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BofAML 21st Annual Financials CEO Conference · PDF file BofAML 21st Annual Financials CEO Conference Investor presentation Casper von Koskull, President and Group CEO London 29th

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  • BofAML 21st Annual Financials CEO Conference Investor presentation

    Casper von Koskull, President and Group CEO

    London 29th September

  • 13% CAGR in capital generation and CET1-ratio up 10.6 pp in 10 years

    Strong capital generation and stable returns at low risk1

    1) CAGR 2015 vs. 2005, adjusted for EUR 2.5bn rights issue in 2009. Equity columns represents end-of-period equity less dividends for the year. No assumption on reinvestment rate for paid out dividends

    2) Calculated as Tier 1 capital excl. hybrid loans 2 •

    2012 2015

    43

    2014

    39

    2013

    37 35

    20

    15

    31

    2008 2006

    12

    2005 2011 2010

    19

    29 26

    2007 2009

    5.92 16.5

    Acc. dividend, EURbn Acc. equity, EURbn

    CET1 Ratio %

  • The most stable bank in the Nordics

    1) Calculated as quarter on quarter volatility in CET1 ratio, adjusted so that the volatility effect of those

    instances where the CET1 ratio increases between quarters are excluded

    Nordea and peers 2006 – 2015, %

    3 •

    146

    77

    4738 2417

    Peer 5 Nordea Peer 4 Peer 2 Peer 3 Peer 1

    1,04 0,88

    0,52 0,350,33

    0,21

    Peer 3 Peer 2 Peer 1 Nordea Peer 4 Peer 5

    Q u

    a rt

    e rl

    y n

    e t

    p ro

    fi t

    v o

    la ti

    li ty

    Q u

    a rt

    e rl

    y C

    E T

    1 r

    a ti

    o

    v o

    la ti

    li ty

    ¹

  • Our focus on ancillary income has offset pressure on NII margins

    2008 2015 Change

    Net Interest Income (EURm) 5 093 4 963 -3%

    Lending and deposit volumes (EURbn) 414 530 +28%

    Net Fee and Commission Income (EURm) 1 883 3 230 +72%

    Net Fair Value (EURm) 1 028 1 645 +60%

    Total Income (EURm) 8 200 10 140 +24%

    4 •

  • Recent Trends

    Q2/16 vs. Q2/15*

    • Income down 3%

     Despite low growth and turbulent financial markets – stabilising trend in the quarter

     Ancillary income holding up well

    • Costs +3% in local currencies

     Developing as expected

     Flat 18 vs. 16, down after 18

    • Loan loss provisions at 15bps

     Expected level for full year approximately 16bps

     Overall, solid asset quality with strongly rated customers

    • CET 1 ratio improved 10bps from previous quarter to 16.8% (Pro forma 17.2%)

     SREP finalised end-September, early October – current requirement of approx. 17%

     Project Archean closed successfully end-August

    • Simplification programme is delivering according to plan

    5 •

    *In local currencies

  • Retail Banking - strong financial development

    1) Lending margins

    2) Adjusted for insourcing of IT and compliance build up

    Income (EURbn) Profitability (%)

    Cost (EURbn)

    ■ Non interest income +9%

    ■ Margins1 +43 bps

    ■ Relationship customers +6%

    ■ FTEs down by ~2,000 (~10%)2

    ■ 35% fewer branch locations

    RoCaR

    Cost / income

    1313

    11

    9

    7

    2013 2012 2011 2014 2015

    65

    59 59

    56 54

    2011

    3.2

    2015

    2.7

    4.9

    2011 2015

    5.0

    6 •

  • Wholesale Banking – a leading Nordic platform

    2015 - Tier 1 – Nordea Nordic #1

    No. 1

    positions

    No. 2

    positions

    No. 3

    positions

    #1 Nordea 22 12 8

    #2 Nordic Peer 14 12 13

    #3 Nordic Peer 5 14 13

    Greenwich Prospera

    7 •

  • 288

    2015 2011 2014

    1,929

    2013 2012 2014

    1,127

    2011 2015 2012 2013 2013 2012 2011 2014 2015

    Wealth Management - 20% profit CAGR since 2011

    Operating income (EURm) Operating profit (EURm) AuM (EURbn)

