Nordea Bank : Third quarter results 2020

Nordea Financial institution Abp
Inventory alternate launch - Interim report (Q1 and Q3)
23 October 2020 at 7:30 EET

Abstract of the quarter:

·
Robust outcome - persevering with optimistic pattern seen in earlier quarters. Working
revenue elevated by 24% in contrast with the third quarter of 2019, with file
excessive working income in most enterprise areas. Complete earnings elevated by Four%,
with internet curiosity earnings rising by 6%, the very best progress price since 2012,
and internet honest worth outcome rising by 30% because of excessive ranges of enterprise
exercise in Markets. Nonetheless, internet price and fee earnings decreased by Four%, as
card and cost price earnings specifically continued to be negatively impacted by
the decrease ranges of financial exercise associated to COVID-19.

· Excessive ranges of exercise and rising enterprise volumes. Revenue progress was
pushed by elevated ranges of buyer exercise. Mortgage lending volumes and
market shares elevated, and SME lending additionally elevated. Moreover, belongings
below administration grew by Four% to a file excessive of EUR 326bn, supported by the
ongoing restoration of the monetary markets and stable internet inflows. Financial savings earnings
elevated by Four%.

· Value effectivity efforts producing anticipated outcomes. Complete working
bills (excluding objects affecting comparability) had been down 6%. Full-year 2020
prices are anticipated to be beneath EUR Four.7bn, together with the prices from SG Finans.

· Good progress in direction of monetary targets. Nordea's cost-to-income ratio is
lowering in keeping with its 2022 goal of 50%, bettering to 52%, down from 58%
in the identical quarter final yr. Return on fairness was 10.1% for the quarter,
demonstrating good progress in direction of the goal of above 10% in 2022.

· Credit score high quality nonetheless robust and credit score outlook unchanged. Internet mortgage losses
amounted to a reversal of EUR 2m. The whole administration judgement buffer of EUR
650m has been retained, as the complete financial influence of the pandemic stays
unsure. The credit score outlook is unchanged: whole full-year 2020 internet mortgage losses
are projected to be beneath EUR 1bn.

· Capital place high of the category in Europe - effectively positioned to pay out
dividends. Nordea's CET1 ratio is 16.Four%, 6.2%-points above the regulatory
requirement. Nordea's monetary power implies that it's effectively positioned to
each assist its prospects and pay dividends to its shareholders. Nordea intends
to pay out a dividend for the monetary yr 2019. The Board of Administrators will
chorus from deciding on the 2019 dividend cost earlier than 1 January 2021. Nordea
will evaluate the scenario within the fourth quarter of 2020 within the gentle of any
additional European Central Financial institution communication.

· Continued dedication to 2022 monetary targets. One yr after its Capital
Markets Day, Nordea stays absolutely dedicated to delivering on its marketing strategy
and monetary targets for 2022. All enterprise areas have improved their cost-to
-income ratios over the previous yr. The progress is evident, pushed by centered
execution, however additional enhancements are nonetheless wanted.

(For additional viewpoints, see the CEO touch upon web page Four. For definitions, see
web page 56 within the Q3 2020 Report)

Third quarter 2020 vs. third quarter 2019 outcomes
(excluding objects affecting comparability[1])

· Internet curiosity earnings EUR 1,146m, 6%
· Complete working earnings EUR 2,172m, Four%
· Complete working expense EUR -1,089m, -6%
· Internet mortgage losses EUR 2m vs EUR -49m
· Working revenue EUR 1,085m, 24%
· Widespread Fairness Tier 1 capital ratio[2,3] 16.Four% vs.15.Four%
· Value/earnings ratio 50% vs. 56%
· Value/earnings ratio[4] 52% vs. 58%
· Internet mortgage loss ratio, amortised price 0bp vs. 55bp
· Return on fairness 10.6% vs Eight.9%
· Return on fairness[4] 10.1% vs Eight.Four%

Third quarter 2020 vs. second quarter 2020 outcomes

· Internet curiosity earnings EUR 1,146m, 5%
· Complete working earnings EUR 2,172m, Four%
· Complete working expense EUR -1,089m, Zero%
· Internet mortgage losses EUR 2m vs EUR -698m
· Working revenue EUR 1,085m, 255%
· Widespread Fairness Tier 1 capital ratio[2,3] 16.Four% vs.15.Eight%
· Value/earnings ratio 50% vs. 52%
· Value/earnings ratio[4] 52% vs. 52%
· Internet mortgage loss ratio, amortised price 0bp vs. 115bp
· Return on fairness 10.6% vs Three.1%
· Return on fairness[4] 10.1% vs Three.Zero%

