Half-year results 2021 - Cision
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Half-year results 2021
Disclaimer
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.
2Executive summary
• Strong result, driven by high income growth, firm cost control and low loan losses
➢ Net interest income up 13%, net fee and commission income up 30% and solid net fair value result
➢ Net loan loss reversals of EUR 51m
• High levels of business activity and strong growth across Nordics
➢ Mortgage volumes up 6% y/y, SME lending up 8% y/y and assets under management up 24% y/y
• Cost-to-income ratio* improving at 49% and underlying cost development in line with plan
➢ Significantly higher business activity driving slightly updated cost outlook
➢ FY2021 costs now expected to be around EUR 4.6bn
• Continued strong credit quality – management buffer largely unchanged
• Profitability improving: return on equity* at 11.4% and earnings per share EUR 0.25
• Capital position among best in Europe with CET1 ratio of 18.0%
➢ Ready to distribute unpaid dividends and start buy-backs in Q4
3 * With amortised resolution feesGroup quarterly results Q2 2021
Income statement and key ratios
Q221 Q220 Q2/Q2 Q121 Q2/Q1
EURm
Net interest income 1,232 1,091 13 % 1,212 2%
Net fee and commission income 878 673 30 % 827 6%
Net fair value result 278 316 -12 % 370 -25 %
Other income 30 10 11
Total operating income 2,418 2,090 16 % 2,420 0%
Total operating expenses excl. res. fee -1,131 -1,039 9% -1,095 3%
Total operating expenses -1,131 -1,088 4% -1,319 -14 %
Profit before loan losses 1,287 1,002 28 % 1,101 17 %
Net loan losses and similar net result* 51 -696 -52
Operating profit 1,338 306 1,049 28 %
Cost-to-income ratio**, % 49 52 48
Return on equity**, % 11.4 3.0 11.0
Diluted earnings per share, EUR 0.25 0.06 0.19
4 * Includes fair value adjustments to loans held at fair value in Nordea Kredit
** With amortised resolution feesNet interest income – highest growth rate in ten years
Year-over-year bridge, EURm Comments
+13% • Net interest income up 13% (up 10% excl. Nordea
0
1,232 Finance Equipment)
57
13 • High levels of business activity and market share
75
1,091
gains across Nordics
22
• Mortgage volumes up 6% and lending to SMEs up 8%
(up 4% excl. NFE)
Q220 Volumes Margins Other FX Day count Q221
• Margins largely unchanged from previous quarter
Quarter-over-quarter bridge, EURm
+2%
1,232
12
1,212
6
6 7
3
Q121 Volumes Margins Other FX Day count Q221
5Net fee and commission income – significant growth in savings and advisory fee income
Year-over-year bridge, EURm Comments
+30%
• Net fee and commission up 30%, highest level ever
878
20 8 19 • Savings fee income up 27%, driven by continued
8
52 AuM growth
673
98 • Solid net inflow: EUR 2.6bn
• High business activity in brokerage and corporate
finance business
Q220 Asset mgmt. Brok. &
advisory
Pay. &
cards
Lending Other FX Q221 • Cards income recovering
Quarter-over-quarter bridge, EURm Savings and investment commission income, EURm
+6%
878
1
15 +37% 617
0 2
11
552 563
25 493
827
450
Q121 Asset mgmt. Brok. & Pay. & Lending Other FX Q221 Q220 Q320 Q420 Q121 Q221
advisory cards
6Net fair value result – continued high activity in customer areas
Net fair value result, EURm Comments
• Solid net fair value result, at more normalised level
• Continued high activity in customer areas, mainly
-12%
370 driven by FX and equity trading
20
316 • Weaker markets drove lower trading result
14
278
134
257
91 32
47 217 33
46
71
211 216 213
176
139
-5
Q220 Q320 Q420 Q121 Q221
Customer areas* Treasury & other**
Market-making operations
7 * Excludes fair value adjustments to loans held at fair value in Nordea Kredit
** Includes valuation adjustments and FXCosts – underlying cost development in line with plan
Year-over-year bridge, EURm Comments
+4%
• Underlying costs unchanged
1,131
• Staff costs lower, adjusted for inclusion of NFE,
42
1,088 variable pay provisions and exchange rate effects
1
38
49
13
Q220 Underlying Resolution fee NFE Variable pay FX & other Q221
costs operating provisions
costs
Quarter-over-quarter bridge, EURm Outlook
-14%
• Updated cost outlook due to significantly higher
1,319
15 income and profits: full-year 2021 costs now
224
1,131
expected to be around, rather than below, EUR
38
12 1 4.6bn
• Prime focus is, and will remain, on costs relative to
income
Q121 Underlying Resolution Variable pay Premises FX Q221
costs fee provisions write-off
8Net loan losses and similar net result – credit quality remains strong
Net loan losses and similar net result Q221, EURm Comments
• Strong credit performance – net reversals of EUR 51m
50 -50
• New provisions still at low levels; stage 3 loans down
to 1.41% from 1.53% in Q1
-30 • EUR 80m release of collective provisions
-21
-30 • EUR 50m related to improved macro outlook and portfolio
quality
-51
Individual Macroeconomy Model Net loan Nordea Kredit Total • EUR 30m driven by model updates
provisions and portfolio update losses fair value adj.
