investor presentation 21 feb 2007 - nordea.com · investor presentation 21 february 2007. ceo...
TRANSCRIPT
Investor Presentation21 February 2007
CEO Presentation
3
Record results following reinforced organic growth strategy – RoE at all time high 22.9%
Operating profit up 25% to EUR 3,820m (EUR 3,048m)Net profit up 39% to EUR 3,153m (EUR 2,269m)Earnings per share EUR 1.21 (EUR 0.86) up 41%Total dividend per share EUR 0.49, up 40% corresponding to total dividend payment of EUR 1,271m. Income up 12% to EUR 7,377m (EUR 6,573m in 2005)Costs up 4% - reflecting higher business activityGap between revenue and cost growth 5.4%-points, excl. full impact of IMB saleCost/income ratio continued down to 52%Positive net loan losses of EUR 257m (EUR 137m) – 11th consecutive quarter with net recoveries Return on equity 22.9% (18.0%)
4
Strong momentum in all business areas
Total lending up 14%Mortgage lending up 15%SME lending up 12%Consumer lending up 12% - non collateralised up 17%Number of credit cards increased by 25%Strong growth in Private BankingIncreased cross-selling of Markets’ products to SMEsStrong increase in capital markets transactions with large corporatesNet written premiums in Life up 22%
5
Continued growth in operating income
EURm
6,1276,573
7,377
0500
1,0001,5002,0002,5003,0003,5004,0004,5005,0005,5006,0006,5007,0007,500
2004 2005 2006
YoY
Up 12%Up 9% excl. sale of IMB shares
Steady increase in net interest income Volume growth more than compensating for lending margin pressure. Improved deposit margins
Higher commission income – fuelled by savings products Net/gains losses – strong increase in customer driven financial transactions
Q4oQ3
Strong increase when adjusting for IMBAccelerating business momentum in all Business Areas
6
Higher share of income being non-interest income
Increased proportion of non-interest income 48%
Excl. IMB sale 46%
Individual client focused advice and product offering increasingly important
A more capital efficient way to finance growth in earnings
Risk diverse revenue streams0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
2004 2005 2006
Net interest income Non-interest income
57%
43%
56%
44%
52%
48%
EURm
7
Revenue growth in Nordea
6,573
Income 2006
Volumes, margins lending
Savings: AM, Life and savings accounts
Markets
+ 38
+224
+168
Income 2005
EURm 7,377+175
Other
+199
Gain from sale of IMB shares
+804
8
4%17%– of which non collateralised lending
7%12%– SME lending
16%15%– CIB lending excl. Markets
6%9%Deposits, total
14%
12%
8%
12%
15%
14%
YoY
16%– CIB deposits excl. Markets
8%– SME deposits
1%
2%
5%
6%
Q4oQ3
– Household deposits
– Consumer lending*
– Mortgage lending
Lending, total
Robust volume growth continues
*Retail consumer lending (collateralised + non-collateralised consumer lending)
9
Reduced cost base since 2002* – despite strong increase in business volumes
3,903 3,8353,675
3,8223,655
146 146
161
188
214
0
500
1000
1500
2000
2500
3000
3500
4000
2002 2003 2004 2005 2006100.0
125.0
150.0
175.0
200.0
225.0
Operating expenses Total lending (right hand scale)
EURm EURbn
*Baseline adjusted for IFRS and net of acquisitions and divestments over the years. PostGirot included in 2002 figures
Cost unchanged despite lending growth of 50% and accumulated inflation of 13% in the period
European average is annual cost increase of 8%
10
Cost/income ratio continues downwards
Continued down to 52% in 2006Income up 12%Costs up 4%Excl. gain from sale of IMB shares C/I 53%
Strong growth in revenues combined with continuous focus on firm cost management Profitable organic growth in focus
6460
5652
63
0
10
20
30
40
50
60
70
2002 2003 2004 2005 2006
%
11
Gap between income and cost development
Percentage points Reported gap of 8.0 percentage
points, excl. full impact from sale of IMB 5.4 percentage points
Revenues up 12.2%Expenses up 4.2%
Three years track record of managing attractive gap between revenue and cost growth
6.6
8.0
5.4
6.9
0
1
2
3
4
5
6
7
8
9
10
2004 2005 2006
Gap excl. full impact from sale of IMB shares
12
Operating profit
EURm
2,745
3,820
3,048
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
2004 2005 2006
YoY
Up 25%Up 19% excl. gain from sale of IMB sharesIncreased focus on profitable organic growth and cross-sellingOperating profit in Business Areas up 17% excl. gain from sale of IMB sharesStrong performance in all Business Areas
Retail up 18%CIB up 18%AM up 24%
13
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1.0
1.1
1.2
Q1/03 Q2/03 Q3/03 Q4/03 Q1/04 Q2/04 Q3/04 Q4/04 Q1/05 Q2/05 Q3/05 Q4/05 Q1/06 Q2/06 Q3/06 Q4/06
Reported Excl. gain from sale of IMB
EUR
Continuous increase in earnings per share- rolling 12 months
14
Dividend up 40%
766
908
1,271
0.28
0.35
0.49
0
200
400
600
800
1000
1200
1400
2004 2005 2006
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1.0
Total amount EURm Dividend per share EUR
EURm EUR
15
Key growth areas – organic growth strategy continues to pay off
Continue to leverage on strong position within long-term savings, eg Nordic Private Banking and Life insurance
Increase in AuM - total net inflow 2006 EUR 4.1bnRecruitment of personal bank advisors, private bank advisors and financial specialists
Strengthening market position within consumer credits incl. cardsConsumer lending up 17% (non collateralised), number of credit cards up 25%
Harness Nordea’s leading position in capital markets – leveraging Nordea’scustomer base. Sale of Nordea Markets products to Business Areas up 38%Further position Nordea successfully in the Baltics, Poland and Russia
Lending up 40% in the Baltics and Poland
Attract new and move existing customers into the most profitable segments
16
Gold and Private Banking customers are the engine for profitable growth
11%16%
64%
9%
Private Banking Gold Silver Bronze
8%3%
8%
45%
Private Banking Gold Silver Bronze
Approx. EUR 3.0bn of Retail Banking’s income is generated from household customers
Gold customers generate two/thirds of the income
Total revenues from household customers increased by 9% during 2006
Private Banking shows very strong growth in income
Share of Retail Household income in 2006
Income growth during 2006
17
Strong success to date
14066
161
72
No. of customers(m)
Volume percustomer(EUR'000)
Business volumes(EUR bn)
2.1 2.2
5.7%8.6%
14.8%
Strong growth in business with Gold customers generated by
Increase in number of customers
Increase in volume per customer
Growth in number of customers is a combined effect of
Existing customers moving upward in the segments
New Nordea customers
Volumes measured as the sum of total lending and savings
Strong growth in Gold segment Dec 2005 to Dec 2006
18
Strong revenue growth in all Retail corporate segments
55%
27%18%
Small Medium Large
Approx. EUR 2.0bn of Retail Banking income is derived from corporate customers
The customers in segment Large account for half of the revenue
In total revenues from corporate customers increased by 6% 2006
Small
7%
6%
4%
Small Medium Large
Share of Retail Corporate income in 2006
Income growth during 2006
19
Continue to leverage on strong position within long-term savings – Private BankingEURbn
Strong asset growth in Nordic Private Banking
Net inflow in Q4 13% annualisedResult of roll-out of new common advisory concepts, particularly in Norway and Sweden
AuM up 20% YoY29 31 33 34 36 37 39 42
8 8 8 9 9 9 99
05
101520253035404550
Q1/05
Q2/05
Q3/05
Q4/05
Q1/06
Q2/06
Q3/06
Q4/06
European private bankingNordic private banking
20
Continue to leverage on strong position within long term savings – stepwise increase of premiums in Life
EURm Net written premiums up 22%Unit linked share of premiums 42%Increased penetration in the customer base – successful cooperation between Life and RetailNordea’s share of signed agreements in Mandatory Company Pension (MCP) Norway approx 16%Market share of new written premiums on private market 8.4% in Sweden end December
590
458404
607 582 560
454
601
198
187174
474
390 404
267
511
0100200300400500600700800900
1,0001,1001,200
Q1/05
Q2/05
Q3/05
Q4/05
Q1/06
Q2/06
Q3/06
Q4/06
