Asset Management and Life & Pensions

Transcription

1 Asset Management and Life & Pensions Investor presentation Snorre Storset, Head of Wealth Management Christian Hyldahl, Head of Asset Management May 26, 2016

2 Agenda Introduction to Wealth Management Asset Management Life & Pensions Concluding remarks and Q&A Snorre Storset Christian Hyldahl Snorre Storset All

3 Wealth Management comprises Private Banking, Asset Management and Life & Pensions Key figures Operating income 1 Operating profit 2 Assets under Management 3 31% 40% 35% Int. 20% Denmark 31% 29% Sweden 19% 22% 100% = EUR 1,929m 100% = EUR 1,127m 100% = EUR 290.9bn Asset Management Private Banking Life & Pensions 46% Asset Management Private Banking Life & Pensions 23% 27% 18% 32% Retail Funds Private Banking AM Inst & Wholesale clients Life & Pensions 1) Operating income in ) Operating Profit in 2015, Wealth Management other is excl. from pie chart, but incl. in total number 3) Per end-q1 2016, Life & Pension incl. Pension Pools 3

4 20% profit CAGR since 2011 Wealth Management Operating income, EURm Operating profit, EURm AuM, EURbn 1,929 1,

5 A growing share of the Group Business area contribution, 2015 Operating income Operating profit Economic capital 19% 24% 10% Int. 20% Denmark 31% Sweden 22% +3pp +4pp +1pp Wealth Management Rest of Nordea Group Development versus

6 Asset Management From a Nordic to a leading European asset manager

7 Asset Management at a glance Diversified client base Asset mix AuM By benchmark 25% 33% 37% 34% 60% 16% Int. 20% Sweden 23% 22% Denmark 31% 6% 48% 18% Institutional Wholesale 1 1 Nordea Life & Pensions, Retail & Private Banking Fixed Income Money Market Equities Multi Assets Nordic European Rest of the world Assets under Management EUR 193bn 2 1) External clients (Institutions and 3 rd party distributors) 2) Per end-q

8 Top ranked by Morningstar on European fund net flows for 4 consecutive years (actively managed funds), EURbn Overall rating 3 year flows Overall rating 2016 YTD March Best selling funds 2016 YTD March BlackRock 61.8 JP Morgan 42.5 Eurizon Capital 36.1 Nordea 33.3 Deutsche Asset Mgmt Allianz Global Investors 26.7 Standard Life 24.8 Union Investment 24.8 UBS 24.2 Pioneer Investments 23.8 Nordea 4.3 Eurizon Capital 2.4 Aviva 2.2 Mercer Global Investments 2.1 Northern Trust 1.6 DNB 1.3 Old Mutual 1.2 Vanguard 1.2 Credit Suisse 1.0 Smith & Williamson 1.0 Aberdeen UK Property Feeder 3.5 JPM Global Macro Opportunities 2.9 Nordea Stable Return 2.6 BlueBay Global Multi-Asset Credit 1.4 Old Mutual Global Eq Abs Return 1.4 MMAccess II EUR Multi Credit 1.3 Unconstrained outcome oriented fund Mercer 5Y Investment pa return 3 / CCF vol.: 7.49% / 4.19% 1.2 Eurizon (Sharpe EasyFund : 1.64) Treasury EUR Well positioned for LYE 1.1 Henderson Best in Instl class Shrt-Dur 10Y track Bd record 1.1 Invesco Global Targeted Returns 1.1 #4 #1 #4 excl. Stable Return fund #3 Source: Morningstars estimated 3Y net flow in OE mutual funds (excl. Money market, funds of funds & ETF s) data extracted Source: Morningstars estimated 2016 net flow in OE mutual funds (excl. Money market, funds of funds & ETF s) data extracted Source: Morningstars estimated 2016 net flow in OE mutual funds (excl. Money market, funds of funds & Feeder ) data extracted

9 Delivered strong AuM growth driven by high net flows AuM development from net flow and market appreciation, EURbn 193 Avg. annual net flows of 7% of AuM since Q Q Net flow split on Group internal / external distribution has in the period been 46% / 54% In 2015 vast part of net flow went into Multi Assets Avg. market appreciation of 5% of AUM since 2011 Fluctuated in line with the general market Acc. Market appreciation Acc. Net Flow - Wholesale and Institutional Acc. Net Flow - Nordea Retail, Private Banking & Life 9