1 See web page 6 within the Q3 2020 Report for additional particulars
2 Finish of interval
Three Together with the outcome for the interval
Four With amortised decision charges

[][][][][][][][][][][][]
Revenue
assertion

Q3 Q3 Q2 Jan Jan
-Sep -Sep
2020 2019 Chg 2020 Chg 2020 2019 Chg
% % %
EURm
Internet curiosity 1,146 1,083 6 1,091 5 Three,346 Three,210 Four
earnings
Internet price and 729 756 -Four 673 Eight 2,167 2,236 -Three
fee
earnings
Internet outcome from 274 211 30 318 -14 701 758 -Eight
objects at
honest worth
Revenue from
related
undertakings
and joint
ventures 6 13 -54 -10 -6 51
accounted for
below the
fairness methodology
Different working 17 22 -23 20 -15 57 86 -34
earnings
Complete working 2,172 2,085 Four 2,092 Four 6,265 6,341 -1
earnings

Employees prices -686 -924 -26 -645 6 -2,Zero30 -2,369 -14
Different bills -245 -366 -33 -303 -19 -967 -1,264 -23
Depreciation,
amortisation
and impairment
fees of -158 -885 -82 -140 13 -428 -1,174 -64
tangible and
intangible
belongings
Complete working -1,089 -2,175 -50 -1,088 Zero -Three,425 -Four,807 -29
bills

Revenue earlier than 1,083 -90 1,004 Eight 2,840 1,534 85
mortgage losses

Internet mortgage losses 2 -331 -698 -850 -434 96
Working 1,085 -421 306 1,990 1,100 81
revenue

Revenue tax -248 89 -63 -450 -308 46
expense
Internet revenue for 837 -332 243 1,540 792 94
the interval

Enterprise
volumes, key
objects[1]

30 Sep 30 Sep 30 Jun
2020 2019 Chg 2020 Chg
% %
EURbn
Loans to the 320.2 328.Three -2 327.7 -2
public
Loans to the 302.Four 299.5 1 304.Four -1
public, excl.
repos
Deposits and 190.Zero 168.Three 13 188.5 1
borrowings
from the general public
Deposits from 184.9 161.9 14 180.7 2
the general public,
excl. repos
Complete belongings 574.Eight 585.9 -2 587.Three -2
Belongings below 326.2 314.Three Four 311.Four 5
administration
Fairness 32.6 30.5 7 31.Eight Three

Ratios and key
figures[2]

Q3 Q3 Q2 Jan Jan
-Sep -Sep
2020 2019 Chg 2020 Chg 2020 2019 Chg
% % %
Diluted Zero.21 -Zero.08 Zero.06 Zero.37 Zero.19 95
earnings per
share,
EUR
EPS, rolling 12 Zero.56 Zero.32 75 Zero.27 Zero.56 Zero.32 75
months up
to interval finish,
EUR
Share value[1], 6.49 6.50 Zero 6.15 6 6.49 6.50 Zero
EUR
Fairness per Eight.06 7.55 7 7.86 Three Eight.06 7.55 7
share[1], EUR
Potential Four,Zero50 Four,Zero50 Zero Four,Zero50 Zero Four,Zero50 Four,Zero50 Zero
shares
excellent[1],
million
Weighted Four,040 Four,036 Zero Four,039 Zero Four,039 Four,034 Zero
common quantity
of
diluted shares,
million
Return on 10.6 -Four.Four Three.1 6.5 Three.Four
fairness, %
Return on 12.Zero -5.Zero Three.5 7.Four Three.9
tangible
fairness,
%
Return on threat 2.2 -Zero.9 Zero.6 1.Three Zero.7
publicity
quantity, %
Return on 10.1 -5.Zero Three.Zero 6.7 Three.6
fairness with
amortised
decision
charges,
%
Value-to-income 50 104 52 55 76
ratio, %
Value-to-income 52 107 52 54 75
ratio with
amortised
decision
charges,
%
Internet mortgage loss Zero 55 115 47 24
ratio,
amortised price,
bp
Widespread Fairness 16.Four 15.Four 15.Eight 16.Four 15.Four
Tier 1
capital
ratio[1,3], %
Tier 1 capital 18.2 17.Four 17.6 18.2 17.Four
ratio[1,3],
%
Complete capital 19.9 20.Zero 20.1 19.9 20.Zero
ratio[1,3], %
Tier 1 27.Four 27.Three 1 27.2 1 27.Four 27.Three 1
capital[1,3],
EURbn
Danger publicity 151 156 -Four 155 -Three 151 156 -Four
quantity[1],
EURbn
Variety of 27,880 29,469 -5 27,954 Zero 27,880 29,469 -5
workers
(FTEs)[1]
Financial 23.7 26.5 -11 24.2 -2 23.7 26.5 -11
capital[1],
EURbn