Traditional insurance Unit linked
21
Accelerated market position within consumer lending and cards
EURbn
YoY
Consumer lending up 12%Non collateralised up 17%
Approx. 500,000 new cards issued In total 5.6 million cards issued
Of which approx. 11% credit cardsNumber of credit cards up 25%
Q4oQ3
Consumer lending up approx. 2% Growth strategy and penetration of customer base is paying offMargins basically unchanged adjusting for business mixCard commissions up 5%
13.2 13.5 13.8 13.9 14.214.9
15.4 15.6
0
2
4
6
8
10
12
14
16
Q1/05
Q2/05
Q3/05
Q4/05
Q1/06
Q2/06
Q3/06
Q4/06
Retail consumer lending
22
Increased cross-selling of Markets related products to SMEs
Successful penetrationLeveraging Nordea’s customer base
SME segment still under penetrated
Focus on customer solutions rather than product push
Strong concepts in risk management and asset-liability managementIncreased capabilities in derivatives
Revenue increase driven byStructured productsStill strong and stable core business in F/X and fixed income trading
202
270
373
0
50
100
150
200
250
300
350
400
2004 2005 2006
Markets total revenue from Retail customers
EURm
23
Increased investments to capture growth opportunities in fast growing markets
Accelerated growth plan in Nordic markets, in particular SwedenIn line with Nordeas’ profitable organic growth strategy
Recruitment of personal bank advisors
Investments in Private BankingPrivate bank advisors and financial specialists
Increased growth ambitions in Poland with up to 150 new branches in 2-3 years. Aim to outperform market growth
Increased penetration in all customer segments but with emphasis on private customers and SMEs
22 new branch offices were opened in 2006 - 9 in Q4
24
OutlookBased on solid macroeconomic forecasts for the Nordic area, double digit growth in business volumes is expected
Despite the current pressure on lending margins Nordea expects the strong revenue growth to continue in 2007
Focus on risk-adjusted pricing combined with expected higher market rates will positively affect the revenue generation in 2007
The quality of the credit portfolio remains strong, however lower expected recoveries means that new provisions are expected to exceed reversals in 2007
The cost increase in 2007 is expected to be of the same magnitude as in 2006
The gap between revenue and cost growth is for the full year 2007 expected to be 3-4 percentage points *
*Excl. the acquisition of Russian Orgresbank
25
SummaryRecord result following reinforced organic growth strategy
Net profit up 39%
Gap between revenue and cost growth 5.4 percentage points when excluding the full impact of IMB saleReported Return on equity 22.9%
Excl. gain from sale of IMB 21.5%
Record dividend – EUR 0.49 per shareNordeas’ growth strategy is paying off
Increasing number of core customersStrong performance in long term savings – especially private bankingIncreased penetration among SME clients with Markets related productsLending volumes up from high levelGrowth strategies in Sweden and Poland & Baltics developing well
CFO Presentation
27
Income statement summary
253,0483,820Operating profit
392,2693,153Net profit
196780Equity method122143318Other income
137257Loan losses4
-3428
12
3576
Chg %
-3,668-131
-1,455-2,0826,573
7651,9353,6632005
-86Depreciation-1,485Other expenses
-3,822Total operating expenses
-2,251Staff costs7,377Total operating income
1,036Net gains/losses on items at fair value2,074Net fee and commission income3,869Net interest income2006EURm
28
Income statement summary
0
-9
9-171010-2
-88-53
3810
3Chg %
7481,063967Operating profit
506872876Net profit
21178Equity method2921726Other income
75582Loan losses-956
-31-393-532
1,696
184529933
Q4/05
-928-23
-355-550
1,934
224497979
Q3/06
-19Depreciation-391Other expenses
-1,016Total operating expenses
-606Staff costs1,899Total operating income
310Net gains/losses on items at fair value549Net fee and commission income
1,006Net interest incomeQ4/06EURm
29
Net interest income
EURm
YoY
Up 6%Volume growth compensated for pressure on lending marginsTotal lending up 14%
Mortgage lending up 15%SME lending up 14%
Increased contribution from depositsMargins recovering following higher market rates
Q4oQ3
Up 3%Total lending up 6%Household deposit margins improved
913 933 927 957 979 1,006
920
0
100
200
300
400
500
600
700
800
900
1,000
Q2/05
Q3/05
Q4/05
Q1/06
Q2/06
Q3/06
Q4/06
30
48Treasury
834Other, net
27206Total
-7-164Margin driven
62
-226
64
264
328
YoY
10-Deposit margins
-17
3
19
22
Q4oQ3
-Lending margins
-Deposit volumes
-Lending volumes
Volume driven
Change in net interest income
EURm
31
Net commission income
EURm
YoY
Up 7%Savings commissions up 9%
Asset management commissions up 9%
Cards up 12%Q4oQ3
Up 10% - recovered in Q4 after market turmoil effects in Q3Strong growth in savings related commissions – up 19%
Mainly from Asset ManagementStrong Life commissions growth following significant premium growth and strong investment result
Payment commissions up 5%
484
529507 521
497
549
469
0
100
200
300
400
500
600
Q2/05
Q3/05
Q4/05
Q1/06
Q2/06
Q3/06
Q4/06
32
Breakdown of commission income - gross
281306
319338 335 325
301
359
162175 177 177 171 183 187 197
82 90 87 98 88 86 87 91
51 48 3259
41 45 3649
0
40
80
120
160
200
240
280
320
360
400
Q1/05 Q2/05 Q3/05 Q4/05 Q1/06 Q2/06 Q3/06 Q4/06
Savings related Payments related Lending related Other
EURm
Of which Asset Mgmt Of which Cards
33
Customer business drives increase in net/gains losses
EURm
230220
205
-46
28 3 19 33
251
277
-50-30-101030507090
110130150170190210230250270290
Q4/05 Q1/06 Q2/06 Q3/06 Q4/06
Business Areas Treasury and eliminations
YoY
Up 35%Up 23% in Business Areas
Strong customer demand for structured products Client driven FX and fixed income transactions
Strong contribution from Group Treasury
Q4oQ3
Up 35% in Business AreasStrong improvement in Group Treasury
34
44
277
80
6
93
98
Q4/06
8
205
51
7
72
75
Q3/06
7
220
61
4
68
87
Q2/06
108Asset Mgmt
8387CIB
-3140Group Treasury
230265BAs
69
101
Q1/06
70
67
Q4/05
Life
Retail
Net/gains losses, EURm
Increased revenues from net/gains losses in Business areas
35
Total operating income
EURm
YoY
Up 12%Increased focus on top line growthSteady increase in net interest income
Volume growth more than compensating for lending margin pressure. Improved deposit margins
Commission driven by savings related commissionsNet/gains losses – strong increase in customer driven financial transactions
Q4oQ3
Strong increase when adjusting for IMBAccelerating business momentum in all Business Areas
1,601
1,759 1,785
1,934 1,899
1,7341,696
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
Q3/05 Q4/05 Q1/06 Q2/06 Q3/06 Q4/06
Excl. gain from sale of IMB shares
36
Expenses
EURm
YoY
Costs up 4%Increases following
Investments in growth areasNumber of FTEs increases by approx 300 – mainly P&B, Life and Growth plan SwedenGeneral wage increase approx 3.5%Variable salaries and profit sharing
Approx 3% when excluding variable salaries and profit sharing
Q4oQ3
Up 9% following strong performance and high business activity
520 543 552 550606
345393 367 372 355
39131
31 23 21 2319
532
0
100200
300400
500600
700
800900
1,000
Q3/05 Q4/05 Q1/06 Q2/06 Q3/06 Q4/06
Staff costs Other expensesDepreciation
933896
1,016928956 945
37
Well controlled expense growth 2006
4.2%
2.9%
1.3%
0%
1%
2%
3%
4%
5%
Reported Excl. Variablesalaries and profit
sharing
Excl. Variablesalaries, profit
sharing andinvestments ingrowth areas
Cost increase driven by decision to invest in profitable growth areasCost management well established
38
Strong result and investments explains cost increase
3,668
Expenses 2006
OtherIncrease in variable salaries and profit sharing
+46
+48
Expenses 2005
EURm
3,822
Investments in areas like Growth Plan Sweden, Cards, Life, Private Banking
Investments in growth areas*
+60
+154
39
Staff costs
2,082
Staff costs 2006
Wage increases
Higher variable salaries and profit sharing
Increase in FTEs, net
+73
+19+29
Staff costs 2005
EURm2,251
No. of recruitedFTEs: approx.
2,400
No. of FTEs thathas left: approx.
