Interim Report January - March 2001

Interim Report January - March 2001 Strong core earnings · Operating profit EUR 555m, up 17% from the fourth quarter 2000 · Return on equity excluding goodwill 19.7% · Highest profit ever excluding investment earnings · Continuous growth in net interest income · Net commission income only slightly lower despite turbulent equity markets · Expenses down 10% adjusted for CBK · Loan losses remain low at 0.14% Integration process continues according to plan · Solo concept introduced in Denmark; more than 100 merchants have signed up · ArosMaizels to be renamed Nordea Securities · Merger process of Nordea's two banks in Poland started · Shipping, Offshore & Oil Services division established Business highlights · 2.3 million e-customers · More than 7.0 million Internet bill payments per month, up 13% since December · Retail Banking: Operating profit up to EUR 458m · Corporate and Institutional Banking: Operating profit up to EUR 140m · Assets under management: Positive net inflow, but negative market development reduced assets under management to EUR 97bn · General Insurance: Improved technical result, but investment income negatively influenced by weak equity markets Operational income statement1 Q1 Q4 Q3 Q2 Q1 2001 2000 2000 2000 2000 EURm Note Net interest income 932 811 785 779 723 Net commission income 1 365 370 333 384 377 Operating income from 92 122 167 118 203 insurance Net result from financial 149 73 74 91 145 operations Other income 51 58 48 127 108 Total income 1,589 1,434 1,407 1,499 1,556 Personnel expenses -545 -482 -459 -460 -445 Other expenses -419 -433 -335 -385 -352 Total expenses 2 -964 -915 -794 -845 -797 Profit before loan losses 625 519 613 654 759 Loan losses, net -45 -22 -20 -20 -17 Profit from companies accounted for under the equity method 11 -1 31 23 9 Profit before goodwill 591 496 624 657 751 depreciation Goodwill depreciation -36 -23 -21 -27 -22 Operating profit 555 473 603 630 729 Loss on disposal of real - - - - -40 estate holdings Refund of surplus in pension - 8 7 9 8 foundation Taxes -157 -149 -182 -163 -197 Minority interests -1 0 -1 0 -2 Net profit 397 332 427 476 498 Ratios and key figures Earnings per share, EUR 0.13 0.11 0.14 0.16 0.17 Share price2, EUR 6.88 8.10 8.09 7.90 5.55 Shareholders' equity per 3.62 3.74 3.73 3.60 3.45 share2, EUR Shares in issue2 (millions) 2,982 2,982 2,982 2.979 2.961 Return on equity (%) 14.1 11.9 15.6 17.8 19.2 Return on equity excl 19.7 14.4 18.7 21.7 23.2 goodwill3 (%) Lending2, EURbn 131 129 110 109 109 Deposits2, EURbn 77 79 67 65 66 Shareholders' equity2, EURbn 11 11 11 11 10 Total assets2, EURbn 233 224 199 192 194 Assets under management2, 97 105 107 104 102 EURbn Cost/income ratio, banking4 55 60 56 52 52 (%) Combined ratio, general 106 110 107 102 122 insurance5 (%) Tier 1 capital ratio2 (%) 6.6 6.8 9.0 9.0 8.5 Total capital ratio2 (%) 9.2 9.4 11.0 10.8 10.6 Risk-weighted amounts 136 132 111 110 111 (banking)2, EURbn 1 Profit Q1 - Q4 2000 excluding Christiania Bank og Kreditkasse (CBK). Q1 2000 pro forma including Unidanmark. 2 End of period, including CBK from Q4 2000. 3 Excluding goodwill depreciation and excluding remaining goodwill which has reduced shareholders' equity. 4 Before loan losses and goodwill depreciation. 5 Excluding provision for (run-off from) the hurricane combined ratio was 104 in Q3 2000, 97 in Q2 2000 and 107 in Q1 2000. Notes Note Net commission income Q1 Q4 Q3 Q2 Q1 1 EURm 2001 2000 2000 2000 2000 Brokerage 79 68 55 87 93 Asset Management/Mutual funds 113 130 122 128 125 Issue of securities 10 16 15 24 20 Lending 75 81 73 68 66 Deposits and payments 129 117 103 111 101 Currency exchange 12 16 16 17 19 Other commission income 20 16 13 15 13 Commission expenses -73 -74 -64 -66 -60 Net commission income 365 370 333 384 377 Note Total expenses Q1 Q4 Q3 Q2 Q1 2 EURm 2001 2000 2000 2000 2000 Personnel 545 482 459 460 445 Information technology 95 80 49 68 73 Marketing 29 41 21 29 21 Postage, telephone and office 57 67 49 56 51 expenses Rents, premises and real 81 89 75 73 73 estate expenses Other 157 156 141 159 134 Total expenses 964 915 794 845 797 Profit excluding investment earnings In the income statement below the volatile investment earnings are separated from total earnings. Net interest income is further reported exclusive of trading-related interest income and expenses. Investment earnings consist of total outcome of non-trading investment operations including operating expenses. Q1 Q4 Q3 Q2 Q1 EURm 2001 2000 2000 2000 2000 Net interest income 872 757 733 707 641 Net commission income 361 368 320 386 380 Trading 156 94 108 72 141 Other banking income 36 36 35 29 34 Net income from insurance 134 129 102 138 82 Expenses -955 -907 -785 -840 -788 Profit before loan losses 604 477 513 492 490 Loan losses -45 -22 -20 -20 -17 Equity method 11 -1 31 23 9 Profit excluding investment 570 454 524 495 482 earnings Treasury, investment 68 34 30 105 98 portfolio1 Other banking 2 20 17 71 56 Life insurance -17 -2 15 3 45 General insurance -32 -10 38 -17 70 Investment earnings 21 42 100 162 269 Goodwill depreciation -36 -23 -21 -27 -22 Operating profit 555 473 603 630 729 1 Including reclassification of interest- bearing securities of EUR 68m in Q1, 2001 The Group Result summary Operating profit increased to EUR 555m during the first quarter of 2001, up 17% from the fourth quarter last year. Compared to the combined figures for the fourth quarter of 2000 for Nordea and Christiania Bank (CBK) operating profit rose by 15%. The acquisition of CBK contributed positively to the result already from the first quarter. Earnings per share equalled EUR 0.13 (EUR 0.58 for the full year 2000). Return on equity was 14.1% and 19.7% excluding goodwill Profit excluding investment earnings and goodwill rose by EUR 116m or 26% to EUR 570m. The favourable development of core earnings was due to increased net interest income and higher profit from trading activities. Investment earnings decreased to EUR 21m