Associated Company Nordea Bank AB
Nordea, the largest bank in the Nordic region, has around 11 million customers and is among the ten largest universal banks in Europe in terms of total market capitalization. In Sampo Group’s reporting Nordea is treated as an associated company and is included in the segment Holding.
On 31 December 2014 Sampo plc held 860,440,497 Nordea shares corresponding to a holding of 21.2 per cent. The average price paid per share amounted to EUR 6.46 and the book value in the Group accounts was EUR 8.21 per share. The closing price as at 30 December 2014 was EUR 9.68.
Nordea’s Board of Directors proposes to the AGM 2015 a dividend of EUR 0.62 per share (0.43). The Board’s ambition is to continue increasing the pay-out ratio for 2015, while maintaining a strong capital base. If the AGM approves the Board’s dividend proposal, Sampo plc will receive a dividend of EUR 533 million from Nordea on 30 March 2015.
Results Nordea Bank AB, 2014
| Results | |||
| Nordea Bank AB, 2014 | |||
| EURm | 2014 | 2013 | Change, % |
| Net interest income | 5,482 | 5,525 | -1 |
| Total operating income *) | 9,847 | 9,891 | 0 |
| Profit before loan losses | 5,015 | 4,851 | 3 |
| Net loan losses | -543 | -735 | -27 |
| Loan los ratio (ann.), bps | 15 | 21 | - |
| Operating profit | 4,324 | 4,116 | 5 |
| Diluted EPS (cont.oper.), EUR | 0.83 | 0.77 | - |
| Return on equity, % | 11.5 | 11.0 | - |
| *) Excluding non-recurring income and cost items in Q2 and Q3 2014 – capital gain of EUR 378 million and charge for impairment of intangible assets of EUR 344 million in Q3 2014 and restructuring costs of EUR 190 million in Q2 2014. |
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The following text is based on Nordea’s full-year 2014 result release published on 28 January 2015.
Despite a challenging environment with low growth, low interest rates and increased geopolitical tensions, Nordea delivered a robust result with stable revenues, decreased costs and improved credit quality.
Total income was up 2 per cent in local currencies (largely unchanged in EUR) compared to last year, excluding nonrecurring items, and operating profit was up 12 per cent in local currencies (+9 per cent in EUR) compared to last year excluding non-recurring items.
Net interest income was up 2 per cent in local currencies (down 1 per cent in EUR) compared to last year. Lending volumes were up 4 per cent in local currencies excluding reversed repurchase agreements. Corporate and household lending margins were higher, while deposit margins overall were down from one year ago.
Net fee and commission income increased 10 per cent in local currencies (+8 per cent in EUR) and the net result from items at fair value decreased by 6 per cent in local currencies (-7 per cent in EUR) compared to last year.
Total expenses were down 1 per cent in local currencies (-4 per cent in EUR) compared to 2013 excluding impairment charge and restructuring costs. Staff costs were up 3 per cent in local currencies (largely unchanged in EUR) excluding restructuring costs. In local currencies and excluding non-recurring items and variable pay, costs were down by 2.2 per cent. Total expenses in the full year 2014 excluding the restructuring costs and the charge for impairment of intangible assets were EUR 4,832 million.
Net loan loss provisions decreased to EUR 534 million, corresponding to a loan loss ratio of 15 basis points (21 basis points last year).
Net profit including non-recurring items increased 9 per cent in local currencies (+7 per cent in EUR) to EUR 3,332 million and net profit as basis for dividend distribution increased 17 per cent in local currencies (+15 per cent in EUR) to EUR 3,593 million.
The impact from currency fluctuations was a reducing effect of 3 percentage points on income and expenses and approx. -3 percentage points on loan and deposit volumes compared to a year ago.
The Group’s fully loaded Basel III Common equity tier 1 (CET1) capital ratio increased to 15.7 per cent at the end of the fourth quarter from 15.6 per cent at the end of the third quarter, following strong profit generation and the continuous focus on capital management. The CET1 capital ratio was negatively affected by 10 basis points due to currency effects. The tier 1 capital ratio increased to 17.6 per cent and the total capital ratio increased 0.4 percentage points to 20.7 per cent.
REA was EUR 145.5 billion, a decrease of EUR 7.1 billion compared to the previous quarter. A reduction in REA of EUR 4.4 billion has been realized in the quarter following the continued focus on capital management.
Nordea’s cost efficiency programme is progressing as planned and the net cost reduction effects are expected to accelerate during 2015. An annualized gross reduction in total expenses of EUR 65 million has been conducted in the fourth quarter and EUR 415 million from the beginning of 2013. The focus on capital management will continue.
For more information on Nordea Bank AB and its results for 2014, see www.nordea.com.