Asset Management and Life & Pensions Investor presentation
Snorre Storset, Head of Wealth Management Christian Hyldahl, Head of Asset Management
May 26, 2016
14.00 – 14.05
14.05 – 14.25
14.25 – 14.45
14.45 – 15.15
Introduction to Wealth Management Snorre Storset
Asset Management Christian Hyldahl
Life & Pensions Snorre Storset
Concluding remarks and Q&A All
Agenda
2
Wealth Management comprises Private Banking, Asset Management and Life & Pensions
3
Key figures
Denmark 31%
Sweden 22%
Int. 20%
Operating income1 Operating profit2
Assets under Management3
31%
29%
40% 35%
19%
46%
32%
18% 23%
27%
Life & Pensions
Asset Management Private Banking
100% = EUR 1,929m 100% = EUR 1,127m 100% = EUR 290.9bn
1) Operating income in 2015 2) Operating Profit in 2015, “Wealth Management other” is excl. from pie chart, but incl. in total number
3) Per end-Q1 2016, Life & Pension incl. Pension Pools
Retail Funds Private Banking AM Inst & Wholesale clients Life & Pensions
Private Banking Asset Management
Life & Pensions
4
1,929
2015 2014 2013 2012 2011
1,127
2011 2013 2012 2014 2015
288
2012 2013 2014 2011 2015
20% profit CAGR since 2011
Operating income, EURm Operating profit, EURm AuM, EURbn
Wealth Management
A growing share of the Group
5
Denmark 31%
Sweden 22%
Int. 20%
Operating income Operating profit Economic capital
19% 24% 10%
Rest of Nordea Group Wealth Management
+3pp +4pp +1pp
Development versus 2014
Business area contribution, 2015
Asset Management From a Nordic to a leading European asset manager
Asset Management at a glance
7
Denmark 31%
Sweden 22%
Int. 20%
1) External clients (Institutions and 3rd party distributors) 2) Per end-Q1 2016
Diversified client base Asset mix AuM By benchmark
16%
25%
60%
48%
18%
34%
Institutional Wholesale Rest of the world
European Nordic
Assets under Management EUR 193bn2
1
1
Nordea Life & Pensions, Retail & Private Banking
33%
6% 23%
37%
Money Market Fixed Income
Equities Multi Assets
Top ranked by Morningstar on European fund net flows for 4 consecutive years (actively managed funds), EURbn
8
Overall rating 3 year flows 2013-15
Best selling funds 2016 YTD March
Overall rating 2016 YTD March
Source: Morningstars’ estimated 2016 net flow in OE mutual funds (excl. Money market, funds of funds & ETF´s) data extracted 22.04.2016.
Source: Morningstars’ estimated 2016 net flow in OE mutual funds (excl. Money market, funds of funds & Feeder ) data extracted 22.4.2016.
Source: Morningstars’ estimated 3Y net flow in OE mutual funds (excl. Money market, funds of funds & ETF´s) data extracted 29.03.2016.
