Goldman Sachs European Financials Conference

Transcription

1 Goldman Sachs European Financials Conference Defining a winning strategy: specialisation vs diversification Fredrik Rystedt Group CFO 5 June 2009, Frankfurt

2 Nordea the leading Nordic bank Global Other Group¹ 29% Norway 12% Finland 15% A unique customer base Approx. 7.7 million HH customers in programmes and 0.7 million active corporate customers Denmark 21% Sweden 17% 6% New European Markets Strong distribution power Approx branches Financial strength EUR 16.1bn in tier 1 capital Tier 1 ratio 10.9% before transition rules Economies of scale Cost base/rwa ratio 2.3% Corp. lending % HH. Lending % % Share of Group income (size of bubbles) Diversification No single market accounts for more than one quarter of Nordea s income 2 1 ) Shipping, Oil services & International, International Private Banking and Group Functions and Financial Institutions

3 on track from Good to Great Profit orientation cost, risk and capital Strong income growth - costs under control Strong capital and funding position Ambitious vision and targets In line with targets, risk-adjusted profit ahead Clear growth strategy Strategic initiatives delivers according to plans More customers - more income per customer Strong customer-oriented values and culture Values have become part of Nordea s DNA Increasing scores on CSI¹ as well as ESI² 3 ¹ Customer Satisfaction Index ² Employee Satisfaction Index

4 by applying the middle of the road we aim to maintain the high business momentum Not reacting to the downturn Unchanged lending growth Unchanged growth in costs and investments Raise of hybrid Tier-1 capital only Middle of the road Focus on core customers selected new business opportunities Proactive risk management manage cost growth down and significant adjustment of growth investments Creating a Core Tier 1 ratio of 10% - rights issue and dividend reduction Over-reacting to the situation Closing down growth initiatives Drastic cost-cutting No dividend pay-out asset releases Not responding prudently to the economic crisis Balancing opportunities and challenges Lost momentum - withdrawing from customers 4

5 Product specialization The Nordea journey creating a Nordic champion Cross boarder Product diversification The rationale Create the leading financial service group in the Nordics and Baltic sea region Ensure the best improvement of shareholder value in the peer group Create high customer satisfaction for prioritised customer groups Improve the customer offering Expand with the customer base Advantages Diversification Cross-selling Customer knowledge and technical know how from mergers 5 Single country Economies of scope and scale in production, procurement, service and support Capital flexibility

6 Geographic diversification through Nordic consolidation NBH International Moscow Bank Estonia Latvia Bank Komunalny Lithuania PostgirotBank LG Petro Kredyt Bank Sampo Polska Tryg Vesta Orgres Bank Roskilde BWP 6

7 7 Well spread income streams from selected geographical markets Geographical split of total income in customer areas Q1 2009, EUR 2148m Global* 15% NEM 5% SE 26% NEM 6% NO 14% Global* 24% SE 18% NO 13% DK 25% FI 19% DK 23% FI 16% Share of total lending, EUR 274bn Corporate 59% Mortgage 32% Consumer 9% Strong franchise in four largely equally sized markets Different business cycles in the Nordic countries Less than 6% income proportion from New European Markets Well-diversified lending mix measured by geography and customer segments Low risk mortgage portfolio accounts for approximately 1/3 of total lending *Shipping, Oil services & International, International Private Banking and Financial Institutions

8 Well diversified industry split in the corporate portfolio No sector larger than 22% of the portfolio Small changes in industry split over time real estate exposure decreasing Corporate 59% Mortgage 32% Consumer 9% LOANS AND RECEIVABLES TO THE PUBLIC - CORPORATES BY INDUSTRY EURbn Q1 Share of End Share of End Share of 2009 portfolio 2008 portfolio 2007 portfolio Real estate management and investment 35,529 22% 35,500 23% 36,766 28% Other financial institutions 19,830 13% 16,275 11% 10,502 8% Industrial commercial services etc 14,487 9% 15,482 10% 15,403 12% Other, public and organisations 13,533 9% 10,462 7% 7,855 6% Consumer staples (food, agriculture etc) 12,658 8% 12,943 9% 11,267 8% Shipping and offshore 11,598 7% 11,296 7% 7,581 6% Retail trade 10,968 7% 11,020 7% 10,190 8% Other materials (chemical, building materials 5,698 4% 5,377 4% 3,568 3% Transportation 4,618 3% 4,017 3% 3,845 3% Construction and engineering 3,983 3% 3,671 2% 3,243 2% Utilities (distribution and production) 3,867 2% 4,022 3% 3,310 2% Industrial capital goods 3,308 2% 3,264 2% 3,189 2% Consumer durables (cars, appliances etc) 3,286 2% 2,752 2% 2,807 2% Energy (oil, gas etc) 2,872 2% 2,815 2% 1,448 1% Media and leisure 2,826 2% 3,171 2% 3,104 2% Paper and forest materials 2,239 1% 2,287 2% 1,928 1% Metals and mining materials 1,744 1% 1,750 1% 792 1% IT software, hardware and services 1,617 1% 1,489 1% 1,309 1% Telecommunication operators 1,553 1% 1,686 1% 1,062 1% Health care and pharmaceuticals 1,498 1% 1,606 1% 1,772 1% Telecommunication equipment 522 0% 623 0% 641 0% Banks 126 0% 206 0% 1,737 1% TOTAL LENDING TO CORPORATES 158, , ,321 8