and write-offs quality • Management buffer largely unchanged at EUR 610m
Stage 3 loans and PD of total loans, % • EUR 40m utilised to cover additional provisions for new
NPL requirements
Stage 3 loans, % Avg. PD
• Substantial buffer retained for potential future credit losses
2.0 0.75
0.70
• Net loan losses in 2021 expected to be significantly
1.5
below 2020 level
0.65
1.0
0.60
0.5
0.55
0.0 0.50
Q220 Q320 Q420 Q121 Q221
Stage 3 loans Avg. probability of default (PD) of performing loans
9Capital – very strong capital position to support customers and pay dividends
CET1 capital ratio development, % Comments
1.9
• CET1 capital ratio 18.0%, 7.8 percentage points
-0.5
0.7 0.2 -0.1 0.2
above regulatory requirement*
• CET1 capital up EUR 0.5bn, mainly driven by profit net of
17.5 18.0Personal Banking – high levels of business activity and volume growth
Total income, EURm Comments
+14% • Total income up 14%
929
877
818 838 847 • Continued strong mortgage activity: volumes up 6%
569 • Further increases in mortgage market shares across Nordics
501 543 535 562
• Improved mortgage and deposit margins
• Strong savings and investment activity; 65% of fund sales
267 317
279 290 296 now done digitally
50 16 22 19 43
Q220 Q320 Q420 Q121 Q221
• Improvement in cost-to-income ratio, now 49%
Net interest income Net fee and commission income Net fair value result and other
Lending*, EURbn Cost-to-income ratio**, %
-5pp
+5% 167
165 55
54 54
163 52
161
159 49
Q220 Q320 Q420 Q121 Q221 Q220 Q320 Q420 Q121 Q221
11 * Excluding FX effects
** With amortised resolution feesBusiness Banking – high levels of business activity
Total income, EURm Comments
+20%
• Strong quarter – high levels of business activity
641 648
617
542 543
• Lending volumes up 8% (4% excl. Nordea Finance Equipment) –
strong growth in Norway and Sweden
395 406
339 351
383 • High investment banking activity and improved savings and
payments income
125 159 166 159 • More than 275,000 customers now onboarded to new
135
78 57 75 80 83 netbank and over 80% of loan products available for digital
Q220 Q320 Q420 Q121 Q221 signing
Net interest income Net fee and commission income Net fair value result and other • Improvement in cost-to-income ratio, now 44%
Lending*, EURbn Cost-to-income ratio**, %
-6pp
+8%
95 50 51
94
92 48
4
4 45
4 44
88 88
88 90 91
Q220 Q320 Q420*** Q121*** Q221*** Q220 Q320 Q420 Q121 Q221
12 * Excluding FX effects
** With amortised resolution fees
*** Acquisition of SG Finans (now Nordea Finance Equipment) contributed EUR 4bnLarge Corporates & Institutions – clear progress on strategic repositioning plan
Total income, EURm Comments
+9% • Total income up 9%, driven by strong commission income
622
• Highest level of net fee and commission income in 17 quarters
505
476
465 445 240 • Very high customer activity in capital markets areas
214 226
228
229 • Steady NII from higher lending margins while lending volumes lower
137
101 118 163
• Continued capital efficiency in line with repositioning plan
116
150 132
245 • Economic capital down 17%
101 113
Q220 Q320 Q420 Q121 Q221 • Cost-to-income ratio 41%
Net interest income Net fee and commission income Net fair value result and other • Return on capital at risk 16%
Lending*, EURbn Return on capital at risk**, %
-11%
49 19
47 46 45 44 16
13
11
1
Q220 Q320 Q420 Q121 Q221 Q220 Q320 Q420 Q121 Q221
13 * Excluding repurchase agreements
** With amortised resolution feesAsset & Wealth Management – very high customer activity, especially in internal channels
Total income, EURm Comments
+28%
• Total income up 28%, mainly driven by increase in AuM
263
292
19
292
19
• AuM up 24% to all-time high of EUR 387bn
247
228 16
17
16 • Net inflow of EUR 2.6bn (annualised 3%), subdued by EUR 3.7bn
outflow related to a divested business in Denmark
235 244
186 204 228 • Solid Private Banking net inflow: EUR 2.0bn
• Continued high demand for ESG products: over 90% of net flow
25 27 19 38 29 • Improvement in cost-to-income ratio, now 41%
Q220 Q320 Q420 Q121 Q221
Net interest income Net fee and commission income Net fair value result and other
• Return on capital at risk 31%
Assets under management, EURbn, and net flows, % Cost-to-income ratio*, %
AuM Annualised net flow as % of AuM -16pp
372 387 57
354 51 52
311 326
42 41
10% 326
6%
4% 3%
5%
Q220 Q320 Q420 Q121 Q221 Q220 Q320 Q420 Q121 Q221
14 * With amortised resolution feesSustainability at the core of our strategy
Our actions Our targets
Strategy and climate targets launched in February 2021 – clear progress in implementation CO2
across Group
Net-zero
emissions by 2050