and goodwill depreciation increased by EUR 13m to EUR 36m. During the first quarter of 2001 substantial unrest prevailed on the equity markets, not least in comparison with the corresponding period in 2000. This exerted an adverse influence on investment earnings as well as fund management and other equityrelated commissions. The combined equity positions in insurance and banking showed a negative result, which was partly balanced by ordinary profits from fixed-income securities. Including a one-off profit of EUR 68m, due to reclassification to current assets of the fixed-income portfolio previously held as financial fixed assets, investment earnings totalled EUR 21m. The reclassification was prompted by the cash acquisition of CBK. Quarterly development Total net interest income amounted to EUR 932m. As compared to the combined figures for Nordea and CBK in the fourth quarter, this meant an increase by 2% reflecting growth in lending volume and reduced costs for the deposit guarantee in Sweden. Net commission income was EUR 365m, down 12% adjusted for CBK, due to lower commission income from fund management and from corporate finance activities. Operating income from insurance, including investment income, amounted to EUR 92m, a decline of 25% due to investment losses. Net result from financial operations, comprising investment income generated by the banks as well as earnings from customer trading and forex transactions, amounted to EUR 149m including the previously mentioned reclassification gain of EUR 68m. Adjusted for CBK this meant an increase of EUR 48m from the fourth quarter. Total expenses amounted to EUR 964m, which was slightly below the quarterly average for last year and represented a reduction of 10% from the fourth quarter, adjusted for CBK. All in all profit before loan losses was up 20% to EUR 625m. Loan losses increased by EUR 23m to EUR 45m, representing an annualised loan loss level of 0.14%, up from 0.08% for the full year 2000. The increase is a combination of lower recoveries, a couple of larger new provisions, and increase in country risk reserves. Doubtful loans net amounted to EUR 841m (797m at 31 Dec 2000) representing 0.6% (0.6%) of total lending. Comparison with the first quarter of 2000 The effect of volatile investment earnings is clearly demonstrated in the comparison with the first quarter 2000. Compared to that period, profit excluding investment earnings increased by 18% or EUR 88m whereas investment earnings deteriorated by EUR 248m. Total operating profit was reduced by 24% or EUR 174m to EUR 555m. Adjusted for CBK operating profit was reduced by 25%. Visible synergy effects When the merger between MeritaNordbanken and Unidanmark was announced synergies were estimated to be EUR 200m annually before tax, with full effect within a three-year period. The integration of Nordea and CBK is expected to result in merger synergies of an additional EUR 110m annually before tax within a three-year period. Cost synergies account for EUR 190m of the combined business case of EUR 310m. A further EUR 50m of annual pre-tax synergies are expected from Retail Banking. Last year Nordea realised annual synergies amounting to EUR 23m, mainly from the integration of international units. At the end of the first quarter 2001 realised synergies had increased to EUR 30m and for the full-year accumulated synergies of EUR 130m are expected. A number of merger integration milestones were reached in the first quarter 2001. · Nordea's Solo Market was introduced in Denmark and is now being marketed to Danish personal customers. · Corporate cash management services were improved. · The merger process of Nordea's two Polish banks started. · The international branches of Nordea and CBK are in the process of integration. · Improvements of services to large corporate customers continue with the launch of an industry group approach and a common Customer Relationship Management system. · Marketing of Nordea's branches in Germany has also started in Norway · Corporate pension schemes were launched in Finland. · The merger of Nordea's Norwegian life insurance operations started. · General Insurance was established in Finland and will offer general insurance products to personal customers via the Solo portal as from the end of the second quarter Assets under management Assets under management amounted to EUR 97bn compared to EUR 105bn 31 December 2000. To increase assets under management in compliance with the 20% growth target set for the whole year, a positive development of the equity markets is thus required. Internet-based operations developed positively By the end of March 2001 a total of 2.3 million customers had signed up for net banking services. The number of log-ons had increased by 12% since December 2000. Bid on Atle Nordea has accepted the official bid from Ratos AB and 3i Group plc, through their jointly owned company Woodrose Invest AB, on Atle AB. The bid is conditional on 90% acceptance. Nordea has 3,858,400 shares (7.4%) in Atle. The acceptance has not influenced the result in the first quarter of 2001. Shareholders' equity Shareholders´ equity amounted to EUR 10.7bn at the end of March. The fair value of assets in the Group´s pension foundations and pension fund exceeded pension commitments by EUR 0.2 bn. No refund of surplus was made during the quarter. The Nordea share The share price of the Nordic financial institutions has declined during the first quarter 2001, along with the equity markets in general. The Nordea share was quoted ex-dividend of SEK 2.00 (equivalent to EUR 0.22) on 11 April 2001 and traded at SEK 59.00 (equivalent to EUR 6.53) on 12 April 2001. Based on this price there has been a value reduction of 17.5% compared to year-end 2000. Over the last 12 months the price of the Nordea share has increased by 11.3%. Results by business area January - March 2001 Profit by Business areas business area1 EURm Retai Corpo Asset Inves Life Gener Treas Other Total l rate Manag tment Insur al ury Banki and e- Banki ance Insur ng Insti ment ng2 and ance3 tutio Pensi nal ons3 Banki ng Customer responsible units: Income 1,066 292 66 39 10 68 90 -42 1,589 Expenses -592 -125 -38 -34 -24 -99 -10 -42 -964 Loan losses -16 -30 - - - - - 1 -45 Equity method - 3 - - - - - 8 11 Goodwill - - - - - - - -36 -36 Operating 458 140 28 5 -14 -31 80 -111 555 profit 2000: 345 74 27 12 -3 -23 34 7 473 - Q4 423 119 25 2 22 45 34 -67 603 - Q3 351 114 29 22 9 5 99 1 630 - Q2 353 112 39 25 44 26 102 28 729 - Q1 Return on 25% 15% Neg. Neg. 14.1% equity Cost/income 56% 43% 62% 92% 11% 55% ratio Combined 106% 106% ratio Product responsible units: Income 145 48 24 Expenses -70 -38 -38 Product 75 10 -14 result 2000: 68 20 -2 - Q4 75 22 15 - Q3 69 31 8 - Q2 94 53 52 - Q1 1 Business area reporting excludes CBK in 2000. 