Post on 29-May-2020
Nordea overview and
direction
May 12, 2014
Lennart Jacobsen, Head of Retail Banking &
Country Senior Executive Sweden
ABG Sundal Collier presentation
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Highlights
Nordea delivers stable income and improving cost efficiency
Continued stable but low lending demand
Pick up in corporate advisory business
Continued strong activity in the savings area
Loan losses are down 12% q-o-q
Operating profit up 6% on Q1/13
Cost/income ratio improved to 49% compared to 51% in Q1/13
Fully loaded Basel III CET 1 ratio is up by 70 bps to 14.6% (Total capital ratio of
18.4%)
RoE up 30 bps y-o-y to 11.4%
2 •
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Comments 76 116 154
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Financial result Q1/14
EURm Q1/14 Q4/13 Chg % Q1/13 Chg %
Net interest income 1 362 1 390 -2 -1 1 358 0 5
Net fee & commission income 704 703 0 0 623 13 16
Net fair value result 411 333 23 24 444 -7 -7
Total income* 2 501 2 469 1 2 2 506 0 3
Staff costs -756 -739 2 2 -754 0 4
Total expenses -1 237 -1 283 -4 -3 -1 267 -2 1
Profit before loan losses 1 264 1 186 7 8 1 239 2 5
Net loan losses -158 -180 -12 -12 -198 -20 -19
Operating profit 1 106 1 006 10 11 1 041 6 10
Net profit from continuing operations 840 760 11 12 783 7 11
Return on equity (%) 11.4 10.5 +90 bps - 11.1 +30 bps -
CET1 capital ratio** (%) 14.6 13.9 +70 bps - 12.1 +250 bps
Cost/income ratio (%) 49 52 - - 51 - -
* Includes other income
** Q4/13 and Q1/13 are estimated Basel III numbers
3 •
EURm Q1/14 Q4/13 Chg % Q1/13 Chg %
Net interest income 942 948 -1 0 955 -1 2
Net fee & commission income 280 271 3 3 266 5 8
Net fair value result 86 79 9 9 93 -8 -4
Total income 1 320 1 316 0 1 1 350 -2 1
Staff costs -339 -335 1 1 -345 -2 1
Total expenses -719 -750 -4 -4 -746 -4 0
Profit before loan losses 601 566 6 6 604 0 3
Net loan losses -124 -145 -14 -13 -131 -5 -2
Operating profit 477 421 13 13 473 1 5
4 •
The leading Nordic Retail bank
Retail Banking result Q1/14
Retail Banking contribution*
Operating income Operating profit FTE’s Lending Deposits
54% 45% 59% 67% 60%
* FY 2013
Chg %
Q1/13
39 -5
-5 -17
-19 -5
20 -5
-29 n.m.
-9 n.m.
EURm Chg %
Q1/13
Total income 249 -4 8
Staff costs -38 -7 6
Total expenses -110 -10 1
Profit before loan
losses 139 1 14
Net loan losses -14 27 40
Operating profit 125 -1 12
Chg %
Q1/13
374 -3* 1*
-73 -4 1
-213 -5 -1
161 -13 -9
-6 -45 -45
155 -10 -7
Chg %
Q1/13
301 16
-58 2
-161 1
140 41
-7 -46
133 55
EURm Chg %
Q1/13
Total income 392 -2
Staff costs -74 -1
Total expenses -206 0
Profit before loan
losses 186 -3
Net loan losses -67 -22
Operating profit 119 12
5 •
Geographically diversified Retail Banking operations
Retail Banking result Q1/14 - Country breakdown
*Adjusted for capital gain of EUR 23m in Q1/13
Retail Banking
6 •
Household lending Q412/ Q413/ Q413/ Q114/
% Q411 Q412 Q313 Q414
Nordea 4.9% 6.6% 1.8% 1.3%
Swedbank 3.3% 2.7% 1.1% 0.7%
SEB 10.5% 6.8% 1.4% 1.2%
Handelsbanken 2.2% 5.0% 1.3% 1.5%
More relationship customers and continued transformation
Acquired Gold, Premium and Private Banking customers Household lending Sweden
Mobile log-ons are
incl. bankdroids
+592%
2013
218
19
2012
124
24
2011
32 30
-35%
Mobile log-ons
Transactions in branches
Transactions / mobile log-ons, millions
20,447
Q4 12
19,896
Q3 12
19,993
Q2 12
22,582
Q1 12
21,297
+7%
FY 13
89,648
FY 12
83,768
Q4 13
22,970
Q3 13
23,649
Q2 13
22,582
Q1 13
Comments
90,000 new relationship customers in 2013
7% higher inflow of external customers than in
2012
More than 1,000 new mobile banking customers every
day
1.3m customers are active users of Nordea’s
mobile offerings, 500,000 more than one year ago
Manual transactions continue to decline
Strong inflows during second half of 2013
Significantly above current market share level
supporting the strong inflow of new relationship
customers
7 •
Future Outlook
8 •
Retail Banking customers rapidly changing behaviour
9 •
• Online/mobile growing rapidly
o mobile logon’s up roughly 600% last two years - # of logon’s
higher in mobile than in Netbank
• Branch traffic and cash transactions decreasing
o cash transactions down by roughly -20% per year last two
years
• Advisory services expected where and when the customer
wants it
o 30-50% of customers preferring remote advisory
• Price pressure on all products/services
o customers are increasingly price sensitive
CUSTOMER BEHAVIOUR CHANGES
Other Cards Netbank Mobile ATM Direct
IVR Contact
centre
Branch
teller
Branch
meetings
Rapid Changes In Retail Banking
. . . Billions Of Customer Touch Points
