates
10% (18%)
-1% (5%)
–
New European Markets
27%
5%
Figures within parenthesises excl. FX-effects mainly in Norway and Sweden 4
YoY
Focus on core customers Total income corporate customers, EURm 3 952
Income from corporate customers up 22% compared to last year – strengthened market position
Strong income contribution from sale of capital market products
Income from Household customers up 1% - dampened by:
3 248
FY 2007
FY 2008
Total income household customers, EURm 3 427 3 406
FY 2007
5
FY 2008
Lower margins on savings and transaction accounts
Lower assets under management in the savings area
Net interest income up 19% YoY 1 386
EURm
1 296 1 143
1 181
1 230
Strong increase in lending and deposit volumes Lending to public up 8% - 17% in local currency Deposit volumes up 4% - 12% in local currency
Corporate lending up 11% reflecting strong demand across sectors – up 19% adjusted for FX effects Nordea continued to support core customers
Corporate lending margins increased reflecting re-pricing of credit risks and to compensate for higher liquidity premiums
Q4oQ3 Q4/07
Q1/08
Q2/08
Q3/08
Q4/08
Up 7% driven by high quality volume growth and increased margins Total lending up 5% in local currency
6
Change in net interest income EURm
YoY
Q4oQ3
Volume driven
433
46
-Lending volumes
371
41
-Deposit volumes
62
5
Margin driven
220
37
-Lending margins
157
94
-Deposit margins
63
-58
Orgresbank
85
13
Other net
73
-6
811
90
Total
7
Structural Interest Income Risk (SIIR) EURm annualised effect on NII* Increasing market rates 100bp Decreasing market rates 100bp
Q4/08
Q3/08
Q2/08
Q1/08
Q4/07
55
204
244
238
235
-218
-232
-275
-268
-267
• Lower SIIR (increasing market rates) in Q4 following hedging arrangements • SIIR for decreasing rates slightly lower change in SIIR for increasing rates • Underlying position has faced significant changes due to position taking customer behavior and positioning for liquidity management due to financial turmoil *Approx. end of period SIIR is defined as the effect on net interest income (NII) in the next 12 months if market rates change by one percentage point. Figures are asymmetrical as interest rates on deposits from customers cannot be reduced below 0%. Figures are based on maturity and repricing structure and the effect going forward will be subject to management decisions and the competitive situation in the market. 8
Net fee and commission income down 12% YoY EURm
526 495
518 480
Savings-related commission down 18% affected by weak equity markets AuM down 20% compared to one year ago
390
Lending-related commission up 12% Corporate Merchant Banking and Shipping and Oil services
Q4oQ3
Down 19% Weak trend for savings commissions continued Lending commission down 14% due to lower activity
Q4/07
9
Q1/08
Q2/08
Q3/08
Q4/08
Commission expenses increased by EUR 50m related to Danish State guarantee fee
Net outflow from Asset Management due to market depreciation YoY
Net flows AuM, EURbn
-1.7
-1.0
Lower AuM following falling asset values and limited outflows
Net outflow EUR 2.0bn - compensated by net inflow into saving deposit accounts of EUR 4.7bn
0.5 0.6 -2 3
Nordic Retail funds EUR -4.5bn Nordic Private Banking EUR 2.1bn Institutional clients EUR 1.1bn Q4/Q3 Q4/07
Q1/08
Nordic Retail funds Nordic Private Banking Institutional customers
10
Q2/08
Q3/08
Q4/08
European Fund Distribution International Private Banking Life & Pension
Net outflow in Q4 EUR 2.3bn – mainly Nordic Retail funds EUR 1.1bn
Net gains/losses – Q4 strongest quarter ever YoY
EURm
350 304
300
284
300
272
250
Limited impact from market turmoil Risk management products in the fixed income
181
200 150
and FX areas
100 50
Net gains/losses down 15% Solid result in customer areas driven by strong activity within capital markets products
40 16
21
0
0
Lower revenues from listed and non-listed equities and from Life & Pensions Earlier recognised revenues from Life & Pensions
-50
in Denmark were deferred due to a decline in financial buffers
-74
-100 Q4/07
Q1/08
Q2/08
Customer areas
Q3/08
Q4/08
Other areas
Q4oQ3
Up 47% High activity in the customer-driven capital markets operations
11
Income growth in Nordea YoY (EURm) Customer operations
72.6%
-38.8% 73
197 30.7% 6.8%
-22.2% 80
21.9% 75
-84.6% 96 11
74
6.4%*
78 103
4.0%
409 8 200 7 886
Income FY Nordic 07 Banking
Shipping
Financial New Institutions European Markets
*Growth in customer operations 12
IPB&F
Life
Unallocated Treasury FX effects Finnish Income FY 08 deposit result from operations guranatee Capital incl. NCSD and other Markets
Cost in line with target EURm
1 150
1 073
1 055
1 073
1 060
29
27
33
30
429
384
406
395
644
634
635
655
Q1/08
Q2/08
Q3/08
Q4/08
615
Q4/07
Staff costs
13
Other expenses
34
461
Depreciation
Up 7% - in line with target
Approx half of the increase related to investments in growth areas – FTE’s up 8% incl. acquisition of Roskilde Bank and Svensk Kassaservice
Expense growth in Nordea (EURm)
1.8% 2.8%
2.7%
-0.5% -21
1.5%
-1.4%
59
-57
6.7%
70
113 4 338
108
4 066 Expenses 2007
14
Wage increases
Variable salaries
Investments in Volume driven Restructuring and one-off grow th areas production expenses costs and FTEs
FX-effects
Expenses 2008
Number of FTEs
4 402
4 297
4 051
3 813
3 506
YoY
Up 7% or 2 287 FTEs
New European Markets +900
Nordic Markets +1 400 incl. acquisition of Roskilde Bank and Svensk Kassaservice
28 944
Q1/08
Q2/08
Nordea excl. New European Markets
15
Q3/08
29 606
28 595
Q4/07
29 464
28 215
Q4oQ3
Q4/08
New European Markets
Up 250 FTEs
New European Markets +105
Nordic Markets +145
Net profit EURm YoY
764 687
Q4/07 *
Q1/08
693
Q2/08
655
Q3/08
637
Net profit down 15%
Shift in loan losses
Q4/08
* For comparison reasons the refund from the Finnish deposit guarantee system in Q4 2007 of EUR 120m reported as Other income has been excluded. 16
High profitability 2008
23.6 22.7
% 20.6
21.4
20.8
Net loan losses of EUR 466m compared to
19.1
18.0
Return on equity of 15.3% (19.7%) recoveries of EUR 60m the same period last year
15.3
RaRoCar 20.8% (23.6%) - high level despite market turmoil Nordic Banking 23% IIB 42%
2005
2006 RoE
17
2007
*
2008
*
RaRoCar
* For comparison reasons two major non-recurring items have been excluded. For 2007 the refund from the Finnish deposit guarantee system of EUR 120m and for 2006 the capital gain from the IMB sale of EUR 199m
Despite the difficult environment Nordea continue to have access to new funding at attractive prices
Nordea continues to benefit from being a well recognised AA-rated bank with prudent liquidity management and a conservative business profile
During 2008 Nordea issued approx EUR 31bn long-term funding
Total long-term funding issued (EURbn) 31 27
FY 2007
FY 2008
Covered bond issuance EUR 16bn and senior unsecured 15bn
During Q4 well functioning covered bond markets with issuance of 5bn. Senior unsecured 2bn.
