2009-07-21 15:00:00 CEST
2009-07-21 15:01:34 CEST
REGULATED INFORMATION
Nordea Pankki Suomi Oyj - Interim report (Q1 and Q3)
Nordea Bank Finland Plc: Interim Report January-June 2009
Nordea Bank Finland Plc is a wholly owned subsidiary of Nordea Bank
AB (publ), the listed parent company of the whole Nordea Group. This
statutory interim report covers the operations of the legal entity
Nordea Bank Finland Plc with its subsidiaries in Finland and abroad.
The business operations of the Nordea Group have been organised in
three customer areas, all of which operate across national
boundaries: Nordic Banking, Private Banking and Institutional and
International Banking. The consolidated interim report of Nordea Bank
AB (publ) embraces all the activities of the Nordea Group and
provides the most complete and fair view. The Finnish Asset
Management & Life operations are included in the interim report of
the Nordea Group.
Nordea Bank Finland Group
Result summary January-June 2009
The first six months of 2009 were characterised by maintained high
income and profit levels despite clearly higher net loan losses.
NBF's total income increased by 9% to EUR 1,520m (1,394) and total
expenses by 8% to EUR 525m (484). (The comparison figures in brackets
refer to the first six months of 2008.)
NBF's operating profit was only slightly lower than in the same
period last year and it amounted to EUR 835m (884). Return on equity
was 11.4% (12.9) and the cost/income ratio 35% (35). Loan losses
amounted to EUR 160m (26). Net profit decreased by 10% to EUR 621m
(689).
Market development in the first half of 2009
The Finnish economy shrank sharply during the first months of the
year. With the advancement of spring, trust in the economy has begun
to increase and share prices have risen. Nevertheless, unemployment
rates are still rising sharply. However, the rise in consumer prices
stopped in the spring. The ECB cut its key rate to 1% in the spring,
which is a record-low level. Long-term interest rates were, however,
on the rise already in the spring.
Income
Total income increased by 9% to EUR 1,520m. The income growth is
driven by volume growth as well as the high activity level in the
customer-driven capital markets operations. Margin pressure in
deposits continued and together with lower interest rates caused the
decline in net interest income. Net interest income totalled EUR 630m
(855). Total lending to the public increased by 1% year-on-year to
EUR 67.4bn. Deposits and borrowings from the public increased by 6%
year-on-year to EUR 45.7bn.
Net commission income decreased by 29% to EUR 104m. Savings-related
commissions decreased due to the decline in assets under management,
lower transaction activity and outflow from high margin products.
Lending-related commissions developed positively following the
centralisation of Trade Finance operations to Finland. Higher payment
and card volumes increased payment and card fees. Commission expenses
increased by 59% mainly as a result of higher transaction volumes and
fees.
Net gains/losses at fair value showed a continued strong increase
during the first half of 2009 and the income increased by 99% to EUR
753m (379). The customer-driven capital markets activities continued
to perform strongly, with high demand within risk management
products.
Profit from companies accounted for under the equity method was
stable and amounted to EUR 1m (1).
Other operating income increased to EUR 32m (13).
Expenses
Total operating expenses increased by 8% and amounted to EUR 525m
(484).
Staff costs increased by 9% to EUR 300m (276) explained by wage
inflation, higher variable salaries and higher pension expenses. The
number of full-time employees decreased by approximately 270
year-on-year.
Other operating expenses totalled EUR 208m (193), up by 8% compared
to last year. The higher activity level increased IT expenses whereas
marketing expenses were lower than in the corresponding period last
year.
Depreciation of tangible and intangible assets increased slightly to
EUR 17m (15).
The cost/income ratio was maintained at 35% in the first half of
2009.
Loan losses
Net loan losses were affected by the sharp economic slowdown in
Finland and the Baltic countries. Net loan losses of EUR 160m (26)
were recorded in the first half year corresponding to a loan loss
ratio of 47 basis points.
Net loan losses as well as impaired loans continue to stem from a
large number of smaller and medium-sized exposures rather than from a
few large exposures.
Throughout this report, "Nordea Bank Finland" and "NBF" refer to the
parent company Nordea Bank Finland Plc, business identity code
1680235-8, with its subsidiaries. The registered office of the
company is in Helsinki. Nordea Bank Finland Plc is a wholly owned
subsidiary of Nordea Bank AB (publ), the listed parent company of the
whole Nordea Group. The business operations of the Nordea Group have
been organised in three customer areas, all of which operate across
national boundaries: Nordic Banking, Private Banking and
Institutional & International Banking. The consolidated interim
report of Nordea Bank AB (publ) embraces all the activities of the
Nordea Group and provides the most complete and fair view. This
statutory interim report covers the operations of the legal entity
Nordea Bank Finland Plc with its subsidiaries.
Taxes
The effective tax rate for the first half of 2009 was approximately
26% compared to 22% in the first half of 2008.
Net profit
Net profit decreased by 10% to EUR 621m (689) corresponding to a
return on equity of 11.4% compared to 12.9% in the first half of last
year.
Balance sheet
(Comparison figures in brackets refer to December 2008 figures)
The total assets of NBF amounted to EUR 207bn (220). The change
mainly reflects a decrease in balance sheet values of derivatives and
a decrease in other assets.