1 Finish of interval.
2 For extra detailed data relating to ratios and key figures outlined as
various efficiency measures,
see https://www.nordea.com/en/investor-relations/reports-and-presentations/group
-interim-reports.
Three Together with the outcome for the interval.

CEO remark

"Over the previous few quarters we've witnessed how people, companies and
societies have tailored to a brand new way of life because of the COVID-19 pandemic. We
have seen a gradual restoration, however have additionally confronted some setbacks. Though
uncertainty stays, the danger of a renewed extreme downturn has decreased. Thanks
to our devoted workers, robust steadiness sheet and top quality digital
providers, we've been capable of assist our prospects and the societies round
us, and can proceed to take action.

We've got seen clear efficiency enhancements in all foremost areas within the third
quarter. Our buyer satisfaction ranges are increased now than previous to the
outbreak. We've got launched new services and products for our prospects. For
instance, we now supply inexperienced mortgages in our cellular financial institution app. Our enterprise
volumes have continued to extend in a spread of areas, notably in
mortgages and financial savings. We've got constantly taken steps in the best path.

Consequently, the ends in the quarter had been robust. Working revenue elevated
by 24% in contrast with the third quarter of 2019, with earnings rising by Four% and
prices declining by 6%, which suggests we've taken a decisive step in direction of our
cost-to-income goal. Return on fairness was 10.1%. Our return on fairness was
supported by very low internet mortgage losses within the third quarter, however the underlying
growth is clearly optimistic.

Our earnings progress was pushed by excessive buyer exercise. Our evaluation is that
we're rising quicker than the market in a number of areas. Internet curiosity earnings was
6% increased than within the third quarter of 2019, the very best progress price since 2012,
because of elevated mortgage lending volumes and better market shares, in addition to
elevated SME lending. Internet price and fee earnings declined by Four%. This was
primarily because of card and cost price earnings persevering with to be negatively impacted
by the decrease ranges of financial exercise associated to COVID-19. Belongings below
administration reached a file excessive of EUR 326bn and internet inflows from all enterprise
areas had been stable. Financial savings earnings elevated by Four%. Sometimes, internet honest worth
result's seasonally low within the third quarter, however our outcome elevated by 30%
in contrast with final yr, primarily because of an bettering efficiency in Markets.

Our efforts to enhance price effectivity proceed to repay. We've got lowered our
cost-to-income ratio to 52% from 58% inside a yr. There have been some
short-term COVID-19-related results, however the principle driver was structural price
reductions: we've diminished ranges of complexity in our operations and
processes, and now have decrease numbers of workers. We proceed to anticipate that
whole prices for 2020 will probably be beneath EUR Four.7bn, together with the prices from SG
Finans.

Our credit score high quality stays robust. Internet mortgage losses amounted to a reversal of EUR
2m. We've got maintained our EUR 650m whole administration judgement, as the complete
financial influence of the pandemic stays unsure. As beforehand acknowledged, we
challenge that whole full-year 2020 internet mortgage losses will probably be beneath EUR 1bn.

We proceed to be among the many greatest capitalised banks in Europe, with a CET1 ratio
of 16.Four%, which is 6.2%-points above the regulatory requirement. Our robust
monetary place implies that we're effectively positioned to each assist our
prospects and pay out dividends. We intend to pay a dividend for the monetary
yr 2019. The Board of Administrators will chorus from deciding on the 2019
dividend cost earlier than 1 January 2021, and we are going to evaluate the scenario within the
fourth quarter of 2020 within the gentle of any additional European Central Financial institution
communication. Furthermore, we proceed to deduct the 2020 dividend from our
capital in line with our dividend coverage and have the monetary power to
distribute it.

Within the third quarter all 4 enterprise areas made progress in direction of their 2022
targets. In Private Banking we noticed robust momentum in mortgages, with volumes
and market shares rising. Complete lending volumes grew by Four% in native
currencies. We additionally added new digital providers to our cellular financial institution app and noticed an
improve in buyer satisfaction in contrast with a yr in the past. Prices decreased by
13%, leading to a cost-to-income ratio of 54%. Working revenue elevated by
7% in contrast with the third quarter of final yr.

