Group CEO Frank Vang-Jensen at our AGM 2024

Nordea

25 Mar 202413:20

Summary

TLDRIn 2023, despite geopolitical tensions and economic challenges, NOA achieved strong financial results, becoming one of Europe's most profitable banks. The bank maintained a close relationship with customers, adapted to changing needs, and focused on digital growth, resulting in increased customer satisfaction and business volumes. NOA also prioritized sustainability, facilitating sustainable financing and aiming for a net-zero emission status by 2050. The bank's strategic acquisitions and investments in risk management and technology have positioned it well for the future.

Takeaways

🌐 Geopolitical tensions and conflicts, such as the war in Ukraine and situations in the Middle East, highlighted the fragile state of the world in 2023.
📉 The economic environment in 2023 was challenging, with rising prices leading to higher interest rates, affecting individuals and corporations globally.
💼 Nordic households and businesses responded to the economic climate by reducing consumption and investment, but the region showed resilience.
🏦 NOA had a successful year, remaining one of the most profitable banks in Europe and demonstrating adaptability and strength in the face of adversity.
📈 NOA's return on equity was 16.9%, surpassing the outlook of above 15%, and the full-year operating profit increased by 18% to 6.3 billion EUR.
📈 Customer satisfaction scores improved, business volumes grew, and NOA strengthened its position in the Nordic markets.
🎯 NOA's strategy focuses on delivering best-in-class customer experiences, driving profitable growth, and increasing operational and capital efficiency.
🔄 NOA pursued selective acquisitions, such as the purchase of Dana Bank's Norwegian personal customer and private banking business, to complement organic growth.
💡 Investments were made in risk management, financial crime prevention, and technology to ensure NOA's future readiness and digital leadership.
🌱 Sustainability is a core focus for NOA, with 135 billion EUR in sustainable financing facilitated and a commitment to becoming a net-zero emission bank by 2050.
📊 All four business areas of NOA grew income faster than costs, and the board proposed a dividend of 92 EUR per share, reflecting confidence in the bank's high profitability.

Q & A

What were some of the challenges faced in 2023 according to the transcript?
-The challenges faced in 2023 included high geopolitical tensions due to Russia's continued war in Ukraine, a difficult situation in the Middle East, a tough economic environment with rising prices leading to higher interest rates, and reduced consumption and investment in the Nordic region.
How did NOA perform financially in 2023?
-NOA had a strong year in 2023, becoming one of the most profitable banks in Europe. They achieved a return on equity of 16.9%, exceeding their outlook of above 15%, and a full-year operating profit increase of 18% to 6.3 billion EUR.
What is NOA's strategy for supporting customers through different economic cycles?
-NOA aims to stay close to its customers, understanding their changing circumstances and needs. They maintain a proactive approach to keep good business momentum and deliver strong financial results, supporting their customers through all economic cycles.
What type of acquisitions has NOA been involved in?
-NOA has been involved in selective bolt-on acquisitions that fit their plans, with an example being the purchase of Dana bank's Norwegian personal customer and private banking business, which was announced in the summer and expected to close in the fourth quarter of 2024.
How has NOA invested in risk management and technology?
-NOA has made important long-term investments in risk management, financial crime prevention, and strengthening their technology and digital capabilities to ensure they are well positioned for the future and to bolster their ability to be the preferred partner for their customers.
What was the impact of NOA's digital services on customer activity in 2023?
-Customer activity was high in 2023, with a record high use of NOA's digital services. Customer logins to mobile and online banking services increased by 133% year on year to 1.4 billion logins.
How does NOA approach sustainability and its role in the transition to a low carbon economy?
-Sustainability is a key focus for NOA, and they play an important role in supporting the transition to a low carbon economy by facilitating sustainable financing and helping customers with their own transitions. They have committed to reducing emissions across their lending and investment portfolios by 40 to 50% by 2030 and becoming a net zero emission bank by 2050.
What were NOA's achievements in sustainable financing over the past years?
-Over the past years, NOA has facilitated 135 billion EUR in sustainable financing, including 77 billion in 2023, and they are on track to meet their 2025 target of 200 billion euros.
How did NOA perform in terms of business area growth and income in 2023?
-All four of NOA's business areas grew income faster than cost and delivered solid returns in 2023. Group income increased by 14% to 11.7 billion EUR, and corporate lending grew by 1% year on year.
What is NOA's credit quality and risk position like?
-NOA's risk position and credit quality remain strong, supported by a well-diversified pan-Nordic credit portfolio and prudent credit policies. At the end of 2023, their Common Equity Tier 1 ratio was 17.7%, which is 4.9% above the current regulatory requirements.
What is NOA's dividend proposal for 2023?
-For 2023, NOA's board of directors has proposed a dividend of 92 EUR C per share, which represents a year-on-year increase of 15%. The total distribution for shareholders, including share buybacks during the past year, will amount to approximately 27 EUR per share.
What is NOA's long-term financial target?
-NOA has updated their financial target, aiming for a return on equity of above 15% for 2025, up from their previous target of above 13%. This confidence is grounded in the progress they have made in recent years, focusing on improving customer experience and driving profitable growth.

