Debt investor presentation Q2 2019 - Nordea
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Most
Financial impressive
Issuer of
the year
Financial
Institution
Debt investor presentation Q2 2019
BorrowerDisclaimer
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 forward-looking 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.
2Table of contents 1. Nordea quarterly update 4 2. Capital 17 3. Funding 20 4. Macro 33 3
1. Nordea quarterly update 4
The largest financial services group in the Nordics
Household market Corporate & Institutional
position* market position**
#1 #1 Business position
- Leading market position in all four Nordic countries
- Universal bank with strong position in household, corporate and wealth management
- Well diversified business mix between net interest income, net commission income and capital markets income
10 million customers and strong distribution power
#1 - Approx. 9.5 million household customers
#2
- 570,000 corporate customers, including Nordic Top 500
#1-2 Operating Income
- Approx. 360 branch office locations
#2 #2-3 - Enhanced digitalisation of the business for customers
- Income evenly distributed between net interest income and ancillary business 6%
#3-4
Financial strength
#2-3 - EUR 9bn in full year income (2018) 18%
- EUR 583bn of assets (Q2 2019) 34%
#2 - EUR 31.1bn in equity capital (Q2 2019)
- CET1 ratio 14.8% (Q2 2019)
- Leverage ratio 5.0% (Q2 2019)
AA level credit ratings 18%
- Moody’s Aa3 (stable outlook)
- S&P AA- (stable outlook)
- Fitch AA- (stable outlook) 24%
EUR ~26bn in market cap (Q2 2019) Personal Banking Asset & Wealth Management
- One of the largest Nordic corporations Commercial & Business Banking Group Corporate Center & Other
- A top-15 universal bank in Europe
Wholesale Banking
5 * Combined market shares in lending, savings and investments
** Combined market position from Corporate & Investment Banking, Markets and Commercial & Business BankingNordea is the most diversified bank in the Nordics
A Nordic-centric portfolio (97%) Lending: 45% Corporate and 55% Household
Russia Other Public Sector
2% Other 1% Household (Denmark)
1%
12% 14%
Denmark Shipping and offshore
26% 3%
Sweden Retail trade
30% 3%
Consumer staples Household (Finland)
(food, agriculture etc) 13%
3%
Credit portfolio Credit portfolio
Industrial commercial
by country services etc by sector
4%
EUR 300bn* EUR 300bn*
Other financial
institutions
5%
Household (Norway)
Real estate 12%
(residential)
Finland 6%
20% Real estate
Norway (commercial) Household (Sweden)
21% 8% 16%
6 * Excluding reversed reposExecutive summary
Improved business momentum despite tough environment
• Regaining market share in mortgages
• Strong inflow in Asset & Wealth Management
• Improved customer satisfaction
Volumes not offsetting for margin pressure
Costs increased 3% in the quarter due to depreciations and seasonality
Loan loss ratio at 10 bps
• We expect largely unchanged credit quality in the coming quarters
Common Equity Tier 1 (CET1) ratio improved by 20 bps to 14.8%
Results remain unsatisfactory and further actions are needed
Financial targets including capital and dividend policy will be reviewed –
expected communication after publication of third quarter resultsGroup financial highlights second quarter 2019
Income statement, EURm Q2 2019 Q1 2019 Q2/Q1 change Q2 2018 Q2/Q2 change
local currencies local currencies
Net interest income 1,071 1,056 2% 1,110 -1%
Net fee and commission income 743 737 1% 800 -6%
Net fair value result 283 264 7% 260 8%
Other Income 44 59 408
Total operating income 2,141 2,115 2% 2,578 -16%
Total operating income excl. IAC* 2,141 2,115 2% 2,229 -4%
Total operating expenses -1,180 -1,452 -18% -1,154 3%
Adj.** operating expenses excl. IAC* -1,180 -1,150 3% -1,154 3%