Nordea 4.3
Eurizon Capital 2.4
Aviva 2.2
Mercer Global Investments 2.1
Northern Trust 1.6
DNB 1.3
Old Mutual 1.2
Vanguard 1.2
Credit Suisse 1.0
Smith & Williamson 1.0
Aberdeen UK Property Feeder 3.5
JPM Global Macro Opportunities 2.9
Nordea Stable Return 2.6
BlueBay Global Multi-Asset Credit 1.4
Old Mutual Global Eq Abs Return 1.4
MMAccess II EUR Multi Credit 1.3
Mercer Investment 3 CCF 1.2
Eurizon EasyFund Treasury EUR 1.1
Henderson Instl Shrt-Dur Bd 1.1
Invesco Global Targeted Returns 1.1
BlackRock 61.8
JP Morgan 42.5
Eurizon Capital 36.1
Nordea 33.3
Deutsche Asset Mgmt. 28.3
Allianz Global Investors 26.7
Standard Life 24.8
Union Investment 24.8
UBS 24.2
Pioneer Investments 23.8
#1 #4 #4 excl. Stable
Return fund #3
Unconstrained outcome oriented fund 5Y pa return / vol.: 7.49% / 4.19%
(Sharpe : 1.64) Well positioned for LYE Best in class 10Y track record
9
AuM development from net flow and market appreciation, EURbn
Delivered strong AuM growth driven by high net flows
Q1 2016 Q4 2010
+30
+27
193
112 +24
Avg. annual net flows of 7% of AuM since 2011
Net flow split on Group internal / external distribution has in the period been 46% / 54%
In 2015 vast part of net flow went into Multi Assets
Avg. market appreciation of 5% of AUM since 2011
Fluctuated in line with the general market
Acc. Net Flow - Wholesale and Institutional Acc. Net Flow - Nordea Retail, Private Banking & Life
Acc. Market appreciation
171 208 289
374
530
0
1 00
2 00
3 00
4 00
5 00
6 00
2011 2012 2013 2014 2015
Delivered strong earnings growth
10
Income development, EURm
Profit development, EURm
Margin improvement derived mainly from changes in client and product mix
Higher growth in Retail channels i.e. both through Nordea and Wholesale compared to Institutional Clients and Nordea Trad. Life
Margins 2015
Nordea Retail, Private Banking and Life & Pensions 41bp
Wholesale and Institutional Clients 41bp
3 years earnings growth: EUR 322m
383 423 512
597 767
34
41
3 0
3 2
3 4
3 6
3 8
4 0
4 2
4 4
4 6
4 8
5 0
0
1 00
2 00
3 00
4 00
5 00
6 00
7 00
8 00
2011 2012 2013 2014 2015Income Margin, bps
11
82% of composites outperformed benchmarks in 3Y
42% of our rated funds have 4- or 5-Star Morningstar ratings vs. 32.5% average2
1) Gross of fee 2) Including funds being marketed in Luxembourg
Strong investment performance Investment performance last 3Y1
-10%
-5%
0%
5%
10%
15%
0 20 40 60 80 100
AuM Cumulative – based on 605 portfolios
% of the AuM with positive Excess Return
Exc
ess
retu
rn Negative
18% Positive excess return
82% Avg. excess return 1.18%
Nordea distribution AuM Development, EURbn
Wholesale & Institutional distribution AuM Development, EURbn
Multi channel distribution network – focus on brand building in Europe
12
115115107928571
Q1/16 2015 2014 2013 2012 2011 Nordea Life & Pensions, Retail & Private Banking
39 43 50 48 48
17 26 31
446
2014
67
2015
74 78
Q1/16 2013
55 11
2012
53 9
2011
45
Institutional Wholesale
Growing Wholesale distribution throughout Europe
13
Asset country split, EUR 31bn
6%
15%
18%
21%
8%
6%
10% 16% Benelux
Rest of the world
Germany Italy
UK
Iberia Swiss/Austria
France
40% 45%
14%
Multi Assets Equities Fixed Income
Asset mix, EUR 31bn
Well diversified asset, client and country
mix 14 strategies comprise 80% of assets 27 strategies comprise 90% of assets
High share of AuM in defensive strategies
Servicing ~300 international fund distributors incl. 25 global wealth managers
Sales force serviced by central client/product service hub in Luxembourg
Both selling to advisory and discretionary segment
Stable institutional client base, with focus on increasing margins
14
Asset country split, EUR 48bn
25% 55%
7%
13%
Multi Assets Equities Money Market Fixed Income
Asset mix, EUR 48bn
1) Prospera
10% 40%
9% 10%
14%
17% Rest of the world
Denmark
Finland Norway
Germany Sweden
Stable Institutional client base focusing on increasing value of AuM
Servicing more than 475 Nordic and international clients Sales force located in the Nordics,