The growth rate of the housing loan stock was 2% in Finland. The
economic downturn has clearly affected the lending growth rate in the
Baltic countries and the housing loan stock was by large at the same
level as in December. Total loans to the public decreased by 1%
compared with the end of 2008. The balance sheet values of
derivatives have decreased mainly due to changes in interest rates.
Deposits and borrowings from the public increased from the year-end
level and amounted to EUR 45.7bn (45.3).
Capital position and capital management
At the end of June, NBF's risk-weighted amounts (RWA) were EUR 73.4bn
excluding transition rules, compared to EUR 73.1bn at year-end 2008
and 73.3bn one year ago. As transition rules no longer had an effect
on RWA, the reported RWA decreased by EUR 8.3bn compared with end
2008 figures.
The Tier 1 ratio was 13.3% and the total capital ratio was 13.8%.
Profit for the period has not been included in Tier 1.
A subordinated loan with the nominal value of EUR 600m was
prematurely paid in March with the permission of FIN-FSA.
Credit portfolio
Total lending was EUR 67.4bn (68.3) at the end of June 2009. The
share of lending to corporate customers was 52%. Lending in the
Baltic countries constitutes 12% of NBF's total lending.
Contracting economies in NBF's home markets have affected impaired
loans and loan losses. Some weakening mainly in the corporate lending
portfolio was seen in the first half of 2009.
Impaired loans gross increased to EUR 1,626m at the end of June 2009
compared to EUR 971m at the end of December 2008. EUR 276m of this
increase is attributable to the Baltic countries. Individually
assessed impaired loans, net, amounted to EUR 1,274m (713)
representing 1.09% of total loans and receivables before allowances.
At year-end 2008 the ratio was 0.61%.
Total allowances in the Baltic countries amounted to EUR 202m, of
which EUR 140m were collective provisions.
Off-balance sheet commitments
The total amount of off-balance sheet commitments increased to EUR
34.2bn (33.7). The increase mainly related to the unutilised portion
of approved overdraft facilities. The volumes of derivatives have
continued to grow and they amounted to EUR 4,314bn (3,781).
Sale of business operations
The business operations of Menox Palvelut Oy were sold at the
beginning of June 2009 to ISS Palvelut Oy. All the approximately 60
employees previously employed by Menox continue in ISS Palvelut
taking care of archiving, distribution and reception services.
Risks and uncertainties
Nordea's revenue base reflects the Group's business with a large and
diversified customer base, comprising household customers, corporate
customers and financial institutions, representing different
geographic areas and industries.
Nordea's main risk exposure is credit risk. The Group also assumes
risks such as market risk, liquidity risk, operational risk and life
insurance risk. For further information on risk composition, see the
Annual Report.
So far, the financial crisis and the deteriorating macroeconomic
situation have not had material impact on Nordea's financial
position. However, the macroeconomic development remains highly
uncertain and the risk has increased for a somewhat higher loan loss
ratio for the full year compared to the first half year, as
communicated in the Outlook on next page.
None of the above exposures and risks is expected to have any
significant adverse effect on the Group or its financial position in
the next six months.
Within the framework of the normal business operations, the Group
faces claims in civil lawsuits and other disputes, most of which
involve relatively limited amounts. None of these disputes are
considered likely to have any significant adverse effect on the Group
or its financial position in the next six months.
Outlook 2009
For 2009, Nordea Group expects risk-adjusted profit, i.e. profit
before loan losses, minus Expected Loss and standard tax, to be
higher than in 2008. In the interim report for the first quarter, the
forecast was an unchanged risk-adjusted profit. NBF is expected to
contribute to this development.
Cost growth in Nordea Group is expected to be slightly lower than in
2008.
Loan loss provisions in Nordea Group in the first half of the year
amounted to 55 basis points, excluding the provision concerning the
contested claim related to the debt restructuring liquidation of
Swiss Air Group in 2001, broadly in line with the Outlook from the
beginning of the year. Since global and Nordic economies have
contracted clearly beyond general expectations at the beginning of
the year, uncertainty concerning how the economic recession will
affect customers' cash flow and filter through into Nordea Group's
lending book has increased. Therefore, the risk has increased for a
somewhat higher loan loss ratio for the full year compared to the
annualised level in the first half of the year.
The effective tax rate of Nordea Group is expected to be approx. 25%.