Profit before loan losses 961 663 45% 1,424 -32%
Net loan losses -61 -42 48% -59 5%
Operating profit 900 621 45% 1,365 -33%
Adj.** operating profit excl. IAC* 900 923 -2% 1,016 -11%
Net profit 681 443 53% 1,115 -38%
8 * IAC = Items affecting comparability: Includes Q218: Divestment Nordea Liv & Pension Denmark 262m and UC 87m. Q119: Provision -95m
** Adjusted for Resolution Fees: Q119: 207mContinued improvement in lending volumes
Lending volumes (Jan 18 = Index 100) Comments
106.4 • Strong growth in the corporate segment
• Household lending volumes accelerating
104.6
102.9
100.0
Mar Sep Mar Jun
18 18 19 19
Corporate
Household
Household including Gjensidige
9Assets under Management
Flow, EURbn Comments
3.8
1.0 • Highest inflow since Q316, all areas
-0.6 -0.4
contributing
-2.8
-1.9
• EUR 1.4bn Private Banking inflow in the
-3.5
quarter
-5.3
Q218 Q318 Q418 Q119 Q219
• Increased sales activity and new products in
Reported
Excl. PBI, PB / PeB moves* Institutional Sales support momentum
AuM development, EURbn
312
307 307
11 300
11
283
1
296 300 282 5%
1%
-1%
-2%
-5%
Q218 Q318 Q418 Q119 Q219
PBI* Adj. annualised net flow / AuM
AuM
10 * PBI = Private Banking International, PB = Private Banking, PeB = Personal BankingStrong asset quality
Total net loan losses*, EURm Comments
• Net loan losses EUR 61m in Q2 vs EUR 42m in Q1
106
• Q2 loan loss ratio 10 bps vs 7 bps in Q1
79
71
59 61
44 42
40
30
Outlook
• We expect largely unchanged credit quality in the
coming quarters
Q217 Q317 Q417 Q118 Q218 Q318 Q418 Q119 Q219
11 * Total net loan losses: includes Baltics up until Q317Outlook
Cost
• Costs expected to be 3% lower in 2021 vs. 2018 in constant currencies*
• Costs expected to be lower in 2019 vs 2018 in constant currencies**
• Total cash cost expected to be up to 10% lower in 2021 vs. 2018 in constant currencies
• Total cash cost expected to be lower in 2019 vs. 2018 in constant currencies
Credit quality
• Our expectation for the coming quarters is that credit quality will remain largely unchanged
Capital policy
• Capital policy to maintain a management buffer range of 40-120bps
• The ambition is to achieve a yearly increase in the dividend per share, while maintaining
a strong capital position in line with the capital policy
Financial targets including capital and dividend policy will be reviewed –
expected communication after publication of third quarter results
12 * Excluding items affecting comparability, ie EUR141m in goodwill write-down in 2018 related to Russia
** Excluding items affecting comparability, ie EUR141m in goodwill write-down in 2018 related to Russia transaction costs of EUR 90m in 2019, higher resolution fee in 2019 as well as resolution fees moved to the
expense line and provision of EUR 95m in Q119Key initiatives to drive cost efficiency
priorities
Key Priorities
Drive cost efficiency
Increased usage of AI and robotics 18 more processes robotised
Workforce shift 300 FTE’s added in Poland & Baltics, +7.2% QoQ
Simplification of products and services 64 out of 370 products in DK and NO discontinued
Efficiency by consolidating common units Continued consolidation of capabilities +100 FTE’s
13Key initiatives to increase business momentum
Key priorities
Priorities
Increase business
momentum
Investments in Private Banking EUR 1.4bn net inflow in Private Banking
Stable return strategy to be distributed in the US retail
New distribution channels market through John Hancock
Regain momentum on mortgages Increased market share of new sales across all countries
Engaged employees Continuous positive trend on employee engagement QoQ
14Continued debate over AML issues
• The Danish FSA started looking into our processes in 2015 and
handed it over to the Danish Public Prosecutor in 2016.