In Enterprise Banking we witnessed rising enterprise exercise in direction of the top of
the quarter. Lending volumes grew by Four% and deposit quantity progress was very
robust at 20% in native currencies. We additionally organized an rising variety of bond
points for our prospects through the quarter. Complete earnings elevated by 5% and
prices decreased by Four%, resulting in a cost-to-income ratio of 47%, down from 52% a
yr in the past. Working revenue was at its highest ever stage within the quarter. On 1
October we accomplished the acquisition of SG Finans, additional strengthening our
place within the Nordic market.

In Massive Corporates & Establishments working revenue was at its highest stage
for the reason that fourth quarter of 2016, with enhancements throughout all earnings and price
strains. Complete earnings elevated by 21%, prices decreased by 11% and the cost-to
-income ratio improved to 42%. Financial capital decreased by 13%, pushed by
decrease market threat and a discount in low-yielding belongings. Return on capital at
threat elevated to 12%. Total, we're progressing with the repositioning of
Massive Corporates and Establishments as a centered and extra worthwhile enterprise
space.

In Asset & Wealth Administration internet inflows of EUR Four.6bn within the quarter and the
ongoing restoration of the monetary markets led to a Four% year-on-year improve in
belongings below administration, which now whole EUR 326bn. Buyer satisfaction in
Non-public Banking continued on a optimistic trajectory. Complete earnings elevated by Four%
in contrast with the third quarter of 2019, whereas prices continued to lower,
leading to a cost-to-income ratio of 50%, down from 62% a yr in the past.

Within the third quarter of 2019 we revealed our monetary targets for 2022 and
up to date our marketing strategy. A yr later we're seeing clear efficiency
enhancements. We've got retaken misplaced floor in enterprise, improved buyer
expertise and elevated effectivity. This can even be our path for the
coming years. We're dedicated to delivering on our plan and targets for 2022.

Our technique for assembly our targets is evident. We'll proceed specializing in our
three key priorities: to optimise operational effectivity, drive earnings progress
initiatives and create nice buyer experiences. In doing so, we are going to proceed
to fulfil our duty in direction of our prospects, workers and shareholders.
This advantages each society and our enterprise."

Frank Vang-Jensen
President and Group CEO

Outlook
Key priorities to succeed and meet the monetary targets
Nordea's marketing strategy focuses on three key priorities to ship on our 2022
monetary targets: 1) to optimise operational effectivity, 2) to drive earnings
progress initiatives, and three) to create nice buyer experiences.

Monetary targets 2022
Nordea's monetary targets for 2022 are:

·
a return on fairness above 10%

· a cost-to-income ratio of 50%

Prices (working bills)
In 2020, Nordea expects to achieve a value base of beneath EUR Four.7bn, with deliberate
continued internet price reductions past 2020.

Capital coverage
A administration buffer of 150-200bp above the regulatory CET1 requirement, from 1
January 2020.

Dividend coverage
Our dividend coverage stipulates a dividend payout ratio of 60-70%, relevant to
revenue generated from 1 January 2020. Nordea will constantly assess the
alternative to make use of share buy-backs as a device to distribute extra capital.

Credit score high quality
For the complete yr 2020, our projections level to whole internet mortgage losses beneath EUR
1bn, equivalent to a mortgage loss stage of lower than 41bp.

The complete report will be discovered on the beneath hyperlink on our web site.
Nordea Group Q3 2020 Report (https://www.nordea.com/en/investor
-relations/reports-and-presentations/latest-interim-results/)

For additional data:

Frank Vang-Jensen, President Mark Kandborg, appearing Group
and Group CEO, +358 503 821 CFO, +45 5547 8372
391
Matti Ahokas, Head of Investor Sara Helweg-Larsen, Head of
Relations, +358 405 759 178 Group Communications, +45 2214
0000

The knowledge offered on this inventory alternate launch was submitted for
publication, by way of the company of the contact individuals set out above, at 07.30
EET (06.30 CET) on 23 October 2020.

Nordea is a number one Nordic common financial institution. We're serving to our prospects realise
their goals and aspirations - and we've achieved that for 200 years. We need to
make an actual distinction for our prospects and the communities the place we function -
by being a powerful and private monetary companion. The Nordea share is listed on
the Nasdaq Helsinki, Nasdaq Copenhagen and Nasdaq Stockholm exchanges. Learn extra
about us on nordea.com