2,100
Training and other staff related expenses
+48 +169
40
Number of FTEs
Increased number of sales related employees and falling number of employees in processing and staff unitsReduction of approx. 150 in Q4 following efficiency gains and outsourcing
28,930 29,052 29,201 29,396 29,249
0
4,000
8,000
12,000
16,000
20,000
24,000
28,000
32,000
Q4/05 Q1/06 Q2/06 Q3/06 Q4/06
+2561.5021.758of which P&B
-2686,2385,972Group Functions
+58522,69223,277BAs
+31928,93029,249Total
-24
-242
+93
+274
+218
Chg YoY
1,192
5,046
2,001
3,331
17,360
Q4/05
1,168
4,804
2,094
3,605
17,578
Q4/06
Group Staffs
CIB
GPT
AM & Life
Retail
FTEs
41
Loan losses
EURmYoY
Positive net loan losses reflecting low new provisions coupled with recoveries maintained at a high levelCredit quality remains strong in all markets
Q4oQ3
Continued flow of recoveries and low new provisions
Large movements in gross provisions Changes in group-wise provisions
-23-31
-89
-55
-82
-6 -7
-101
-120
-100
-80
-60
-40
-20
0
20
Q1/05
Q2/05
Q3/05
Q4/05
Q1/06
Q2/06
Q3/06
Q4/06
42
0.18
74
374
-1,118
1,492
Q4/06
0.21
74
416
-1,188
1,604
Q3/06
0.20
76
405
-1,270
1,675
Q2/06
0.18
80
341
-1,371
1,712
Q1/06
0.18
81
340
-1,480
1,819
Q4/05
Reserves
Reserves/impaired loans, gross,%
Impaired loans, net/lending,%
Impaired loans, net
Impaired loans, gross
EURm. End of period
Impaired loans
Net impaired loans as per cent of total lending: 18bp
43
-416-354Allowances for collectively assessed loans59%60%Total allowances / Impaired loans, gross individually assessed
0.78%0.52%Impaired loans, net / lending (%)42%41%Allowances, individually assessed / Impaired loans, gross,
1,4621,104Impaired loans, net, individually assessed -1,064-764Allowances for individually assessed loans
1,868
31 Dec 2006
2,526
31 Dec 2005
Impaired loans, gross, individually assessed
EURm
New baseline impaired loansNordea has of end of December 2006 changed the definition of impaired but performing loans. The change increases the size of impaired loans but leaving the allowances unchanged
44
Operating profit
EURm
688 728 748
858932
1,063967
884 864
0100200300400500600700800900
1,0001,100
Q1/05
Q2/05
Q3/05
Q4/05
Q1/06
Q2/06
Q3/06
Q4/06
Excl. gain from sale of IMB shares
YoY
Up 25%Up 19% excl. gain from sale of IMB sharesOperating profit in BAs up 17% excl. gain from sale of IMB sharesIncreased focus on profitable organic growth and cross-sellingStrong performance in all Business areas
Retail up 18%CIB up 18%AM up 24%
Q4oQ3
Up 29%6% gap between revenue and cost growth in Q4
45
Net profit
EURmYoY
Up 39% Operating profit up 25%Strong gap between revenue and cost growth combined with low tax rateEffective tax rate 19% (excl tax-free gain from IMB) following the revaluation of the deferred tax asset in Finland
Q4oQ3
Up 30% excl. gain from sale of IMB shares
563
665740
872 876
506
673
0
100
200
300
400
500
600
700
800
900
Q3/05 Q4/05 Q1/06 Q2/06 Q3/06 Q4/06
Excl. gain from sale of IMB shares
46
Return on equity
%Strong RoE - 22.9%
21.5% excl. gain from sale of IMB
At top level among Nordic peers
16.9
22.9
18.0
21.5
0
5
10
15
20
25
2004 2005 2006
Excl. gain from sale of IMB shares
47
Strong growth also in risk-adjusted EPS
0.86
0.67
1.21
0.81
0
0.2
0.4
0.6
0.8
1
1.2
1.4
Reported EPS, EUR EPS, risk adjusted, EUR
2005 2006
48
Risk-weighted assets (RWA)
EURbnYoY
RWA up 9%Total lending up 14%
Q4oQ3
RWA unchanged
Nordeas’ model to calculate VaR has been approved by FSA:s
Decreased RWA with approx. EUR 7bn
153159 162
169 174180 185 185
0
20
40
60
80
100
120
140
160
180
200
Q1/05
Q2/05
Q3/05
Q4/05
Q1/06
Q2/06
Q3/06
Q4/06
49
Capital position
%Tier 1 ratio 7.1%Profitable volume growthTotal capital ratio at 9.8%
7.06.8 6.8 6.9 7.1
6.8
0
1
2
3
4
5
6
7
8
Q3/05 Q4/05 Q1/06 Q2/06 Q3/06 Q4/06
50
Return on risk weighted assets, rolling 4 quarters
153 159 162169 174 180 185 185
1.261.42 1.45 1.41 1.47 1.44 1.46
1.62
0
20
40
60
80
100
120
140
160
180
200
Q1/05 Q2/05 Q3/05 Q4/05 Q1/06 Q2/06 Q3/06 Q4/060.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
2.0
2.2
RWA Return on RWA
EURbn %
*
* Excl. Gain from sale of IMB shares
** Reported RWA of EUR 185bn is after EUR 7bn reduction of RWA following new models for calculating market risks
7
192**
51
18.2
14.8
9.6
0.02.04.06.08.0
10.012.014.016.018.020.0
Capital base Regulatory Capital Economic Capital
(EU
Rbn
- En
d of
yea
r 200
6)
Continuous strive for capital efficiency
How much capital must Nordea have?
How much capital should Nordea have?
How much capital does Nordea have?
Tier 1+Tier2 (8% of RWA)
Tier 1
13.1
Tier 2
5.1
52
Tier 1 capital
18.2
13.114.5
10.5
13.3
9.6
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
18.0
20.0
EUR
bn
Nordea expects to have excess capital after full implementation of Basel II
185
148
0
20
40
60
80
100
120
140
160
180
200
2006 2006*
EUR
bn
Capital base(Tier 1+ Tier 2)
Expected reduction RWA Pillar 1; approx. 30%
Expected reduction RWA incl Pillar 2; approx. 20%
* Pro-forma Basel II
9.8% 9.8%
9.0%
7.1%7.1%
6.5%
20% reduction in RWA Implications for capital ratios
2006 2006* 2006* 2006 2006* 2006*
53
Nordea’s new financial targets
Long term financial targets Target
TSR (%) In the top quartile of European peer group
Risk adjusted profit (EUR m)
In line with top Nordic peersRoE (%)
Double in 7 years
Capital structure policy Policy
Dividend payout-ratio > 40% of net profit
Tier 1 capital ratio > 6.5%
54
2,107
819
373
3,822
-256
7,377
Baseline 2006
Risk adjusted profit
standard tax
expected losses
total operating expenses
non recurring items*
Total income
EURm
Risk adjusted profit
Increased by 18% in 2006
* Includes sales gain and contribution under equity method from IMB and sales gain from Asiakastieto
Business trends
56
Total lending
0
20
40
60
80
100
120
140
160
180
200
220
Q1/03 Q2/03 Q3/03 Q4/03 Q1/04 Q2/04 Q3/04 Q4/04 Q1/05 Q2/05 Q3/05 Q4/05 Q1/06 Q2/06 Q3/06 Q4/06
Corporate Housing loans Other loans Public sector
EURbn
148146
182
149147147 156 155
170161
175189
199191
201214
57
Household mortgages, volumes and margins
44.3 45.748.2 48.9 50.0
52.6 54.5 56.3 57.760.4 62.6 64.5 65.8
68.5 70.674.4
05
101520253035404550556065707580
Q1/03 Q2/03 Q3/03 Q4/03 Q1/04 Q2/04 Q3/04 Q4/04 Q1/05 Q2/05 Q3/05 Q4/05 Q1/06 Q2/06 Q3/06 Q4/060.20.30.40.50.60.70.80.91.01.11.21.31.41.51.6
EURbn %
58
Retail consumer lending, volumes and margins
12.1 12.2 12.4 12.4 12.2 12.5 12.7 12.9 13.2 13.5 13.8 13.9 14.214.9
15.4 15.6
0
2
4
6
8
10
12
14
16
Q1/03 Q2/03 Q3/03 Q4/03 Q1/04 Q2/04 Q3/04 Q4/04 Q1/05 Q2/05 Q3/05 Q4/05 Q1/06 Q2/06 Q3/06 Q4/060.0
0.6
1.2
1.8
2.4
3.0
3.6
4.2
4.8EURbn %
59
Lending to corporates (SME), volumes and margins
57.3 57.3 57.4 56.7 56.3 58.1 58.561.0
64.0 65.367.9 70.0 70.9 73.2 73.4
78.4
0
10
20
30
40
50
60
70
80
Q1/03 Q2/03 Q3/03 Q4/03 Q1/04 Q2/04 Q3/04 Q4/04 Q1/05 Q2/05 Q3/05 Q4/05 Q1/06 Q2/06 Q3/06 Q4/060.6
0.7
0.8
0.9
1.0
1.1
1.2
1.3
1.4
EURbn %
60
CIB lending, volumes and margins*
21.722.6
21.4
18.4 18.120.3
19.018.0
21.4 21.720.8 21.2
22.6 23.322.3
23.6
02468
1012141618202224262830
Q1/03 Q2/03 Q3/03 Q4/03 Q1/04 Q2/04 Q3/04 Q4/04 Q1/05 Q2/05 Q3/05 Q4/05 Q1/06 Q2/06 Q3/06 Q4/060.00.10.20.30.40.50.60.70.80.91.01.11.21.31.41.5
EURbn %
* Excl. Markets, Poland and Baltics
61
Total deposits
0102030405060708090
100110120130
Q1/03 Q2/03 Q3/03 Q4/03 Q1/04 Q2/04 Q3/04 Q4/04 Q1/05 Q2/05 Q3/05 Q4/05 Q1/06 Q2/06 Q3/06 Q4/06
Of which household deposits
EURbn
979892
969391
95
105 105 108106
116119
113119
127
62
Retail deposits, households, volumes and margins
40.2 40.7 41.7 41.3 40.442.3 42.9 43.8 44.1
45.7 46.9 47.0 47.149.6 50.1 50.7
0
5
10
15
20
25
30
35
40
45
50
Q1/03 Q2/03 Q3/03 Q4/03 Q1/04 Q2/04 Q3/04 Q4/04 Q1/05 Q2/05 Q3/05 Q4/05 Q1/06 Q2/06 Q3/06 Q4/060.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
2.0
2.2
2.4
EURbn%
63
Structural Interest Income Risk (SIIR)
-220
206
Q4/06
-175
154
Q4/05
-165
174
Q3/06
Decreasing market rates, 100bp
Increasing market rates, 100bp
EURm, annualised effect on NII*
*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.