Stockholm, 21 July 2009
Board of Directors
Key financial figures
Income statement
Jan-Jun Jan-Jun Change Full year
EURm 2009 2008 % 2008
Net interest income 630 855 -26 1,812
Net fee and commission income 104 146 -29 215
Net gains/losses on items at
fair value 753 379 99 770
Equity method 1 1 0 -4
Other operating income 32 13 146 29
Total operating income 1,520 1,394 9 2,822
Staff costs -300 -276 9 -537
Other expenses -208 -193 8 -397
Depreciation of tangible and
intangible assets -17 -15 13 -33
Total operating expenses -525 -484 8 -967
Profit before loan losses 995 910 9 1,855
Net loan losses -160 -26 515 -133
Impairment of securities held as
financial non-current assets 0 0 -
Disposals of tangible and
intangible assets 0 0 0
Operating profit 835 884 -6 1,722
Income tax expense -214 -195 10 -389
Net profit for the period 621 689 -10 1,333
Business volumes, key items
30 Jun 30 Jun Change 31 Dec Change
EURm 2009 2008 % 2008 %
Loans and receivables to the
public 67,364 66,500 1 68,293 -1
Deposits and borrowings from
the public 45,663 43,085 6 45,279 1
Equity 10,596 10,629 0 11,275 -6
Total assets 206,838 176,666 17 219,961 -6
Ratios and key figures
Jan-Jun Jan-Jun Full year
2009 2008 2008
Return on equity, % 11.4 12.9 12.1
Cost/income ratio, % 35 35 34
Tier 1 capital ratio[1], % 13.3 12.8 12.0
Total capital ratio[1], % 13.8 14.2 13.3
Tier 1 capital[1], EURm 9,784 9,833 9,807
Risk-weighted amounts incl transition
rules, EURm 73,402 76,749 81,720
Loan loss ratio, basis points 47 9 22
Number of employees (full-time
equivalents)[1] 9,361 9,631 9,634
[1] End of period
Formulas used
Return on equity, %:
100 x (Operating profit after taxes) / (Shareholders' equity (average
for beginning and end of year))
Cost/income ratio, %:
100 x (Total operating expenses/Total operating income)
Half-year development
Jan-Jun Jan-Jun
Net fee and commission income, EURm 2009 2008
Asset Management commissions 14 23
Life insurance 6 4
Brokerage 13 10
Custody 19 26
Deposits 2 2
Total savings related commissions 54 65
Payments 81 73
Cards 29 22
Total payment commissions 110 95
Lending 40 37
Guarantees and documentary payments 56 39
Total lending related commissions 96 76
Other commission income 41 34
Fee and commission income 301 270
Payment expenses -35 -29
Other commission expenses -162 -95
Fee and commission expenses -197 -124
Net fee and commission income 104 146
Jan-Jun Jan-Jun
General administrative expenses, EURm 2009 2008
Staff -300 -276
Information technology[1] -75 -61
Marketing -11 -18
Postage, telephone and office expenses -21 -21
Rents, premises and real estate expenses -42 -42
Other -59 -51
Total -508 -469
[1] Refers to IT operations, service expenses and consultant fees.
Total IT-related costs including staff etc, were EUR 97m in the first
half of 2009 (EUR 85m in the first half of 2008).
Income statement
Jan-Jun Jan-Jun Full year
EURm Note 2009 2008 2008
Operating income
Interest income 1,666 2,741 5,694
Interest expense -1,036 -1,886 -3,882
Net interest income 630 855 1,812
Fee and commission income 301 270 545
Fee and commission expense -197 -124 -330
Net fee and commission income 104 146 215
Net gains/losses on items at
fair value 3 753 379 770
Profit from companies accounted
for under the equity method 1 1 -4
Other operating income 32 13 29
Total operating income 1,520 1,394 2,822
Operating expenses
General administrative
expenses:
Staff costs -300 -276 -537
Other expenses -208 -193 -397
Depreciation, amortisation and
impairment charges of tangible and
intangible assets -17 -15 -33
Total operating expenses -525 -484 -967
Profit before loan losses 995 910 1,855
Net loan losses 4 -160 -26 -133
Impairment of securities held
as financial non-current
assets 0 0 -
Disposals of tangible and
intangible assets 0 0 0
Operating profit 835 884 1,722
Income tax expense -214 -195 -389
Net profit for the period 621 689 1,333
Attributable to:
Shareholders of Nordea Bank
Finland Plc 620 688 1,331
Non-controlling interests 1 1 2
Total 621 689 1,333
Statement of comprehensive income
Jan-Jun Jan-Jun Full year
EURm 2009 2008 2008
Net profit for the period 621 689 1,333
Currency translation differences during
the period 0 0 0
Available-for-sale investments:
Valuation gains/losses during the
period 0 -1 -1
Tax on valuation gains/losses during
the period 0 0 0
Other comprehensive income, net of
tax 0 -1 -1
Total comprehensive income 621 688 1,332
Attributable to:
Shareholders of Nordea Bank Finland
Plc 620 687 1,330
Non-controlling interests 1 1 2
Total 621 688 1,332
Balance sheet
30 Jun 31 Dec 30 Jun
EURm Note 2009 2008 2008
Assets
Cash and balances with central
banks 2,951 906 1,712
Treasury bills 705 691 673
Loans and receivables to credit
institutions 5 48,863 47,447 56,395
Loans and receivables to the
public 5 67,364 68,293 66,500
Interest-bearing securities 3,679 4,929 3,614
Financial instruments pledged as
collateral - 0 -
Shares 914 982 982
Derivatives 8 77,157 85,662 43,686
Fair value changes of the hedged
items in portfolio hedge of
interest rate risk 170 157 -106
Investments in associated
undertakings 52 51 79
Intangible assets 61 59 53
Property and equipment 122 117 112
Investment property 4 3 4
Deferred tax assets 12 15 2
Current tax assets 126 133 83
Retirement benefit assets 85 82 66
Other assets 4,152 9,532 2,067
Prepaid expenses and accrued
income 421 902 744
Total assets 206,838 219,961 176,666
Liabilities
Deposits by credit institutions 41,307 37,713 38,432
Deposits and borrowings from the
public 45,663 45,279 43,085
Debt securities in issue 26,910 31,263 32,968
Derivatives 8 76,265 87,291 44,134
Fair value changes of the hedged
items in portfolio hedge of
interest rate risk 17 16 -57
Current tax liabilities 231 341 113
Other liabilities 4,466 4,403 4,940
Accrued expenses and prepaid
income 833 1,016 1,075
Deferred tax liabilities 39 39 47
Provisions 33 59 52
Retirement benefit obligations 28 28 44
Subordinated liabilities 450 1,238 1,204
Total liabilities 196,242 208,686 166,037
Equity
Non-controlling interests 8 7 6
Share capital 2,319 2,319 2,319
Share premium reserve 599 599 599
Other reserves 2,941 2,941 2,928
Retained earnings 4,729 5,409 4,777
Total equity 10,596 11,275 10,629
Total liabilities and equity 206,838 219,961 176,666
Assets pledged as security for own
liabilities 10,020 16,840 8,699
Other assets pledged - - -
Contingent liabilities 16,975 17,119 16,693
Derivative commitments 8 4,314,461 3,780,569 3,449,783
Credit commitments[1] 16,695 16,046 17,413
Other commitments 533 502 549
[1] Including unutilised portion of approved overdraft facilities of
EUR 8,473m (31 Dec 2008: 7,850m, 30 Jun 2008: 8,265m).