Total wholesale funding approx EUR 128bn – 66% long-term financed
18
Insignificant long-term funding matures the next 12 months
Higher prices on long-term funding affecting average funding cost
Risk weighted assets RWA end of period EURbn 205
214
201
190
176
171
218 194
YoY 213
Increased RWA incl transition rules driven by increased lending volumes
Approval to use IRB models for the Retail credit portfolio
169
Q4/07
Q1/08
Q2/08
RWA incl transition rules
Q3/08
Q4/08
RWA excl transition rules
6
-28 - 11
9
171
RWA Rating Lending Q407 migration growth 19
16 9
IRB FX effect Other Retail risks approval
RWA affected by 4% coming from rating migration Mainly in Q4
RWA impact in 2008 EURbn 22
Reduced RWA with approx 14%
RWA Q408
1
Reported capital position - revised capital targets Tier 1 ratios
Tier I ratio excl. transition rules 9.3%
As part of entering the new Basel II regime new targets for Tier 1 and total capital have been established
The new policy is that Tier 1 and total capital should be 9.0% and 11.5% over the cycle
Over the cycle means that actual capital ratios will exceed the target when entering the weaker part of the cycle and possibly be lower at the bottom of the cycle
9.3 8.3 7.4
7.0
2007 Tier I incl transition rules
2008* Tier I excl transition rules
*Including new dividend proposal 20
Customer areas 21
Nordic Banking by market in local currency Balanced growth between lending and deposits YoY volume growth in% 21 17 12
16
14
13 8
Nordic Banking
14
10 6
Denmark
Finland Lending
Norway
Sweden
Deposits
YoY income and cost growth % 20
7
5
6
9
7 -1
Nordic Banking
Denmark
Finland Income
22
3
Cost
5
6
Norway
Sweden
Credit portfolio
Well diversified lending portfolio Share of total lending EUR 265bn
NEM 6%
Other 8%
DK 27%
NO 16%
FI 19%
Despite a well-diversified lending portfolio spread over four largely equally sized markets credit quality is weakening
Low risk mortgage portfolio accounts for approximately 1/3 of total lending
Mortgage 32%
Corporate 57%
SE 26%
24
Public 2%
Consumer 9%
Credit portfolio by industry
Loans and
Impaired
Allowances
Loan losses
receivables
loans
Individually &
2008, net
to the public
gross
collectively
Real estate management and investment
35 500
206
195
45
Other financial institutions
16 275
55
17
9
Industrial commercial services etc
15 482
143
88
32
2008 EURm
Consumer staples (food agriculture etc)
12 943
137
110
23
Shipping and offshore
11 296
59
6
11
Retail trade
11 020
217
95
56
Other public and organisations
10 462
55
86
27
Other materials chemical building materials
5 377
169
75
36
Utilities (distribution and production)
4 022
2
2
3
Transportation
4 017
54
32
13
Construction and engineering
3 671
136
77
55
Industrial capital goods
3 264
18
8
-4
Media and leisure
3 171
71
29
7
Energy (oil gas etc)
2 815
0
1
0
Consumer durables (cars appliances etc)
2 752
169
42
21
Paper and forest materials
2 287
19
6
0
Metals and mining materials
1 750
2
2
0
Telecommunication operators
1 686
1
3
-1
Health care and pharmaceuticals
1 606
39
7
-3
IT software hardware and services
1 489
22
9
2
Telecommunication equipment
623
33
10
-2
Banks
206
34
23
32
Corporate
151 711
1 641
925
363
Household
108 602
579
243
103
4 787
5
2
0
265 100
2 224
1 170
466
Public sector Nordea 25
Approximately half of the credit portfolio is low risk – a few challenging areas… Total lending to public end 2008 EUR 265bn Commercial real estate Construction Drybulk/Container PE companies
Mortgage lending
Special attention areas; 18%
Media/Leisure Transportation Tankers/Offshore
26
Fin Institutions
Low risk areas; 50%
Russia
Metals/Mining
Telecom operators
Public sector
Baltics
Telecom/IT
Residential real estate
Medium risk areas; 32%
Health care
Shipping and offshore – 5% of total loan portfolio Loan and receivables, EURbn 11.3 Container
Well proven business model and credit policy applied consistently for 15 years - focus on listed companies with strong track record
Largely collateralized and well diversified loan portfolio – less than 15% towards high risk sectors (dry bulk and container)
Almost half of lending growth explained by the strengthened USD
Loan losses have been very low over the last 20 years but are expected to increase in 2009 and 2010
Offshore and Oil services Other shipping
9.1
Gas tankers Chemical tankers Crude tankers Product tankers Bulk carriers 2007
2008
Average internal rating Shipping portfolio 4,5 4,3 4,0 3,8 3,5 2002 2003 27
2004
2005
2006
2007
2008
Private-equity funds – 3% of total loan portfolio
Portfolio well diversified between industries and the Nordic markets – more than 100 portfolio companies
High quality growth in 2008 with low leverage and to solid sectors
Mainly senior debt – insignificant exposure to junior debt (mezzanine)
Several successful restructuring cases now finalised – other negotiations ongoing
Next two years will be challenging but manageable
Total lending, EURbn 7.4 6.7 5.7
2006
28
2007
2008
New European Markets affected by sharp economic slowdown – 6% of total lending Total lending NEM EURbn 15.3
•
Specific loan losses increased in the Baltic countries and Russia - net loan losses 47bps in 2008
•
Accumulated provisions approx. 190bps in NEM end 2008
•
Collective allowances for the Baltic countries EUR 109m or 134bps of total lending equalling net impaired loans of EUR 112m
•
Slowing lending growth rate – new lending to existing customers
Lithuania
9.8
Estonia Latvia
4.6
Russia Poland
2006
2007
2008
Quarterly lending growth NEM%
29 23 18
17
17
Lending past due end 2008
Nordea
Total market
Estonia (60 days)
1.74%
2.68%
Latvia (90 days)
1.85%
3.60%
Lithuania (60 days)
2.01%
4.54%
10 4
Q2/07 Q3/07 Q4/07 Q1/08 Q2/08 Q3/08 Q4/08 29
Source: Central bank data
Loan and receivables net of allowances FY 2008 EURm
Finland
Norway
Sweden
22 375
21 318
15 167
20 724
1 552
138
2 700
–
83 974
Private individuals other
9 870
6 594
734
5 545
63
107
119
1 594
24 626
Real estate management
4 782
7 638
7 721
13 547
230
417
1 164
–
35 499
Construction
1 074
897
490
676
43
143
348
–
3 671
Agriculture and fishing
8 233
1 820
1 603
993
79
45
170
–
12 943
766
911
549
1 282
116
175
216
–
4 015
1 685
3 333
5 725
533
1
0
20
–
11 297
12 136
6 704
8 304
7 149
282
325
793
–
35 693
304
2 506
196
787
22
745
101
–
4 661
20 890
6 012
1 716
11 227
29
303
101
107
40 385
Renting consulting and other company services
1 181
881
549
367
72
0
120
–
3 170
Public sector
1 270
406
512
1 904
393
119
183
–
4 787
Other
6 249
5 553
2 952
6 036
391
994
2 105
–
24 280
Total1
90 815
64 572
46 219
70 769
3 273
3 511
8 143
1 702
289 004
Private individuals mortgage loans
Transport Shipping Trade and services Manufacturing Financial operations
30
Denmark
Poland
Russia
Baltic
Other
Total
¹ Including lending to credit institutions
Largely secured lower risk real estate portfolio Lending to real estate management per country EURbn
End 2008
Commercial
Residential
End 2007
Sweden
13 5
44%
56%
14 9
Norway
77
72%
28%
86
Finland
71
49%
51%
70
Denmark
48
60%
40%
46
Baltics
12
75%
25%
10
Russia
04
100%
0%
01
Poland
02
61%
39%
01
Other
05
NORDEA
35 5
44% of the portfolio towards low risk residential counterparties
05
56%
44%
36 8
Internal rating distribution real estate management portfolio
74% of the total real estate management portfolio above investment grade end of 2008 (internal rating 4- and higher)
6+ 6 6- 5+ 5 5- 4+ 4 4- 3+ 3 3- 2+ 2 2- 1+ 1 1- 0+ 0 0-Nonrated 31
State and municipality owned companies tenant owned associations and social housing associations with a state guarantees
More than ¼ of the total real estate exposure downgraded a notch or more during 2008
High quality commercial real estate portfolio 40 largest Nordic commercial real estate exposures, EURbn
Geographically well diversified portfolio – limited exposure to Danish market
40 largest customer accounts for approx 40% of the portfolio – 90% above investment grad
Commercial portfolio largely secured
Debt capacity supported by low interest rates
Low growth numbers - Nordea accounts for less than 5% of the total transaction volume since 2006* in Sweden – less than 4% 2008
6000
4000
2000
0
Internal rating
6
5
4
Commercial real estate lending EUR 19.9bn, geographic split Other 11% Denmark 15% Finland Sweden 18% 29% Norway 27% 32
Below investment grade
* Source: Transaction volumes according to Newsec
Potential losses in lending book – illustrative example Loans and receivables to public, EURm* Mortgage lending
Distribution
