Finland down to the last card - SPCC · Nordea is one of the biggest banks in Europe Nordea peer group*; market cap, year end; EURbn 1 Santander 54.0 Santander 95.2 Santander 66.0

Finland down to the last cardlast card

November 2013Suvi Kosonen

Nordea is the leading financial services group in the Nordic and Baltic Sea region

• 11 million customers• Ranked the first or the second in most

Nordic markets in both retail andNordic markets in both retail and wholesale banking

• 900 branches• Personnel over 33,000 • Balance sheet ca. 630bn euros (Q3 2013)

and market value* ca 37bn euros

Nordea’s vision:

and market value ca. 37bn euros• Strong credit rating Aa3/AA‐/AA‐

To be a great European bank, acknowledged for its people,creating superior value for customers and shareholders.

* 21.11.20132

Nordea is one of the biggest banks in Europe

Nordea peer group*; market cap, year end; EURbn

Nordea is one of the biggest banks in Europe

1 Santander 54.0 Santander 95.2 Santander 66.0 Santander 52.3 Santander 63.1 Santander 72.92 BBVA 32.4 BNP Paribas 66.2 BNP Paribas 57.0 BNP Paribas 36.4 BNP Paribas 52.0 BNP Paribas 66.03 Intesa 31.8 BBVA 47.7 Lloyds 52.2 BBVA 32.8 RBS 45.1 Lloyds 63.84 BNP Paribas 27.6 Intesa 39.5 Barclays 37.2 Unicredit 28.2 Lloyds 41.7 BBVA 49.1

08.11.20132008 2009 2010 2011 2012

5 Unicredit 23.3 Unicredit 39.3 Deutsche 36.3 Deutsche 26.6 Barclays 39.4 Barclays 48.96 SocGen 20.9 Lloyds 36.3 BBVA 34.0 RBS 26.6 BBVA 38.0 RBS 43.67 RBS 20.1 SocGen 36.2 Nordea 32.8 Barclays 25.7 Deutsche 30.8 Nordea 37.18 Credit Agricole 17.8 Barclays 35.4 SocGen 30.0 Nordea 24.2 Nordea 29.1 Deutsche Bank 35.59 Deutsche 16.0 Deutsche 30.8 Unicredit 29.9 Lloyds 21.3 SocGen 22.3 SocGen 32.7

10 Barclays 13.2 Nordea 28.7 RBS 26.7 Intesa 21.3 Unicredit 21.3 Unicredit 31.411 Nordea 13.0 Credit Agricole 28.6 Intesa 25.7 SocGen 12.9 Intesa 21.0 Intesa 28.612 Lloyds 11.1 RBS 18.5 Credit Agricole 22.8 SHB 12.7 SHB 17.2 Credit Agricole 22.713 KBC 7.6 SHB 12.4 DnB NOR 17.1 DnB NOR 12.3 DnB NOR 15.4 Swedbank 21.514 SHB 7.1 DnB NOR 12.3 SHB 14.9 Swedbank 11.0 Credit Agricole 15.1 SHB 21.415 Erste 5.1 Danske 11.0 SEB 13.6 Credit Agricole 10.9 SEB 14.2 DnBNOR 20.816 Commerzbank 5.1 KBC 10.9 Danske 13.4 SEB 9.9 Swedbank 14.1 SEB 19.4

* Excluding Dexia and including Deutsche Bank

17 Danske 4.9 Erste 9.8 Erste 13.3 Danske 9.1 Danske 13.0 Danske Bank 17.118 SEB 3.8 SEB 9.5 Swedbank 12.1 Commerzbank 6.7 Erste 9.6 KBC 16.419 DnB NOR 3.7 Swedbank 8.0 KBC 9.1 Erste 5.3 Commerzbank 8.4 Commerzbank 11.820 Swedbank 3.1 Commerzbank 7.2 Commerzbank 7.0 KBC 3.3 KBC 6.1 Erste 11.1