2 Product result within Investment Banking refers to Equities excluding Corporate Finance. 3 Income is reported as net of premiums, investment income, claims, benefits and provisions. Operating income from insurance EUR 92m in the Group income statement includes operating income from product earnings in Life Insurance and Pensions (EUR 24m), income from customer responsible units in General Insurance (EUR 68m), and group adjustments of EUR 0m. Nordea's operations are organised into six business areas: Retail Banking, Corporate and Institutional Banking, Asset Management, Investment Banking, Life Insurance and Pensions, and General Insurance. The business areas operate as decentralised profit centres. The Group's financial management operations are conducted by Group Treasury. Within Nordea, customer responsibility is fundamental. Decentralised profit responsibility essentially means that the Group's total business relations with customers are reported in the customer responsible unit's income statement and balance sheet. Equity is allocated to the customer responsible units, and each unit's performance is evaluated in relation to its individual target for return on allocated capital. When calculating return on allocated equity 28% standard tax is applied. In addition to customer responsibility, Asset Management, Investment Banking and Life Insurance and Pensions also assume product responsibility, which means ensuring competitive and profitable products for the customer responsible units. Product units are monitored through the evaluation of product results, which include all income and expenses within the Group related to the respective products. The capital allocated to the business areas is calculated according to existing BIS rules, corresponding to a Tier 1 ratio of 6.5%. For Life Insurance and Pensions, capital is allocated corresponding to 5% of reserves and for General Insurance the capital allocated corresponds to 45% of gross premium income. A model for allocating capital based on each business unit's actual risk exposure will be implemented during 2001. The model takes into consideration credit and insurance risks, market risks and operational risks. It optimises utilisation and distribution of capital between the different business areas. Operating profit by business area and relating to customer responsibility is shown in the accompanying table. For business areas carrying product responsibility and where a substantial part of product earnings is allocated to other customer responsible business areas, product results are also reported. In addition to the six business areas, Group Treasury, with responsibility for managing the Group's own positions in securities portfolios and internal bank activities, is included in the table. The column "Other" includes income and expenses not allocated to business areas, ie funding costs for the cash acquisition of CBK, results from real estate holdings and business- related equity holdings, expenses for Group staffs, goodwill depreciation, central provisioning for loan losses and profits from companies accounted for under the equity method. ( · Operating profit up 33% to EUR 458m · Return on equity 25% · Strong sales of e-banking products Retail Banking includes development, marketing and distribution of a broad range of financial products related to personal customers and corporations. Retail Banking is organised in four Retail operations - Denmark, Finland, Norway and Sweden - and a regional organisation for Poland and the Baltic countries. Retail banking continues to see improvements in ROE and cost/income ratio. Savings Retail Banking's total deposits amounted to EUR 60bn, with marginally lower market shares. The net inflow of savings into the Group's mutual funds was in Denmark EUR 645m, in Finland EUR 198m, in Norway EUR 62m and in Sweden EUR 95m during the first quarter. Lending Retail Banking's lending at the end of March totalled EUR 95bn compared to EUR 93bn at year-end. Over the last twelve months Retail's lending increased by 10%. Strong sales in e-banking Retail banking continues to see strong sales in the growing range of all e-banking products. By 31 March 2.3 million customers had signed up as users of the Group's net banking services, and the targeted number at the beginning of 2002 is 2.7 million. At the end of March the Group had 220,000 customers who traded equities on the Internet. Netbank activity continues to grow at a rapid pace. The number of log- ons was 6.2 million in March, an increase of 12% compared to December 2000, and the number of netbank bill payments showed a 13% growth since December to a total of 7.0 million in March. Major new services and events · The Danish version of the Solo Market was launched. More than 100 merchants have signed a Solo agree-ment and more than 50 are accessible through the portal. Several of the companies have already chosen to offer their services in all four Nordic markets through the Solo Market. · Corporate cash management services was enhanced through the introduction of cross border balance reporting, local payments, and group payments. · Danish customers have been offered the opportunity to order