Investigation not yet concluded Nordea in the Baltics
– The ‘troika laundromat’ is a complex of allegations which has been
covered by media on several occasions and is included in the Danish • Nordea has never had a business focus on mirror trading and non-
investigation resident deposits, etc
• Nordea’s Baltic operation and Luminor have not been subject to
• In October 2018, Hermitage Capital filed money laundering
any AML/Sanctions regulatory fines
allegations with all Nordic regulators. Swedish and Finnish
• In September 2018, Nordea and DNB agreed to jointly sell 60% of
authorities have stated no formal investigations would be opened Luminor to Blackstone. Nordea and Blackstone have entered a
separate forward sale agreement of Nordea’s remaining 20%
• In 2015, Nordea was fined by the Swedish FSA in 2013 (SEK holding in Luminor
30m) and 2015 (SEK 50m) for insufficient AML processes in the
• Due diligences were conducted by Nordea and DNB when
past. In 2018, the Swedish FSA concluded a review of Nordea Luminor was created in 2017, and by Blackstone in the acquisition
AML prevention, resulting in satisfactory feedback process
• The transaction is subject to customary regulatory approvals and
• In Q1 2019, Nordea made a provision of EUR 95m related to past
is most likely to close in H2 2019
weak AML processes
15Significant investments to combat financial crime
Actions against money-laundering Significant build-up
• We collaborate closely with all relevant authorities including law
Employees EURm
enforcement and regulators and encourage to even closer collaboration on
multiple levels as financial crime knows no borders 1,600 1,500 1,500 1,500 300
• Significantly strengthened financial crime defense, more than EUR 700m 1,400
250
spent between 2015 and 2018 1,200
216
1,200
193
• Approx. 2 billion transactions on annual basis subject to hundreds of 1,000 174 177
200
different monitoring scenarios, resulting in hundreds of thousands of alerts
which lead to thousands of Suspicious Activity Reports (SARs) filed with 800 150
the relevant authorities 115
600 500 Financial crime prevention staff
100
• More than 1,500 employees dedicated to working on prevention of Financial crime prevention spend, annually
financial crime 400
50
200
• 12,000 employees in direct contact with our customers are trained
regularly to identify signs of financial crime 0 0
2015 2016 2017 2018 2019
Strong governance model
1. Governance and Control
4. Transaction Sanctions
2. Know Your Customer 3. Customer Screening 5. Transaction Monitoring 6. Intelligence and Analytics
Screening
162. Capital 17
Common Equity Tier 1 ratio development
Q219 vs Q119 Comments
• Common Equity Tier 1 ratio increased by 20 bps to
14.8 120 bps
130 bps 14.6 0.2 14.8%
0.1 0.1
• Risk Exposure Amount EUR 160bn in Q2 vs
13.6
13.3
EUR 163bn in Q1
• Management buffer 120 bps
EUR EUR
21.7 bn 21.7 bn
Q119 Q119 Volumes Consolidation Other Q219 Q219
Capital of Luminor Capital
Commitment* Commitment*
18 * Nordea’s capital commitment EUR 21.7bn in nominal termsCapital position
Capital position and requirement Comments
120 bps • In Q2 2019 Nordea’s CET1 ratio was 14.8% and total capital ratio was
19.8%.
13.1% P2G • During the transitional period Nordea has committed to maintain a
nominal capital level based on SREP 2018.
P2R
3.1%
• This level equals EUR 21.7bn in CET1 (~13.6%) and EUR 27.8bn in
CCyB own funds (~17.4%)
1.0%
• Regulatory CET1 requirement including transitional Pillar 2 estimated at
SRB
2.0% 13.1% in Q1 2019.