Increased SIIR following growth in assets and liabilities in Q4. Increased non-interest bearing liabilities
Reduced duration in ALM programme
64
Retail deposits, SME, volumes and margins
26.2 26.3 26.728.3 28.4 28.9 28.8
30.5 29.4 30.131.5
33.4 32.634.8 34.7
37.5
0
5
10
15
20
25
30
35
40
Q1/03 Q2/03 Q3/03 Q4/03 Q1/04 Q2/04 Q3/04 Q4/04 Q1/05 Q2/05 Q3/05 Q4/05 Q1/06 Q2/06 Q3/06 Q4/060.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
EURbn %
65
CIB, deposits, volumes and margins*
14.415.4
13.315.2 14.9
17.9 18.0
21.0
23.2
20.418.5
22.121.2
22.3 21.8
25.0
0
2
4
6
8
10
12
14
16
18
20
22
24
Q1/03 Q2/03 Q3/03 Q4/03 Q1/04 Q2/04 Q3/04 Q4/04 Q1/05 Q2/05 Q3/05 Q4/05 Q1/06 Q2/06 Q3/06 Q4/060.00
0.05
0.10
0.15
0.20
0.25
0.30
0.35
0.40
0.45
0.50
0.55
0.60
EURbn %
* Excl. Markets, Poland and Baltics
66
0
20
40
60
80
100
120
140
160
Q4/05 Q1/06 Q2/06 Q3/06 Q4/06
Nordic Retail funds European Fund DistributionNordic Private Banking International Wealth ManagementInstitutional clients Life & Pension
Assets under management
EURbnYoY
Up 9%
Strong growth in Nordic Private Banking up 23%
Asset growth from well diversified sales platforms
Q4oQ3
Favourable equity markets
Net outflow due to one single mandate lost – strong underlying trend
158148
153154161
67
-7
-6
-5
-4
-3
-2
-1
0
1
2
3
4
5
Q4/05 Q1/06 Q2/06 Q3/06 Q4/06 Q4/06Adjusted
Nordic Retail funds European Fund DistributionNordic Private Banking International Wealth ManagementInstitutional clients Life & Pension
Net inflows
EURbn
Net inflow in 2006 EUR 4.1bn Strong increase in Nordic Private Banking, Institutional clients and Life
Net outflow from Retail funds in Q4 of EUR 6.5bn
In the fourth quarter a mandate of 6.4bn was withdrawn, following a new administrative set-up decided by the client.
Net inflow in Q4 within Nordic Private Banking and Institutional clients
Net inflow for European Fund distribution
Adjusted net inflow in Q4 EUR 2bn
1.80.9
3.4 3.3
-4.4 2.0
68
Retail profit before loan losses
EURmYoY profit up 13%
Key product areas showing double digit volume growth
Strong improvement in result from deposits
Strong revenue growth from gold customers
Plan to capture untapped potential in Sweden proceeding well
556600 583 585577
050
100150200250300350400450500550600650700
Q4/05 Q1/06 Q2/06 Q3/06 Q4/06
24
55
Q4/05
26
53
FY 2006
26
55
Q4/06
RaRoCar, %
C/I ratio, %
Key ratios
69
CIB profit before loan losses
EURm
YoY profit up 21%, excl gain from sale of IMBHigh activity in all areasAccelerated growth plan for Poland outlined
144
160
145
159169
0
20
40
60
80
100
120
140
160
180
Q4/05 Q1/06 Q2/06 Q3/06 Q4/06
19
51
Q4/05
22*
49*
FY 2006
29
50
Q4/06
RaRoCar, %
C/I ratio, %
Key ratios
*
*Excl. gain from sale of IMB shares
70
Asset Management product result
EURmYoY product result up 23%
Up 46% Q4oQ3
Double digit income growthStronger sales of newly launched products with better marginsHigher transaction and performance feesPositive trend within institutional asset management
96
8580
117
93
0
10
20
30
40
50
60
70
80
90
100
110
120
Q4/05 Q1/06 Q2/06 Q3/06 Q4/06
151
48
Q4/05
161
46
Q4/06
AuM, EURbn
C/I ratio, %
Key ratios
71
Life insurance, product result
EURmNet written premiums up 22%
Up 54% in Q4
Unit link premiums up 52%Accounting for 42% of total premiums
Fee based business model continues to deliverStrong investment result in Q4Nordea Life and Pension became the largest insurance company in the Nordic market in 2006, measured by premiums
5652
61
74
56
0
10
20
30
40
50
60
70
80
90
Q4/05 Q1/06 Q2/06 Q3/06 Q4/06
16.5
1.6
Q4/05
22.8
2.3
Q4/06
Financial buffers, %
Inv return, %
Key ratios
72
Group Treasury, operating profit
-23
15 12 7
3926
34
21 32
42
-25
-5
15
35
55
75
95
Q4/05 Q1/06 Q2/06 Q3/06 Q4/06
Group Investment Group Funding
EURm
Strong improvements for both Group Investment and Group Funding Operating profit EUR 203m -more than a doubling compared to 2005
Supported by successful positions in the money and capital markets
Gross investment returns at 3.98%, well above return target
73
SummaryRecord result following reinforced organic growth strategy
Net profit up 39%
Gap between revenue and cost growth 5.4 percentage points when excluding the full impact of IMB sale
Reported Return on equity 22.9%RoE excl. gain from sale of IMB 21.5%
Record dividend – EUR 0.49 per share
Nordeas’ growth strategy is paying off Increasing number of core customersStrong performance in long term savings – especially private bankingIncreased penetration among SME clients with Markets related productsLending volumes up from high levelGrowth strategies in Sweden and Poland & Baltics developing well
Facts & figures
75
Facts & Figures, content
Credit quality Page 76
Economic capital Page 86
Business areas Page 89
Balance sheet Page 118
Market shares Page 121
Appendix Page 128
Credit quality
77
Loan portfolio by customer category*
85 84 8278 79
83 8084
9197 100 101
105 105113
44 46 48 49 50 53 55 56 58 60 63 65 66 68 71 74
14 15 15 16 16 17 17 17 18 19 19 20 20 21 21 22
93
0
10
20
30
40
50
60
70
80
90
100
110
Q1/03 Q2/03 Q3/03 Q4/03 Q1/04 Q2/04 Q3/04 Q4/04 Q1/05 Q2/05 Q3/05 Q4/05 Q1/06 Q2/06 Q3/06 Q4/06
Corporate lending Housing loans Other loans
EURbn
* Excluding public sector
78
Public sector2.1%
Household customers
44.9%Companies53.0%
Household customers
45.1%
Public sector1.9%
Companies53.0%
End Q4/05, EUR 188.5bnEnd Q4/06, EUR 214.0bn
Loan portfolio by customer group
79
Housing loans77.2%
Other loans22.8%
Lending to household customersEnd of Q4/06
EUR 96.4bnOther loans comprise
consumer credits
investment credits
car financing
overdraft facilities
credit cards
home equity credits
80
Other9%
Real estate27%
Construction3%
Agriculture & Fishing6%
Transp. & Communication
5%
Finance11%
Renting,Consulting and other services
11%
Manufacturing13%
Commerce and services
10%
Shipping & Offshore5%
Lending to companies by industry End of Q4/06
EUR 113.5bn
81
214.0
5.7
6.4
14.2
12.5
12.7
15.0
11.1
5.9
3.4
30.7
96.4
Q4/06