    8 •

  • Banking: an industry in transition – and more disruption lurks

    around the corner

    Big Data – relevance & personalisation

    Cloud – profitability at lower scale

    A digital

    revolution

    Mobile – always

    accessible

    Social Media – networks redefined

    KEY TECHNOLOGIES IMPACTING BANKING MORE DISRUPTION COMING

    E.g. Blockchain

    9 •

  • Banking customers: Same needs as before but changing behavior

    Co-creation Network

    building Personalisation

     Impatient & empowered - 24/7

    availability and immediate delivery

     Knowledgeable - Specialised and

    tailored advise that complements the

    research we have done ourselves

     Integrated & connected – Integrated

    into my process and

    connected/compared with peers

     Require relevance - Personalised

    products, services and interaction

     Are becoming less loyal

     Use several channels in combination

     Use digital channels more intensively

     Use digital channels to enforce:

    CHANGING CUSTOMER EXPECTATIONS… …AND CHANGING CUSTOMER BEHAVIOR

    10 •

  • Also Nordea’s customers are changing their behavior

    22 Mobile

    Branches

    ■ Digital response required

    ■ Front-end solutions will not suffice

    ■ Automated end-to-end processes across

    the full value chain is a must

    ■ Consistency and endurance in execution to

    unlock benefits

    T ra

    n s a

    c ti

    o n

    s

    M ill

    io n s

    Q3/10 Q3/15

    A b

    il it

    y t

    o e

    x e

    c u

    te

    Level of digital response

    60

    End-to-end digital response required Relationship banking is turning digital fast

    3

    Netbank

    Q2

    2015

    10%

    Q4

    2014

    3%

    Q4

    2016

    17%

    Q4

    2015

    Q4

    2017

    S h

    a re

    o f

    R e

    m o

    te

    M e e ti

    n g

    s

    (P e

    rc e

    n t)

    11 •

  • Surge in new operational regulations

    & OUR CUSTOMERS

    Machinery

    room

    Recovery and

    resolution

    Solvency 2

    TLAC

    Structural reforms

    for banking

    Investor

    compensation

    Living

    wills

    Leverage

    ratio

    NSFR

    Shadow

    banking

    Banking union

    Products

    Short selling CSD

    regulations

    AIFMD

    UCITS

    Long-term

    financing

    Prospectus

    Directive Bank

    account IORP II

    SFT

    transparency

    Margin for

    derivatives

    Mortgage

    Directive Securities

    legislation

    MMFs

    Capital

    requirements

    Deposit

    guarantee

    MAD

    AML

    EMIR PRIPs

    MiFID II

    FTT

    FATCA Data

    protection

    SEPA

    Dodd-Frank

    Payment

    package

    Corporate

    governance

    Benchmark

    regulations

    Transparency

    Directive

    Balance sheet

    regulations

    Fundamental

    review of the

    trading book

    Operational regulations

    PSD II

    12 •

  • IT complexity in large legacy banks

    Complex, risky, expensive & slow – hinders compelling customer experience

    Source: BCG

    13 •

  • For Nordea the strategic response to the industry transformation is

    “Simplification” – the corner stone of our transformation

    Digital offering Compliance

    One operating

    model

    Cost and

    capital efficiency

    Simplification

    14 •

  • 2015 2020

    M il e s to

    n e s

    K

    e y a

    c ti

    v it

    ie s

    High-level delivery and migration plan for Core Banking Platform

    Country migrations done

    1 2 3 4 SV / SI

    selected

    Contract signed

    CBP implementation done

    Decommissioning done

    Prep.

    Pilot

    Deposits

    Loans

    Mortgages

    Trans. accounts

    Complex

    Customers Data cleansing and decommissioning

    Business case +

    migration strategy

    agreed First version of model bank

    implemented Pilot

    Implemented

    15 •

  • Digitalisation is at the heart of the future business/operating model

    New

    great customer

    experiences

    Robust platforms

    as foundation

    COMPETENT

    RELEVANT

    SAFE

    ANYTIME, ANYWHERE

    EFFICIENT COMPLIANT

    CONFIGURABLE RESILIENT

    Four strategic capabilities

     Agility

     Competence

     Resilience

     Scale

    16 •

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