Germany, UK and US serviced by central client service hub in Copenhagen
#1 ranked by Nordic institutions1
Strong product offering to Nordea Retail, Private Banking & Life
15
11%
19%
34%
34% 2%
Norway Finland Denmark Sweden
International
Asset country split, EUR 115bn
Asset mix, EUR 115bn
28%
8%
40%
25%
Fixed Income Money Market
Multi Assets Equities
#1 in Nordic retail fund market with a 16% market share
Strong all weather product range Multi Assets solutions in high demand Broad fund range supports Nordea Life’s
transformation to market return products
18.7 17.1 15.9 13.9 12.6
0
2
4
6
8
1 0
1 2
1 4
1 6
1 8
2 0
2011 2012 2013 2014 2015Cost/ Avg. AuM
Efficient and scalable platform
16
Cost development, EURm
Cost/Avg. AuM, Bps
212 216 223 223 237 55%
31%
0 .0 %
1 0. 0 %
2 0. 0 %
3 0. 0 %
4 0. 0 %
5 0. 0 %
6 0. 0 %
0
5 0
1 00
1 50
2 00
2 50
3 00
3 50
2011 2012 2013 2014 2015Costs C/I
C/I ratio is among the lowest in the European asset management industry Has been achieved through scale and
simplification
Expected future C/I to be in range of 30-35% The strong growth requires
investments in sales support and operations
Increased work in relation to regulation and compliance
IT investments
Business risks and challenges
17
Beta Low NAV sensitivity due to defensive product mix Diversified client base - documented ability to attract net
flows in volatile market environment
MiFID
Following implementation closely Nordea will not be categorised as independent advisor Substantial implementation costs Opportunities for Wholesale distribution
Margin pressure
Traditional long only equity products constitute small part of AuM ~21%
Strong investment performance with 82% of AuM outperforming
Multi Asset offering is resilient to margin pressure
Strong position for future growth
18
Multi channel distribution
Strong distribution through Nordea’s network in the Nordic region that has a strong savings culture
Growing Wholesale distribution throughout Europe
Exploit strong momentum in
Europe
Developed from almost unknown to strong and well recognised asset manager
Cross sale opportunities by becoming preferred partner
All weather product range
Broad product range distributed through all channels Strong internal capabilities supplemented with external ESG integration
Low yield environment
Well positioned through leading Multi-Assets competences recognised across the client base
Migration from savings accounts to savings products
Scalable platform
Global industry where scale is a prerequisite to stay competitive
Coping with increased regulatory requirements
Life & Pensions Low-cost and capital efficient business model
Largest Life & Pensions provider in the Nordic countries
20
Market leader in market return products
Peer5
4%
Peer4
5%
Peer3
6%
Peer2
9%
Peer1
11%
Nordea
25%
#1 #1 #1 #3
Growth in GWP vs Q4/14
Main focus areas
Life & Pensions MRP market share 12 months rolling est., Q4/15 Finland & Sweden: Individual life
savings and risk-related products. Nordea Bank distribution
Denmark & Norway: Corporate & individual pensions and risk-related products. NLP’s sales force, Nordea Bank & external distribution
Pension Funds: Poland, Estonia & Latvia
7% 1% 6% 4% 4% 15%
Finland Sweden Norway Denmark
Responding to market development
21
Trends
Cost efficiency
Capital efficiency
Product portfolio optimised
Bancassurance
Profitability (RoE) over volume (GWP)
Low yield environment
Regulatory transformation
Demographics and customer behaviour
Strategic response
Delivered a turnaround – Strong starting point
22
5.9 5.7 6.7 7.6 8.5
56% 72%
82% 87% 89%
0%
20%
40%
60%
80%
100%
2,000
4,000
6,000
8,000
10,000
2011 2012 2013 2014 2015
Total GWP R12m MRP share of GWP
46 51 53 57 61
32% 42%
50% 52% 58%
0%
10%
20%
30%
40%
50%
60%
20
30
40
50
60
70
2011 2012 2013 2014 2015
Total AUM MRP share of AUM
220 214 209 206 197
53% 43% 43%
37% 33%
0%
10%
20%
30%
40%
50%
60%