Statement of changes in equity
Attributable to shareholders of Nordea Bank
Finland Plc
Other reserves:
Avail-
able- Non-
Share Share for-sale contro-
capital premium Other invest- Retained lling Total
EURm [1] reserve reserves ments earnings Total interests equity
Opening
balance at 1
Jan 2009 2,319 599 2,941 0 5,409 11,268 7 11,275
Total 620 1
comprehensive
income 620 621
Share-based
payments 1 1 1
Dividend for
2008 -1,300 -1,300 -1,300
Other changes -1 -1 -1
Closing
balance at 30
Jun 2009 2,319 599 2,941 0 4,729 10,588 8 10,596
Attributable to shareholders of Nordea Bank
Finland Plc
Other reserves:
Avail-
able- Non-
Share Share for-sale contro-
capital premium Other invest- Retained lling Total
EURm [1] reserve reserves ments earnings Total interests equity
Opening
balance at 1
Jan 2008 2,319 599 2,928 1 4,939 10,786 7 10,793
Total
comprehensive
income -1 1,331 1,330 2 1,332
Share-based
payments 1 1 1
Dividend for
2007 -850 -850 -850
Other changes 13 -12 1 -2 -1
Closing
balance at 31
Dec 2008 2,319 599 2,941 0 5,409 11,268 7 11,275
Attributable to shareholders of Nordea Bank
Finland Plc
Other reserves:
Avail-
able- Non-
Share Share for-sale contro-
capital premium Other invest- Retained lling Total
EURm [1] reserve reserves ments earnings Total interests equity
Opening
balance at 1
Jan 2008 2,319 599 2,928 1 4,939 10,786 7 10,793
Total
comprehensive
income -1 688 687 1 688
Share-based
payments 0 0 0
Dividend for
2007 -850 -850 -850
Other changes 0 0 -2 -2
Closing
balance at 30
Jun 2008 2,319 599 2,928 0 4,777 10,623 6 10,629
[1] Total shares registered were 1,030.8 million (31 Dec 2008:
1,030.8 million, 30 Jun 2008: 1,030.8 million).
Cash flow statement
Jan-Jun Jan-Jun Full year
EURm 2009 2008 2008
Operating activities
Operating profit 835 884 1,722
Adjustments for items not included in
cash flow -465 45 -398
Income taxes paid -315 -50 -86
Cash flow from operating activities
before changes in operating assets
and liabilities 55 879 1,238
Changes in operating assets and
liabilities 82 4,269 4,859
Cash flow from operating activities 137 5,148 6,097
Investing activities
Sale/acquisition of associated
undertakings -1 -7 16
Property and equipment -19 -17 -42
Intangible assets -5 -15 -33
Other financial fixed assets -600 19 -4,157
Cash flow from investing activities -625 -20 -4,216
Financing activities
Issued/amortised subordinated
liabilities -773 -43 -64
Dividend paid -1,300 -850 -850
Other changes - -2 -1
Cash flow from financing activities -2,073 -895 -915
Cash flow for the period -2,561 4,233 966
Cash and cash equivalents at beginning of
period 16,400 15,434 15,434
Exchange rate difference 0 0 0
Cash and cash equivalents at end of
period 13,839 19,667 16,400
Change -2,561 4,233 966
Cash and cash equivalents 30 Jun 30 Jun 31 Dec
The following items are included in cash
and cash equivalents (EURm): 2009 2008 2008
Cash and balances with central banks 2,951 1,712 906
Loans and receivables to credit
institutions, payable on demand 10,888 17,955 15,494
Cash comprises legal tender and bank notes in foreign currencies.
Balances with central banks consist of deposits in accounts
with central banks and postal giro systems under government
authority, where the following conditions are fulfilled:
- the central bank or the postal giro system is domiciled in the
country where the institution is established
- the balance on the account is readily available at any time.
Loans and receivables to credit institutions, payable on demand
include liquid assets not represented by bonds or other
interest-bearing securities.