EUR 21.7bn 14.8%
• During Q2 2019 the 2% O-SII was applicable. However, from Q3 2019
~13.6%
2.5% CCoB this will be replaced by the Systemic Risk Buffer (SRB) of 3%
• In Q4 2019, ECB is expected to decide on potential Pillar 2
Requirement (P2R) and Pillar 2 Guidance (P2G) which are to be met
fully by CET1 capital. In addition to the CET1 capital requirement, we
4.5% Minimum Cap.Req
expect to have Tier 1 and Tier 2 requirements at the minimum level
• Current MDA level of 10% in Q2 2019 will increase by 1% following the
Nordea’s capital CET1 ratio Q219 Regulatory Future requlatory introduction of the Systemic Risk Buffer in Q3 2019 as well as with
commitment CET1 req. Q219 req. (est Q120) additional adjustments due to changes in the CCyB*
P2G Transitional pillar 2 Capital conservation buffer (CCoB)
• The Board of Directors has decided on a capital policy with a
MDA Level Countercyclical buffer (CCyB) Min. CET1 requirement
management buffer range of 40-120bps
P2R O-SII/ Systemic risk buffer
19 * Including decided changes: Denmark has decided to raise the countercyclical buffer rate from 0.5% to 1% by 30 September 2019 and from 1% to 1.5% by 30 June 2020. Norway has decided to raise the
countercyclical buffer rate from 2% to 2.5% by 31 December 2019. Sweden has decided to raise the countercyclical buffer rate from 2% to 2.5% by 19 September 2019.3. Funding 20
Diversified balance sheet
Total assets EUR 583bn
Cash and balances with Deposits by credit
central banks institutions
Loans to credit institutions
Deposits and borrowings
from the public
Loans to the public Credit
CDs and CPs* Short-term funding S&P Moody’s Fitch
ratings
Short-term A-1+ P-1 F1+
Covered bonds Covered
AAA Aaa -
Long-term funding** bonds
Senior
Senior bonds unsecured AA- Aa3 AA-
(preferred)
Interest-bearing securities
incl. Treasury bills Derivatives
Senior
non- A Baa1 AA-
Derivatives preferred
Other liabilities
Tier 2 A- Baa1 A+
Other assets Subordinated liabilities Additional Baa3/
Capital base BBB BBB
Equity Tier 1 Ba1***
Assets Liabilities and Equity
21 * Including CDs with original maturity over 1 year
** Excluding subordinated liabilities
*** Unsolicited ratingsSolid funding operations
Long-term issuance YTD Q2 2019, gross volumes, EUR 15.1bn* incl. AT1 High level issuance plan for 2019
EURm AT1 T2 Senior non-preferred Senior unsecured** Covered • Full year 2019 long-term funding plan expected around EUR 20-25bn, to
4 500
be issued via covered bonds, senior preferred and senior non-preferred
4 000
bonds, of which EUR 5.2bn was issued in Q2 2019*
3 500
3 000 • Around 50% to be issued in domestic markets
2 500
• The earlier communicated roll-out plan of senior non-preferred remains
2 000
unchanged, i.e. around EUR 10bn to be issued until the end of 2021 of
1 500
which around EUR 2.6bn has already been issued
1 000
500 • (for more information, see slide 27-29)
0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
• In 2018 long-term issuance amounted to EUR 22.6bn, including covered
bonds, senior preferred and senior non-preferred bonds*
Long- and short-term funding outstanding, EUR 200bn Distribution of long vs. short-term funding, gross volumes***
Long-term funding Short-term funding** Column1 EURbn
CDs & CPs**
22% 250
200
Subordinated debt
5%
150
Domestic covered
Senior non-preferred bonds
bonds 46% 100
1%
50
International senior
unsecured bonds
14% 0
Q4 Q4 Q4 Q4 Q4 Q4 Q4 Q4 Q4 Q4 Q4 Q4 Q4 Q4 Q4
Domestic senior International covered 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
unsecured bonds bonds
3% 9%
22 * Excluding Nordea Kredit covered bonds *** As of Q2 2019 79% of total funding is long term
** Including CDs with original maturity over 1 yearShort-term funding – prudent and active management
Comments Short-term issuance
EURbn
70
• Short term issuance well diversified between currencies, duration,
60
programs and investors
50
• Nordea maintains its active focus on issuing long-dated (18m to 3yr) 40
short-term issuance out of the US market 30
20
• The US CP market has been more active in Q2 than NY CD’s
10
• During Q2 Nordea has reached a good balance between European Q4 Q4 Q4 Q4 Q4 Q4 Q4 Q4 Q4 Q4 Q4 Q4 Q4 Q4 Q4
0
and US issuance 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
• Total issuance remains around EUR 40bn
Split between programs
• Pricing slightly improved since Q1 EURbn
12
10
8
6
4
2
0
ECP London CD French CP NY CD US CP
23Nordea’s global issuance platform
2% 16%
1%
3% 7% 2%
80%
NOK
(EUR 13bn eq.) 90%
100%
SEK
DKK (EUR 34bn eq.)