201.1
5.3
6.1
13.7
12.5
8.4
14.6
10.8
5.9
3.3
28.6
91.9
Q3/06
198.8
5.2
5.8
14.5
12.0
9.6
14.5
10.4
5.8
3.6
28.0
89.4
Q2/06
190.7
5.4
5.7
15.1
10.4
8.7
14.0
9.9
5.8
2.9
26.8
86.0
Q1/06
188.4
5.3
5.8
14.6
9.6
10.5
13.4
9.9
5.6
2.9
26.2
84.6
Q4/05
Total
Shipping & Offshore
Agriculture & Fishing
Other companies/public sector
Renting, Consulting and other services
Finance
Manufacturing
Trade and services
Transport, communication
Construction
Real estate
Household customers
EURbn
Loan portfolio in figures
82
EU countries other3.7%
USA0.7%
Asia1.0% Latin America
0.6%
Other non OECD0.3%
Other OECD0.6%
Slice 80.0%
Other6.9%
Nordic countries and P&B
93.1%
Lending by geographical area End of Q4/06
EUR 214.0bn
Nordic countries and P&B, EURbnSweden 59.2Denmark 58.1Finland 42.4Norway 34.7P&B 4.8
83
325Public sector
10717Shipping & Offshore
132538Construction
133750Transport, communication
115162Agriculture & Fishing
21126147Renting, Consulting and other services
29136165Other companies
44107151Trade and services
43348391Manufacturing
1,098
20
65
176
Provisions
1,492
25
94
348
Gross
394
5
29
172
Net
Total
Finance
Real estate
Household customers
EURm. End of Q4/06
Impaired loans
84
088Credit Institutions
213Public sector
19726Shipping & Offshore
272148Construction
362763Transport, communication
222143Agriculture & Fishing
76113189Renting, Consulting and other services
7849127Other companies
106107213Trade and services
192213405Manufacturing
757
20
57
121
Provisions
1,868
42
129
572
Gross
1,103
22
72
451
Net
Total
Finance
Real estate
Household customers
EURm. End of Q4/06
New baseline impaired loans
85
Loan losses
EURm
192156
9258
86
-215-163
-123 -147 -140
-23 -7 -31-89
-54
299
-381
-82
-420-370-320-270-220-170-120
-70-203080
130180230280330
Q3/05 Q4/05 Q1/06 Q2/06 Q3/06 Q4/06
Gross Reversals Net
YoY
Positive net loan losses reflecting low new provisions coupled with recoveries at a high levelCredit quality remains strong in all markets
Q4oQ3
High recoveries in Q4, partly related to changes in group-wise provisions. Nordea Bank Denmark has restated EUR 60m in 2005 following Danish FSA decision - effect for Nordea Group in Q4 2006
Economic capital
87
Economic capital (EC)
EURbn
8.9 9.0 9.2 9.39.0
0
1
2
3
4
5
6
7
8
9
10
Q3/05 Q4/05 Q1/06 Q2/06 Q3/06
1,035Life
1,962CIB
168Asset Mgmt
418
126
Treasury
GPT
1Other
5,890Retail Banking
9,600
Q4/06
Total
EC per business area (EURm)
88
Economic capital – distributionEnd of Q4/06
Life risk1%
Market risk15%
Operational risk9%
Business risk12%
Credit risk63%
Other1%
CIB21%
Treasury4%
Asset Mgmt & Life12%
Retail61%
Retail Banking
90
Retail Banking lending and deposit volumes
26.0
14.7
25.8
21.7
Q4/06
23.9
14.3
25.0
21.6
Q3/06
23.9
14.2
25.0
21.4
Q2/06
11.211.912.512.913.4Norway
21.8
24.1
20.5
Q1/06
22.4
24.8
20.3
Q4/05
21.3
23.9
20.6
Q3/05
20.8
23.4
18.1
Q1/05
20.6
24.0
19.3
Q2/05
Denmark
Sweden
Finland
Deposits, EURbn
51.1
28.8
39.5
52.5
Q4/06
48.8
27.4
38.6
48.7
Q3/06
49.1
26.8
37.7
47.5
Q2/06
21.823.324.325.226.0Norway
46.5
36.4
45.5
Q1/06
46.1
35.6
45.1
Q4/05
45.2
34.8
43.2
Q3/05
43.3
33.8
41.3
Q2/05
44.0
33.0
38.5
Q1/05
Denmark
Sweden
Finland
Lending, EURbn
91
Retail Banking breakdown of lending
4.0
17.2
18.3
Q4/06
4.3
16.5
17.7
Q3/06
4.2
16.0
17.5
Q2/06
4.0
15.5
16.9
Q1/06
3.9
15.2
16.4
Q4/05
3.8
14.8
16.2
Q3/05
3.7
13.6
15.7
Q1/05
3.8
14.2
15.9
Q2/05
Corporate
Consumer lending
Households mortgages
Finland, EURbn
6.5
22.5
21.9
Q4/06
6.3
21.8
19.1
Q3/06
6.0
20.8
18.2
Q2/06
5.8
20.3
18.2
Q1/06
5.8
19.6
18.1
Q4/05
5.8
18.8
17.0
Q3/05
5.5
17.2
14.7
Q1/05
5.7
17.9
16.1
Q2/05
Corporate
Consumer lending
Household mortgages
Denmark, EURbn
92
Retail Banking breakdown of lending
4.1
20.5
24.9
Q4/06
3.7
19.5
24.0
Q3/06
3.6
19.2
24.8
Q2/06
3.4
18.3
23.5
Q1/06
3.4
18.0
23.5
Q4/05
3.3
17.4
23.2
Q3/05
3.3
16.6
22.9
Q1/05
3.3
16.6
22.2
Q2/05
Corporate
Consumer lending
Household mortgages
Sweden, EURbn
1.0
14.7
13.3
Q4/06
1.0
14.0
12.7
Q3/06
1.0
13.3
12.7
Q2/06
0.9
12.8
12.3
Q1/06
0.9
12.4
12.0
Q4/05
0.8
11.9
11.5
Q3/05
0.7
10.5
10.6
Q1/05
0.8
11.4
11.1
Q2/05
Corporate
Consumer lending
Household mortgages
Norway, EURbn
93
Retail Banking breakdown of deposits
7.9
9.9
7.9
Q4/06
7.7
9.9
7.4
Q3/06
7.5
10.1
7.4
Q2/06
7.2
9.9
7.0
Q1/06
7.1
10.4
7.2
Q4/05
6.6
10.4
7.0
Q3/05
6.5
9.9
6.9
Q1/05
6.6
10.3
7.2
Q2/05
Corporate
Households, savingsaccounts
Households, currentaccounts
Finland, EURbn
10.0
3.4
8.3
Q4/06
9.9
3.3
8.3
Q3/06
9.9
3.4
8.0
Q2/06
9.5
3.1
7.8
Q1/06
9.4
3.2
7.8
Q4/05
9.5
3.1
8.0
Q3/05
9.0
3.1
7.2
Q2/05
8.4
2.9
6.8
Q1/05
Corporate
Households, savingsaccounts
Households, currentaccounts
Denmark, EURbn
94
Retail Banking breakdown of deposits
7.8
5.8
12.5
Q4/06
7.8
5.5
10.6
Q3/06
7.4
5.4
11.1
Q2/06
6.7
5.0
10.1
Q1/06
6.3
5.0
11.0
Q4/05
6.8
5.0
9.6
Q3/05
6.4
4.9
9.5
Q1/05
6.5
4.8
9.4
Q2/05
Corporate
Households, savingsaccounts
Households, currentaccounts
Sweden, EURbn
3.9
2.0
8.8
Q4/06
3.8
2.1
8.3
Q3/06
3.7
2.2
8.3
Q2/06
3.7
2.0
7.7
Q1/06
3.7
1.8
7.4
Q4/05
3.9
1.7
6.9
Q3/05
3.8
1.7
6.3
Q2/05
3.6
1.4
6.2
Q1/05
Corporate
Households, savingsaccounts
Households, currentaccounts
Norway, EURbn
95
Retail Banking margins
1.74
1. 06
3.46
0.57
0.92
Q4/06
1.69
1.03
3.53
0.63
0.95
Q3/06
1.66
1.02
3.61
0.70
0.98
Q2/06
0.920.850.810.760.75Mortgages, households
4.074.043.813.743.66Consumer loans, households
1.62
1.01
1.00
Q1/06
1.55
1.05
1.04
Q4/05
1.56
1.06
1.06
Q3/05
1.55
0.86
1.13
Q1/05
1.53
1.06
1.09
Q2/05
Lending to SME’s
Deposits, households
Deposits, SME’s
%
Payments & transactions
97
E-banking customers, all customers
E-banking customers
0.0
0.51.0
1.5
2.02.5
3.0
3.5
4.04.5
5.0
Fe
b-00
Ju
ne-
O
ct-0
0
Feb-
01
June
- O
ct-0
1 F
eb-0
2 J
une-
02 O
ct-0
2Fe
b-03
Jun-
03O
ct-0
3Fe
b-04
Jun-
04O
ct-0
4Fe
b-05
Jun-
05O
ct-0
6Fe
b-06
Jun-
06O
ct-0
6
Mill.E-banking payments
05
10152025303540455055
Q1/
00
Q3/
00
Q1/
01
Q3/
01
Q1/
02
Q3/
02
Q1/
03
Q3/
03
Q1/
04
Q3/
04
Q1/
05
Q3/
05
Q1/
06
Q3/
06
Denmark Finland Norway Sweden
Mill.