83 974
32%
Energy (oil, gas etc)
2 815
1%
Health care and pharmaceuticals
1 606
1%
Other financial institutions and other public
26 943
10%
Residential real estate
15 620
6%
Telecommunication
2 309
1%
Utilities
4 022
2%
Residual
Low risk areas Consumer loans
133 939
50% 9%
Metals and mining materials
1 750
1%
Other materials (chemical, building material)
5 377
2%
Industrial capital goods
3 264
1%
15 482
6%
Other shipping
9 328
4%
Transportation
4 017
2%
Media and leisure
3 171
1%
Retail trade
11 020
4%
Consumer durables
12,943
5%
1,489
1%
623
0%
Paper and forest materials
2 287
1%
Poland (Standardised approach in RWA)
3 800
1%
IT software, hardware and services Telecommunication equipment
Deducted: Corporate owned by PE companies
-7 400
Residual
-7 500
Medium risk areas
84 279
32%
Baltics
7 700
3%
Russia (Standardised approach in RWA)
3 800
1%
Construction and engineering
3 671
1%
Consumer durables
2 752
1%
Corporates owned by PE companies
7 400
3%
Dry bulk/Container
1 928
1%
19 600
7%
Commercial real estate
Special attention areas 33Total*
LGD
Average EL, normalised loss level
Loan loss level, illustrative example
Share of total
-3 350
24 628
Industrial commercial services
PD
0.57%
26%
15 bps
15 bps
7 bps
0.84%
41%
34 bps
55 bps
18bps
46 891
18%
0.87%
41%
36 bps
150 bps
27 bps
265 100
100%
0.73%
34%
25 bps
52 bps
52 bps
* Loan and receivables to the public is presented as a proxy for EAD, which also include off-balance sheet exposure
Increased loan losses following economic slowdown in all markets
Loan losses, EURm
140
152
121 21
Loan loss ratio of 19 basis points - excluding Danish scheme 17bps (EUR 44m)
Fourth quarter 52bps – 45 bps excluding Danish scheme
476
320
151
Net loan losses EUR 466m full year 2008
Large gross numbers in Q4 is partly explained by a shift between individual and collective allowances
Individual allowances increased in several sectors
Net collective allowances of EUR 54m were made in 2008 – construction real estate agriculture and consumer finance
89 36
-6
-157 Q4/07
-120 Q1/08
Gross loan losses
34
-85
-63 -157
Q2/08 Reversals
Q3/08
Q4/08
Net loan losses
FY 2008 EURm To credit institutions To the public - of which corporate Energy (oil gas etc.) Metals and mining materials Paper and forest materials Other materials (building materials etc.) Industrial capital goods Industrial commercial services etc. Construction and civil engineering Shipping and offshore Transportation Consumer durables (cars appliances etc.) Media and leisure Retail trade Consumer staples (food agriculture etc.) Healthcare and pharmaceuticals Financial institutions Real estate IT software hardware and services Telecommunication equipment Telecommunication operators Utilities (distribution and production) Other
- of which household Total 35
New Provisions and write-offs -38 -852 -635
Reversals and recoveries 6 418 305
0 0 -15 -46 -6 -60 -66 -12 -18 -37 -12 -76 -46 -1 -12 -64 -6 -10 0 -3 -144
0 0 15 11 10 28 11 1 6 16 5 20 23 4 4 19 3 12 1 0 117
0 0 0 -36 4 -32 -55 -11 -13 -21 -7 -56 -23 3 -9 -45 -2 2 1 -3 -27
2 5 0 100 – 21 170 15 33 76 21 55 21 – 7 12 18 – – 9 34
-216 -890
113 424
-103 -466
10 17
Net loan losses -32 -433 -330
Loan loss ratio bps 13 18 25
Credit rating migration expected following economic downturn – minor down-rating so far Corporate rating migration Q408 / Q407
•
Basel II will for the first time be tested in a downturn
•
Minor down-ratings so far but expected to accelerate in coming quarters
•
Rating migration will increase RWA and consequently lower capital ratios
56%
30%
Down-rated
25%
Up-rated
20% 16% 15% 10%
10% 5% 5%
5%
3% 1%
1%
> -5
-4
2%
1%
1%
4
>5
0% -3
-2
-1
0
1
2
Number of notches up- and down-rated
36
3
Appendix
Transaction Overview
Net Proceeds: approximately €2,500 million Type of Security: Ordinary Shares Subscription Ratio: 11 New Shares per 20 Existing Shares Shareholders receive 11 Subscription Rights for every Existing Share held on the Record Date Shareholders require 20 Subscription Rights to subscribe for 1 New Shares at the Subscription Price Subscription Price: EUR 1.81, SEK 20.75 and DKK 13.49 per New Ordinary Share(1) 43.8% discount to the theoretical ex-right price (TERP), adjusted for the proposed dividend, based on the SEK 48.10 closing price on 10 March Number of New Shares Issued: 1,430,059,525 (55% of pre-offering ordinary shares outstanding) Listing of New Ordinary Shares: NASDAQ OMX Stockholm, Copenhagen and Helsinki Shareholder Support and Underwriting: Nordea’s 3 largest shareholders, the Swedish State, Sampo Oyj and Nordea Fonden, have agreed to subscribe for their pro rata share, representing in aggregate 36.3% of the Rights Offering In addition, Sampo Oyj has agreed to underwrite an additional 13% of the Rights Offering, subject to certain conditions J.P. Morgan and Merrill Lynch International have agreed to underwrite the remaining 50.7% of the Rights Offering, subject to customary terms and conditions Structure: Reg. S / Rule 144A Joint Bookrunners and Joint Global Coordinators: J.P. Morgan, Merrill Lynch International, Nordea Markets
13 March: First day of trading after detachment of subscription rights 17 March: Record day for participating in the Rights Offering and Prospectus published 20 March - 3 April: Subscription Period 20 March - 31 March: Subscription Rights Trading Period (ends 27 March on NASDAQ OMX Helsinki) 20 March - 20 April: Trading of paid subscribed shares 8 April: Announcement of preliminary outcome of the Rights Offering 17 April: Announcement of final outcome of the Rights Offering Early May: Completion of the Rights Offering
Terms & Conditions
Key Dates
38
1)
The alternative EUR, SEK, DKK Subscription Prices apply when subscription is made by exercise of Subscription Rights registered in the respective Swedish, Danish and Finnish securities systems
Customer segments Nordic Corporate Merchant Banking Customers
Customers (000) Income (EURm) Volumes (EURbn): Lending Deposits Margins (%): Lending Deposits
Large Corporate Customers
Small and Medium Corporate Customers
6 1,079
18 916
951
43.2 17.1
42.0 17.3
0.99 0.39
0.94 0.64 1
Total Corporate Customers
Shipping and Oil Services
Financial Institutions
Total Corporate and Financial Institutions1
2,946
79 291
2 306
1 409
3,952
22.9 19.5
108.2 53.9
10.7 3.2
13.8 6.4
2.0 14.5
134.7 78.0
1.04 1.59
0.97 0.93
1.72 1.58
1.10 0.42
0.55 0.34
1.03 0.79
Includes Nordic – Total Corporate Customers, New European Markets Corporate Customers, Shipping, Oil Services & International Custom ers and Financial Institutions.
Nordic
Private Banking
New European Markets Corporate Customers
Gold Customers
Silver and Bronze Household Customers
Total Household Customers1
New European Markets Household Customers2
International Private Banking
Total Household Customer3
Customers (000)
83
2 510
746
12
Income (EURm)
324
1 911
999
3 234
108
85
3 427
Lending
4.5
90.5
10.9
105.9
4.6
0.9
111.3
Deposits
6.2
40.6
16.4
63.2
1.6
1.7
66.5
Volumes (EURbn):
Assets under Management
6.8
36.1
Margins (%): Lending
0.70
0.87
2.46
1.07
1.48
0.77
1.08
Deposits
0.71
1.47
2.57
1.74
1.12
0.60
1.70
1
2
39
3
Includes Nordic Private B anking, Nordic Gold customers, Nordic Silver customers, Nordic Bronze customers as well as other custom ers, who have accounts with Nordea , but do not participate in the customer programme. Includes Gold, Silver and Bronze custom ers. Includes Nordic – Total Household Customers, New European Markets Household Customers and International Private Banking.
Average balance and interest rates 2006
EURm
Average balance
Interest
2007
Average rate %
Average balance
Interest
2008
Average rate %
Average balance
Interest
Average rate %
Assets Loans and receivables to credit institutions Loans and receivables to the public Bonds and other interest-bearing securities Total interest-earning assets
Non-interest earning assets Total average assets
28,979
797
2.8
29,708
685
2.3
28,347
1,121
4.0
196,896
8,190
4.2
225,885
11,175
4.9
261,394
13,862
5.3
43,751
682
1.6
43,907
1,049
2.4
45,724
1,571
3.4
269,626
9,669
3.6
299,500
12,909
4.3
335,465
16,753
5.0
58,520
70,193
93,683
328,146
369,693
429,148
Liabilities Deposits by credit institutions
30,402
1,138
3.7
31,861
1,033
3.2
41,920
1,595
3.8
117,746
2,105
1.8
131,166
3,946
3.0
146,821
4,398
3.0
Debt securities in issue
82,502
2,220
2.7
95,111
3,218
3.4
108,787
4,587
4.2
Subordinated liabilities
8,041
310
3.9
7,849
399
5.1
7,728
393
5.1
-
27
n.a.