(EUR 52bn eq.) 3%
3%
5% 31%
10%
20% 29%
38% 66%
47%
48%
90% JPY
71%
28% (EUR 1bn eq.)
GBP CHF 11%
(EUR 2bn eq.) (EUR 1bn eq.)
USD
(EUR 18bn eq.) EUR
(EUR 40bn)
Covered bond Senior unsecured Senior non-preferred CDs > 1 year Capital instruments
24Nordea covered bond operations
Nordea Eiendomskreditt Nordea Hypotek Nordea Kredit * Nordea Mortgage Bank
Four aligned covered
bond issuers with
complementary roles
Legislation Norwegian Swedish Danish/SDRO Finnish
Cover pool assets Norwegian residential mortgages Swedish residential mortgages primarily Danish residential & commercial Finnish residential mortgages primarily
mortgages
Cover pool size EUR 16.4bn (eq.) EUR 51.4bn (eq.) Balance principle EUR 21.8bn
Covered bonds outstanding EUR 9.5bn (eq.) EUR 31.4bn (eq.) EUR 52.2bn (eq.) EUR 16.2bn
OC 71% 63% CC1/CC2 33%/10% 35%
Issuance currencies NOK, GBP, USD, CHF SEK DKK, EUR EUR
Rating (Moody’s / S&P) Aaa / - Aaa / AAA Aaa / AAA Aaa / -
• Covered bonds are an integral part of Nordea’s long term funding operations
• Issuance in Scandinavian and international currencies
• ECBC Covered Bond Label on all Nordea covered bond issuance
25 * Data as per Q119Most
Nordea recent benchmark transactions Financial
Issuer of
impressive
Financial
the year Institution
Borrower
Issue Maturity
Issuer Type Currency Amount (m) FRN / Fixed Callable
date date
Nordea Eiendomskreditt Covered GBP 300 FRN Jun-18 Jun-23
Nordea Bank Senior non-preferred EUR 1,000 Fixed Jun-18 Jun-23
2,250 Fixed
Nordea Bank Senior non-preferred SEK Jun-18 Jun-23
750 FRN
750 Fixed
Nordea Bank Senior non-preferred USD Aug-18 Aug-23
250 FRN
Nordea Bank Tier 2 USD 500 Fixed Sep-18 Sep-33 15NC10
Nordea Bank Senior non-preferred NOK 2,000 FRN Sep-18 Sep-23
SEK 1,750 FRN
Nordea Bank Tier 2 Sep-18 Sep-28 10NC5
NOK 500 FRN
Nordea Hypotek* Covered SEK 5,000 Fixed Jan-19 Sep-24
Nordea Eiendomskreditt* Covered NOK 10,000 FRN Feb-19 Jun-24
Nordea Mortgage Bank Covered EUR 1,500 Fixed Mar-19 Mar-26
Nordea Bank Additional Tier 1 USD 1,250 Fixed Mar-19 Mar-26 PerpNC7
Nordea Eiendomskreditt* Covered NOK 1,500 Fixed May-19 May-26
Nordea Mortgage Bank Covered EUR 1,000 Fixed May-19 May-27
Nordea Bank Senior preferred, Green bond EUR 750 Fixed Jun-19 Jun-26
26 * Continued tap issuanceTimeline for MREL and Banking Package*
SRB public SRB public MREL Rest of Banking Interim binding MREL target
statement policy on Banking Package enters MREL deadline
on CRR2 Package into force
SRMR1/BRRD1 SRMR2/BRRD2
BRRD2 National implementation
2019 2020 2021 2022 …2024
Interim MREL
SRMR1/BRRD1 MREL
SRMR2/BRRD2 MREL
27 * Banking Package consists of amendments to CRR (Capital Requirement Regulation), CRD IV (Capital Requirement Directive IV), SRMR (Single Resolution Mechanism Regulation),
BRRD (Bank Recovery and Resolution Directive)SNP and MREL requirements
Comments Current senior bonds available for potential refinancing in SNP format