98
Cards, all customers
Issued debit and credit cards
0.0
1.0
2.0
3.0
4.0
5.0
Ja
n-01
M
ay-0
1
Sep
t-01
Jan
-02
May
-02
Sep
t-02
Jan-
03M
ay-0
3S
ep-0
3Ja
n-04
May
-04
Sep
-04
Jan-
05M
ay-0
5S
ep-0
5Ja
n-06
May
-06
Sep
-06
Debit cards Credit cards
Mill.Card payments
0
20
40
60
80
100
120
140
160
180
Q1/
01
Q3/
01
Q1/
02
Q3/
02
Q1/
03
Q3/
03
Q1/
04
Q3/
04
Q1/
05
Q3/
05
Q1/
06
Q3/
06
Mill.
99
Payment transactions, households
0
20
40
60
80
100
120
140
160
180
200
Q1 03 Q2 03 Q3 03 Q4 03 Q1 04 Q2 04 Q3 04 Q4 04 Q1 05 Q2 05 Q3 05 Q4 05 Q1 06 Q2 06 Q3 06 Q4 06Manual transactions Payment ATMs Card paymentsCash withdrawal ATMs Direct debit Netbank payments
100
Payment transactions, households
1,286
168.3
109.3
164.8
700.4
16.3
108.9
2006
78.297.6117.3139.3155.7E-banking payments
8989611,0261,1091,187Total
78.5
207.2
333.5
34.3
166.2
2001
81.5
204.4
395.5
31.7
150.6
2002
86.1
197.4
459.9
27.1
137.7
2003
527.8603.6Card payments
23.619.7Payterminals
129.1124.6Manual transactions
190.4181.7Cash withdrawal ATM
101.2
2005
98.5
2004
Direct debit
Mill.
Corporate and Institutional Banking
102
CIB lending and deposit volumes and margins
0,86
36,4
4,6
9,4
1,5
12,7
Q4/06
0.83
31.1
3.8
9.1
1.3
12.0
Q3/06
0.87
32.3
3.7
9.1
1.5
12.7
Q2/06
0.93
32.2
3.4
8.6
2.0
12.0
Q1/06
0.96
32.4
3.3
8.5
1.7
11.1
Q4/05
0.86
32.5
2.5
7.7
2.0
12.0
Q2/05
0.91
32.2
2.8
8.1
1.8
10.9
Q3/05
30.9Total*
2.3Poland and Baltic
12.8Corporate Banking Division
0.94
6.5
2.0
Q1/05
International and Shipping Division
Financial Institutions Division
Lending, EURbn
Margins**, %
* Incl. Markets volumes** Excl. Markets and Poland & Baltics
0,34
29,3
2,3
4,3
13,0
7,8
Q4/06
0.38
25.1
2.0
3.8
11.3
6.7
Q3/06
0.37
26.4
1.9
4.5
10.3
7.5
Q2/06
0.37
25.7
1.8
4.3
10.4
6.6
Q1/06
0.40
26.8
1.8
4.3
10.9
7.0
Q4/05
0.40
24.7
1.4
3.6
8.8
8.0
Q2/05
0.39
23.3
1.5
3.6
8.6
6.3
Q3/05
26.7Total*
1.3Poland and Baltic
8.9Corporate Banking Division
0.37
3.2
11.1
Q1/05
International and Shipping Division
Financial Institutions Division
Deposits, EURbn
Margins**,%
103
Nordea operations in Poland and the Baltic countries
12**5153Operating profit (Q4), EURm
1.1 %2.8 %3.4 %5.8 %Market share, deposits, %
18
1.7 %
1,230
1,764
2,117
887
45
363,650
Poland
753Country position, overall
1,775195364316Number of FTEs
90111717Branches/salespoints
1,232,500*41,60043,95054,300Customers
5,9949431,4841,450Total assets, EURm
7.8 %
375
1,418
Latvia
9.4 %
452
1,281
Estonia
6.2 %
255
812
Lithuania
Market share, lending, %
2,311Deposits & Funds, EURm
5,276Commitments***, EURm
TotalEnd of Q4/06
* Incl. Polish Life customers*’ Difference compared to summary of country result is explained by Nordic expenses *** Includes guarantees
Asset Management & Life Insurance
105
* All funds targeted at Nordic Retail segment.** Includes EUR 4.9bn in pension pools products
Breakdown of AuM by market and channels
Denmark
Finland
Norway
Sweden
Europe
North America
Retail funds* (sold through
own distribution)
Fund sales through
third-partiesPrivate Banking
Institutional customers
Total by market
Q2/06EURbn
161.137.6
12.0
7.1
1.8
19.3
-
-
-
-
-
-
5.7
-
17.9
15.9
2.2
9.2
-
11.5
4.6
3.8
3.0
2.7
0.6
18.6**
8.9**
5.0**
-
6.4 3.9**
1.2
59.9
36.5
12.8
32.6
18.8
0.6
26.251.65.740.1
Life & Pensions
106
Asset Management – margins*
BpsQ4oQ3
Income margin up 13bp, Mainly due to high performance fee, based on very good value adding performance
Operating expenses margin in line with last quarter Result margin record highUnchanged asset mix
6371 70 66 64
77
-20 -22 -22 -21 -21 -23
3037 35 32 30
43
-30-20-10
01020304050607080
Q3/05
Q4/05
Q1/06
Q2/06
Q3/06
Q4/06
Income margin Operating expenses marginResult margin
*Margins calculated using average AuM for Asset Management Activities excl. Nordic Private Banking activities. In Q3 these assets were EUR 106.8bn.Volumes used for calculating margins have been restated compared to previously reported figures. Non-income generating mandates of EUR 9bn havebeen deducted.
107
Nordic fixed
income45%
Int'l. equities
28%
Nordic equities
14%
Int'l. fixed income
13%Nordic fixed
income44%
Int'l. equities
28%
Nordic equities
15%
Int'l. fixed income
13%
Asset structure*
Q4/06
*Average AuM for Asset Management activities excl. Nordic Private Banking activities, in Q3 this was EUR 106.8bn
Q4/05
108
European fund distribution
-1,000
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
Q3/00 Q1/01 Q3/01 Q1/02 Q3/02 Q1/03 Q3/03 Q1/04 Q3/04 Q1/05 Q3/05 Q1/06 Q3/06
Inflow AuM
EURbn
109
Life - breaking out profit driversFee based on size of life provisions in “with profit” companies – DK, FIProfit-sharing from the Norwegian business (existing model, change pending)
25% of surplus/deficit from cost result in DK, 100% from FI and SE Profit-/loss-sharing in Norway
25% of surplus/deficit from risk result in DK, 100% from FI and SEProfit-/loss-sharing in Norway
Investment return from separated shareholders’ equity (DK, SE)
Health and accident result, holding company result etc.