MasterCards through the Netbank. · The old agreement with the Swedish Post expired at the end of March and was replaced by a new agreement at a significantly lower cost. · General Insurance has been established in Finland and will offer general insurance to personal customers via the Solo portal. The products encompass simple quality products which have been developed and adapted to the Finnish market by Tryg-Baltica. Later this year customers will also be able to buy insurance through the bank's 464 branches. · A new customer loyalty programme was launched in Denmark which encourages customers to buy all their financial services in Nordea. The programme's fixed-price structure also marks an end to the possibility of negotiating prices. · Around 500 large and medium-sized companies mostly from the Helsinki area have been gathered in a new organisation, The Helsinki Corporate Unit. The new unit will target about 30% of Retail Finland's company-linked businesses. · The branch network in the Baltic countries was extended through the opening of a new office in Pärnu, Estonia. Results Operating profit in the first quarter 2001, EUR 458m, was up by EUR 113m compared to the fourth quarter 2000, of which EUR 42m relates to the inclusion of Retail Norway as from 2001. For comparable entities, ie including CBK in the fourth quarter 2000, operating profit increased 17% in the first quarter. Total income decreased by 2%, because commission income was lower due to the weakening of stock markets, while expenses were down by 8%. The cost/income ratio for the first quarter 2001 was 56%. Loan losses are still at a very low level. Return on equity in the first quarter was 25%. Retail Banking by market in the first quarter of 2001 EURm Retail Retail Retail Retail Retail Poland Banking Finland Sweden Denmark Norway & Baltic Net interest 774 245 212 217 94 6 income Net commissions and other income 292 76 113 64 37 2 Total income 1,066 321 325 281 131 8 Total expenses -592 -146 -185 -170 -85 -6 Profit before 474 175 140 111 46 2 loan losses Loan losses -16 -4 1 -9 -4 0 Operating profit 458 171 141 102 42 2 Cost/income 56 45 57 61 65 76 ratio (%) Retail Banking Q1 Q4 Q3 Q2 Q1 EURm 2001 2000 2000 2000 2000 Operating profit 458 345 423 351 353 Return on equity (%) 25 20 27 24 26 Cost/income ratio (%) 56 58 53 58 57 Customer base: personal 8.9 customers, million 0.6 corporate customers, million Number of employees (full-time 22,200 equivalents) (CBK is not included in the 2000 figures) Corporate and Institutional Banking · Shipping, Offshore & Oil Services division established · Increased quarterly profit including CBK units Corporate and Institutional Banking delivers a range of financial products and services to all corporate customer segments of the Group. It also has customer responsibility for well-defined customer segments, such as large corporates, shipping, offshore and oil services companies, and financial institutions. Based on Christiania Bank's position in shipping and offshore financing, a new division has been established, Shipping, Offshore & Oil Services. The division has a Nordic organisation and also an international presence through the Group's branches in London, New York, and Singapore. Generally, the experiences gained from the merger between MeritaNordbanken and Unibank have facilitated the integration between Nordea and CBK. The latter's operations in Corporate and Institutional Banking have now been organisationally integrated with Nordea. CBK's branch offices in Stockholm and Copenhagen and the MeritaNordbanken branch office in Oslo are being closed during the spring. The international branch offices of Nordea and CBK in London, New York and Singapore are in the process of integrating, with full integration scheduled to be completed by the end of this year. Markets is, for efficiency reasons, closing down the trading operation in London. Business developments The business climate for corporate and institutional banking has changed substantially during the first quarter of 2001 due to the more negative outlook for the economy. Activity continues to be relatively strong in many sectors, while the business environment in others has deteriorated. Efforts to improve the services to large corporate customers have continued. Industry groups have been launched to improve internal industry expertise and thus enhance the value added to customers. A Customer Relationship Management (CRM) system used in Denmark has been installed in Finland, with Sweden and Norway to follow shortly. A recent independent customer survey shows that Nordea Corporate Division has a very strong market position with an increased number of customers for whom Nordea is the main bank. Nordea is the only bank in the Nordic region with noticeably higher quality index. According to the survey Nordea is a clear market leader in the large corporate sector in Finland and Denmark. The Markets division is now fully operational across all four Nordic home markets in one common, coherent business organisation. The activity in Debt Capital Markets continued to be strong and included a mandate for the Viking securitisation programme from Finnish paper producer Myllykoski and debt issuance activities for, among others, Elisa Communications, Sydkraft, Bærum Municipality and Novozymes. Business in international branches has developed favourably. A number of new customer relationships has been established in Germany. In custody, the value of the Nordic approach has been confirmed by a contract with a new broker/dealer customer covering sub-custody in all four Nordic markets. Results Operating profit was EUR 140m, an increase of EUR 66m compared to the fourth quarter 2000, of which EUR 46m refers to the inclusion of CBK as from 2001. Return on equity reached 15%. The cost/income-ratio was 43%. Good earnings in Markets strengthened the result, while custody income has decreased compared to late 2000 levels due to falling share prices. Net loan losses amount to EUR 