Source: Bloomberg

3

Finland down to the last card

• Real GDP in 2015 will still be slightly lower than in 2007

• Recovery depends on exports, domestic development sluggish

• Public debt continues to build up

4

Finnish growth not yet picking upFinnish growth not yet picking up

Finland: Economic sentiment and GDPFinland: Economic sentiment and GDP

8

10

115

120 %, y/yIndex

2

4

6

100

105

110

4

-2

0

85

90

95

-8

-6

-4

75

80

85Economic sentiment, lhs GDP, rhs

Source: Nordea Markets and Reuters Ecowin

00 01 02 03 04 05 06 07 08 09 10 11 12 13-1070


5

Finnish economy relies on consumption and exportsFinnish economy relies on consumption and exports

50%

Finnish GDP composition, total 192.5Bn in 2012

30%

10%

n s s s s s

-10%

e co

nsu

mption

c co

nsu

mpt

ion

e in

vest

men

ts

c in

vest

men

ts

Exp

ort

s

in inve

nto

ries

Impor

ts

-50%

-30%

Priv

ate

Public

Priv

ate

Public

Chan

ge

50%

6

Recession over but employment keeps deterioratingRecession over but employment keeps deteriorating

GDP and employmentGDP and employment

4

6

6

8 % y/y% y/yEmployment, 3M average, right

0

2

2

4

-6

-4

-2

-4

-2

0

-10

-8

6

-8

-6

4

GDP 4 quarter average left


00 01 02 03 04 05 06 07 08 09 10 11 12 13-12-10

GDP, 4 quarter average, left


7

Only modest increase in private consumptionOnly modest increase in private consumption

Confidence and retail salesConfidence and retail sales

6

8

20

25%, y/yIndex

2

4

6

10

15

20

0

2

5

10

Consumer confidence, lhs

-4

-2

-5

0Consumer confidence, lhs

Retail sales volume,3 th i h


05 06 07 08 09 10 11 12 13-6-10

3 mth moving avg., rhs


8

Euro area manufacturing PMI’s have improved – No signs in Finnish industry yet

Finland: Manufacturing output and EA PMIFinland: Manufacturing output and EA PMI

20

25

65

70%, y/y

Finland, Manufacturing outputSA 3M avg

Index

5

10

15

55

60

SA, 3M avg

10

-5

0

45

50

-20

-15

-10

35

40EA PMI, 3M avg

Lähde: Nordea Markets ja Reuters Ecowin

98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13-2530

Lähde: Nordea Markets ja Reuters Ecowin

9

Construction drives investmentsConstruction drives investments

Investment per GDP 4Q averageInvestment per GDP, 4Q average

23

25

23

25 %%

15

18

20

15

18

20

M hi d i t

Other

10

13

15

10

13

15 Machinery and equipment

Other construction

3

5

8

3

5

8

Residential buildings


96 98 00 02 04 06 08 10 1200


10

Cautious consumers sink the residential building permits

Finland: residential buildingsFinland: residential buildings

1.4

1.5

1.4

1.5M cubic meters, 12M avgM cubic meters, 12M avg

1.2

1.3

1.2

1.3Permits

0.9

1.0

1.1

0.9

1.0

1.1

0.7

0.8

0.9

0.7

0.8

0.9Finished

Starts


00 01 02 03 04 05 06 07 08 09 10 11 12 130.60.6


11

World trade is expected to pick upWorld trade is expected to pick up

World tradeWorld trade

20

25

60

65 %, y/yWorld trade volume, 3M avg

Index

5

10

15

50

55

60

10

-5

045

50

-20

-15

-10

35

40 Global PMI, export orders3m ma, advanced 3m


98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13-2530


12

Activity strengthening in export markets, should reflect on Finnish exports as well

World trade and Finnish exportsWorld trade and Finnish exports

20

30

20

30 %, y/y% y/y

0

10

20

0

10

20

-10

0

-10

0

World trade volume, 3M avg

-30

-20

-30

-20Volume of Finnish goods exports, 3M avg


96 98 00 02 04 06 08 10 12 14-40-40


13

Finland exports mostly to EuropeFinland exports mostly to Europe

19%14%

Structure of exports (by exporting industry), 2012

30%

7%

8%

Structure of exports (by area), 2012

18%

15% Forest industryChemical industryMetals and machineryElectronicsWholesale and retail