-
31
n.a.
-
687
n.a.
238,690
5,800
2.4
265,987
8,627
3.2
305,256
11,660
3.8
Deposits and borrowings from the public
Derivatives and other interest bearing liabilities Total interest-bearing liabilities
Non-interest bearing liabilities
75,810
87,795
106,342
Equity
13,645
15,911
17,550
328,146
369,693
429,148
Total average liabilities and equity Net interest income Net yield on interest-earning assets 40
3,869
4,282 1.4
5,093 1.4
1.5
Analysis of changes in interest income and expense
Increase/decrease due to changes, EURm
31 December 2007 compared to
31 December 2008 compared to
31-dec-06
31-dec-07
Average volume
Average interest rate
Net change
Average volume
Average interest rate
Net change
Assets Loans and receivables to credit institutions
20
-132
-112
-31
467
436
1 206
1 779
2 985
1 757
930
2 687
2
364
367
43
479
522
n.a.
n.a.
0
n.a.
n.a.
199
1 228
2 011
3 240
1 769
1 876
3 844
55
-160
-105
326
236
562
Deposits and borrowings from the public
240
1 601
1 841
471
-19
452
Debt securities in issue
339
659
998
463
906
1,369
Subordinated liabilities
-7
96
89
-6
0
-6
Derivatives and other interest bearing liabilities
n.a.
n.a.
4
n.a.
n.a.
656
Total interest-bearing liabilities
626
2 197
2 827
1 254
1 123
3 033
Loans and receivables to the public Bonds and other interest-bearing securities Derivatives and other interest bearing assets Total interest income Liabilities Deposits by credit institutions
41
Risks in Life operations
2006
2007
2008
Effects on policyholders
Effect on equity
Effects on policyholders
Effect on Nordea’s own account
Mortality – increased living with 1 year
-68.3
-9.1
-65.9
-8.2
-94.1
-7.9
Mortality – decreased living with 1 year
81.1
10.2
50.1
7.0
80.7
7.0
Disability – 10% increase
-14.0
-0.4
-6.6
-1.7
-35.9
-0.4
Disability – 10% decrease
13.4
0.4
6.1
1.7
35.4
0.4
50 bp increase in interest rates
52.5
-5.7
-127.7
-6.1
-183.0
-1.3
50 bp decrease in interest rates
-74.7
3.6
34.1
3.6
122.4
0.1
12% decrease in all share prices
-608.8
-6.0
-583.0
-22.0
-103.4
-7.3
8% decrease in property value
-183.4
0.0
-258.5
0.0
-176.9
-28.9
8% loss on counterparties
-46.3
-5.0
-105.6
-7.1
-144.3
-6.1
EURm
Effects on policyholders
Effect on Nordea’s own account
Change in assumptions
42
43
Household and SME (scored customers) by rating grade as of end 2008
Probability of Default PD rating and scoring as of end 2008
Exposure to corporate customers (rated) by rating grade end of 2008
Exposure to institutional customers by rating grade end of 2008
Exposure towards Corporates, distributed by rating grade1) EURm Rating
PD scale
den 31 december 2008
den 31 december 2007
Corporate
Corporate
EAD
Average risk weight
PD scale
EAD
Average risk weight
6+
0,03%
1 946
12%
0,03%
2 610
14%
6
0,03%
4 438
15%
0,03%
2 294
15%
6-
0,05%
5 075
19%
0,05%
3 873
18%
5+
0,07%
8 855
24%
0,07%
7 532
20%
5
0,10%
12 290
29%
0,10%
10 509
29%
5-
0,16%
16 079
37%
0,14%
14 184
35%
4+
0,24%
17 851
45%
0,20%
19 392
41%
4
0,35%
23 643
56%
0,32%
20 721
53%
4-
0,53%
18 865
66%
0,54%
16 740
67%
3+
0,81%
14 205
77%
0,85%
13 656
80%
3
1,18%
10 982
89%
1,31%
10 621
93%
3-
2,01%
9 513
98%
2,04%
7 209
101%
2+
3,63%
2 260
119%
3,39%
1 046
113%
2
6,16%
1 406
142%
5,21%
814
131%
2-
9,86%
635
160%
8,29%
462
146%
1+
14,79%
232
172%
12,43%
164
174%
1
20,71%
308
227%
17,74%
77
202%
1-
26,93%
100
247%
26,85%
43
220%
57%
0.61%2
131 947
55%
0.72%2 Exposure includes rated customers
1
Exposure weighted PD
2
44
148 684
Macro Economic Outlook Sweden
45
Benefitting from weakening currency
Domestic demand increasing- reduced pessimism within households
Tax cuts and lower interest rates strengthen households’ purchasing power (household consumption accounts for approx. 50% of GDP)
Stimulus packages with potential to boost consumption
Sharp rise in unemployment
Public finances in good order
Macro Economic Outlook Denmark
46
Steep drop in economic activity
Sharp depreciations in SEK, GBP and NOK has eroded competiveness
Falling commodity prices, tax cuts and lower interest rates prevent permanent damages and have positive influence on household finances. Possible increase in private consumption already in 2009
Very low unemployment
Low cyclicality among export companies
Macro Economic Outlook Finland
Economy to be helped by expected fall in inflation, real wages increase and interest rate fall fast. A solid position when export markets rebound
Export negatively affected by weakening markets in CEE-countries
Decline in investments, mostly in constructions
Lower interest rates and house prices affordability of households will reach highest level of the decade during autumn 2010. Lighter taxations will increase purchasing power. Lower debt levels in households than other countries
Slow down in public spending - curb the pace of total consumption
47
Macro Economic Outlook Norway
48
Sharp drop in mainland investment and weak exports
Strong growth in public investments and government consumption expected in the years ahead
Decline in investments, sharp drop in construction
Sustained growth in oil investments in 2009 which will offset some negative effects in manufacturing industry
Much lower interest rates will offset impact of unemployment and together with falling energy prices purchasing power will be sharply improved
Macro Economic Outlook Estonia
49
Retail sales and industrial production declining
Weak outlook for production and consumption
Household and business confidence is low
Expected decline in GDP and investments
Unemployment to increase, private consumption further weakened
Deceleration in inflation expected
Strong public finances, Estonia practically debt-free
Expected return to growth track, well into 2010
Macro Economic Outlook Latvia
50
Weakening housing market gives negative impact on residential investments and private consumption
Global recession weakens export
Economy forecasted to contract 6% in 2009
Expected growth in unemployment
Public deficit expected to grow 6% of GDP
Requested financial support from IMF and EU
Currency peg is expected to remain unchanged
Macro Economic Outlook Lithuania
51
On the brick of recession
Continued fall in GDP, no signs of leveling out
Economy projected to contract 3% in 2009
Economic crises weighs down export growth
Inflation trend downwards
Government programme supports financial stability, though an increase in public deficit is assumed
Cost If Ignalia power plats closes in end 2009 higher energy costs impact GDP negatively
Macro Economic Outlook Russia
52
Severe slow in growth due to sharp decline in oil prices
Gradual devaluation of rouble expected. Estimated to be approx 15% weaker in end 2009 compared to the beginning of 2009
Falling oil prices have negative impact on current account and public budget.