30m. They consist of provisions for new losses of EUR 56m and recoveries of EUR 32m. Furthermore, country risk provisions have increased by EUR 6m, primarily due to the downgrading of Turkey. Lending volumes remained at a stable level of EUR 30bn. Corporate and Institutional Q1 Q4 Q3 Q2 Q1 Banking 2001 2000 2000 2000 2000 EURm Operating profit 140 74 119 114 112 Return on equity (%) 15 9 15 15 15 Cost/income ratio (%) 43 48 49 50 51 Number of employees (full-time 3,000 equivalents) (CBK is not included in the 2000 figures) Asset Management · Negative trend in equity markets during first quarter · Assets under management down EUR 8bn since year-end despite robust inflow of new assets · Profits restrained by market pressure on assets under management · Award for investment excellence: "A firm to watch in 2001" from Euromoney Global Investor Asset Management includes Group activities within institutional investment management, private banking and mutual funds. A joint unit with Retail Banking targets the retail market for investment, savings and life insurance products. Nordea Asset Management holds a leading position in the Nordic area. A negative trend in equity markets began at the end of fourth quarter and continued into the first quarter of 2001. This put downward pressure on assets under management and moved the emphasis in the retail market towards lower-margin, fixed-income products. However, these effects have been mitigated by continued net inflows from both existing and new clients. Investment Management Investment Management experienced continued demand for its institutional management services, with net inflow of new assets totalling EUR 1.7bn. In February, Investment Management won the award for "A firm to watch in 2001" from Euromoney Global Investor and was runner-up in the category "Best Manager, European Equities". The award was given for the quality of the investment processes used and for the consistent strategy followed over time. Assets under management in Investment Management were EUR 71.6bn at the end of the first quarter, down from EUR 75.0bn at the year-end 2000. Mutual Funds In varying degrees, all the Nordic markets saw softer demand for mutual funds. However, sales of Nordea funds through intermediaries in the European market continued to increase. The Group's Nordic market shares for mutual funds were maintained in the first quarter and 7 new funds were launched. Assets under management in Mutual Funds amounted to EUR 33bn, down 3bn from year-end 2000, in spite of net inflows of EUR 1.1bn. Market shares in the core markets at end of first quarter: Sweden Finland Denmark Norway Nordic 19.5%1 28.8% 26.4% 9.3% 20.4% 1) Q4 2000 (Q1 2001 na) European Private Banking European Private Banking maintained a steady inflow of new clients in the first quarter. Assets under management in European Private Banking at the end of the first quarter were EUR 5.8bn compared to EUR 6.2bn for the year-end 2000. Nordic Private Banking Nordic Private Banking also saw a continued inflow of new capital. However, due to the considerable weight of Nordic technology stocks in some portfolios, assets under management declined significantly. Assets under management in Nordic Private Banking (excluding mutual funds, life insurance and deposits) fell to EUR 15.9bn from EUR 20.6bn at year-end. Integration with CBK The activities of K-Kapitalforvaltning and K-fondene have been fully integrated into the Nordea Group. Results Operating profit was in line with the previous quarter. Despite the drop in the market, earnings were maintained by transaction-based income. The product result was slightly up when including operations within CBK. Asset Management Q1 Q4 Q3 Q2 Q1 EURm 2001 2000 2000 2000 2000 Operating profit, customer 28 27 25 29 39 responsible units Cost/income ratio (%) 62 58 57 56 43 Product result 75 68 75 69 94 Assets under management, EURbn 97 1051 107 104 102 Number of employees (full-time 800 equivalents) (CBK is not included in the 2000 figures) 1 Including EUR 3.1bn in CBK. Investment Banking · Difficult market conditions · Highest market share on the Helsinki stock exchange and the second highest in Copenhagen · ArosMaizels to be renamed Nordea Securities in May The Nordea investment banking services are offered through offices in Denmark, Finland, Norway, Sweden, the UK and the US. The business areas consist of Equities and Corporate Finance, and had 640 employees at the end of the first quarter 2001. The customer base encompasses Nordic and international clients, and includes institutional investors, financial institutions, corporations, brokers, government bodies as well as personal customers. Equities Equities offer research, sales and trading in equities and derivatives. Equities is responsible for institutional equity sales and for providing retail equity products to Nordea retail banks in the four Nordic countries A total of 82 analysts are covering over 300 companies in the Nordic region representing more than 90% of the market capitalisation. The analysts are based locally and organised as cross-border industry sector teams. ArosMaizels is a member of all Nordic stock exchanges. In international equities ArosMaizels trades directly through its memberships of the London, Frankfurt, Amsterdam and EASDAQ stock exchanges. Market shares Investment Bankings's market shares January - March 2001 on the Stock Exchanges; · Copenhagen 17.1% · Helsinki 12.2% · Oslo 6.4% · Stockholm 3.5% Corporate Finance The Corporate Finance business unit offers a wide range of services, including equity offerings, initial public offerings (IPOs), private placements, privatisations, mergers and acquisitions transactions (M&A), restructurings, project finance structuring and other financial advisory services. During the first quarter of 2001 Corporate Finance was involved in 6 equity transactions with a total transaction value exceeding EUR 0.6bn. Of these transactions ArosMaizels held a lead position in five. The Nordic