• Sufficient senior unsecured debt available for potential refinancing in EURbn 36
SNP format
8
• MREL requirement based on SRB current methodology expected to be
decided after ECB SREP decision
• Decided interim MREL requirement of 7.1% of TLOF*
28 Final maturity
• Can be met by own funds, eligible SNP and senior unsecured debt before 2022
• MREL subordination requirement expected to be decided in the ~10
beginning of 2021, based on the SRB public MREL policy on Banking
Package Outstanding Senior Unsecured Debt excl. issued SNP issuance plan incl. issued SNP EUR 2.6bn &
SNP EUR 2.6bn potential additional MREL
SRB current MREL methodology and SRMR2/BRRD2 subordination requirement
Market confidence charge CBR – 125bps
P2R
Recapitalisation amount P1
CBR At least 8% of TLOF
Loss absorption amount P2R
P1
SRB current MREL methodology SRMR2/BRRD2 subordination***
28 * Total Liabilities and Own Funds
** At least 8% of TLOF and potentially 2x(P1+P2R)+CBR, applied for banks with total assets > EUR 100bnPending regulatory clarity, current SNP issuance plan is unchanged
Comments Capital and funding plan
Point of Non Viability Resolution
• Currently planned total SNP issuance of ~EUR 10bn* during
2018 and 2021 (~4 years) EURbn
• Potentially updated SNP issuance plan after clarity about SRB
public MREL policy on Banking Package and SRB MREL
subordination decision ~10
Own funds EUR 32bn
• Nordea’s strong capital position will provide a substantial 4 4 4
buffer to protect SNP investors 4 4 4 4
• Nordea’s own funds of EUR 32bn** will rank junior to SNP
investors
24 24 24 24 24
• Nordea has issued SNP of EUR 2.6bn since June 2018
CET1 AT1 T2 SNP issance Remaining
plan & potential Senior
additional MREL Unsecured Debt
29 * To be subject to balance sheet adjustments
** Excluding amortised Tier 2Maturity profile
Maturity profile Comments
EUR bn
300
• The balance sheet maturity profile has during the last couple of years
become more balanced by
200
• Lengthening of issuance and focusing on asset maturities
100
• Resulting in a well balanced structure in assets and liabilities in general,
0
as well as by currency
-100
• The structural liquidity risk is similar across all currencies
-200
• Balance sheet considered to be well balanced also in foreign currencies
-300
• Long-term liquidity risk is managed through own metric, Net Balance of
-400
10y Not specified Stable Funding (NBSF)
Assets Liabilities Equity Net Cumulative Net
Maturity gap by currency Net Balance of Stable Funding
EURbn EURbn
60 120
50 100
40
30 80
20 60
10 40
0
-10 20
-20 0
-30
-40
10 y Not NBSF is an internal metric, which measures the excess of stable liabilities against stable assets. The
specified stability period was changed into 12 month (from 6 months) from the beginning of 2012. In Q3 2017
EUR USD DKK NOK SEK the data sourcing was updated and classifications now in line with the CRR.