Investments expected to contract
Companies’ financing situation remains tight. Poor availability for consumer credit, drop in private consumption growth
Authorities reacted rapidly to the crises with an extensive rescue package with special support to banks and industries
Macro Economic Outlook Poland
53
Economy is slowing down fast
Growth in manufacturing in free fall
Exports and investments are contracting
Labour market remains fairly tight, together with temporary boost from tax cuts a decent growth in private consumption is supported
Possible avoidance of an outright recession expected
Economy estimated to start recovering gradually in Q2 2009
Financial result in detail
Income statement summary EURm Net interest income
Q4/08 1 386
Q3/08 1 296
Chg % 7
390 325
480 221
-19 47
45
-25
105 2 251
24 1 996
13
Staff costs
-655
-635
3
Other expenses
-461
-395
17
-34
-30
13
Total operating expenses
-1 150
-1 060
8
Profit before loan losses Loan losses Operating profit
1 101 -320 781
936 -89 847
18
637
655
-3
Net fee and commission income Net gains/losses on items at fair value Equity method Other income Total operating income
Depreciation
Net profit 3
-8
Adjusted for FX effects volume growth continues % Total Lending
excl. repurchase agreements
Q4oQ3
7% (15%)
-3% (4%)
–
Nordic household mortgages
-1% (7%)
-5% (1%)
–
Nordic consumer lending
6% (14%)
-2% (5%)
–
Nordic corporates
6% (15%)
-3% (3%)
–
New European Markets
56%
4%
5% (11%)
-2% (3%)
Total Deposits
excl. repurchase agreements
–
Nordic households
3% (11%)
-3% (3%)
–
Nordic corporates
10% (18%)
-1% (5%)
–
New European Markets
27%
5%
Figures within parenthesises excl. FX-effects mainly in Norway and Sweden 4
YoY
Focus on core customers Total income corporate customers, EURm 3 952
Income from corporate customers up 22% compared to last year – strengthened market position
Strong income contribution from sale of capital market products
Income from Household customers up 1% - dampened by:
3 248
FY 2007
FY 2008
Total income household customers, EURm 3 427 3 406
FY 2007
5
FY 2008
Lower margins on savings and transaction accounts
Lower assets under management in the savings area
Net interest income up 19% YoY 1 386
EURm
1 296 1 143
1 181
1 230
Strong increase in lending and deposit volumes Lending to public up 8% - 17% in local currency Deposit volumes up 4% - 12% in local currency
Corporate lending up 11% reflecting strong demand across sectors – up 19% adjusted for FX effects Nordea continued to support core customers
Corporate lending margins increased reflecting re-pricing of credit risks and to compensate for higher liquidity premiums
Q4oQ3 Q4/07
Q1/08
Q2/08
Q3/08
Q4/08
Up 7% driven by high quality volume growth and increased margins Total lending up 5% in local currency
6
Change in net interest income EURm
YoY
Q4oQ3
Volume driven
433
46
-Lending volumes
371
41
-Deposit volumes
62
5
Margin driven
220
37
-Lending margins
157
94
-Deposit margins
63
-58
Orgresbank
85
13
Other net
73
-6
811
90
Total
7
Structural Interest Income Risk (SIIR) EURm annualised effect on NII* Increasing market rates 100bp Decreasing market rates 100bp
Q4/08
Q3/08
Q2/08
Q1/08
Q4/07
55
204
244
238
235
-218
-232
-275
-268
-267
• Lower SIIR (increasing market rates) in Q4 following hedging arrangements • SIIR for decreasing rates slightly lower change in SIIR for increasing rates • Underlying position has faced significant changes due to position taking customer behavior and positioning for liquidity management due to financial turmoil *Approx. end of period SIIR is defined as the effect on net interest income (NII) in the next 12 months if market rates change by one percentage point. Figures are asymmetrical as interest rates on deposits from customers cannot be reduced below 0%. Figures are based on maturity and repricing structure and the effect going forward will be subject to management decisions and the competitive situation in the market. 8
Net fee and commission income down 12% YoY EURm
526 495
518 480
Savings-related commission down 18% affected by weak equity markets AuM down 20% compared to one year ago
390
Lending-related commission up 12% Corporate Merchant Banking and Shipping and Oil services
Q4oQ3
Down 19% Weak trend for savings commissions continued Lending commission down 14% due to lower activity
Q4/07
9
Q1/08
Q2/08
Q3/08
Q4/08
Commission expenses increased by EUR 50m related to Danish State guarantee fee
Net outflow from Asset Management due to market depreciation YoY
Net flows AuM, EURbn
-1.7
-1.0
Lower AuM following falling asset values and limited outflows
Net outflow EUR 2.0bn - compensated by net inflow into saving deposit accounts of EUR 4.7bn
0.5 0.6 -2 3
Nordic Retail funds EUR -4.5bn Nordic Private Banking EUR 2.1bn Institutional clients EUR 1.1bn Q4/Q3 Q4/07
Q1/08
Nordic Retail funds Nordic Private Banking Institutional customers
10
Q2/08
Q3/08
Q4/08
European Fund Distribution International Private Banking Life & Pension
Net outflow in Q4 EUR 2.3bn – mainly Nordic Retail funds EUR 1.1bn
Net gains/losses – Q4 strongest quarter ever YoY
EURm
350 304
300
284
300
272
250
Limited impact from market turmoil Risk management products in the fixed income
181
200 150
and FX areas
100 50
Net gains/losses down 15% Solid result in customer areas driven by strong activity within capital markets products
40 16
21
0
0
Lower revenues from listed and non-listed equities and from Life & Pensions Earlier recognised revenues from Life & Pensions
-50
in Denmark were deferred due to a decline in financial buffers
-74
-100 Q4/07
Q1/08
Q2/08
Customer areas
Q3/08
Q4/08
Other areas
Q4oQ3
Up 47% High activity in the customer-driven capital markets operations
11
Income growth in Nordea YoY (EURm) Customer operations
72.6%
-38.8% 73
197 30.7% 6.8%
-22.2% 80
21.9% 75
-84.6% 96 11
74
6.4%*
78 103
4.0%
409 8 200 7 886
Income FY Nordic 07 Banking
Shipping
Financial New Institutions European Markets
*Growth in customer operations 12
IPB&F
Life
Unallocated Treasury FX effects Finnish Income FY 08 deposit result from operations guranatee Capital incl. NCSD and other Markets
Cost in line with target EURm
1 150
1 073
1 055
1 073
1 060
29
27
33
30
429
384
406
395
644
634
635
655
Q1/08
Q2/08
Q3/08
Q4/08
615
Q4/07
Staff costs
13
Other expenses
34
461
Depreciation
Up 7% - in line with target
Approx half of the increase related to investments in growth areas – FTE’s up 8% incl. acquisition of Roskilde Bank and Svensk Kassaservice
Expense growth in Nordea (EURm)
1.8% 2.8%
2.7%
-0.5% -21
1.5%
-1.4%
59
-57
6.7%
70
113 4 338
108
4 066 Expenses 2007
14
Wage increases
Variable salaries
Investments in Volume driven Restructuring and one-off grow th areas production expenses costs and FTEs
FX-effects
Expenses 2008
Number of FTEs
4 402
4 297
4 051
3 813
3 506
YoY
Up 7% or 2 287 FTEs
New European Markets +900
Nordic Markets +1 400 incl. acquisition of Roskilde Bank and Svensk Kassaservice
28 944
Q1/08
Q2/08
Nordea excl. New European Markets
15
Q3/08
29 606
28 595
Q4/07
29 464
28 215
Q4oQ3
Q4/08
New European Markets
Up 250 FTEs
New European Markets +105
Nordic Markets +145
Net profit EURm YoY
764 687
Q4/07 *
Q1/08
693
Q2/08
655
Q3/08
637
Net profit down 15%
Shift in loan losses
Q4/08
* For comparison reasons the refund from the Finnish deposit guarantee system in Q4 2007 of EUR 120m reported as Other income has been excluded. 16
High profitability 2008
23.6 22.7
% 20.6
21.4
20.8
Net loan losses of EUR 466m compared to
19.1
18.0
Return on equity of 15.3% (19.7%) recoveries of EUR 60m the same period last year
15.3
RaRoCar 20.8% (23.6%) - high level despite market turmoil Nordic Banking 23% IIB 42%
2005
2006 RoE
17
2007
*
2008
*
RaRoCar
* For comparison reasons two major non-recurring items have been excluded. For 2007 the refund from the Finnish deposit guarantee system of EUR 120m and for 2006 the capital gain from the IMB sale of EUR 199m
Despite the difficult environment Nordea continue to have access to new funding at attractive prices
Nordea continues to benefit from being a well recognised AA-rated bank with prudent liquidity management and a conservative business profile
During 2008 Nordea issued approx EUR 31bn long-term funding
Total long-term funding issued (EURbn) 31 27
FY 2007
FY 2008
Covered bond issuance EUR 16bn and senior unsecured 15bn
During Q4 well functioning covered bond markets with issuance of 5bn. Senior unsecured 2bn.