Outlines

00:00

🌐 Economic Challenges and NOA's Resilience

This paragraph discusses the challenging economic environment of 2023, marked by geopolitical tensions, the ongoing war in Ukraine, and the difficult situation in the Middle East. It highlights the impact of rising prices and increased interest rates on Nordic households and businesses, which led to reduced consumption and investment. Despite these conditions, the region showed resilience and NOA had a strong year, becoming one of the most profitable banks in Europe. The bank's proactive approach and understanding of changing circumstances helped maintain business momentum and deliver strong financial results, with a return on equity of 16.9% and a full-year operating profit increase of 18%. The paragraph also mentions NOA's strategy of providing class-leading omni-channel experiences, making bold acquisitions like the purchase of Dana bank's Norwegian business, and investing in risk management, financial crime prevention, and digital capabilities.

05:00

🌱 Sustainability and NOA's Role in a Low Carbon Economy

This paragraph emphasizes the importance of sustainability as a core part of NOA's strategy. It outlines the bank's role in supporting the transition to a low carbon economy and assisting customers with their own transitions. NOA has facilitated 135 billion euros in sustainable financing, with 77 billion in 2023, and is on track to meet its 2025 target of 200 billion euros. The bank is also committed to reducing its carbon emissions by 40-50% by 2030 and becoming a net zero emission bank by 2050. Sector targets for carbon emission reduction have been set for key industries such as shipping, residential real estate, oil and gas, and mining, with additional targets for agriculture, power production, and motor vehicles. The paragraph also highlights the bank's financial results, with all four business areas growing income faster than cost and delivering solid returns. Despite a slower housing market, corporate lending and asset management increased, and the bank's risk position and credit quality remained strong.

10:02

💰 NOA's Financial Performance and Contributions to Nordic Societies

This paragraph focuses on NOA's financial performance and its contributions to the Nordic societies. It mentions the updated financial target for a return on equity of above 15% by 2025 and the confidence in sustaining high profitability, grounded in the progress made in recent years. The bank's commitment to improving customer experience and driving profitable growth is highlighted, along with the structural improvements across the group that have led to consistent high-quality earnings. The paragraph also discusses the shareholder distributions, with a proposed dividend increase of 15% and the total distribution amounting to €27 per share. The capital returned supports economic activity and development in the Nordic region. The paragraph concludes with gratitude towards customers, shareholders, stakeholders, and employees for their cooperation and efforts, and a reaffirmation of NOA's ambition to be the preferred partner for customers in need of a broad range of financial services.

Mindmap

Keywords

💡geopolitical tensions

Geopolitical tensions refer to the strained relationships and conflicts between countries due to political, economic, or territorial disputes. In the context of the video, it highlights the ongoing challenges in international relations, such as Russia's war in Ukraine and the situation in the Middle East, which impact the global economic and financial environment. These tensions affect the business operations and strategies of companies like NOA, as they need to navigate through the uncertainties and potential risks associated with such geopolitical issues.

💡economic environment

The economic environment refers to the overall conditions of an economy, including factors like inflation, interest rates, employment rates, and consumer spending. In the video, the challenging economic environment is characterized by rising prices and central banks' response to increase interest rates, which affects businesses and households' consumption and investment patterns. NOA's strong performance amidst this environment demonstrates its resilience and adaptability.