30Liquidity Coverage Ratio
Liquidity Coverage Ratio Comments
350% • EBA Delegated Act LCR in force starting from October 2016
300%
• LCR of 178%
250%
200% • LCR compliant in USD and EUR
150% • Compliance is reached by high quality liquidity buffer and management
100% of short-term cash flows
50%
0%
• Nordea Liquidity Buffer EUR 104bn, which includes the cash and central
bank balances
Combined USD EUR • New liquidity buffer method introduced in July 2017
LCR subcomponents, EURbn Time series – liquidity buffer
Combined USD EUR
Unweighted
EURm Unweighted value Weighted value Unweighted value Weighted value value Weighted value
EURbn
Total high-quality liquid assets (HQLA) 104,340 101,818 24,826 24,758 32,198 31,904 120 110 107104
Liquid assets level 1 100,540 98,591 24,486 24,469 31,174 31,033 103104
99
Liquid assets level 2 3,800 3,227 340 289 1,024 870 95
100 91
Cap on level 2 0 0 0 0 0 0
Total cash outflows 322,841 70,930 53,298 34,014 133,958 45,595 80 68 65 69
Retail deposits & deposits from small 91,146 6,002 317 47 28,073 1,876 61 62 64 60 64 67 66 66 66 61 62 62 67 66 65 65 65 65
59 60 60 59
business customers 56 56 58
60 49
Unsecured wholesale funding 90,310 45,826 14,348 8,298 25,791 12,664
Secured wholesale funding 34,656 4,963 4,051 1,022 20,289 1,395
Additional requirements 52,044 9,162 29,389 24,493 41,154 28,432 40
Other funding obligations 54,685 4,977 5,192 155 18,652 1,228
20
Total cash inflows 62,115 13,757 30,993 25,511 52,671 29,242
Secured lending (e.g. reverse repos) 44,726 3,459 1,162 473 22,476 958
Inflows from fully performing exposures 8,699 4,398 815 469 3,193 1,505 0
Other cash inflows 8,690 5,900 29,016 28,931 27,002 26,779
Limit on inflows 0 -4,363 0
Liquidity coverage ratio (%) 178% 291% 195%
31
* EBA Delegated Act LCR
** LCR weighted amountsNordea’s sustainability work further enhanced from 2015 – deepened green focus
Enhanced ESG focus from 2015 Deepened green bond focus
• Business Ethics & Values Committee established (2015) • Green Bond Framework and Inaugural Green Bond issuance (2017)
• New Corporate Values Framework (2017) • Second green bond issued in May 2019, as a 7-year EUR 750m senior
• Climate Change Position Paper (2017) unsecured bond
• New Sustainability Policy (2017) • Nordea aims at continuing to be a relevant issuer of green bonds, and
has set a target of being the leading arranger of sustainability bonds and
• First Sustainable Finance Conference (2017) the leading bank on green lending in the Nordics by 2021
• New Sustainability governance structure (2017) and Group Sustainable • The externally reviewed green bond asset portfolio has grown to
Finance organisation (2018) EUR 2.3bn in Q4 2018. An update of the asset portfolio and external
• Further development of the ESG evaluation process in relation to second party opinion is expected to be completed in August 2019
lending, including specific green lending products: Hydro Power
24%
The Nordea ESG evaluation process includes an assessment of
large corporate borrowers with respect to:
45% Green Buildings
• Governance
• Environmental, health and safety management processes 16%
• Social aspects including human and labour rights Wind power
5% 1%
• Potential controversies 1% 8% 1%
Public Transportation
Electric cars Water Management
Waste-to-energy Waste-water
Sustainability acknowledgements
Company Rating: C (A+ to D-)* ESG Rating: BBB (AAA to CCC)
ESG Score: 20.3 (0 to 100)** Rank 47 (in the 2019 Global 100 ranking)***
32 * Highest rating within sector is C+
** Lower score represents lower ESG risk (scale has changed, previously the other way around). Nordea currently ranked in the top 6th percentile among banks
*** Nordea ranked as the 47th most sustainable corporation in the world in the 2019 Global 100 ranking4. Macro 33
Robust Nordic economies
GDP development Unemployment rate
Comments GDP forecast, %
• The Nordics have enjoyed a solid economic development in recent Country 2016 2017 2018 2019E 2020E
years. The global economy slowed down more than expected during the
end of last year to this year, especially in the euro area Denmark 2.4 2.3 1.4 1.8 1.7
• Export-dependent Sweden and Finland have been most hit by the Finland 2.5 2.8 2.3 1.5 1.0
downturn, while higher growth is projected in Norway and Denmark
Norway 1.1 2.0 2.2 2.6 2.1
• Monetary policy has shifted to a more cautious stance (except Norway)
as the global growth and inflation outlook remains subdued
Sweden 2.4 2.4 2.3 1.0 1.3
• In Sweden, unemployment is increasing from a large net inflow to the
Source: Nordea Markets Economic Outlook May 2019, Macrobond and OECD.