Total wholesale funding approx EUR 128bn – 66% long-term financed
18
Insignificant long-term funding matures the next 12 months
Higher prices on long-term funding affecting average funding cost
Risk weighted assets RWA end of period EURbn 205
214
201
190
176
171
218 194
YoY 213
Increased RWA incl transition rules driven by increased lending volumes
Approval to use IRB models for the Retail credit portfolio
169
Q4/07
Q1/08
Q2/08
RWA incl transition rules
Q3/08
Q4/08
RWA excl transition rules
6
-28 - 11
9
171
RWA Rating Lending Q407 migration growth 19
16 9
IRB FX effect Other Retail risks approval
RWA affected by 4% coming from rating migration Mainly in Q4
RWA impact in 2008 EURbn 22
Reduced RWA with approx 14%
RWA Q408
1
Reported capital position - revised capital targets Tier 1 ratios
Tier I ratio excl. transition rules 9.3%
As part of entering the new Basel II regime new targets for Tier 1 and total capital have been established
The new policy is that Tier 1 and total capital should be 9.0% and 11.5% over the cycle
Over the cycle means that actual capital ratios will exceed the target when entering the weaker part of the cycle and possibly be lower at the bottom of the cycle
9.3 8.3 7.4
7.0
2007 Tier I incl transition rules
2008* Tier I excl transition rules
*Including new dividend proposal 20
Customer areas 21
Nordic Banking by market in local currency Balanced growth between lending and deposits YoY volume growth in% 21 17 12
16
14
13 8
Nordic Banking
14
10 6
Denmark
Finland Lending
Norway
Sweden
Deposits
YoY income and cost growth % 20
7
5
6
9
7 -1
Nordic Banking
Denmark
Finland Income
22
3
Cost
5
6
Norway
Sweden
Credit portfolio
Well diversified lending portfolio Share of total lending EUR 265bn
NEM 6%
Other 8%
DK 27%
NO 16%
FI 19%
Despite a well-diversified lending portfolio spread over four largely equally sized markets credit quality is weakening
Low risk mortgage portfolio accounts for approximately 1/3 of total lending
Mortgage 32%
Corporate 57%
SE 26%
24
Public 2%
Consumer 9%
Credit portfolio by industry
Loans and
Impaired
Allowances
Loan losses
receivables
loans
Individually &
2008, net
to the public
gross
collectively
Real estate management and investment
35 500
206
195
45
Other financial institutions
16 275
55
17
9
Industrial commercial services etc
15 482
143
88
32
2008 EURm
Consumer staples (food agriculture etc)
12 943
137
110
23
Shipping and offshore
11 296
59
6
11
Retail trade
11 020
217
95
56
Other public and organisations
10 462
55
86
27
Other materials chemical building materials
5 377
169
75
36
Utilities (distribution and production)
4 022
2
2
3
Transportation
4 017
54
32
13
Construction and engineering
3 671
136
77
55
Industrial capital goods
3 264
18
8
-4
Media and leisure
3 171
71
29
7
Energy (oil gas etc)
2 815
0
1
0
Consumer durables (cars appliances etc)
2 752
169
42
21
Paper and forest materials
2 287
19
6
0
Metals and mining materials
1 750
2
2
0
Telecommunication operators
1 686
1
3
-1
Health care and pharmaceuticals
1 606
39
7
-3
IT software hardware and services
1 489
22
9
2
Telecommunication equipment
623
33
10
-2
Banks
206
34
23
32
Corporate
151 711
1 641
925
363
Household
108 602
579
243
103
4 787
5
2
0
265 100
2 224
1 170
466
Public sector Nordea 25
Approximately half of the credit portfolio is low risk – a few challenging areas… Total lending to public end 2008 EUR 265bn Commercial real estate Construction Drybulk/Container PE companies
Mortgage lending
Special attention areas; 18%
Media/Leisure Transportation Tankers/Offshore
26
Fin Institutions
Low risk areas; 50%
Russia
Metals/Mining
Telecom operators
Public sector
Baltics
Telecom/IT
Residential real estate
Medium risk areas; 32%
Health care
Shipping and offshore – 5% of total loan portfolio Loan and receivables, EURbn 11.3 Container
Well proven business model and credit policy applied consistently for 15 years - focus on listed companies with strong track record
Largely collateralized and well diversified loan portfolio – less than 15% towards high risk sectors (dry bulk and container)
Almost half of lending growth explained by the strengthened USD
Loan losses have been very low over the last 20 years but are expected to increase in 2009 and 2010
Offshore and Oil services Other shipping
9.1
Gas tankers Chemical tankers Crude tankers Product tankers Bulk carriers 2007
2008
Average internal rating Shipping portfolio 4,5 4,3 4,0 3,8 3,5 2002 2003 27
2004
2005
2006
2007
2008
Private-equity funds – 3% of total loan portfolio
Portfolio well diversified between industries and the Nordic markets – more than 100 portfolio companies
High quality growth in 2008 with low leverage and to solid sectors
Mainly senior debt – insignificant exposure to junior debt (mezzanine)
Several successful restructuring cases now finalised – other negotiations ongoing
Next two years will be challenging but manageable
Total lending, EURbn 7.4 6.7 5.7
2006
28
2007
2008
New European Markets affected by sharp economic slowdown – 6% of total lending Total lending NEM EURbn 15.3
•
Specific loan losses increased in the Baltic countries and Russia - net loan losses 47bps in 2008
•
Accumulated provisions approx. 190bps in NEM end 2008
•
Collective allowances for the Baltic countries EUR 109m or 134bps of total lending equalling net impaired loans of EUR 112m
•
Slowing lending growth rate – new lending to existing customers
Lithuania
9.8
Estonia Latvia
4.6
Russia Poland
2006
2007
2008
Quarterly lending growth NEM%
29 23 18
17
17
Lending past due end 2008
Nordea
Total market
Estonia (60 days)
1.74%
2.68%
Latvia (90 days)
1.85%
3.60%
Lithuania (60 days)
2.01%
4.54%
10 4
Q2/07 Q3/07 Q4/07 Q1/08 Q2/08 Q3/08 Q4/08 29
Source: Central bank data
Loan and receivables net of allowances FY 2008 EURm
Finland
Norway
Sweden
22 375
21 318
15 167
20 724
1 552
138
2 700
–
83 974
Private individuals other
9 870
6 594
734
5 545
63
107
119
1 594
24 626
Real estate management
4 782
7 638
7 721
13 547
230
417
1 164
–
35 499
Construction
1 074
897
490
676
43
143
348
–
3 671
Agriculture and fishing
8 233
1 820
1 603
993
79
45
170
–
12 943
766
911
549
1 282
116
175
216
–
4 015
1 685
3 333
5 725
533
1
0
20
–
11 297
12 136
6 704
8 304
7 149
282
325
793
–
35 693
304
2 506
196
787
22
745
101
–
4 661
20 890
6 012
1 716
11 227
29
303
101
107
40 385
Renting consulting and other company services
1 181
881
549
367
72
0
120
–
3 170
Public sector
1 270
406
512
1 904
393
119
183
–
4 787
Other
6 249
5 553
2 952
6 036
391
994
2 105
–
24 280
Total1
90 815
64 572
46 219
70 769
3 273
3 511
8 143
1 702
289 004
Private individuals mortgage loans
Transport Shipping Trade and services Manufacturing Financial operations
30
Denmark
Poland
Russia
Baltic
Other
Total
¹ Including lending to credit institutions
Largely secured lower risk real estate portfolio Lending to real estate management per country EURbn
End 2008
Commercial
Residential
End 2007
Sweden
13 5
44%
56%
14 9
Norway
77
72%
28%
86
Finland
71
49%
51%
70
Denmark
48
60%
40%
46
Baltics
12
75%
25%
10
Russia
04
100%
0%
01
Poland
02
61%
39%
01
Other
05
NORDEA
35 5
44% of the portfolio towards low risk residential counterparties
05
56%
44%
36 8
Internal rating distribution real estate management portfolio
74% of the total real estate management portfolio above investment grade end of 2008 (internal rating 4- and higher)
6+ 6 6- 5+ 5 5- 4+ 4 4- 3+ 3 3- 2+ 2 2- 1+ 1 1- 0+ 0 0-Nonrated 31
State and municipality owned companies tenant owned associations and social housing associations with a state guarantees
More than ¼ of the total real estate exposure downgraded a notch or more during 2008
High quality commercial real estate portfolio 40 largest Nordic commercial real estate exposures, EURbn
Geographically well diversified portfolio – limited exposure to Danish market
40 largest customer accounts for approx 40% of the portfolio – 90% above investment grad
Commercial portfolio largely secured
Debt capacity supported by low interest rates