14%EurozoneOther EUOther EuropeAsiaNorth-America

24%

10%

Other

24%

17%

Other

Source: Finnish Customs

14

Trade balance with Poland narrowingTrade balance with Poland narrowing

25002500

Poland number 12 in trade with Finland

M euros, 12m M euros, 12m

20002000

1000

1500

1000

1500

500500

002002 2004 2006 2008 2010 2012

Value import (euro) Value export (euro)Source: Finnish Customs:

15

Structural change opens up opportunities, changewithin sectors not visible in the figures

F i d• Forest industryand Electricaland electronicproducts in a 5 4 5 411

116 8 9 10

17 16 15 13 9 8 7 6 6

80%

90%

100%

Manufacturing composition, % of total value added

ptransition

• Machinery & 5

6 4 53

4 4 412 11

10

12 14 1614

1615

14 20

1912 11 11

4 9 57

613 11 12

50%

60%

70%

80%

yequipment and chemicalindustriesgaining traction25 25 25 22

20 2430

325

54

4 6

54 5

54

45 3

1112

1211

20%

30%

40%

gaining traction

• Specializing in higher value

6 5 8 9 12

25 2418

14

21

0%

10%

1975 1980 1985 1990 1995 2000 2005 2010 2011

Electrical and electronic products Machinery and equipment Basic metals higher valueadding products instead of bulk

Non-metallic mineral products Chemical Paper

Woodworking Food industry Other manufacturingSource: Nordea Markets & Statistics Finland

16

Recovery in world trade expected support new manufacturing orders

150

160

150

160

MANUFACTURING, NEW ORDERS, SA, 3 MTH AVG, 2010=100

120

130

140

150

120

130

140

150

90

100

110

90

100

110

60

70

80

60

70

80

2008 2009 2010 2011 2012 20132008 2009 2010 2011 2012 2013

All Paper and pulp Chemical Metal

17

Growth in global demand will turn Finnish exports into growth next year

20000

GOODS EXPORTS - SA, IN 2000 PRICES

18000

16000

12000

14000

100002005 2006 2007 2008 2009 2010 2011 2012 2013 2014 20152005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

18

Trade balance in slight surplus – current account deficit to shrink slightly

Finnish current accountFinnish current account

10.0

12.5 % GDP

Trade balance

5.0

7.5Current account

Services

Trade balance

-2.5

0.0

2.5

-7.5

-5.0

2.5

Current transfers

Interest, dividend and other income


90 92 94 96 98 00 02 04 06 08 10 12 14-10.0

Current transfers


19

In comparison Finnish public finances still solidIn comparison Finnish public finances still solid

14

10

12

143

Norway

4

6

8

GD

P, 2

013

0

2

4

ance

, %

of

Euro A st ia

GermanySweden

-6

-4

-2

Public

bal

a

US

Euro Area

Finland

Portugal

Austria

Netherlands

Italy

France

UK

Denmark Belgium

-80 20 40 60 80 100 120 140

Public debt % of GDP 2013

USSpain Ireland

20

Public debt, % of GDP, 2013

Central government will maintain the public finances deficit – 7th year of deficit in 2015

Public sector income and expenditurePublic sector income and expenditure

95

100

200205210 Bn euros

Public sector expenditures,

Bn euros

85

90

95

185190195200 4Q MA, right

80

85

170175180185

P bli t i

GDP, 4Q MA, left

70

75

155160165170 Public sector income,

4Q MA, right


05 06 07 08 09 10 11 12 1365150

21


An eight year dip – real GDP in 2015 will still be slightly lower than in 2007

115

GDP at market prices, 2005 = 100(seasonally adjusted, at 2000 prices)