Net unit-linked result including unit-linked cost/risk result
Commissions paid to Retail Banking less distribution cost in Retail Banking
Fee contribution
Contribution from cost result
Contribution from risk result
Inv. return on shareholders’ equity
Other profits
Unit-linked
Retail commission and distribution cost
110
Life - profit drivers
511602
1.112
3789-510834
138
-461
Q4/06
267454720
3761-414515660
34
Q3/06
404560964
3552-41343516
-435
Q2/06
390582972
3056-41347507
-136
Q1/06
474607
1,081
2956-3104961
10-133
Q4/05
Of which income within Retail
Key figures
Premiums written, net of reinsuranceHere of from Traditional businessHere of from Unit-linked business
Total Profit Unit linked
Traditional insurance
Other profits
Estimated distribution cost in Retail
Inv. return on Shareholders Equity
Total Profit Traditional
Total product result
Contribution from risk resultContribution from cost resultFee contribution/profit sharing
EURm
111
Life – net written premiums by market
1.112
150
191
238
205
328
Q4/06
720
97
95
151
134
244
Q3/06
964
124
153
221
205
262
Q2/06
254151Sweden
111107Other
1,081972Total
147236Norway
296237Denmark
273241Finland
Q4/05Q1/06EURm
112
Life, investments
EURbn Equitiespredominantly listed equities1/3 Nordic, 2/3 international
Bonds¾ Nordic issuersprimarily govmn’t & mortgage inst.
0
5
10
15
20
25
30
35
Q4/05 Q1/06 Q2/06 Q3/06 Q4/06
Equities Real Estate Alternative investments Bonds Unit linked
29,9 30,5 30,3 31,132,5
113
Life - asset allocation
212231.132.5Total
7
19
22
29
Q4/06
Equities, %
6
17
21
27
Q3/06
3.4
4.4
8.3
14.0
Q3/06Q4/06
3.7Sweden
4.7Norway
8.6Finland
14.4Denmark
Total, EURbn
114
Life - solvency situation End of Q4/06
2157914869Sweden**
308490725235Finland
123120634515Denmark
217181335154Norway*
Solvency in % of requirement
Solvencybuffer
Actualsolvency
RequiredsolvencyEURm
* Excluding unit linked company
** Nordea Life Sweden I
115
Life – solvency sensitivityEnd of Q4/06
215217308123Solvency in % of requirement
189217231124Equities drop 12%
214217333121Interest rates down 50bp
217
Norway
179
Sweden
124
Denmark Finland
291Interest rates up 50bp
116
Life – financial buffers
10.4
12.4
6.4
6.8
13.1
Q4/06
2,277
210
232
361
1,474
Q4/06
8.3139Sweden
% of total provisionsEURm
8.71,901Total
5.3286Finland
11.71,318Denmark
4.6157Norway
Q3/06Q3/06
117
Life – buffers in different scenariosEnd of Q4/06
EURm
2102323611,474Financial buffers, actual
1921401841,157Equities drop 12%
1512354191,394Interest rates down 50bp
230
Norway
259
Sweden
1,520
Denmark Finland
323Interest rates up 50bp
Balance sheet
119
Balance sheet
325,549
12,960
21,386
7,822
28,602
82,609
26,830
115,550
29,790
325,549
69,355
28,876
188,460
31,578
7,095
31 Dec 2005
15,322Total equity
346,890Total assets
32,288Deposits by credit institutions
126,452Deposits and borrowings from the public
31,041Liabilities to policyholders
83,417Debt securities in issue
346,890
25,254
8,177
24,939
75,228
24,207
213,985
26,792
6,678
29 Dec 2006
Other liabilities
Other assets
Derivatives
Subordintated liabilities
Loans and receivables to credit institutions
Derivatives
Loans and receivables to the public
Total liabilites and equity
Treasury bills and other eligible bills
EURm
120
Capital base
185,3989,069
176,3299.8%
18,159-179
-1,535684
6,726
7.1%13,147-1,4431,770-369
1,458
15,271
Q4/06
185,05216,192
168,8609.5%
17,613-173
-1,535812
6,617
6.9%12,704-1,001-1,765
-2751,457
14,288
Q3/06
180,38215,252
165,1309.3%
16,784-290
-1,535812
6,410
6.8%12,199
-634-1,800
-3041,458
13,479
Q2/06
173,61816,312
157,3069.4%
16,284-276
-1,537827
6,376
6.8%11,721-1,210-1,795
-3081,462
13,572
Q1/06
15,545RWA market risk
-279Deductions for other investments15,486Total capital base
9.2%Total capital ratio
837-of which perpetual subordinated loans
169,028
153,483
-1,535
5,862
6.8%11,438
-831-1,794
-3271,472
12,918
Q4/05
RWA credit risk
Tier 1 capitalTier 1 capital ratio
Tier 2 capital
Deductions for investments in ins. companies
Hybrid capital loans
GoodwillOther items net
Deferred tax assets
Total RWA
Core equity
EURm
Market shares
122
Market position in Nordic markets
9.6%11.2%30.8%14.6%- consumer lending
4.6%10.1%27.7%15.2%Life & Pensions (end June)
13.9%16.3%35.8%19.7%- lending21.1%17.2%37.9%21.8%- deposits
17.8%8.3%32.9%21.5%- deposits
15.5%12.6%31.2%15.3%- mortgage lending
1.8%
14.0%
Sweden
2.8%
8.3%
Norway
3.8%
26.3%
Finland
7.7%
19.0%
Denmark
Corporate customers
Brokerage (Jan 2007)
Investment funds
Personal customersMarket shares
Statistics mainly from November -December 2006
* Based on estimates
** Please note that KLP is excluded from the calculations
* **
123
Personal customer deposits - market volume & share
0
10
20
30
40
50
60
Dec-04
Feb-05
Apr-05
Jun-0
5Aug
-05Oct-
05Dec-0
5Feb
-06Apr-
06Ju
n-06
Aug-06
Oct-06
Dec-06
30%
32%
34%
36%
38%
40%
0100200300400500600
Nov-05
Jan-0
5Mar-
05May
-05Ju
l-05
Sep-05
Nov-05
Jan-0
5Mar-
05May
-05Ju
l-05
Sep-05
Nov-05
Jan-0
6Mar-
06May
-06Ju
l-06
Sep-06
Nov-06
18%
20%
22%
24%
26%
28%
0100200300400500600700
Dec-03
Feb-04
Apr-04
Jun-0
4Aug
-04Oct-
04Dec-0
4Feb
-05Apr-
05Ju
n-05
Aug-05
Oct-05
Dec-05
Feb-06
Apr-06
Jun-0
6Aug
-06Oct-
06Dec-0
6
15%
17%
19%
21%
23%
25%
EURbn FinlandDKKbn
Denmark
SEKbn SwedenNOKbn Norway
Market volume Market share
0
100
200
300
400
500
600
Nov-03
Jan-0
4Mar-
04May
-04Ju
l-04
Sep-04
Nov-04
Jan-0
5Mar-
05May
-05Ju
l-05
Sep-05
Nov-05
Jan-0
6Mar-
06May
-06Ju
l-06
Sep-06
Nov-06
5%
7%
9%
11%
13%
15%
124
Corporate deposits - market volume & share
0
5
10
15
20
25
30
Dec-04
Feb-05
Apr-05
Jun-0
5Aug
-05Oct-
05Dec-0
5Feb