9 Strong asset quality - approximately half of the credit portfolio is low risk a few challenging areas Total lending to public Q1 2009, EUR 274bn Commercial real estate Construction Dry bulk/container PE companies Baltics Russia Telecom/IT Metals/Mining Media/Leisure Transportation Tankers/Offshore Industrials Pulp and paper Special attention areas, 19% Medium risk areas, 33% Low risk areas, 48% Mortgage lending Residential real estate Telecom operators Fin Institutions Public sector Health care Companies owned by Private Equity funds 3% of total lending Well diversified between industries Insignificant exposure to junior debt Shipping and offshore 4% of total lending Largely collateralised and well diversified portfolio less than 16% towards high risk sectors (dry bulk and container) Commercial real estate 7% of total lending Largely secured with limited exposure towards the Danish market Baltic exposure 3% of total lending Prudent business model 9

10 Broad product range income split varies over the business cycle Differentiating through a complete offering, provided seamlessly across channels Product development in the current market environment favours standardised products with low capital consumption rather than complex and non-transparent products 1537 Income from key product groups FY 2008, EURm Corporate lending 10 Household mortgage lending Consumer lending Corporate deposits Household deposits Finance company products Payments Cards Guarntees and documentary payments Capital market products Savings Products & Asset Management Life & Pension

11 Nordea s relationship driven strategy Well diversified universal bank The customer base is the main asset Customer segment strategy to leverage the full value of the customer base 11

12 Segment strategy enables Nordea to fully exploit the opportunities of its customer base A clear segment strategy ensure that resources are prioritised to customers providing the best opportunities Value propositions has been developed for both household and corporate segments including contact and service policies, pricing and product solutions Corporate strategy is relationship driven and aims at building house-bank relations Emphasis on a holistic view on customers business 12

13 Tailored offerings to different segments Four segments based upon customer share of wallet Clear emphasis on relationship banking, being a lifetime financial partner, and identifying potential Gold customers in the lower segments Household segments Customers, 000 s Value proposition Challenging market conditions proves the Nordea house-bank concept Customer satisfaction stable increased loyalty Pro-activity and staying close to customers increasingly important Corporate segments Customers, 000 s Value proposition Private 83 banking Gold 2,474 Silver 1,255 The best Nordea has to offer Named advisor priority in access guaranteed best price Personal service when needed favorable price CMB 3 Large 25 Medium 70 Strategic partnership one point of entry tailored, individual solutions Partnership one point of entry individual solutions Business relationship individual solutions standard pro Bronze 13 3,785 Inactive Simple service fair price Small 590 Personal relationship simple service - efficient

14 Successful outcome of the Nordea journey Cost management Support to customers C/I down from 64 to 53 Total lending up 65% since 2004 Strong track record of improved cost efficiency High business momentum 2008 Income up 34% since Risk-adjusted profit Up 38% since 2005 C/I down from 64 despite strong volume growth By applying the middle of the road we trust we can maintain the high business momentum

15 Concluding remarks Strong start of the year on track from Good to Great Organic growth strategy adjusted Middle of the road Geographic diversification through Nordic consolidation Well spread income streams from geographical markets selected Broad product range income split varies over the business cycle A relationship driven strategy customers the main asset Segmentation strategy enables Nordea to fully exploit the opportunities of its customer base 15

16 Goldman Sachs European Financials Conference Defining a winning strategy: specialisation vs diversification Fredrik Rystedt Group CFO 5 June 2009, Frankfurt