Nordea: Third Quarter Results 2014

STOCKHOLM, Sweden--(BUSINESS WIRE)--Regulatory News:

CEO Christian Clausen’s comments on the results: “In the third quarter we continued to welcome more new customers and were trusted with more savings, thereby passing the milestone of EUR 250bn in assets under management. Despite continued macro headwind, income is holding up well and we are clearly on track to deliver on our cost targets. Credit quality continues to improve and the loan loss level is below the 10-year average.

Nordea once again was confirmed as one of the safest banks globally, when issuing two Additional Tier 1 instruments, of USD 1.5bn with the lowest coupons among corresponding instruments issued in the USD market. This strengthened the Tier 1 ratio by 75 basis points and our total capital ratio is above 20%.

We are continuously developing our services to meet the changing customer behaviour. To provide even more personalised and convenient solutions we are currently simplifying our processes and will as a next step build new core banking and payment platforms, leading to an average annual increase in our combined IT investments of approximately 30-35% over the coming 4-5 years. As a consequence we will replace some of our current IT systems, leading to an impairment charge of EUR 344m.”

(For further viewpoints, see CEO comments, page 2)

First nine months 2014 vs. First nine months 2013 (Third vs. Second quarter 2014)¹:

• Total operating income -1%¹, in local currencies +2%¹ (-3%¹)
• Total expenses -4%¹, in local currencies -1%¹ (-2%¹, in local currencies -1%¹)
• Operating profit +7%¹, in local currencies +9%¹ (-3%¹)
• Common equity tier 1 capital ratio 15.6%, up from 13.4%² (up to 15.6% from 15.2%)
• Cost/income ratio down to 49%¹ from 51% (unchanged at 49%¹)
• Loan loss ratio of 15 basis points, down from 21 basis points (down to 12 bps from 16 bps)
• Return on equity 11.5%¹, up from 11.2% (down to 11.2%¹ from 12.0%)

Summary key figures, continuing operations³, EURm	Q3	Q2	ch%	Q3	ch	loc.	YTD	YTD	ch	loc.
	2014	2014		2013	%	curr	2014	2013	%	curr
Net interest income	1,396	1,368	2	1,386	1	2	4,126	4,135	0	3
Total operating income¹	2,377	2,456	-3	2,426	-2	0	7,334	7,422	-1	2
Total operating income	2,754	2,456	12	2,426	14	16	7,711	7,422	4	7
Profit before loan losses	1,238	1,070	16	1,192	4	5	3,572	3,665	-3	0
Net loan losses	-112	-135	-17	-171	-35	-32	-405	-555	-27	-24
Loan loss ratio (ann.), bps	12	16		20			15	21
Operating profit¹	1,093	1,125	-3	1,021	7	8	3,324	3,110	7	9
Operating profit	1,126	935	20	1,021	10	12	3,167	3,110	2	4
Diluted EPS (total oper.), EUR	0.23	0.17		0.19			0.61	0.58
Diluted EPS (basis for dividend distribution [4], total oper.), EUR	0.30	0.17		0.19			0.68	0.58
Return on equity¹, %	11.2	12.0		10.8			11.5	11.2
Return on equity, %	12.8	10.0		10.8			11.4	11.2

Exchange rates used for Q3 2014 for income statement items are for DKK 7.46, NOK 8.28 and SEK 9.04, see also Note 1.

Net impact from currency fluctuations between Q3 2014 and Q2 2014 was insignificant.

¹) Excluding non-recurring income and cost items in Q3 2014 of pre-tax EUR +34m net and restructuring costs in Q2 2014 of EUR 190m.

²) Previously estimated Basel III CET1 ratio.

³) Key figures for continuing operations, following the divestment of the Polish banking, financing and life insurance operations.

⁴⁾ Diluted EPS, basis for dividend distribution, is excluding impairment of intangible assets in Q3 2014.

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The information provided in this press release is such that Nordea is required to disclose pursuant to the Swedish Financial Instruments Trading Act (1991:980) and/or the Swedish Securities Markets Act (2007:528).

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