Countless other touch
points:
• e-mail correspondence
• Phone calls to PBA/RM
• Facebook contacts
• Swish transactions
• Branch greeter queries
• … and many more
10 •
2m 360 degree
meetings
16m branch
teller contacts
113m ATM
transactions
204m mobile
logons
362m netbank
logons
1,4b card
transactions
27m contact
centre calls
59m letters
to customers
• Relations Customer relations built by great employees
BUT also by great products, processes, price, image/brand
• Data Ability to understand the customers, meeting their needs
BUT without violating the personal integrity
• Scale Ability to run an efficient high quality factory @ low cost
BUT yet personalizing each customer experience
Customer
Value
Low
Cost
Segmentation
Sophistication
Automation
Simplification
11 •
Great customer experiences in the future must leverage…
Retail Banking supporting changing customer behaviours –
Great customer experiences also in the future
12 •
• Increased investments in online and mobile
solutions as well as data driven services –
personalization in all touch points
CUSTOMER BEHAVIOUR CHANGES NORDEA RESPONSE
• Less manual cash services - removed
and/or replaced by ATM/ADMs
• Reduced branch locations
• Remote advisory services expanded
• Contact center expansion
o more complex advisory services and
extended opening hours
o Chat services being tested for further
flexibility
• Automation, digitalisation, and off-shoring of
processes to increase efficiency
• Simplification in everything we do (e.g.,
reduction of products)
• Discretionary spending reduced (marketing,
consultants, travel, etc.)
• Online/mobile
• Branch traffic and cash
• Advisory services
• Price pressure
Accelerated Cost Efficiency – Retail banking
13 •
• Discretionary Travel, Consultants, Marketing . . .
• Customer Behavior Distribution, cash, online, contact ctr . . .
• Simplification Products, processes, IT platform . . .
• Automation Automating processes, CESAM . . .
• Business Model Adjustments within existing strategy
Efficiency Framework
Simplification
14 •
Simplify
BUT
secure
sophistication
• Reducing low value add products
• Reducing # of variations of existing products
• …
• Culture – clarity, simplify, accountability . . .
• Fewer and shorter meetings, less attendees
• …
• Reduced # of processes
• Drive CESAM framework . . .
CentralizeEliminateSimplifyAutomateMove
• …
• Reduce # of applications
• Modularize and re-use of core
• …
• Re-use of processes and data across channels
• Simplify customer interface e.g., simpler forms
• Continue to optimize branch network, cash, locations
…
Channels
Processes
IT
Organisation
Products How?
How?
How?
How?
How?
Re-configuration of Retail banking network underway and
generating more relationship customers
15 •
911
813 766
583
423 381
19 32
218
0
50
100
150
200
250
0
100
200
300
400
500
600
700
800
900
1000
2011 2012 2013
# of locations
# of cash locations
# of branch transactions,millions
# of mobile logons,millions
71
73
78
80
73 74
80
82
2.9
3.1
2600000
2700000
2800000
2900000
3000000
3100000
70
72
74
76
78
80
82
84
86
2011 2012 2013
ESI - Satisfaction & Motivation
ESI - Loyalty
ESI - Daily work
ESI - Great customer experiences
# of relationship customers,millions
All in all – building the next generation relationship bank
16 •
Great personalized customer
value in every touch point …
• Where, what and when driven by
customer needs & preference
• Customer needs are foreseen and
deployed across all channels
… using financial and behaviour data
… efficiently & compliant
delivered by a simplified effective
back end
• Compliant processes with minimized
customer and employee hassle
• Simplified business model and IT
solutions low cost, high quality
Internet bank
Mobile Facebook
Online meetings
Phone & IVR
Physical meeting
Cards
Letters
Customers
Thank you!
17 •
APPENDIX
18 •
Delivering advice in new ways – Remote pilot results
Meeting
efficiency up
by 10-20%
Swedish case shows 9% efficiency gain on 360 meetings and 22%
efficiency gain on other sales meetings
Norwegian remote pilot show reduction in average meeting length
from 45 to 36 minutes equivalent of 20% efficiency gain (with
screen sharing)
Customers
satisfied
Customer satisfaction score of 3.8 out of 4 for remote meetings
93% would like to have remote meetings again
Strong sales
and volume
effect
Business value and volumes equal to physical meetings
Opportunity to improve by deployment of better tools
19 •
Nordea overview and
direction
May 12, 2014
Lennart Jacobsen, Head of Retail Banking &
Country Senior Executive Sweden
ABG Sundal Collier presentation