10 Delivered strong earnings growth Income development, EURm Income Margin, bps 41 Margin improvement derived mainly from changes in client and product mix Higher growth in Retail channels i.e. both through Nordea and Wholesale compared to Institutional Clients and Nordea Trad. Life Margins 2015 Profit development, EURm Nordea Retail, Private Banking and Life & Pensions 41bp Wholesale and Institutional Clients 41bp 3 years earnings growth: EUR 322m

11 Strong investment performance Investment performance last 3Y 1 15% % of the AuM with positive Excess Return Excess return 10% 5% 0% -5% Negative 18% Positive excess return 82% Avg. excess return 1.18% -10% AuM Cumulative based on 605 portfolios 82% of composites outperformed benchmarks in 3Y 42% of our rated funds have 4- or 5-Star Morningstar ratings vs. 32.5% average 2 1) Gross of fee 2) Including funds being marketed in Luxembourg 11

12 Multi channel distribution network focus on brand building in Europe Nordea distribution AuM Development, EURbn Q1/16 Nordea Life & Pensions, Retail & Private Banking Wholesale & Institutional distribution AuM Development, EURbn Q1/16 Wholesale Institutional 12

13 Growing Wholesale distribution throughout Europe Asset mix, EUR 31bn Fixed Income Equities 40% 45% Multi Assets Well diversified asset, client and country mix 14 strategies comprise 80% of assets 27 strategies comprise 90% of assets High share of AuM in defensive strategies 14% Asset country split, EUR 31bn Italy 15% 21% Germany 6% 6% Swiss/Austria Iberia 8% 18% France UK 10% Benelux 16% Rest of the world Servicing ~300 international fund distributors incl. 25 global wealth managers Sales force serviced by central client/product service hub in Luxembourg Both selling to advisory and discretionary segment 13

14 Stable institutional client base, with focus on increasing margins Asset mix, EUR 48bn 13% Fixed Income Money Market Equities 25% 55% Multi Assets 7% Asset country split, EUR 48bn Stable Institutional client base focusing on increasing value of AuM Servicing more than 475 Nordic and international clients Sales force located in the Nordics, Germany, UK and US serviced by central client service hub in Copenhagen #1 ranked by Nordic institutions 1 10% 9% 10% 14% 17% 40% Denmark Germany Sweden Norway Finland Rest of the world 1) Prospera 14

15 Strong product offering to Nordea Retail, Private Banking & Life Asset mix, EUR 115bn Fixed Income 28% Money Market 40% Equities Multi Assets 8% 25% #1 in Nordic retail fund market with a 16% market share Strong all weather product range Multi Assets solutions in high demand Broad fund range supports Nordea Life s transformation to market return products Asset country split, EUR 115bn 19% 11% 2% 34% Sweden Denmark Finland Norway International 34% 15

16 % 50. 0% 40. 0% 30. 0% 20. 0% 10. 0% 0.0% Efficient and scalable platform Cost development, EURm 55% Cost/Avg. AuM, Bps % Costs C/I 12.6 C/I ratio is among the lowest in the European asset management industry Has been achieved through scale and simplification Expected future C/I to be in range of 30-35% The strong growth requires investments in sales support and operations Increased work in relation to regulation and compliance IT investments Cost/ Avg. AuM 16

17 Business risks and challenges Beta Low NAV sensitivity due to defensive product mix Diversified client base - documented ability to attract net flows in volatile market environment MiFID Following implementation closely Nordea will not be categorised as independent advisor Substantial implementation costs Opportunities for Wholesale distribution Margin pressure Traditional long only equity products constitute small part of AuM ~21% Strong investment performance with 82% of AuM outperforming Multi Asset offering is resilient to margin pressure 17

18 Strong position for future growth Multi channel distribution All weather product range Low yield environment Exploit strong momentum in Europe Scalable platform Strong distribution through Nordea s network in the Nordic region that has a strong savings culture Growing Wholesale distribution throughout Europe Broad product range distributed through all channels Strong internal capabilities supplemented with external ESG integration Well positioned through leading Multi-Assets competences recognised across the client base Migration from savings accounts to savings products Developed from almost unknown to strong and well recognised asset manager Cross sale opportunities by becoming preferred partner Global industry where scale is a prerequisite to stay competitive Coping with increased regulatory requirements 18