Low growth numbers - Nordea accounts for less than 5% of the total transaction volume since 2006* in Sweden – less than 4% 2008
6000
4000
2000
0
Internal rating
6
5
4
Commercial real estate lending EUR 19.9bn, geographic split Other 11% Denmark 15% Finland Sweden 18% 29% Norway 27% 32
Below investment grade
* Source: Transaction volumes according to Newsec
Potential losses in lending book – illustrative example Loans and receivables to public, EURm* Mortgage lending
Distribution
83 974
32%
Energy (oil, gas etc)
2 815
1%
Health care and pharmaceuticals
1 606
1%
Other financial institutions and other public
26 943
10%
Residential real estate
15 620
6%
Telecommunication
2 309
1%
Utilities
4 022
2%
Residual
Low risk areas Consumer loans
133 939
50% 9%
Metals and mining materials
1 750
1%
Other materials (chemical, building material)
5 377
2%
Industrial capital goods
3 264
1%
15 482
6%
Other shipping
9 328
4%
Transportation
4 017
2%
Media and leisure
3 171
1%
Retail trade
11 020
4%
Consumer durables
12,943
5%
1,489
1%
623
0%
Paper and forest materials
2 287
1%
Poland (Standardised approach in RWA)
3 800
1%
IT software, hardware and services Telecommunication equipment
Deducted: Corporate owned by PE companies
-7 400
Residual
-7 500
Medium risk areas
84 279
32%
Baltics
7 700
3%
Russia (Standardised approach in RWA)
3 800
1%
Construction and engineering
3 671
1%
Consumer durables
2 752
1%
Corporates owned by PE companies
7 400
3%
Dry bulk/Container
1 928
1%
19 600
7%
Commercial real estate
Special attention areas 33Total*
LGD
Average EL, normalised loss level
Loan loss level, illustrative example
Share of total
-3 350
24 628
Industrial commercial services
PD
0.57%
26%
15 bps
15 bps
7 bps
0.84%
41%
34 bps
55 bps
18bps
46 891
18%
0.87%
41%
36 bps
150 bps
27 bps
265 100
100%
0.73%
34%
25 bps
52 bps
52 bps
* Loan and receivables to the public is presented as a proxy for EAD, which also include off-balance sheet exposure
Increased loan losses following economic slowdown in all markets
Loan losses, EURm
140
152
121 21
Loan loss ratio of 19 basis points - excluding Danish scheme 17bps (EUR 44m)
Fourth quarter 52bps – 45 bps excluding Danish scheme
476
320
151
Net loan losses EUR 466m full year 2008
Large gross numbers in Q4 is partly explained by a shift between individual and collective allowances
Individual allowances increased in several sectors
Net collective allowances of EUR 54m were made in 2008 – construction real estate agriculture and consumer finance
89 36
-6
-157 Q4/07
-120 Q1/08
Gross loan losses
34
-85
-63 -157
Q2/08 Reversals
Q3/08
Q4/08
Net loan losses
FY 2008 EURm To credit institutions To the public - of which corporate Energy (oil gas etc.) Metals and mining materials Paper and forest materials Other materials (building materials etc.) Industrial capital goods Industrial commercial services etc. Construction and civil engineering Shipping and offshore Transportation Consumer durables (cars appliances etc.) Media and leisure Retail trade Consumer staples (food agriculture etc.) Healthcare and pharmaceuticals Financial institutions Real estate IT software hardware and services Telecommunication equipment Telecommunication operators Utilities (distribution and production) Other
- of which household Total 35
New Provisions and write-offs -38 -852 -635
Reversals and recoveries 6 418 305
0 0 -15 -46 -6 -60 -66 -12 -18 -37 -12 -76 -46 -1 -12 -64 -6 -10 0 -3 -144
0 0 15 11 10 28 11 1 6 16 5 20 23 4 4 19 3 12 1 0 117
0 0 0 -36 4 -32 -55 -11 -13 -21 -7 -56 -23 3 -9 -45 -2 2 1 -3 -27
2 5 0 100 – 21 170 15 33 76 21 55 21 – 7 12 18 – – 9 34
-216 -890
113 424
-103 -466
10 17
Net loan losses -32 -433 -330
Loan loss ratio bps 13 18 25
Credit rating migration expected following economic downturn – minor down-rating so far Corporate rating migration Q408 / Q407
•
Basel II will for the first time be tested in a downturn
•
Minor down-ratings so far but expected to accelerate in coming quarters
•
Rating migration will increase RWA and consequently lower capital ratios
56%
30%
Down-rated
25%
Up-rated
20% 16% 15% 10%
10% 5% 5%
5%
3% 1%
1%
> -5
-4
2%
1%
1%
4
>5
0% -3
-2
-1
0
1
2
Number of notches up- and down-rated
36
3
Appendix
Transaction Overview
Net Proceeds: approximately €2,500 million Type of Security: Ordinary Shares Subscription Ratio: 11 New Shares per 20 Existing Shares Shareholders receive 11 Subscription Rights for every Existing Share held on the Record Date Shareholders require 20 Subscription Rights to subscribe for 1 New Shares at the Subscription Price Subscription Price: EUR 1.81, SEK 20.75 and DKK 13.49 per New Ordinary Share(1) 43.8% discount to the theoretical ex-right price (TERP), adjusted for the proposed dividend, based on the SEK 48.10 closing price on 10 March Number of New Shares Issued: 1,430,059,525 (55% of pre-offering ordinary shares outstanding) Listing of New Ordinary Shares: NASDAQ OMX Stockholm, Copenhagen and Helsinki Shareholder Support and Underwriting: Nordea’s 3 largest shareholders, the Swedish State, Sampo Oyj and Nordea Fonden, have agreed to subscribe for their pro rata share, representing in aggregate 36.3% of the Rights Offering In addition, Sampo Oyj has agreed to underwrite an additional 13% of the Rights Offering, subject to certain conditions J.P. Morgan and Merrill Lynch International have agreed to underwrite the remaining 50.7% of the Rights Offering, subject to customary terms and conditions Structure: Reg. S / Rule 144A Joint Bookrunners and Joint Global Coordinators: J.P. Morgan, Merrill Lynch International, Nordea Markets
13 March: First day of trading after detachment of subscription rights 17 March: Record day for participating in the Rights Offering and Prospectus published 20 March - 3 April: Subscription Period 20 March - 31 March: Subscription Rights Trading Period (ends 27 March on NASDAQ OMX Helsinki) 20 March - 20 April: Trading of paid subscribed shares 8 April: Announcement of preliminary outcome of the Rights Offering 17 April: Announcement of final outcome of the Rights Offering Early May: Completion of the Rights Offering
Terms & Conditions
Key Dates
38
1)
The alternative EUR, SEK, DKK Subscription Prices apply when subscription is made by exercise of Subscription Rights registered in the respective Swedish, Danish and Finnish securities systems
Customer segments Nordic Corporate Merchant Banking Customers
Customers (000) Income (EURm) Volumes (EURbn): Lending Deposits Margins (%): Lending Deposits
Large Corporate Customers
Small and Medium Corporate Customers
6 1,079
18 916
951
43.2 17.1
42.0 17.3
0.99 0.39
0.94 0.64 1
Total Corporate Customers
Shipping and Oil Services
Financial Institutions
Total Corporate and Financial Institutions1
2,946
79 291
2 306
1 409
3,952
22.9 19.5
108.2 53.9
10.7 3.2
13.8 6.4
2.0 14.5
134.7 78.0
1.04 1.59
0.97 0.93
1.72 1.58
1.10 0.42
0.55 0.34
1.03 0.79
Includes Nordic – Total Corporate Customers, New European Markets Corporate Customers, Shipping, Oil Services & International Custom ers and Financial Institutions.
Nordic
Private Banking
New European Markets Corporate Customers
Gold Customers
Silver and Bronze Household Customers
Total Household Customers1
New European Markets Household Customers2
International Private Banking
Total Household Customer3
Customers (000)
83
2 510
746
12
Income (EURm)
324
1 911
999
3 234
108
85
3 427
Lending
4.5
90.5
10.9
105.9
4.6
0.9
111.3
Deposits
6.2
40.6
16.4
63.2
1.6
1.7
66.5
Volumes (EURbn):
Assets under Management
6.8
36.1
Margins (%): Lending
0.70
0.87
2.46
1.07
1.48
0.77
1.08
Deposits
0.71
1.47
2.57
1.74
1.12
0.60
1.70
1
2
39
3
Includes Nordic Private B anking, Nordic Gold customers, Nordic Silver customers, Nordic Bronze customers as well as other custom ers, who have accounts with Nordea , but do not participate in the customer programme. Includes Gold, Silver and Bronze custom ers. Includes Nordic – Total Household Customers, New European Markets Household Customers and International Private Banking.