at latest
Engagement with customers to facilitate and enable their transition
Assessment of climate impact of corporate lending portfolio – work ongoing to set specific
targets for sectors most vulnerable to climate-related risks
*
40-50%
reduction in
emissions across
Sustainability-linked lending to SMEs up 20% in Q2 lending and
investment
portfolios by 2030
Development of sustainability competencies through training activities and enhanced
governance
50%
reduction
Bloomberg league table #1 positions for Nordic sustainable bonds overall and Nordic in emissions from
internal
corporate sustainable bonds operations by
2030
15 * Baseline year 2019Good progress in developing our digital omnichannel banking model
Mobile bank 71% y/y 44% of
ranked no 1 growth in online loan
digital savings promise
in Nordics with
advisory applications*
4.5-4.6 app
sessions with approved
store rating
robotic adviser within minutes
Active mobile
65% of 71 self-
users** service
private
up 9% y/y customer fund features in
mobile bank –
with >1bn sales through
leading position
logins annually digital channels
in Nordics
16 *Sweden
**Personal BankingWe are committed to delivering on our 2022 financial targets
Cost-to-income ratio Capital policy
50% 150-200bp
management buffer
above regulatory CET1 requirement
Return on equity Dividend policy
60-70% payout of distributable
>10% profits to shareholders
Excess capital intended to be distributed
to shareholders through buy-backs
17Appendix
Loan book – well diversified with strong credit quality
Portfolio well diversified Five segments with 4% of
Updated analysis of COVID-19
across countries and total exposures significantly
impact by segment
segments affected
0.1% Air transportation
EUR 13bn, 4% Significantly affected
0.1% Mining & supporting activities
0.1% Household & personal products
EUR 68bn 0.3% Oil, gas & offshore
Partially affected
21% 0.4% Materials
0.5% Media & entertainment
0.5% Accomodation & leisure
0.5% Consumer durables
Total portfolio
43% 0.8% Land transportation
49% EUR 323bn* 0.9% Capital goods
1.0% Retail trade
1.5% Wholesale trade
Not significantly 2.0% Maritime
EUR 242bn affected 2.2% Unsecured consumer lending
75%
2.4% Agriculture
8% 5.7% Residential real estate
5.8% Secured consumer lending
8.9% Commercial real estate
17.6% Other corporates
Corporates Consumer Mortgages
48.7% Mortgages
Nordic societies have well-structured social safety nets, strong fiscal positions and effective legal systems
Lending by country
20% 25% 22% 32% 1%
20 * Excluding reposStrong and stable credit quality
Stage 2 and 3 loans at amortised cost, EURm Comments
• Decrease in stage 2 loans (11% q/q), partly related
to enhanced data and model methodology
12,512 13,576 13,840 14,383
12,843
• Stage 3 loans at low levels; decrease due to active
credit risk management
• Coverage ratio for potential losses in stage 3 up at
4,421 4,219 3,979 4,023 3,750 44%
Q220 Q320 Q420 Q121 Q221
Stage 2 Stage 3
Coverage ratio, %
Stage 3 Stage 2
45 44 5.0
43 43
42 42
4.5
40 39
3.7 4.0
37 3.6 3.5
3.4 3.4 3.4
3.5
35 3.2
3.0
30 2.5
Q419 Q120 Q220 Q320 Q420 Q121 Q221
Stage 3 Stage 2
21Coverage ratios – well provisioned for potential losses
Coverage ratios
Significantly Partially affected Non-significantly
affected segments segments affected segments
77
Avg. 52% Avg. 46% Avg. 34%
68
66
63
62
61 60
58
55 55
52 53
50 51 51
49 48 47
46 47 46 46 45
43 44 44
41 41 41 41 42
38 38 38
15
9
Acc. Air Retail Maritime Oil, Consumer Media & Capital Land Mining Wholesale Unsecured Secured Commercial Residential Other Mortgages Nordea
& transp. trade gas & durables entert. goods transp. trade consumer consumer real real corporates Group
leisure offshore lending lending estate estate
Average Q2 2021 coverage ratio Q1 2021 Q2 2021
22Nordic economic development – resilient economies back on track
Housing prices Nordic countries among the best performing during COVID
• Danish GDP down 1.0% q/q in Q1. Unemployment down to 4.0%
in May; house prices up 14.9% y/y and apartment prices up
17.3% y/y in June.
• Finnish GDP down 0.1% q/q in Q1. Unemployment down to
7.6% in May and apartment prices up 3.9% y/y in May.
• Norwegian mainland GDP down 1.0% q/q in Q1. Unemployment
down to 3.0% in June and housing prices up 10% y/y in June.
• Swedish GDP up 0.8% q/q in Q1. Unemployment down to
7.9% in June and housing prices up 18% y/y in May.
Unemployment rate GDP forecasts, %, y/y (Nordea Markets)
Country 2020 2021E 2022E
Denmark -2.7 3.0 2.8
Finland -2.8 3.0 3.0
Norway -2.5 3.5 4.0
Sweden -3.1 4.5 3.0
23You can also read