💡resilience

Resilience in this context refers to the ability of an organization, region, or individual to withstand or recover quickly from challenges, changes, or crises. The video emphasizes the resilience of the Nordic region and NOA as a bank, showcasing their capacity to adjust well to the changing environment and maintain strong financial results despite external challenges.

💡customer satisfaction

Customer satisfaction is a measure of how well a company's products or services meet or exceed the expectations of its customers. It is a critical performance indicator for businesses as it directly impacts customer loyalty and retention. In the video, NOA's improvement in customer satisfaction scores reflects their commitment to enhancing customer experience and building a strong relationship with their clients.

💡digital services

Digital services refer to the provision of services over the internet or through digital platforms, enabling users to access products and information online. In the context of the video, NOA's digital services include mobile and online banking, which saw a significant increase in usage. This highlights the bank's efforts to expand its digital offerings and become a leader in the Nordic markets, providing customers with convenient and personalized banking experiences.

💡sustainability

Sustainability refers to the practice of meeting current needs without compromising the ability of future generations to meet their own needs. In the video, sustainability is a key focus area for NOA, emphasizing their role in supporting the transition to a low-carbon economy and facilitating sustainable financing. This commitment demonstrates the bank's responsibility towards environmental stewardship and long-term societal impact.

💡sustainable financing

Sustainable financing involves the allocation of financial resources to support projects, businesses, or initiatives that have positive environmental, social, or governance impacts. In the video, NOA has facilitated a significant amount of sustainable financing, which reflects their commitment to promoting economic activities that contribute to a more sustainable future.

💡net zero emission

A net zero emission target means achieving a balance between emitting greenhouse gases and removing them from the atmosphere, resulting in no overall contribution to global warming. In the video, NOA's commitment to becoming a net zero emission bank by 2050 demonstrates their long-term strategy to reduce their environmental impact and support climate change mitigation efforts.

💡risk management

Risk management is the process of identifying, assessing, and prioritizing risks followed by coordinated and economical application of resources to minimize, monitor, and control the probability or impact of unfortunate events. In the context of the video, NOA's investments in risk management and financial crime prevention indicate their proactive approach to safeguarding the bank's operations and maintaining trust with their customers and stakeholders.

💡corporate lending

Corporate lending involves providing loans or credit facilities to businesses for their operational or investment needs. In the video, NOA's growth in corporate lending indicates the bank's support for businesses in the Nordic region and its ability to maintain and expand its market share in the face of economic challenges.

💡asset under management (AUM)

Asset under management (AUM) refers to the total market value of investments and assets that a financial institution manages on behalf of its clients. In the video, NOA's increase in AUM signifies the bank's success in attracting and retaining clients, reflecting its strong reputation and effective wealth management services.

💡capital efficiency

Capital efficiency refers to the effective use of a company's capital to generate returns and maximize shareholder value. In the context of the video, NOA's focus on increasing operational and capital efficiency is part of their strategy to optimize their resources and improve their overall financial performance.

Highlights

2023 was a challenging year with geopolitical tensions and economic difficulties.

Russia's continued war in Ukraine and the situation in the Middle East highlighted the world's fragility.

Central banks raised interest rates to the highest levels in 15 years due to rising prices.

NOA had a strong year, becoming one of the most profitable banks in Europe.

NOA's return on equity was 16.9%, exceeding the outlook of above 15%.

Full year operating profit was up 18% at 6.3 billion EUR.

NOA's customer satisfaction scores improved alongside business volumes growth.

NOA made bold acquisitions, including Dana bank's Norwegian personal customer and private banking business.

Investments in risk management, financial crime prevention, and digital capabilities were emphasized for future positioning.

Digital services saw record high usage with a 133% year-on-year increase in customer logins.

NOA facilitated 135 billion EUR in sustainable financing, including 77 billion in 2023.

NOA is on track to meet its 2025 target of 200 billion euros in sustainable financing.

The bank is committed to reducing its carbon emissions by 40 to 50% by 2030, aiming for net-zero emissions by 2050.

NOA's lending portfolio financed emissions are down 29% compared with 2019 levels.

All four of NOA's business areas grew income faster than cost in 2023.

The board of directors proposed a dividend of 92 EUR C per share, a 15% year-on-year increase.

NOA's C1 ratio was 177% at the end of 2023, 4.9% above the current regulatory requirements.

NOA is targeting a return on equity of above 15% for 2025, up from above 13% previously.