110

105

100

952005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

22

European Central Bank continues easingEuropean Central Bank continues easing

ECB and euribor ratesECB and euribor rates

5

6%

4

5

2

312m euribor, %ECB refinancing rate, %

1

2

3m euribor, %

Source: Nordea Markets and Reuters EcoWin

08 09 10 11 12 130

ECB deposit rate, %

Source: Nordea Markets and Reuters EcoWin

23

Finland down to the last card

• Real GDP in 2015 will still be slightly lower than in 2007

• Recovery depends on exports, domestic development sluggish

• Public debt continues to build up

24

Finland – Actual figures and estimatesFinland – Actual figures and estimates

Finland: Macroeconomic indicators (% annual real changes unless otherwise noted)2010 (EURbn) 2011 2012 2013E 2014E 2015E

Private consumption 99 2.6 0.2 0.4 1.1 1.8Government consumption 44 0.5 0.6 0.5 0.5 0.5Fixed investment 34 5 7 -1 0 -2 1 1 4 4 1Fixed investment 34 5.7 -1.0 -2.1 1.4 4.1Stockbuilding* -1 1.5 -1.3 -0.2 0.2 0.0Exports 72 2.7 -0.2 -1.4 3.9 5.8Imports 70 6.2 -1.0 -2.1 3.8 5.5GDP 2.7 -0.8 -0.5 1.5 2.3Nominal GDP (EURbn) 178 7 188 7 192 5 197 3 203 1 211 3Nominal GDP (EURbn) 178.7 188.7 192.5 197.3 203.1 211.3

Unemployment rate, % 7.8 7.7 8.2 8.3 7.8Industrial production (output), % y/y 3.8 -2.1 -5.0 2.0 4.0Consumer prices, % y/y 3.4 2.8 1.6 1.8 2.0H l % / 2 7 3 2 2 0 1 6 1 5Hourly w ages, % y/y 2.7 3.2 2.0 1.6 1.5Current account (EURbn) -2.7 -3.6 -2.9 -2.8 -2.6 - % of GDP -1.5 -1.8 -1.5 -1.4 -1.2Trade balance (EURbn) -1.3 0.1 0.8 0.7 1.0 - % of GDP -0.7 0.1 0.4 0.4 0.5

General govt budget balance (EURbn) -1.3 -3.4 -4.3 -4.1 -3.2 - % of GDP -0.7 -1.8 -2.2 -2.0 -1.5Gross public debt (EURbn) 92.8 103.1 111.2 119.2 126.3 - % of GDP 49.2 53.6 56.4 58.7 59.8

Source: Nordea Markets, Economic Outlook, September 2013

25

Nordea Markets is the name of the Markets departments of Nordea Bank

Thank you!Norge ASA, Nordea Bank AB (publ), Nordea Bank Finland Plc and Nordea

Bank Danmark A/S.

The information provided herein is intended for background information

only and for the sole use of the intended recipient. The views and other

information provided herein are the current views of Nordea Markets as of

the date of this document and are subject to change without notice. This

notice is not an exhaustive description of the described product or the risks

related to it and it should not be relied on as such nor is it a substitute for

Suvi KosonenAnalyst

related to it, and it should not be relied on as such, nor is it a substitute for

the judgement of the recipient.

The information provided herein is not intended to constitute and does not

constitute investment advice nor is the information intended as an offer or

Research Finland+358 9 165 59002

[email protected]

constitute investment advice nor is the information intended as an offer or

solicitation for the purchase or sale of any financial instrument. The

information contained herein has no regard to the specific investment

objectives, the financial situation or particular needs of any particular

recipient. Relevant and specific professional advice should always be [email protected] @SuviKosonen

obtained before making any investment or credit decision. It is important to

note that past performance is not indicative of future results.

Nordea Markets is not and does not purport to be an adviser as to legal,

taxation, accounting or regulatory matters in any jurisdiction.

This document may not be reproduced, distributed or published for any

purpose without the prior written consent from Nordea Markets.

26

Documents

Finland down to the last card - SPCC · Nordea is one of the biggest banks in Europe Nordea peer group*; market cap, year end; EURbn 1 Santander 54.0 Santander 95.2 Santander 66.0