labour market as a result of the growing population. Looking forward, we
expect a continued decrease in the rest of the Nordics
34Household debt remains high, but so is private and public savings
Household debt Household savings
Public balance/debt, % of GDP, 2020E Comments
10 • Household debt continues to rise somewhat faster than income in
Norway
8 Norway and Finland. Denmark continues to move in the opposite trend
6 while Sweden is showing signs of stabilisation
Fiscal Balance % of GDP
4
Netherlands
Austria • Meanwhile, households’ savings rates remain at high levels, apart from
2 Sweden
Ireland Spain Portugal Finland where savings have declined in recent years
0
Germany Belgium
Denmark
-2 Finland
UK France
Italy • The Nordic public finances are robust due to the overall economic
-4 recovery and firm fiscal policies. Norway is in a class of its own due to
-6 US oil revenues
-8
30 50 70 90 110 130 150
General Government Gross Financial Liabilities % of GDP
blue line = Maastricht criteria
35 Source: Nordea Markets, International Monetary Fund, IMF DataMapper, OECDHouse price development in the Nordics
House prices Household’s credit growth
Comments
• Recent quarters have shown stabilisation in the Swedish and Norwegian housing markets, while prices continue to rise in Denmark and to some extent also
in Finland. Credit growth in the Nordics is showing signs of stabilisation
• In Sweden, house prices declined during H2 2017 but have since then risen slightly. The current main risks are the high supply of homes as well as signs of
a weaker labour market. However, mortgage rates have historically had a strong correlation with the price development and they will most likely remain low
• In Norway, primarily in Oslo, house prices turned down during 2017, but have leveled out and even increased somewhat in Oslo. The downturn was
primarily driven by stricter lending requirements introduced 1 January 2017. Largely unchanged prices are forecast ahead, as dampened demand from
rising interest rates will be balanced by a strengthening labour market and household purchasing power
• In Denmark, tighter regulations have been implemented in an attempt to prevent price bubbles in the housing market. Housing prices are expected to
increase only slightly faster than inflation in the coming years
36Contacts Investor Relations Rodney Alfvén Andreas Larsson Maria Caneman Carolina Brikho Head of Investor Relations Head of Debt IR Senior Debt IR Officer Roadshow Coordinator Nordea Bank Abp Nordea Bank Abp Nordea Bank Abp Nordea Bank Abp Mobile: +46 722 35 05 15 Mobile: +46 709 70 75 55 Mobile: +46 768 24 92 18 Mobile: +46 761 34 75 30 Tel: +46 10 156 29 60 Tel: +46 10 156 29 61 Tel: +46 10 156 50 19 Tel: +46 10 156 29 62 rodney.alfven@nordea.com andreas.larsson@nordea.com maria.caneman@nordea.com carolina.brikho@nordea.com Group Treasury & ALM Mark Kandborg Ola Littorin Petra Mellor Jaana Sulin Head of Group Treasury & ALM Head of Long Term Funding Head of Bank Debt Head of Short Term Funding Tel: +45 33 33 19 09 Tel: +46 8 407 9005 Tel: +46 8 407 9124 Tel: +358 9 369 50510 Mobile: +45 29 25 85 82 Mobile: +46 708 400 149 Mobile: +46 70 277 83 72 Mobile: +358 50 68503 mark.kandborg@nordea.com ola.littorin@nordea.com petra.mellor@nordea.com jaana.sulin@nordea.com 37
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