Notes to the financial statements
Note 1 Accounting policies
NBF's consolidated financial statements are prepared in accordance
with International Financial Reporting Standards (IFRS) and
interpretations of such standards by the International Financial
Reporting Interpretations Committee (IFRIC), as endorsed by the EU
Commission. In addition, certain rules in the Finnish Accounting Act,
the Finnish Credit Institutions Act, the Financial Supervisory
Authority's regulations and guidelines and the Decree of the Ministry
of Finance on the financial statements and consolidated financial
statements of credit institutions, have also been applied.
These statements have been prepared in accordance with IAS 34"Interim Financial Reporting". The interim report is unaudited.
Changed accounting policies and presentation
The accounting policies and basis for calculations are, in all
material aspects, unchanged in comparison with the 2008 Annual
Report.
As of 1 January 2009 the amendments to standards IAS 23 "Borrowing
Costs", IAS 27 "Consolidated and Separate Financial Statements", IAS
32 "Financial Instruments: Presentation" and IFRS 2 "Share-based
Payment" have been implemented. These amendments as well as"Improvements to IFRSs" and applicable new interpretations have had
no or only an insignificant impact. In addition, the amendment to IAS
1 "Presentation of Financial Statements" and the new standard IFRS 8"Operating Segments" have had the following impact on the
presentation:
Amendment of IAS 1 "Presentation of Financial Statements"
IASB has amended IAS 1 "Presentation of Financial Statements" with
effective date for Nordea as from the first quarter 2009. The main
impact from this amendment is that the "Statement of changes in
equity" has been added and the "Statement of comprehensive income"
relocated to be displayed immediately after the "Income statement".
New standard IFRS 8 "Operating Segments"
IFRS 8 is mandatory for Nordea as from the first quarter 2009. The
IFRS requires identification of operating segments on the basis of
the information regularly reviewed by the entity's chief operating
decision maker (CODM) in order to allocate resources to the segment
and assess its performance. The reportable segments in Nordea have,
mainly as a consequence of the restrictions in the aggregation
criteria, been changed, and a note has been added to comply with the
requirements in the new standard. See note 2 "Segment reporting" for
more information.
Note 2
Segment
reporting
Operating segments
Shipping, Oil
New European Services & Capital Markets
Nordic Banking Markets International & Savings
Jan-Jun Jan-Jun Jan-Jun Jan-Jun Jan-Jun Jan-Jun Jan-Jun Jan-Jun
EURm 2009 2008 2009 2008 2009 2008 2009 2008
Total
operating
income 717 862 87 64 47 36 551 211
Operating
profit 256 470 7 29 35 28 401 144
Loans and
receivables
to the
public 46,607 46,562 7,307 6,296 7,055 7,184 - -
Deposits
and
borrowings
from the
public 34,859 32,323 2,029 1,578 4,483 4,439 - -
Other Operating Total Operating
segments segments Reconciliation Total Group
Jan-Jun Jan-Jun Jan-Jun Jan-Jun Jan-Jun Jan-Jun Jan-Jun Jan-Jun
EURm 2009 2008 2009 2008 2009 2008 2009 2008
Total
operating
income 170 244 1,572 1,417 -52 -23 1,520 1,394
Operating
profit 120 206 819 877 16 7 835 884
Loans and
receivables
to the
public 76 390 61,045 60,432 6,319 6,068 67,364 66,500
Deposits
and
borrowings
from the
public 4,348 4,698 45,719 43,038 -56 47 45,663 43,085
Reconciliation between total operating segments and financial
statements
Jan-Jun 2009
Loans and Deposits and
Operating receivables to borrowings from
EURm profit the public the public
Total Operating segments 819 61,045 45,719
Group functions[1] and
unallocated items 16 6,319 -56
Differences in accounting
policies[2] - - -
Total 835 67,364 45,663
Jan-Jun 2008
Loans and Deposits and
Operating receivables to borrowings from
EURm profit the public the public
Total Operating segments 877 60,432 43,038
Group functions[1] and
unallocated items 7 6,068 47
Differences in accounting
policies[2] - - -
Total 884 66,500 43,085
[1] Consists of Group Management Secretariat, Group Internal Audit,
Group Credit and Risk Control, People and Identity and Group Legal.
[2] Internally developed software is expensed as incurred in the
operating segments, but capitalised as required by IAS 38 in the
entity's balance sheet.
Note 2, continued
Basis of segmentation and measurement of segment profit or loss
In November 2006 the IASB issued IFRS 8 "Operating Segments", which
is mandatory for periods beginning on or after 1 January 2009. IFRS 8
has had an impact on the reportable segments in Nordea, mainly as the
previously aggregated segment Institutional & International Banking
has been divided into three individual reportable segments (New
European Markets, Financial Institutions and Shipping, Oil Services &
International), where New European Markets and Shipping, Oil services
and International are reported separate and Financial Institutions is
included in Other Operating segments. Capital Markets & Savings were
previously included in Other Customer operations but are now, since
it exceeds the thresholds in IFRS 8, reported separate. Other
Operating segments below the quantitative thresholds in IFRS 8 are
included in Other operating segments. Comparative information has
been restated accordingly.
In addition, the measurement of segment profit or loss has been
changed during the first half 2009, as internally developed software
is, as from H1 2009, expensed as incurred in the operating segments,
but capitalised as required by IAS 38 in the entity's balance sheet.