Average balance and interest rates 2006
EURm
Average balance
Interest
2007
Average rate %
Average balance
Interest
2008
Average rate %
Average balance
Interest
Average rate %
Assets Loans and receivables to credit institutions Loans and receivables to the public Bonds and other interest-bearing securities Total interest-earning assets
Non-interest earning assets Total average assets
28,979
797
2.8
29,708
685
2.3
28,347
1,121
4.0
196,896
8,190
4.2
225,885
11,175
4.9
261,394
13,862
5.3
43,751
682
1.6
43,907
1,049
2.4
45,724
1,571
3.4
269,626
9,669
3.6
299,500
12,909
4.3
335,465
16,753
5.0
58,520
70,193
93,683
328,146
369,693
429,148
Liabilities Deposits by credit institutions
30,402
1,138
3.7
31,861
1,033
3.2
41,920
1,595
3.8
117,746
2,105
1.8
131,166
3,946
3.0
146,821
4,398
3.0
Debt securities in issue
82,502
2,220
2.7
95,111
3,218
3.4
108,787
4,587
4.2
Subordinated liabilities
8,041
310
3.9
7,849
399
5.1
7,728
393
5.1
-
27
n.a.
-
31
n.a.
-
687
n.a.
238,690
5,800
2.4
265,987
8,627
3.2
305,256
11,660
3.8
Deposits and borrowings from the public
Derivatives and other interest bearing liabilities Total interest-bearing liabilities
Non-interest bearing liabilities
75,810
87,795
106,342
Equity
13,645
15,911
17,550
328,146
369,693
429,148
Total average liabilities and equity Net interest income Net yield on interest-earning assets 40
3,869
4,282 1.4
5,093 1.4
1.5
Analysis of changes in interest income and expense
Increase/decrease due to changes, EURm
31 December 2007 compared to
31 December 2008 compared to
31-dec-06
31-dec-07
Average volume
Average interest rate
Net change
Average volume
Average interest rate
Net change
Assets Loans and receivables to credit institutions
20
-132
-112
-31
467
436
1 206
1 779
2 985
1 757
930
2 687
2
364
367
43
479
522
n.a.
n.a.
0
n.a.
n.a.
199
1 228
2 011
3 240
1 769
1 876
3 844
55
-160
-105
326
236
562
Deposits and borrowings from the public
240
1 601
1 841
471
-19
452
Debt securities in issue
339
659
998
463
906
1,369
Subordinated liabilities
-7
96
89
-6
0
-6
Derivatives and other interest bearing liabilities
n.a.
n.a.
4
n.a.
n.a.
656
Total interest-bearing liabilities
626
2 197
2 827
1 254
1 123
3 033
Loans and receivables to the public Bonds and other interest-bearing securities Derivatives and other interest bearing assets Total interest income Liabilities Deposits by credit institutions
41
Risks in Life operations
2006
2007
2008
Effects on policyholders
Effect on equity
Effects on policyholders
Effect on Nordea’s own account
Mortality – increased living with 1 year
-68.3
-9.1
-65.9
-8.2
-94.1
-7.9
Mortality – decreased living with 1 year
81.1
10.2
50.1
7.0
80.7
7.0
Disability – 10% increase
-14.0
-0.4
-6.6
-1.7
-35.9
-0.4
Disability – 10% decrease
13.4
0.4
6.1
1.7
35.4
0.4
50 bp increase in interest rates
52.5
-5.7
-127.7
-6.1
-183.0
-1.3
50 bp decrease in interest rates
-74.7
3.6
34.1
3.6
122.4
0.1
12% decrease in all share prices
-608.8
-6.0
-583.0
-22.0
-103.4
-7.3
8% decrease in property value
-183.4
0.0
-258.5
0.0
-176.9
-28.9
8% loss on counterparties
-46.3
-5.0
-105.6
-7.1
-144.3
-6.1
EURm
Effects on policyholders
Effect on Nordea’s own account
Change in assumptions
42
43
Household and SME (scored customers) by rating grade as of end 2008
Probability of Default PD rating and scoring as of end 2008
Exposure to corporate customers (rated) by rating grade end of 2008
Exposure to institutional customers by rating grade end of 2008
Exposure towards Corporates, distributed by rating grade1) EURm Rating
PD scale
den 31 december 2008
den 31 december 2007
Corporate
Corporate
EAD
Average risk weight
PD scale
EAD
Average risk weight
6+
0,03%
1 946
12%
0,03%
2 610
14%
6
0,03%
4 438
15%
0,03%
2 294
15%
6-
0,05%
5 075
19%
0,05%
3 873
18%
5+
0,07%
8 855
24%
0,07%
7 532
20%
5
0,10%
12 290
29%
0,10%
10 509
29%
5-
0,16%
16 079
37%
0,14%
14 184
35%
4+
0,24%
17 851
45%
0,20%
19 392
41%
4
0,35%
23 643
56%
0,32%
20 721
53%
4-
0,53%
18 865
66%
0,54%
16 740
67%
3+
0,81%
14 205
77%
0,85%
13 656
80%
3
1,18%
10 982
89%
1,31%
10 621
93%
3-
2,01%
9 513
98%
2,04%
7 209
101%
2+
3,63%
2 260
119%
3,39%
1 046
113%
2
6,16%
1 406
142%
5,21%
814
131%
2-
9,86%
635
160%
8,29%
462
146%
1+
14,79%
232
172%
12,43%
164
174%
1
20,71%
308
227%
17,74%
77
202%
1-
26,93%
100
247%
26,85%
43
220%
57%
0.61%2
131 947
55%
0.72%2 Exposure includes rated customers
1
Exposure weighted PD
2
44
148 684
Macro Economic Outlook Sweden
45
Benefitting from weakening currency
Domestic demand increasing- reduced pessimism within households
Tax cuts and lower interest rates strengthen households’ purchasing power (household consumption accounts for approx. 50% of GDP)
Stimulus packages with potential to boost consumption
Sharp rise in unemployment
Public finances in good order
Macro Economic Outlook Denmark
46
Steep drop in economic activity
Sharp depreciations in SEK, GBP and NOK has eroded competiveness
Falling commodity prices, tax cuts and lower interest rates prevent permanent damages and have positive influence on household finances. Possible increase in private consumption already in 2009
Very low unemployment
Low cyclicality among export companies
Macro Economic Outlook Finland
Economy to be helped by expected fall in inflation, real wages increase and interest rate fall fast. A solid position when export markets rebound
Export negatively affected by weakening markets in CEE-countries
Decline in investments, mostly in constructions
Lower interest rates and house prices affordability of households will reach highest level of the decade during autumn 2010. Lighter taxations will increase purchasing power. Lower debt levels in households than other countries
Slow down in public spending - curb the pace of total consumption
47
Macro Economic Outlook Norway
48
Sharp drop in mainland investment and weak exports
Strong growth in public investments and government consumption expected in the years ahead
Decline in investments, sharp drop in construction
Sustained growth in oil investments in 2009 which will offset some negative effects in manufacturing industry
Much lower interest rates will offset impact of unemployment and together with falling energy prices purchasing power will be sharply improved
Macro Economic Outlook Estonia
49
Retail sales and industrial production declining
Weak outlook for production and consumption
Household and business confidence is low
Expected decline in GDP and investments
Unemployment to increase, private consumption further weakened
Deceleration in inflation expected
Strong public finances, Estonia practically debt-free
Expected return to growth track, well into 2010
Macro Economic Outlook Latvia
50
Weakening housing market gives negative impact on residential investments and private consumption
Global recession weakens export
Economy forecasted to contract 6% in 2009
Expected growth in unemployment
Public deficit expected to grow 6% of GDP
Requested financial support from IMF and EU
Currency peg is expected to remain unchanged
Macro Economic Outlook Lithuania
51
On the brick of recession
Continued fall in GDP, no signs of leveling out
Economy projected to contract 3% in 2009
Economic crises weighs down export growth
Inflation trend downwards
Government programme supports financial stability, though an increase in public deficit is assumed
Cost If Ignalia power plats closes in end 2009 higher energy costs impact GDP negatively
Macro Economic Outlook Russia
52
Severe slow in growth due to sharp decline in oil prices
Gradual devaluation of rouble expected. Estimated to be approx 15% weaker in end 2009 compared to the beginning of 2009
Falling oil prices have negative impact on current account and public budget.
Investments expected to contract
Companies’ financing situation remains tight. Poor availability for consumer credit, drop in private consumption growth
Authorities reacted rapidly to the crises with an extensive rescue package with special support to banks and industries
Macro Economic Outlook Poland
53
Economy is slowing down fast
Growth in manufacturing in free fall
Exports and investments are contracting
Labour market remains fairly tight, together with temporary boost from tax cuts a decent growth in private consumption is supported
Possible avoidance of an outright recession expected
Economy estimated to start recovering gradually in Q2 2009