stock markets Stock market indices have fallen over the first quarter after an increasing number of profit warnings and fear of a recession. Activities in the IPO market have thus decreased. The total issue agenda is likely to remain very weak in the coming few months. Other primary market activities, including share swaps and staff incentive programmes, are seasonally strong and ArosMaizels' market share is good. The M&A market has leveled off. Transactions are generally smaller, reflecting lower value expectations and a reluctance to commit large funds. Results Operating profit was relatively low in the first quarter, especially within equity trading, partly because of a loss in Norway of appoximately EUR 1m due to unauthorised dealing. Also brokerage income has shown a decline, but to a lesser degree. The corporate finance income was modest in the first quarter, mainly due to the normal seasonnally low activity in the start of the year. A number of ongoing projects that are nearly completed is expected to influence the income in the second quarter. Investment Banking Q1 Q4 Q3 Q2 Q1 EURm 2001 2000 2000 2000 2000 Operating profit 5 12 2 22 25 Cost/income ratio (%) 92 78 91 62 58 Product result, Equities 10 20 22 31 53 Number of employees (full-time 640 equivalents) (CBK is not included in the 2000 figures) Life Insurance and Pensions · Positive trend in premium income for customer responsible units up 33% in one year · Negative investment return of 14% due to decline in stock markets The business area is responsible for providing life insurance and pension products and services, comprising risk covers, long-term savings and investment products. Tryg-Baltica Life Group in Denmark has won a tender for taking over a pension fund, NESA, with approximately 700 members. This will increase premium income and assets under management in the third quarter of 2001. The integration of Vesta Life and Vesta Link, and Norske Liv and K- Fondsforsikring in Norway is in full progress, and cross-selling of products, eg corporate pension schemes, has begun. Corporate pensions have also been launched in Finland. Life Insurance and Pensions has launched a "Nordic Investment Portfolio" to individual and corporate customers in Sweden and has introduced unit- linked products. Furthermore, the company has received a license to market pension products in Spain. Web and mobile Internet solutions are constantly being upgraded, and focus is maintained on full-service concepts in order to improve workflow and enhance processing and cost efficiency. The web is also used for active distribution where feasible. Results The results generated by Life Insurance and Pensions are calculated in accordance with the practice within the respective countries regarding the distribution of profits between policyholders and shareholders. The product result for the first quarter of 2001 amounted to EUR -14m, which is affected by stock market turmoil. Premium income Premium income in Denmark rose by 38% compared to the first quarter of 2000. Especially unit-linked sales showed a steep increase. In Norway, premium income rose by 18% in the first quarter of 2001 compared to the first quarter of 2000. In both Finland and Sweden premium income decreased by 43%, compared to the first quarter of 2000, as unit-linked sales suffered from the stock market decline. Investment return Investment return at market value for the first quarter of 2001 totalled -14.2% pa. The return yielded in the respective countries varied between -0.6% and -33.7% pa. The total return on equities was 0.6% points above the MSCI Europe Index, which dropped by more than 10% in 2001 Investment assets under management totalled EUR 20.1bn at 31 March 2001. Life Customer responsible units Product responsible units Insur ance and Pensi ons EURm Q1 Q4 Q3 Q2 Q1 Q1 Q4 Q3 Q2 Q1 2001 2000 2000 2000 2000 2001 2000 2000 2000 2000 Gross 272 278 205 163 204 684 710 584 778 838 premi ums writt en Techn 3 1 4 5 4 3 0 0 5 7 ical resul t Inves -17 -4 18 4 40 -17 -2 15 3 45 tment incom e Opera -14 -3 22 9 44 -14 -2 15 8 52 ting profi t/pro duct resul t Retur -6 -2 11 5 23 n on equit y (% pa) Share 3,632 4,806 5,268 5,300 5,251 5,023 5,934 6,403 5,958 6,148 s Bonds 6,235 5,339 5,645 5,171 5,196 10,503 8,750 8,975 8,428 8,252 Prope 891 887 1,008 994 993 1,463 1,152 1,196 1,184 1,157 rty Unit- 966 953 392 380 399 3,116 3,149 2,607 2,425 2,283 linke d Inves 11,724 11,985 12,313 11,845 11,839 20,105 18,9851 19,181 17,995 17,840 tment s Techn 11,098 11,238 11,444 11,019 10,923 19,122 19,273 18,077 17,324 16,752 ical provi sions Numbe r of 580 850 emplo yees (full- time equiv alent s) 1 Excluding the life insurance group in CBK and Heros Life. General Insurance · Improved technical result · Increased premium rates in Norway · New Service Centre structure in Denmark · Recovery in reinsurance The business area comprises Nordea's activities within direct general insurance and reinsurance. Vesta and CBK have initiated cooperation in developing bancassurance in Norway. General Insurance now underwrites buildings insurance in Denmark for all types of customers. A two-year plan for the development of the Danish Service Centre structure was announced. This plan includes a reduction of the number of locations from 75 to 35 including 7 regional centres during the coming two years. Moody's has upgraded Tryg-Baltica Forsikring from A2 to A1. Standard & Poor's assigned an A- (strong) rating to Tryg-Baltica International and an A (strong) rating to Dansk Kaution. Results Technical result improved by EUR 14m to EUR 1m. The operating profit for the first quarter of 2001 amounted to EUR -31m. The result was affected by the stock market turmoil during the period under review. The combined ratio was 106, compared to 107 for the first quarter of 2000, excluding the effects of the hurricane "Anatole" in Denmark in December 1999. Premiums Gross earned premiums increased by 14% compared to the first quarter 2000. Especially Tryg-Baltica