-06Apr-
06Ju
n-06
Aug-06
Oct-06
Dec-06
35%
37%
39%
41%
43%
45%
0
100
200
300
400
Nov-03
Jan-0
4Mar-
04May
-04Ju
l-04
Sep-04
Nov-04
Jan-0
5Mar-
05May
-05Ju
l-05
Sep-05
Nov-05
Jan-0
6Mar-
06May
-06Ju
l-06
Sep-06
Nov-06
14%16%18%20%22%24%26%28%30%32%
0
100
200
300
400
500
Nov-03
Jan-0
4Mar-
04May
-04Ju
l-04
Sep-04
Nov-04
Jan-0
5Mar-
05May
-05Ju
l-05
Sep-05
Nov-05
Jan-0
6Mar-
06May
-06Ju
l-06
Sep-06
Nov-06
10%
12%
14%
16%
18%
20%
EURbn FinlandDKKbn Denmark
SEKbn SwedenNOKbn Norway
Market volume Market share
0.000
100.000
200.000
300.000
400.000
500.000
600.000Dec-0
3Feb
-04Apr-
04Ju
n-04
Aug-04
Oct-04
Dec-04
Feb-05
Apr-05
Jun-0
5Aug
-05Oct-
05Dec-0
5Feb
-06Apr-
06Ju
n-06
Aug-06
Oct-06
Dec-06
10%
15%
20%
25%
30%
125
Personal customer lending - market volume & share
0
1020
3040
5060
70
Dec-04
Feb-05
Apr-05
Jun-0
5Aug
-05Oct-
05Dec-0
5Feb
-06Apr-
06Ju
n-06
Aug-06
Oct-06
Dec-06
29%
30%
31%
32%
33%
34%
35%
0
100
200
300
400
500Dec-0
3Feb
-04Apr-
04Ju
n-04
Aug-04
Oct-04
Dec-04
Feb-05
Apr-05
Jun-0
5Aug
-05Oct-
05Dec-0
5Feb
-06Apr-
06Ju
n-06
Aug-06
Oct-06
Dec-06
8%
9%
10%
11%
12%
0
200
400
600
800
1000
1200
Nov-03
Jan-0
4Mar-
04May
-04Ju
l-04
Sep-04
Nov-04
Jan-0
5Mar-
05May
-05Ju
l-05
Sep-05
Nov-05
Jan-0
6Mar-
06May
-06Ju
l-06
Sep-06
Nov-06
8%
9%
10%
11%
12%
EURbn FinlandDKKbn Denmark
SEKbn SwedenNOKbn Norway
Market volume Market share
0
100
200
300
400
500
Nov-03
Jan-0
4Mar-
04May
-04Ju
l-04
Sep-04
Nov-04
Jan-0
5Mar-
05May
-05Ju
l-05
Sep-05
Nov-05
Jan-0
6Mar-
06May
-06Ju
l-06
Sep-06
Nov-06
12%
14%
16%
18%
20%
22%
126
Mortgage lending households - market volume & share
0200400600800
10001200
Dec-03
Feb-04
Apr-04
Jun-0
4Aug
-04Oct-
04Dec-0
4Feb
-05Apr-
05Ju
n-05
Aug-05
Oct-05
Dec-05
Feb-06
Apr-06
Jun-0
6Aug
-06Oct-
06Dec-0
6
10%
12%
14%
16%
18%
20%
0
200
400
600
800
1000
Nov-03
Jan-0
4Mar-
04May
-04Ju
l-04
Sep-04
Nov-04
Jan-0
5Mar-
05May
-05Ju
l-05
Sep-05
Nov-05
Jan-0
6Mar-
06May
-06Ju
l-06
Sep-06
Nov-06
8%
9%
10%
11%
12%
13%
EURbn FinlandDKKbn Denmark
SEKbn SwedenNOKbn
Norway
Market volume Market share
0
200
400
600
800
1000
1200
Dec-03
Mar-04
Jun-0
4Oct-
04Dec-0
4Mar-
05Ju
n-05
Sep-05
Dec-05
Mar-06
Jun-0
6Sep
-06Dec-0
6
0%
4%
8%
12%
16%
20%
0
10
20
30
40
50
60
Dec-04
Feb-05
Apr-05
Jun-0
5Aug
-05Oct-
05Dec-0
5Feb
-06Apr-
06Ju
n-06
Aug-06
Oct-06
Dec-06
30%
31%
32%
33%
34%
35%
127
Corporate lending - market volume & share
0
10
20
30
40
50
Dec-04
Feb-05
Apr-05
Jun-0
5Aug
-05Oct-
05Dec-0
5Feb
-06Apr-
06Ju
n-06
Aug-06
Oct-06
Dec-06
32%
34%
36%
38%
40%
42%
0250500750
1,0001,2501,5001,7502,0002,250
Dec-03
Feb-04
Apr-04
Jun-0
4Aug
-04Oct-
04Dec-0
4Feb
-05Apr-
05Ju
n-05
Aug-05
Oct-06
Dec-05
Feb-06
Apr-06
Jun-0
6Aug
-06Oct-
06Dec-0
6
10%
12%
14%
16%
18%
20%
0100200300400500600700
Nov-03
Jan-0
4Mar-
04May
-04Ju
l-04
Sep-04
Nov-04
Jan-0
5Mar-
05May
-05Ju
l-05
Sep-05
Nov-05
Jan-0
6Mar-
06May
-06Ju
l-06
Sep-06
Nov-06
10%
12%
14%
16%
18%
20%
EURbn FinlandDKKbn Denmark
SEKbn SwedenNOKbn Norway
Market volume Market share
0100200300400500600700
Nov-03
Jan-0
4Mar-
04May
-04Ju
l-04
Sep-04
Nov-04
Jan-0
5Mar-
05May
-05Ju
l-05
Sep-05
Nov-05
Jan-0
6Mar-
06May
-06Ju
l-06
Sep-06
Nov-06
18%
20%
22%
24%
26%
28%
30%
Appendix
129
Ratings
AA
AA
AA
AA
Long
R-1 (high)
R-1 (high)
R-1 (high)
R-1 (high)
Short
DBRS
AA-F1+AA-A-1+Aa3P-1Nordea Bank AB
A-1+
A-1+
A-1+
A-1+
Short
S&P
AAA
AAA
AA-
AA-
AA-
Long LongShortLongShort
A1P-1Norgeskreditt
AaaNordea Kredit
AaaNordea Hypotek*
AA-F1+Aa3P-1Nordea Bank N
AA-F1+Aa3P-1Nordea Bank F
AA-F1+Aa3P-1Nordea Bank D
FitchMoody’s
*Covered bond rating
130
32.3
0
5
10
15
20
25
30
35
40
SHB
Commerzbank
ABN AMRO
Danske
Bank
RBOSHBOS
UnicreditoSwed
bankKBC
Barclays
Lloyds
Erste B
ankBNP DnB
Allied Iri
sh Ban
ks
Hypove
reinsb
ank
Societe G
eneral
Nordea SEB
Bank of Ir
eland
% Top quartile
Total shareholder return (TSR) Ytd 2006(1/1 2006 – 29/12 2006)
131
Largest registered shareholders, year end 2006
0.50.4 %9.7Abu Dhabi-0.30.4 %9.7Skandia Funds
0.80.5 %12.3Länsförsäkringar Funds
-2.41.2 %30.1Nordea Funds
12.7
0.00.7 %18.2Fourth Swedish National Pension Fund-1.50.6 %14.4AMF Pension Funds
11.6
55.9 %1,459.0Other100.0 %
0.4 %
0.5 %
0.8 %0.9 %1.0 %
1.2 %1.3 %1.7 %1.8 %2.2 %2.3 %2.5 %4.0 %
19.9 %
Percent of Nordea
0,0Nordea Profit-sharing Foundation
2,594.1Total number of outstanding shares
-2.765.3Robur Funds-7.759.0Alecta
0.0515.6Swedish state0.0102.5Nordea Denmark Fund
-1.156.5SHB/SPP Funds0.046.3AMF Pension
-1.943.4SEB Funds4.034.7Sampo Oyj
0.2Govt of Singapore Inv Corp
-0.320.1Third Swedish National Pension Fund-1.423.5First Swedish National Pension Fund0.125.5Second Swedish National Pension Fund
-0.232.1Skandia Life Insurance
Change 30 days, mill shares
Number of shares, mill
Shareholder
132
3.93
2.54
4.42
3.06
3.99
3.24
3.84
3.05
30-09-06
4.04
2.94
4.86
3.69
4.12
3.74
3.98
3.57
31-12-06
0.11
0.40
0.44
0.63
0.13
0.50
0.14
0.52
Change Q4/06
Short, SE
Long, SE
Short, NO
Long, NO
Long, DK
Short, DK
Long, EUR (5 years)
Short, EUR (one week)
%
Market development – interest rates
133
Macro data – Nordic market
% 2006e 2007e 2008eGross domestic product DK 3.6 2.1 1.5
FI 5.6 3.2 3.6NO 2.6 3.4 2.8SE 4.3 3.4 2.5
Inflation DK 1.9 1.7 1.9FI 1.6 1.8 1.6
NO 2.3 1.0 2.1SE 1.4 1.4 1.3
Private consumption DK 3.9 2.6 1.6FI 3.6 2.5 2.8
NO 4.0 3.2 2.1SE 2.8 3.5 2.4
Unemployment DK 4.5 3.9 4.0FI 7.9 7.4 7.0
NO 3.6 2.9 2.8SE 5.4 5.3 5.1
Source: Nordea Markets Economic Outlook January 2007. In Norway, forecasts are for mainland GDP
134
Financial calendar 2007
Q1 report 2007 will be published on 3 May
www.nordea.com/ir
135
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