180
190
200
210
220
230
2011 2012 2013 2014 2015
Total costs C/I
GWP development, EURbn
Cost development, EURm
AuM development, EURbn RoE development, EURm
1,649 1,693 1,754 1,517 1,565 1,614 1,674
1,498 1,566 1,674 1,703 1,803
12.0%
18.5%
5 .0 %
7 .0 %
9 .0 %
1 1. 0 %
1 3. 0 %
1 5. 0 %
1 7. 0 %
1 9. 0 %
0
5 00
1 00 0
1 50 0
2 00 0
2 50 0
Q2/13 Q4/13 Q2/14 Q4/14 Q2/15 Q4/15
Equity YTD RoE
Low cost growth through bancassurance
23
Bank sold market return products, GWP EURbn
Simplified product options
Automated processes
Deep integration with the Bank
Low yield environment
New product generation 3.1 3.24.2
5.16.1
2013 2014 2015 2011 2012
+136%
-15%
Market Return Company also in terms of AuM
24
AuM split by product category, EURbn
Net flow split by product category, EURbn
31 30 26 27
15 22 27 30 35
26
2012 2013 2014 2015 2011
53 46
57 61
52
-1.0 -1.5-2.6
-1.8 -2.3
2.2 2.83.5 3.8 4.2
2014 2013 2015 2012 2011
MRP Trad
Strong growth in market return and risk profits
25
Product profits – Market return and Risk, EURm
2012 2014 2013 2015
294
170
237
199
Risk MRP
Significantly improved cost efficiency
26
GWP development, EURbn
Cost/AuM, Bps
Costs/GWP, %
220 214
209 206 197
53%
43% 43% 37%
33%
0%
10%
20%
30%
40%
50%
60%
180
190
200
210
220
230
2011 2012 2013 2014 2015
Total costs C/I
48 40 38 35 33
2012 2011 2014 2013 2015
4.0 4.1 3.2 2.7 2.4
2011 2015 2014 2013 2012
Solvency II considerations
27
Attractive new market return and risk business
Disciplined risk management of legacy traditional business
– Liability Driven Investments
Cost efficiency
Further optimisation of investment strategy/hedging
Volatility adjustment in DK, NO, FI
No use of matching adjustment
Transitional on technical provisions in NO
Equity transitionals
Partial internal model longevity in DK
IORP1 exception in SE
Business driven Regulatory driven
1) Institutions for Occupational Retirement Provision
Strong Solvency II capital position enabled dividend in Q1 2016
28
Solvency II capital position , EURbn Current SCR1 Composition
2.6
4.5
2.4
4.2
Q4 2015 Q1 2016
SCR Own Funds
27% 2%
67%
3%
1%
24%
18% 12%
11% 2% 11%
22%
27%
44% 29%
Market Risk drivers
Own funds contribution
175% 169% Health underwriting risks
Operational Risk Default risk
Market risks Life underwriting risk
Spread
Type2 equities Type1 equities
Property
Interest rate
Currency
Concentration
T2 Subordinated loans T1 Other reconciliation reserve T1 Shareholder’s equity
1) Solvency capital requirement
Key sensitivities
29
Key sensitivities on Q4 2015 position
Scenarios tested as at 31.12.2015 IR -/+ 50 bps: Instantaneous parallel shift of interest rates (-/+ 50 bps) Eq -12%/-25%: Instantaneous -12% /-25% decrease in equity investments A -/+: Instantaneous parallel shift of interest rates (-/+ 50 bps) combined with decreased equities (-12%) and properties (-3%) Lapse: Instantaneous mass lapse (+10%)
174%
168%
167%
167%
171%
171%
170%
175%
50% 200% 0% 100% 150%
Equity -12%
A+
A-
Base
-50bp
Lapse
+50bp
Equity -25%
Business model supporting future dividend capacity
30
Capital requirement vs. contribution, EURm
Dividends paid: EUR 300m in 2013, EUR 220m 2014, EUR 300m in Q1 2016
Self-financing growth in market return and risk products
Capital release from run-off traditional book
Balance sheet volatility management
Trad MRP
Solvency capital requirement Reconciliation reserve
Continue to improve quality of Life
31
Market return company
Low cost growth through bancassurance
Competitive product offering
Leading market position
Next generation product offering fuel growth
Life business platform efficiency improve further
Solvency II optimised business model/strategy
Strong risk culture
Strong platform RoE 18% in 2018
Concluding remarks and Q&A
Thank you for listening! Contact information: Head of Investor Relations Rodney Alfvén [email protected] Mob.: +46 722 35 05 15 Senior Investor Relations Officer Andreas Larsson [email protected] Mob.: +46 709 70 75 55