Reportable
Operating
segments
Nordic Banking conducts a full service banking operation. It is
Nordea's largest customer area and serves household customers and
corporate customers in the Nordic markets. The branches within
Nordea's banking activities in the New European Markets offer full
banking services for local and Nordic corporate and personal
customers in Estonia, Latvia, Lithuania, Poland and Russia. The
segment Shipping, Oil Services & International is responsible for
Nordea's customers within the shipping, offshore and oil services
industries. Capital Markets & Savings is responsible for all capital
markets and savings products to all customer segments in Nordea.
Note 3 Net gains/losses on items at fair
value
Full
Jan-Jun Jan-Jun year
EURm 2009 2008 2008
Shares/participations and other
share-related instruments 17 53 85
Interest-bearing securities and other
interest-related instruments 534 168 377
Other financial instruments 59 45 13
Foreign exchange gains/losses 143 113 296
Investment properties 0 0 -1
Total 753 379 770
Note 4 Net loan losses
Jan-Jun Jan-Jun Full year
EURm 2009 2008 2008
Loan losses divided by class
Loans and receivables to credit
institutions -9 -1 -14
- of which provisions -10 -1 -15
- of which write-offs - - -
- of which allowances used for
covering write-offs - - -
- of which reversals 1 0 1
- of which recoveries - - -
Loans and receivables to the
public -177 -17 -101
- of which provisions -180 -52 -157
- of which write-offs -25 -12 -26
- of which allowances used for
covering write-offs 18 9 20
- of which reversals 8 28 50
- of which recoveries 2 10 12
Off-balance sheet items[1] 26 -8 -18
- of which provisions 0 -8 -19
- of which write-offs - - -
- of which allowances used for
covering write-offs - - -
- of which reversals 26 0 1
- of which recoveries - - -
Total -160 -26 -133
Specification of Loan losses
Changes of allowance accounts in the
balance sheet -155 -33 -139
- of which Loans and receivables,
individually assessed -116 -12 -94
- of which Loans and receivables,
collectively assessed -65 -13 -27
- of which Off-balance sheet items,
individually assessed[1] 1 0 -1
- of which Off-balance sheet items,
collectively assessed[1] 25 -8 -17
Changes directly recognised in the
income statement -5 7 6
- of which realised loan losses,
individually assessed -7 -3 -6
- of which realised loan losses,
collectively assessed - - -
- of which realised recoveries,
individually assessed 2 10 12
- of which realised recoveries,
collectively assessed - - -
Total -160 -26 -133
[1] Included in Provisions in the balance sheet
Key ratios
Jan-Jun Jan-Jun Full year
2009 2008 2008
Loan loss ratio, basis points[2] 47 9 22
- of which individual 35 2 15
- of which collective 12 7 7
[2] Net loan losses (annualised) divided by opening balance of loans
and receivables to the public (lending).
Note 5 Loans and receivables and
their impairment
Total
30 Jun 31 Dec 30 Jun
EURm 2009 2008 2008
Loans and
receivables, not
impaired 115,193 115,201 122,485
Impaired loans and
receivables 1,626 971 755
- Performing 870 608 481
- Non-performing 756 363 274
Loans and receivables
before allowances 116,819 116,172 123,240
Allowances for individually
assessed impaired loans -353 -258 -186
- Performing -220 -168 -112
- Non-performing -133 -90 -74
Allowances for collectively
assessed impaired loans -239 -174 -159
Allowances -592 -432 -345
Loans and receivables, carrying
amount 116,227 115,740 122,895
Credit institutions The public
30 Jun 31 Dec 30 Jun 30 Jun 31 Dec 30 Jun
EURm 2009 2008 2008 2009 2008 2008
Loans and
receivables, not
impaired 48,863 47,435 56,398 66,330 67,766 66,087
Impaired loans and
receivables 25 27 - 1,601 944 755
- Performing 25 27 - 845 581 481
- Non-performing - - - 756 363 274
Loans and receivables
before allowances 48,888 47,462 56,398 67,931 68,710 66,842
Allowances for
individually assessed
impaired loans -25 -14 - -328 -244 -186
- Performing -25 -14 - -195 -154 -112
- Non-performing - - - -133 -90 -74
Allowances for
collectively assessed
impaired loans 0 -1 -3 -239 -173 -156
Allowances -25 -15 -3 -567 -417 -342
Loans and receivables,
carrying amount 48,863 47,447 56,395 67,364 68,293 66,500
Note 5, continued
Reconciliation of allowance accounts for
impaired loans
Credit
institutions The public Total
Indi- Collec- Indi- Collec- Indi- Collec-
Loans and vidually tively vidually tively vidually tively
receivables, EURm assessed assessed assessed assessed assessed assessed Total
Opening balance
at 1 Jan 2009 -14 -1 -244 -173 -258 -174 -432
Provisions -10 - -107 -73 -117 -73 -190
Reversals - 1 1 7 1 8 9
Changes through
the income
statement -10 1 -106 -66 -116 -65 -181
Allowances used
to cover
write-offs - - 18 - 18 0 18
Currency
translation
differences - - 4 - 4 0 4
Closing balance
at 30 Jun 2009 -24 0 -328 -239 -352 -239 -591
Opening balance
at 1 Jan 2008 - -2 -186 -138 -186 -140 -326
Provisions -14 0 -124 -34 -138 -34 -172
Reversals 0 1 44 6 44 7 51
Changes through
the income
statement -14 1 -80 -28 -94 -27 -121
Allowances used
to cover
write-offs - - 20 0 20 0 20
Currency
translation
differences and
reclassifications - - 2 -7 2 -7 -5
Closing balance
at 31 Dec 2008 -14 -1 -244 -173 -258 -174 -432
Opening balance
at 1 Jan 2008 - -2 -186 -138 -186 -140 -326
Provisions - -1 -36 -16 -36 -17 -53
Reversals - 0 24 4 24 4 28
Changes through
the income
statement - -1 -12 -12 -12 -13 -25
Allowances used
to cover
write-offs - - 9 - 9 0 9
Currency
translation
differences and
reclassification - - 3 -6 3 -6 -3
Closing balance
at 30 Jun 2008 - -3 -186 -156 -186 -159 -345
Allowances and provisions
30 Jun 31 Dec 30 Jun
EURm 2009 2008 2008
Allowances for items in the balance sheet -591 -432 -345
Provisions for off balance sheet items -21 -47 -41
Total allowances and provisions -612 -479 -386
Key ratios
30 Jun 31 Dec 30 Jun
2009 2008 2008
Impairment rate, gross[1], basis points 139 84 61
Impairment rate, net[2], basis points 109 61 46
Total allowance rate[3], basis points 51 37 28
Allowances in relation to impaired
loans[4], % 21.7 26.6 24.6
Total allowances in relation to impaired
loans[5], % 15.6 31.8 40.2
Non-performing loans and receivables, not
impaired[6], EURm 12 13 25
[1] Individually assessed impaired loans and receivables before
allowances divided by total loans and receivables before allowances.
[2] Individually assessed impaired loans and receivables after
allowances divided by total loans and receivables before allowances.
[3] Total allowances divided by total loans and receivables before
allowances.
[4] Allowances for individually assessed impaired loans and
receivables divided by individually assessed impaired loans and
receivables before allowances.
[5] Total allowances divided by total impaired loans and receivables
before allowances.
[6] Past due loans and receivables, not impaired due to future cash
flows (included in Loans and receivables, not impaired).
Note 6 Classification of financial
instruments
Deri-
Loans Assets vatives
and Held at used Avail-
receiv- Held to for fair for able
EURm ables maturity trading value hedging for sale Total
Financial assets
Cash and
balances with
central banks 2,951 2,951
Treasury bills 705 705
Loans and
receivables to
credit
institutions 45,244 1,486 2,133 48,863
Loans and
receivables to
the public 67,364 67,364
Interest-bearing
securities 3,352 322 5 3,679
Financial instruments pledged as
collateral -
Shares 888 26 914
Derivatives 77,101 56 77,157
Fair value
changes of the
hedged items in
portfolio hedge
of interest rate
risk 170 170
Other assets 1,213 2,931 4,144
Prepaid expenses
and accrued
income 249 249
Total 30 Jun
2009 117,191 3,352 80,502 5,090 56 5 206,196
Total 31 Dec
2008 116,821 4,176 89,588 8,379 105 5 219,074
Total 30 Jun
2008 119,684 - 47,579 8,591 148 5 176,007
Liabili- Deri-
ties vatives
Held at used Other
for fair for financial
EURm trading value hedging liabilities Total
Financial
liabilities
Deposits by
credit
institutions 41,307 41,307
Deposits and
borrowings from
the public 45,663 45,663
Debt securities
in issue 5,922 20,988 26,910
Derivatives 75,864 401 76,265
Fair value
changes of the
hedged items in
portfolio hedge
of interest rate
risk 17 17
Other
liabilities 7 2,105 2,345 4,457
Accrued expenses
and prepaid
income 424 424
Subordinated
liabilities 450 450
Total 30 Jun
2009 81,793 2,105 401 111,194 195,493
Total 31 Dec
2008 90,983 5,600 2,054 109,176 207,813
Total 30 Jun
2008 49,182 - 370 115,850 165,402
Note 7 Financial
instruments at fair value
Determination of fair value from quoted market prices or
valuation techniques
Valuation
Valuation technique
Instruments technique using
with quoted using non-
prices in observable observable
active markets data data
EURm (Level 1) (Level 2) (Level 3) Total
Assets 1,884 74,504 2,659 79,047
Interest-bearing securities and
Treasury bills[1] 909 123 1,032
Of which:
- State and sovereigns 705 0 705
- Municipalities and other
public bodies 64 23 87
- Mortgage institutions 16 16
- Other credit
institutions 140 18 158
- Corporates 66 66
- Corporates, sub-investment
grade
- Other
Financial instruments pledged as
collateral -
Shares 888 26 914
Derivatives 87 74,381 2,633 77,101
Liabilities 100 79,250 2,436 81,786
Debt securities in issue 5,922 5,922
Derivatives 100 73,328 2,436 75,864
[1] Of which EUR 705m Treasury bills and EUR 327m Interest-bearing
securities (the portion held at fair value in Note 6).
Special Purpose Entities
(SPEs) - On balance
NBF's Total Accounting
EURm Purpose Duration investment[2] assets treatment
Kirkas Collateralised
Northern Mortgage
Lights Ltd Obligation >5 years 6,969 6,969 Consolidated
Total 6,969 6,969
[2] Includes all assets towards SPEs (such as bonds, subordinated
loans and drawn credit facilities)
Note 8
Derivatives
Fair value 30 Jun 2009 31 Dec 2008 30 Jun 2008
EURm Assets Liabilities Assets Liabilities Assets Liabilities
Derivatives
held for
trading
Interest
rate
derivatives 57,864 57,080 52,460 52,000 29,367 30,088
Equity
derivatives 839 845 920 1,150 1,158 1,533
Foreign
exchange
derivatives 14,540 14,170 26,268 26,106 8,318 7,564
Credit
derivatives 2,915 2,896 4,635 4,761 2,208 2,140
Other
derivatives 943 873 1,274 1,220 2,487 2,439
Total 77,101 75,864 85,557 85,237 43,538 43,764
Derivatives
used for
hedging
Interest
rate
derivatives 50 190 53 175 147 46
Equity
derivatives - - - - - -
Foreign
exchange
derivatives 6 211 52 1,879 1 324
Total 56 401 105 2,054 148 370
Total fair
value
Interest
rate
derivatives 57,914 57,270 52,513 52,175 29,514 30,134
Equity
derivatives 839 845 920 1,150 1,158 1,533
Foreign
exchange
derivatives 14,546 14,381 26,320 27,985 8,319 7,888
Credit
derivatives 2,915 2,896 4,635 4,761 2,208 2,140
Other
derivatives 943 873 1,274 1,220 2,487 2,439
Total 77,157 76,265 85,662 87,291 43,686 44,134
Nominal
amount 30 Jun 31 Dec 30 Jun
EURm 2009 2008 2008
Derivatives
held for
trading
Interest
rate
derivatives 3,425,662 2,915,880 2,569,170
Equity
derivatives 17,177 17,502 23,196
Foreign
exchange
derivatives 732,143 706,890 723,008
Credit
derivatives 105,821 103,077 100,974
Other
derivatives 11,931 12,017 11,745
Total 4,292,734 3,755,366 3,428,093
Derivatives
used for
hedging
Interest
rate
derivatives 10,095 8,641 18,299
Equity
derivatives - - -
Foreign
exchange
derivatives 11,632 16,562 3,391
Total 21,727 25,203 21,690
Total
nominal
amount
Interest
rate
derivatives 3,435,757 2,924,521 2,587,469
Equity
derivatives 17,177 17,502 23,196
Foreign
exchange
derivatives 743,775 723,452 726,399
Credit
derivatives 105,821 103,077 100,974
Other
derivatives 11,931 12,017 11,745
Total 4,314,461 3,780,569 3,449,783
Note 9
Capital
adequacy
Capital Base 30 Jun 31 Dec 30 Jun
EURm 2009[1] 2008 2008[1]
Tier 1
capital 9,784 9,807 9,833
Total
capital base 10,140 10,860 10,908
[1]
Excluding
profit
Capital
requirement 30 Jun 30 Jun 31 Dec 31 Dec 30 Jun 30 Jun
2009 2009 2008 2008 2008 2008
Capital Capital Capital
EURm requirement RWA requirement RWA requirement RWA
Credit risk 5,231 65,382 5,235 65,439 5,387 67,340
IRB 2,636 32,947 2,829 35,357 2,015 25,192
- of which
corporate 1,848 23,101 1,940 24,246 1,556 19,448
- of which
institutions 473 5,915 540 6,752 444 5,548
- of which
retail 307 3,840 307 3,841
of which
residential
real estate 137 1,707 141 1,757
of which
other 171 2,133 167 2,084
- of which
other 7 91 41 518 15 196
Standardised 2,595 32,435 2,407 30,083 3,372 42,148
- of which
sovereign 15 184 45 567 2 19
- of which
retail 398 4,969 358 4,472 1,253 15,657
of which
residential
real estate 11 143 - -
of which
qaulifying
revolving - - - -
of which
other 386 4,826 358 4,472
- of which
other 2,183 27,282 2,004 25,044 2,117 26,472
Market risk 273 3,414 291 3,636 161 2,007
- of which
trading
book, VaR 189 2,357 240 3,004 111 1,379
- of which
trading
book,
non-VaR 85 1,057 51 631 50 628
- of which
FX, non-VaR 0 0 0 0 0 0
Operational
risk 368 4,606 318 3,975 318 3,975
Standardised 368 4,606 318 3,975 318 3,975
Sub total 5,872 73,402 5,844 73,050 5,866 73,322
Adjustment for
transition rules
Additional
capital
requirement
according to
transition
rules - - 694 8,670 274 3,427
Total 5,872 73,402 6,538 81,720 6,140 76,749
Capital
ratio 30 Jun 31 Dec 30 Jun
2009[1] 2008 2008[1]
Tier I
ratio, % 13.3 12.0 12.8
Capital
ratio, % 13.8 13.3 14.2
[1]
Excluding
profit
Analysis of capital
requirements
Exposure Average risk Capital
class, 30 weight requirement
Jun 2009 (%) (EURm)
Corporate 59 1,848
Institutions 27 473
Retail IRB 13 307
Retail SA 75 398
Sovereign 2 15
Other 42 2,190
Total credit
risk 38 5,231
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