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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 2009Nordea 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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