International and Energo-Asekuracja showed a steep increase. In Norway and in Tryg-Baltica International, premium income was affected by rate increases. Claims and expenses The claims levels reflect a good underwriting result in Denmark, but also a relatively high number of fires in Norway. The expense ratio - excluding the effect from commission expenses - continues to decline as a result of the focus on efficiency. Investment return The investment return for the first quarter of 2001 totalled 1.2% pa, which is 0.7% points below the benchmark return. The investment return is negatively affected by losses on equity holdings. General Insurance Q1 Q4 Q3 Q2 Q1 EURm 2001 2000 2000 2000 2000 Gross earned premiums 428 429 395 389 376 Earned premiums, net of reinsurance 358 371 341 338 319 Technical interest 26 29 33 28 28 Claims incurred, net of reinsurance -286 -307 -277 -257 -303 Insurance operating expenses -97 -106 -90 -87 -88 Technical result 1 -13 7 22 -44 Profit on investment activities -32 -10 38 -17 70 Operating profit -31 -23 45 5 26 Combined ratio (%) 106 110 107 102 122 Return on equity (%) -21 -4 31 4 19 Shares 412 427 498 514 620 Bonds 1,438 1,754 1,711 1,713 1,520 Property 412 409 407 404 413 Investments 2,262 2,590 2,616 2,631 2,553 Number of employees (full-time 4,210 equivalents) Combined ratio not including claims 106 110 104 97 107 from the hurricane Treasury Treasury has responsibility for the Group´s own investment and market risk taking in financial markets (excluding investments within insurance), as well as funding and financial analysis. Treasury conducts operations in Copenhagen, Helsinki, Oslo, Stockholm, London, New York, Singapore, Tallinn and Riga/Vilnius. Investment and Risk Trading The Investment and Risk Trading unit consists of the Fixed Income Investment, Risk Trading and Equity Investment units. Fixed Income Investment manages strategic fixed-income portfolios. The result from the Fixed Income Investment and Risk Trading units was positively influenced mainly by a reclassification of interest-bearing securities, previously classified as financial fixed assets. The reclassification to current assets follows the cash acquisition of Christiania Bank and added EUR 68m to the investment earnings. The result was also positively affected by lower market interest rates. The price risk involved in Treasury's trading positions calculated as a parallel shift assuming a change in markets interest rates of 100 basis points was EUR 215m. The result in the Equity Investment unit was negatively affected by the very weak equity markets. The risk involved in equities measured as VaR was EUR 45m at the end of the quarter. In the beginning of the quarter the VaR was EUR 48m. Group Funding Group Funding manages the external funding of the Group as well as the pricing of all cash flows within the Group. Group Funding also manages the interest and liquidity risks arising from the Group's operations. During the first quarter the work of establishing an Internal Bank in Poland began. The result in Group Funding is positively influenced by the US Federal Reserve's cut in rates with 150 basis points and the steepen in the yield curves. The four individual USCP programmes of the banks within the Group have been combined into a single programme through Nordea North America Inc, sized USD 10bn. Integration process and merger synergies During the first quarter Treasury has concentrated on a project to achieve merger synergies from funding operations. Synergies amounting to EUR 2.5m have been achieved. Treasury is working on a project with the objective to establish a uniform global IT platform. Operating profit Treasury´s operating profit was EUR 80m, including the one-off profit of EUR 68m earlier mentioned. Equity earnings were negatively influenced by the weak equity market during the first quarter. This development was offset by a positive contribution from bonds and other instruments in the fixed-income area and from interest rate risk positions taken in the Group Funding area. Treasury Fixed- Equity Interna Total EURm income portfol l Jan-Mar 2001 portfol ios Bank ios Income 105 -34 19 90 Expenses -2 -1 -7 -10 Operating profit 103 -35 12 80 Number of employees (full-time 100 equivalents) Wednesday 25 April 2001 Thorleif Krarup Group Chief Executive Officer For further information: Thorleif Krarup, Group CEO, tel +46 8 614 7800 Arne Liljedahl, EVP/CFO, tel +46 8 614 7996 (or +46 70 566 7121) Sigurd Carlsen, Investor Relations, tel +46 8 614 7852 (or +46 70 204 98 78) This interim report has not been subject to review by the auditors Next reporting date: The interim report for the first half-year of 2001 will be published on 22 August 2001 Statutory income statement EURm EURm Q1 Q1 2001 2000 Note Interest income 3,057 2,155 Interest expenses -2,125 -1,432 Net interest income 932 723 Dividends received 23 24 Net commission income 365 377 Net result from financial operations 1 149 145 Other operating income 28 84 Total operating income 1,497 1,353 General administrative expenses: Personnel expenses -475 -375 Other expenses -323 -272 Depreciation according to plan -65 -45 Total operating expenses -863 -692 Profit before loan losses 634 661 Loan losses, net 2 -46 -14 Change in value of property taken over for protection of claims 1 -3 Profit from companies accounted for under the 11 9 equity method Operating profit, banking 600 653 Operating profit, insurance 3 -53 70 Total operating profit 547 723 Loss on disposal of real estate holdings - -40 Pension adjustments 8 14 Taxes -157 -197 Minority interests -1 -2 Net profit from the Unidanmark Group for Q1 - -180 2000 Net profit 397 318 EURm EURm Q1 Q1 2001 2000 Note 1 Net result from financial operations Shares/participations and other share-related instruments -23 80 Interest-bearing securities and other interest- related instruments 123 31 Other 1 0 Foreign exchange gains/losses 48 34 Total 149 145 EURm EURm Q1 Q1 2001 2000 Note 2 Loan losses, net Individually appraised receivables Losses incurred during the period 83 65 Previous provisions utilised -72 -76 Provisions for possible loan losses 153 126 Recovery of previously incurred losses -22 -18 Reversal of previous provisions -103 -83 39 14 Receivables appraised by category Losses incurred during the period 8 5 Recovery of previously incurred losses -4 -4 Reversal/provision to reserves for possible loan -4 0 losses 0 1 Country risk 6 -17 Contingent liabilities 1 16 Total 46 14 EURm EURm Q1 Q1 2001 2000 Note 3 Operating profit, insurance General Insurance Earned premiums, net of reinsurance 358 319 Technical interest, net of reinsurance 26 28 Claims incurred, net of reinsurance -286 -303 Insurance operating expenses, net of -97 -88 reinsurance Technical result 1 -44 Investment activities Interest etc 30 32 Realised and unrealised investment gains -30 70 Investment expenses -2 -2 Technical interest transferred to the general insurance technical account -30 -30 Total profit on investment activities -32 70 Profit before tax, General Insurance -31 26 Life Insurance and Pensions Earned premiums, net of reinsurance 648 804 Financial interest, net of reinsurance -543 799 Claims incurred and benefits paid and change in provisions -529 -1,154 Change in bonus equalisation provisions 460 -411 Insurance operating expenses, net of -33 -31 reinsurance Technical result 3 7 Investment activities Interest etc 164 144 Realised and unrealised investment gains -790 757 Investment expenses -5 -4 Pension return tax etc 68 -51 Investment return transferred to the life insurance technical account 546 -801 Total profit on investment activities -17 45 Profit before tax, Life Insurance and Pensions -14 52 Operating profit before group adjustments -45 78 Group adjustments (goodwill depreciation) -8 -8 Operating profit, insurance -53 70 Accounting principles Accounting principles and methods of calculation are unchanged compared to the annual accounts 2000. The Group's interest-bearing securities previously classified as financial fixed assets have been reclassified as current assets. Exchange rates applied 2001 2000 2000 EUR 1 = SEK Jan - Mar Jan - Mar Jan - Dec Income statement (average) 8.9642 8.4833 8.4631 Balance sheet (at end of period) 9.1570 8.2825 8.8313 EUR 1 = DKK Income statement (average) 7.4624 7.4449 7.4532 Balance sheet (at end of period) 7.4627 7.4460 7.4631 EUR 1 = NOK Income statement (average) 8.1981 - 8.1044 Balance sheet (at end of period) 8.0570 - 8.2335 EUR 1 = FIM 5.94573 (fixed rate) Statutory balance sheet, end of period EURbn EURbn Mar 2001 Dec 2000 Loans and advances to credit institutions 25 23 Lending 131 129 Interest-bearing securities 30 28 Shares 1 1 Shares in group and associated undertakings 0 1 Intangible assets 3 3 Land and buildings 2 2 Other assets, banking1 19 15 Assets, insurance1 22 22 Total assets 233 224 1 Investment, customers and policyholders bear 6 6 the whole risk Deposits by credit institutions 35 29 Deposits 77 79 Other borrowings from the public 2 2 Debt securities in issue 58 56 Other liabilities, banking 22 19 Liabilities, insurance 21 21 Subordinated liabilities 7 7 Minority interests 0 0 Shareholders' equity 11 11 Total liabilities and shareholders' equity 233 224 EURm Jan - Mar 2001 Movements in shareholders' equity Shareholders' equity at beginning of year 11,105 Dividend -675 Own shares 25 Currency translation adjustment -110 Net profit for the period 397 At end of period 10,742 EURm EURm Mar 2001 Dec 2000 Capital adequacy Tier 1 capital, EURm 8,919 8,969 Capital base, EURm 12,508 12,422 Risk-weighted amounts (banking), EURbn 136 132 Tier 1 capital ratio (%) 6.6 6.8 Total capital ratio (%) 9.2 9.4 Notes Interest Equity Foreign rate exchange Derivatives derivatives derivatives derivatives EURm Market Book Market Book Marke Book 31 March 2001 value value value t value value Value Positive values 5,620 5,620 259 192 9,897 9,555 Negative values 5,575 5,380 205 144 7,768 7,696 EURm EURm Jan - Mar Jan - Mar 2001 2000 Cash flow statement Net cash inflow/(outflow) from operating activities before changes in ordinary business 465 324 assets and liabilities Changes in ordinary business assets and -5,580 -27,580 liabilities Net cash inflow/(outflow) from operating -5,115 -27,256 activities Net cash inflow/(outflow) from capital expenditure and financial investments 3,669 -556 Net cash inflow/(outflow) from financing 2,007 26,432 Increase/(decrease) in cash 561 -1,380 Cash and cash equivalents at beginning of period 5,831 3,552 Cash and cash equivalents at end of period 6,392 2,172 EURm EURm Mar 2001 Dec 2000 Problem loans Doubtful loans, gross 3,059 3,053 Provisions for bad and doubtful loans -2,218 -2,256 Doubtful loans, net 841 797 Loans with interest deferments 35 29 Problem loans, total 876 826 Provisions/doubtful loans, gross (%) 72.5 73.9 Doubtful loans, net/lending (%) 0.6 0.6 Property taken over for protection of claims Land and buildings 12 18 Shares and participations 8 11 Other 5 2 ------------------------------------------------------------ This information was brought to you by BIT http://www.bit.se The following files are available for download: http://www.bit.se/bitonline/2001/04/25/20010425BIT00640/bit0002.doc http://www.bit.se/bitonline/2001/04/25/20010425BIT00640/bit0002.pdf

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Nordea’s vision is to be a Great European bank, acknowledged for its people, creating superior value for customers and shareholders. We are making it possible for our customers to reach their goals by providing a wide range of products, services and solutions within banking, asset management and insurance. Nordea has around 11 million customers, approximately 650 branch office locations and is among the ten largest universal banks in Europe in terms of total market capitalisation. The Nordea share is listed on the Nasdaq Stockholm, Nasdaq Helsinki and Nasdaq Copenhagen exchanges. More info: www.nordea.com

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