19 Life & Pensions Low-cost and capital efficient business model

20 Largest Life & Pensions provider in the Nordic countries Market leader in market return products Main focus areas Life & Pensions MRP market share 25% 12 months rolling est., Q4/15 Finland & Sweden: Individual life savings and risk-related products. Finland #1 Nordea Bank distribution Sweden #1 11% Norway #1 Denmark & Norway: Corporate & Denmark #3 individual pensions and risk-related products. NLP s sales force, Nordea 9% Bank & external distribution 6% 5% 4% 7% 15% 6% 4% 4% 1% Nordea Peer1 Peer2 Peer3 Peer4 Peer5 Pension Funds: Poland, Estonia & Latvia Growth in GWP vs Q4/14 20

21 Responding to market development Trends Strategic response Profitability (RoE) over volume (GWP) Cost efficiency Regulatory transformation Capital efficiency Low yield environment Product portfolio optimised Demographics and customer behaviour Bancassurance 21

22 % 17. 0% 15. 0% 13. 0% 11. 0% 9.0% 7.0% 5.0% Delivered a turnaround Strong starting point GWP development, EURbn Cost development, EURm 10,000 8,000 6,000 4,000 56% 72% % 87% 89% % 80% 60% 40% 20% % % 43% 37% 33% % 50% 40% 30% 20% 10% 2, % % Total GWP R12m MRP share of GWP Total costs C/I AuM development, EURbn RoE development, EURm % 46 50% 52% 58% 42% % 50% 40% 30% 20% 10% 1,649 1,693 1,754 1,517 1,565 1,614 1,674 1,498 1,566 1,674 1,703 1, % 18.5% % Q2/13 Q4/13 Q2/14 Q4/14 Q2/15 Q4/15 Total AUM MRP share of AUM Equity YTD RoE 22

23 Low cost growth through bancassurance Bank sold market return products, GWP EURbn Simplified product options Automated processes Deep integration with the Bank Low yield environment New product generation

24 Market Return Company also in terms of AuM AuM split by product category, EURbn Net flow split by product category, EURbn % % MRP Trad 24

25 Strong growth in market return and risk profits Product profits Market return and Risk, EURm Risk MRP 25

26 Significantly improved cost efficiency GWP development, EURbn Cost/AuM, Bps % 43% 43% 37% 33% 60% 50% 40% % % 10% Costs/GWP, % % Total costs C/I

27 Solvency II considerations Business driven Regulatory driven Attractive new market return and risk business Disciplined risk management of legacy traditional business Liability Driven Investments Cost efficiency Further optimisation of investment strategy/hedging Volatility adjustment in DK, NO, FI No use of matching adjustment Transitional on technical provisions in NO Equity transitionals Partial internal model longevity in DK IORP 1 exception in SE 1) Institutions for Occupational Retirement Provision 27

28 Strong Solvency II capital position enabled dividend in Q Solvency II capital position, EURbn 175% 169% Current SCR 1 Composition 1% Market risks 27% 2% Life underwriting risk 3% Health underwriting risks 67% Default risk Operational Risk Market Risk drivers % 11% 2% 12% 22% 24% 18% Type2 equities Type1 equities Spread Concentration Interest rate Property Currency Q Q SCR Own Funds Own funds contribution T1 Shareholder s equity 29% T1 Other reconciliation reserve 44% T2 Subordinated loans 27% 1) Solvency capital requirement 28

29 Key sensitivities Key sensitivities on Q position Base -50bp +50bp Equity -12% A- A+ Equity -25% Lapse 175% 170% 171% 171% 167% 167% 168% 174% Scenarios tested as at IR -/+ 50 bps: Instantaneous parallel shift of interest rates (-/+ 50 bps) Eq -12%/-25%: Instantaneous -12% /-25% decrease in equity investments A -/+: Instantaneous parallel shift of interest rates (-/+ 50 bps) combined with decreased equities (-12%) and properties (-3%) Lapse: Instantaneous mass lapse (+10%) 0% 50% 100% 150% 200% 29

30 Business model supporting future dividend capacity Capital requirement vs. contribution, EURm Dividends paid: EUR 300m in 2013, EUR 220m 2014, EUR 300m in Q Self-financing growth in market return and risk products Capital release from run-off traditional book Balance sheet volatility management Trad MRP Solvency capital requirement Reconciliation reserve 30

31 Continue to improve quality of Life Strong platform RoE 18% in 2018 Market return company Next generation product offering fuel growth Low cost growth through bancassurance Life business platform efficiency improve further Competitive product offering Solvency II optimised business model/strategy Leading market position Strong risk culture 31

32 Concluding remarks and Q&A

33 Thank you for listening! Contact information: Head of Investor Relations Rodney Alfvén Mob.: Senior Investor Relations Officer Andreas Larsson Mob.: