Nordea Bank Finland Plc: Interim Report January-June 2010

21.07.10 15:00 | Pörssitiedotteet

Nordea Bank Finland Plc is a wholly owned subsidiary of Nordea Bank AB (publ), the listed parent company of the whole Nordea Group. This statutory interim report covers the operations of the legal entity Nordea Bank Finland Plc with its subsidiaries in Finland and abroad.

The business operations of the Nordea Group have been organised in three customer areas, all of which operate across national boundaries: Nordic Banking, Private Banking and Institutional and International Banking. The consolidated interim report of Nordea Bank AB (publ) embraces all the activities of the Nordea Group and provides the most complete and fair view.  The Finnish Asset Management & Life operations are included in the interim report of the Nordea Group.

Nordea Bank Finland Group

Result summary January-June 2010
The first half year of 2010 showed lower income and profit levels compared to the very strong H1 last year. Net loan losses increased slightly. NBF’s total income decreased by 17% to EUR 1,264m (1,520) and total expenses decreased by 1% to EUR 521m (525). (The comparison figures in brackets refer to the first six months of 2009.)

NBF’s operating profit decreased by 31% compared to the same period last year and it amounted to EUR 576m (835). Return on equity was 7.7% (11.4) and the cost/income ratio 41% (35). Loan losses amounted to EUR 167m (160). Net profit decreased by 33% to EUR 417m (621).

Market development in the first half of 2010
The Finnish economy was subdued in the first months of 2010. It was hampered by temporary factors, such as the dockworkers’ strike. In the spring, signs of the economy picking up increased. Recovery was indicated by the growth of industrial production, retail sales and construction, among other things. The rise in unemployment also stopped. Short-term market rates started to rise slowly in the spring. Worries about the indebtedness of certain euro countries decreased long-term market rates in Finland but increased uncertainty about future economic trends.

Income
Total income decreased by 17% to EUR 1,264m. The decrease is mainly explained by lower net interest income and lower net result from items at fair value. Margin pressure in deposits continued as competition in deposits continued and interest rates stayed on low levels. Net interest income totalled EUR 578m (633). Total loans to the public increased by 2% year-on-year to EUR 68.7bn. Deposits and borrowings from the public increased by 2% year-on-year to EUR 46.5bn.

Net fee and commission income increased by 44% to EUR 145m. Asset management commissions increased whereas custody fees decreased leading to stable savings related commissions. The increase in card commission income and commission income from guarantees and documentary payments mainly explains the increase in fee and commission income. Commission expenses decreased by 12% as a result of lower other commission expenses.

Net result from items at fair value decreased from the record level in 2009 by 30% to EUR 526m (753). The customer-driven capital markets operations continued to be strong with higher volumes, but the result was on a lower level.

Profit from companies accounted for under the equity method was stable and amounted to EUR 1m (1).

Other operating income decreased to EUR 14m (32).

Expenses
Total operating expenses decreased by 1% and amounted to EUR 521m (525).

Staff costs decreased by 11% to EUR 267m (300) explained by lower variable salaries as well as pension and social expenses. The number of full-time employees decreased by approximately 129 year-on-year.

Other operating expenses totalled EUR 234m (208), up by 13% compared to last year. The increase is mainly explained by higher marketing and other expenses than in the corresponding period last year.

Depreciation of tangible and intangible assets increased to EUR 20m (17).

The cost/income ratio increased to 41% in the first half of 2010.

Throughout this report, “Nordea Bank Finland” and “NBF” refer to the parent company Nordea Bank Finland Plc, business identity code
1680235-8, with its subsidiaries. The registered office of the company is in Helsinki. Nordea Bank Finland Plc is a wholly owned subsidiary of Nordea Bank AB (publ), the listed parent company of the whole Nordea Group. The business operations of the Nordea Group have been organised in three customer areas, all of which operate across national boundaries: Nordic Banking, Private Banking and Institutional & International Banking. The consolidated interim report of Nordea Bank AB (publ) embraces all the activities of the Nordea Group and provides the most complete and fair view. This statutory interim report covers the operations of the legal entity Nordea Bank Finland Plc with its subsidiaries.

 

Loan losses
Net loan losses in the first half year increased slightly to EUR 167m (160) corresponding to a loan loss ratio of 51 basis points.

Net loan losses as well as impaired loans continue to stem from a large number of smaller and medium-sized exposures rather than from a few large exposures.

Taxes
The effective tax rate for the first half of 2010 was approximately 28% compared to 26% in the first half of 2009.

Net profit
Net profit decreased by 33% to EUR 417m (621) corresponding to a return on equity of 7.7% compared to 11.4% in the first half of last year.

Other information

Group initiatives 2010
In February 2010 Nordea launched nine group initiatives to support the prudent growth strategy. Activities related to the initiatives are well on track and have started in all areas. Growth Plan Finland proceeds according to plans and more than 100 new advisers and specialists have been recruited this year in high growth areas to ensure services needed in the coming years. 28 branches will be relocated or refurbished to better serve our customers during the next 12 months. More information on group initiatives is disclosed in the Nordea Bank AB’s (publ) interim report for Q2.

Balance sheet
(Comparison figures in brackets refer to December 2009 figures)

The total assets of NBF amounted to EUR 269bn (221). The change relates mainly to higher market values of derivatives.

The growth rate of the housing loan stock was 4% in Finland. Total loans to the public increased by 5% compared with the end of 2009.

Deposits and borrowings from the public increased from the year-end level and amounted to EUR 46.5bn (44.3).

Capital position and capital management
At the end of June, NBF’s risk-weighted amounts (RWA) were EUR 76.2bn excluding transition rules, compared to EUR 72.1bn at year-end 2009 and 73.4bn one year ago.

As transition rules had no effect on RWA, the reported RWA increased by EUR 4.1bn compared with end 2009 figures.

The Tier 1 ratio was 13.3% and the total capital ratio was 13.9%. Profit for the period has not been included in Tier 1.

Credit portfolio
Total lending was EUR 68.7bn (65.7) at the end of June 2010. The share of lending to corporate customers was 50%. Lending in the Baltic countries constitutes 11% of NBF’s total lending.

Impaired loans gross decreased slightly to EUR 1,794m at the end of June 2010 compared to EUR 1,801m at the end of December 2009. Individually assessed impaired loans, net, amounted to EUR 1,290m (1,354) representing 1.01% of total loans before allowances. At year-end 2009 the ratio w
as 1.08%.

Total allowances in the Baltic countries amounted to EUR 347m, of which EUR 194m were collective provisions.

Off-balance sheet commitments
The total amount of off-balance sheet commitments increased slightly to EUR 35.6bn (35.5). The volumes of derivatives have continued to grow and they amounted to EUR 5,231bn (4,526).

Changes in group structure
During the first half of the year two new subsidiaries have been established in Estonia.

Risks and uncertainties
Nordea’s revenue base reflects the Group’s business with a large and diversified customer base, comprising household customers, corporate customers and financial institutions, representing different geographic areas and industries.

Nordea’s main risk exposure is credit risk. The Group also assumes risks such as market risk, liquidity risk, operational risk and life insurance risk. For further information on risk composition, see the Annual Report.

The financial crisis and the deteriorating macroeconomic situation have not had material impact on Nordea’s financial position. However, the macroeconomic development remains highly uncertain as communicated in the outlook statement below.

None of the above exposures and risks is expected to have any significant adverse effect on the Group or its financial position in the next six months.

Within the framework of the normal business operations, the Group faces claims in civil lawsuits and other disputes, most of which involve relatively limited amounts. None of these disputes are considered likely to have any significant adverse effect on the Group or its financial position in the next six months.

Changes in the Board of Directors
President Carl-Johan Granvik and the President’s deputy Ari Kaperi resigned from their positions as of 30 June 2010. The Board elected Ari Kaperi President and Pekka Nuuttila his deputy as from 1 July 2010. Fredrik Rystedt was elected the Chairman and Ari Kaperi the Deputy Chairman of the Board on 1 July 2010. Christian Clausen, Carl-Johan Granvik and Peter Schütze resigned from their positions as members of the Board as of 30 June 2010 and Ari Kaperi and Gunn Wærsted were elected members of the Board as from 1 July 2010. Michael Rasmussen continues as member of the Board until 31 August 2010. Casper von Koskull has been elected a member of the Board as from 1 September 2010.

Outlook 2010
Nordea expects the macroeconomic recovery to continue in 2010. Although the global development is still fragile and hence uncertainty remains, the outlook for the Nordic markets has improved during the year.

Excluding currency effects in 2010, Nordea expects cost growth to be broadly in line with 2009, including the effects from growth and efficiency initiatives.

Nordea expects risk-adjusted profit to be lower in 2010 compared to 2009, due to lower income in Treasury and Markets.

Net loan losses in 2010 are expected to be lower than in 2009. Credit quality continues to stabilise, in line with the macroeconomic recovery. Nordea Bank Finland is expected to contribute to the above-mentioned development.

 

Stockholm, 21 July 2010
Board of Directors

Key financial figures

Income statement

  Jan-JunJan-JunChange Full year
EURm 20102009% 2009
Net interest income 578633-9 1,218
Net fee and commission income 14510144 225
Net result from items at fair value 526753-30 1,325
Equity method 110 4
Other operating income 1432-56 53
Total operating income 1,2641,520-17 2,825
       
Staff costs -267-300-11 -599
Other expenses -234-20813 -432
Dep
reciation of tangible and intangible
assets
 -20-1718 -37
Total operating expenses -521-525-1 -1,068
       
Profit before loan losses 743995-25 1,757
Net loan losses -167-1604 -381
Impairment of securities held as
financial non-current assets
  -0  
Operating profit 576835-31 1,376
Income tax expense -159-214-26 -373
Net profit for the period 417621-33 1,003

 

Business volumes, key items

  30 Jun30 JunChange31 DecChange
EURm 20102009%2009%
Loans to the public 68,68767,364265,7235
Deposits and borrowings from the public46,48745,663244,2565
Equity 10,79010,596210,972-2
Total assets 268,527206,83830221,16521

Ratios and key figures

  Jan-JunJan-Jun  Full year
  20102009  2009
Return on equity, % 7.711.4  9.0
Cost/income ratio, % 4135  38
Tier 1 capital ratio[1], % 13.313.3  14.0
Total capital ratio[1], % 13.913.8  14.6
Tier 1 capital[1], EURm 10,1039,784  10,099
Risk-weighted amounts incl. transition
rules, EURm
 76,22973,402  72,092
Loan loss ratio, basis points 5147  56
Number of employees (full-time equivalents)[1] 9,2329,361  9,218

[1] End of period

Formulas used
Return on equity, %:
100 x (Operating profit after taxes) / (Shareholders’ equity (average for beginning and end of year))
Cost/income ratio, %:
100 x (Total operating expenses/Total operating income)
Loan loss ratio
Net loan losses (annualised) divided by the opening balance of loans to the public

Income statement

    Jan-JunJan-JunFull year
EURmNote  201020092009
Operating income      
Interest income   9341,6692,708
Interest expense   -356-1,036-1 490
Net interest income   5786331,218
Fee and commission income   318298595
Fee and commission expense   -173-197-370
Net fee and commission income   145101225
Net result from items at fair value4  5267531,325
Profit from companies accounted for under the
equity method
   114
Other operating income   143253
Total operating income   1,2641,5202,825
       
Operating expenses      
General administrative expenses:      
  Staff costs   -267-300-599
  Other expenses   -234-208-432
Depreciation, amortisation and impairment
charges of tangible and intangible assets
   -20-17-37
Total operating expenses   -521-525-1,068
       
Profit before loan losses   7439951,757
       
Net loan losses6  -167-160-381
Impairment of securities held as financial
non-current assets
   0
Operating profit   5768351,376
Income tax expense   -159-214-373
Net profit for the period   4176211,003
       
Attributable to:      
Shareholders of Nordea Bank Finland Plc   4156201,001
Non-controlling interests   212
Total   4176211,003

Statement of comprehensive income

   Jan-JunJan-JunFull year
EURm  201020092009
Net profit for the period  4176211,003
      
Currency translation differences during the period  000
Available-for-sale investments:     
  Valuation gains/losses during the period  00
  Tax on valuation gains/losses during the period  00
Other comprehensive income, net of tax  000
      
Total comprehensive income  4176211,002
      
Attributable to:     
Shareholders of Nordea Bank Finland Plc  4156201,001
Non-controlling interests  212
Total  4176211,003

Balance sheet

    30 Jun31 Dec30 Jun
EURm Note 201020092009
Assets      
Cash and balances with central banks   1,0168,0042,951
Treasury bills    1,6751,033705
Loans to credit institutions 7 57,97859,03748,863
Loans to the public 7 68,68765,72367,364
Interest-bearing securities   7,5817,8733,679
Financial instruments pledged as collateral   2741
Shares   1,1291,052914
Derivatives 10 120,43674,52077,157
Fair value changes of the hedged items in portfolio hedge 
of interest rate risk
  149141170
Investments in associated undertakings   565652
Intangible assets   776961
Property and equipment   123143122
Investment property   3774
Deferred tax assets   181712
Current tax assets   490126
Retirement benefit assets   959185
Other assets   8,6953,0294,152
Prepaid expenses and accrued income   452369421
Total assets   268,527221,165206,838
       
Liabilities      
Deposits by credit institutions   46,12744,34441,307
Deposits and borrowings from the public   46,48744,25645,663
Debt securities in issue   36,93239,27626,910
Derivatives 10 118,99673,23776,265
Fair value changes of the hedged items in portfolio hedge 
of interest rate risk
  5717
Current tax liabilities   1129231
Other liabilities   7,9227,8134,466
Accrued expenses and prepaid income   601571833
Deferred tax liabilities   454439
Provisions   844933
Retirement benefit obligations   283028
Subordinated liabilities   509437450
Total liabilities   257,737210,193196,242
       
Equity      
       
Non-controlling interests   668
       
Share capital   2,3192,3192,319
Share premium reserve   599599599
Other reserves   2,8482,8482,941
Retained earnings   5,0185,2004,729
Total equity   10,79010,97210,596
Total liabilities and equity   268,527221,165206,838
       
Assets pledged as security for own liabilities  18,71812,67410,020
Other assets pledged   
Contingent liabilities   17,92117,08416,975
Credit commitments[1]   16,97117,83616,695
Other commitments    701626533

[1] Including unutilised portion of approved overdraft facilities of EUR 9,510m (31 Dec 2009: 10,517m, 30 Jun 2009: 8,473m).

 

Statement of changes in equity

 Attributable to shareholders of Nordea Bank Finland Plc  
  Other reserves:     
EURmShare
capital
[1]
Share
premium
reserve
Other
reserves
Available
-for
-sale
 invest-
ments
Re-
tained
earn-
ings
TotalNon-
control-
ling
interests
Total
equity
Opening balance
at 1 Jan 2010
2,3195992,84805,20010,966610,972
Total comprehensive
income
    4154152417
Share-based payments    22 2
Dividend for 2009    -600-600 -600
Other changes    11-2-1
Closing balance
at 30 Jun 2010
2,3195992,84805,01810,784610,790
         
 Attributable to shareholders of Nordea Bank Finland Plc  
  Other reserves:     
EURmShare
capital
[1]
Share
premium
reserve
Other
reserves
Available
-for
-sale
invest-
ments
Re-
tained
earn-
ings
TotalNon-
control-
ling
interests
Total
equity
Opening balance
at 1 Jan 2009
2,3195992,94105,40911,268711,275
Total comprehensive
income
   01,0011,00121,003
Share-based payments    11 1
Dividend for 2008    -1,301-1,301 -1,301
Other changes  -93 90-3-3-6
Closing balance
at 31 Dec 2009
2,3195992,84805,20010,966610,972
         
 Attributable to shareholders of Nordea Bank
Finland Plc
  
  Other reserves:     
EURmShare
capital
[1]
Share
premium
reserve
Other
reserves
Available
-for
-sale
 invest-
ments
Re-
tained
earn-
ings
TotalNon-
control-
ling
interests
Total
equity
Opening balance
at 1 Jan 2009
2,3195992,94105,40911,268711,275
Total comprehensive
income
    6206201621
Share-based payments    11 1
Dividend for 2008    -1,300-1,300 -1,300
Other changes    -1-1 -1
Closing balance
at 30 Jun 2009
2,3195
99
2,94104,72910,588810,596

[1] Total shares registered were 1,030.8 million (31 Dec 2009: 1,030.8 million, 30 Jun 2009: 1,030.8 million)

 

Cash flow statement       
     Jan-JunJan-JunFull year
EURm    201020092009
Operating activities       
Operating profit    5768351,376
Adjustments for items not included in cash flow   -298-465-834
Income taxes paid    -335-315-450
Cash flow from operating activities before
changes in operating assets and liabilities
    -575592
Changes in operating assets and liabilities    -8,8818214,192
Cash flow from operating activities    -8,93813714,284
Investing activities   
Sale/acquisition of business operations    2-1-2
Property and equipment    -25-19-49
Intangible assets    -14-5-18
Net investments in debt securities, held to maturity    125-599-3,960
Other financial fixed assets    -1-5
Cash flow from investing activities    88-625-4,034
Financing act
ivities
   
Issued/amortised subordinated liabilities    46-773-786
Dividend paid    -600-1,300-1,300
Other changes    0-6
Cash flow from financing activities    -554-2,073-2,092
        
Cash flow for the period    -9,404-2,5618,158
        
Cash and cash equivalents at beginning of the period  24,55816,40016,400
Exchange rate difference    000
Cash and cash equivalents at end of the period   15,15413,83924,558
Change    -9,404-2,5618,158
        
Cash and cash equivalents    30 Jun30 Jun31 Dec
The following items are included in cash and cash equivalents (EURm):201020092009
Cash and balances with central banks    1,0162,9518,004
Loans to credit institutions, payable on demand14,13810,88816,554

Cash comprises legal tender and bank notes in foreign currencies. Balances with central banks consist of deposits in accounts 
with central banks and postal giro systems under government authority, where the following conditions are fulfilled:
– the central bank or the postal giro system is domiciled in the country where the institution is established
– the balance on the account is readily available at any time.

Loans to credit institutions, payable on demand include liquid assets not represented by bonds or other interest-bearing securities.

Notes to the financial statements

Note 1 Accounting policies
NBF’s consolidated financial statements are prepared in accordance with International Financial Reporting Standards (IFRS) and interpretations of such standards by the International Financial Reporting Interpretations Committee (IFRIC), as endorsed by the EU Commission. In addition, certain rules in the Finnish Accounting Act, the Finnish Credit Institutions Act, the Financial Supervisory Authority’s regulations and guidelines and the Decree of the Ministry of Finance on the financial statements and consolidated financial statements of credit institutions, have also been applied.

These statements have been prepared in accordance with IAS 34 “Interim Financial Reporting”. The interim report is unaudited.

Changed accounting policies and presentation
The accounting policies, basis for calculations and presentation are, in all material aspects, unchanged in comparison with the 2009 Annual Report, except for the classification of lending commissions in the income statement further described below.

Classif
ication of lending commissions
The accounting treatment of lending commissions, including the classification in the income statement, depends on for which purpose the commission is received. Commissions that are considered to be an integral part of the effective interest rate of a loan are included in the calculation of effective interest and classified as “Net interest income” in the income statement, while commissions considered to be compensation for performed services are classified as “Net fee and commission income”.

Judgment has to be exercised when deciding on whether or not a commission shall be included, and to what extent, in the calculation of the effective interest of a loan.  During H1 2010 NBF reassessed this judgment, which has lead to a reclassification of commissions from “Net fee and commission income” to “Net interest income”. The comparable figures have been restated accordingly and the impact is, together with the impact on 2010, disclosed in the below table.

 

 Jan-Jun 2010Jan-Jun 2009Full year 2009
EURmRestatedPre policy
change
RestatedReportedRestatedReported
Net interest income5785646336301,2181,202
       
Net commission income145159101104225241
Note 2  Segment reporting[1]        
 Operating segments
 Nordic BankingNew
European
Markets
Financial
 Institutions
Shipping,
Oil Services &
International
 Jan-JunJan-JunJan-JunJan-JunJan-JunJan-JunJan-JunJan-Jun
EURm20102009201020092010200920102009
Total operating income716717918746615147
Operating profit180256-3727324335
Loans to the public48,56946,6076,9137,30724606,8867,055
Deposits and borrowings 
from the public
37,26434,8591,7282,0298201,0776,1984,483
         
 Other
Operating 
segments
Total
Operating 
segments
ReconciliationTotal 
Group
 Jan-JunJan-JunJan-JunJan-JunJan-JunJan-JunJan-JunJan-Jun
EURm20102009201020092010200920102009
Total operating income3746191,2781,531-14-111,2641,520
Operating profit2404414877718964576835
Loans to the public6,2896,72468,90367,693-216-32968,68767,364
Deposits and borrowings 
from the public
556046,06542,5084223,15546,48745,663

[1] Historical information has been restated mainly due to organisational changes.

Reconciliation between total operating segments and financial statements

   Operating 
profit
Loans
to the public
Deposits and 
borrowings 
from the public
   Jan-JunJan-JunJan-JunJan-JunJan-JunJan-Jun
EURm  201020092010200920102009
Total Operating segments  48777168,90367,69346,06542,508
Group functions[2]  8964-216-3294223,155
Differences in accounting policies  
Total  57683568,68767,36446,48745,663

[2] Consists of Group Management Secretariat, Group Executive Management, Group Internal Audit, Group Credit and Risk Control, Group Human Resources and Group Identity and Communications.

Change in basis of segmentation and measurement of segment profit or loss
Compared with the 2009 Annual Report there have been no changes in the basis of segmentation and measurement of segment profit or loss.

Reportable Operating segments
Nordic Banking conducts a full service banking operation. It is Nordea’s largest customer area and serves household customers and corporate customers in the Nordic markets. The branches within Nordea’s banking activities in the New European Markets offer full banking services for lo
cal and Nordic corporate and personal customers in Estonia, Latvia and Lithuania. The Financial Institutions segment is responsible for Nordea’s customers within the financial institution industry. The segment Shipping, Oil Services & International is responsible for Nordea’s customers within the shipping, offshore and oil services industries.

Note 3   Net fee and commission income     
    Jan-JunJan-JunFull year
EURm   201020092009
Asset Management commissions   241431
Life insurance   4610
Brokerage   131325
Custody   101935
Deposits   225
Total savings related commissions   5354106
Payments    8681165
Cards   372961
Total payment commissions   123110226
Lending   353974
Guarantees and documentary payments   7056117
Total lending related commissions   10595191
Other commission income   373972
Fee and commission income   318298595
       
Payment expenses   -36-35-72
Other commission expenses   -137-162-298
Fee and commission expenses   -173-197-370
Net fee and commission income   145101225
Note 4   Net result from items at fair value      
     Jan-JunJan-JunFull year
EURm    201020092009
Shares/participations and other share-related instruments  301722
Interest-bearing securities and other interest-related instruments  321534929
Other financial instruments    6159131
Foreign exchange gains/losses    115143244
Investment properties    -10-1
Total    5267531,325
Note 5   General administrative expenses      
     Jan-JunJan-JunFull year
EURm    201020092009
Staff    -267-300-599
Information technology[1]    -74-75-146
Marketing    -14-11-25
Postage, telephone and office expenses    -23-21-41
Rents, premises and real estate expenses    -43-42-86
Other   &nb
sp;
-80-59-133
Total    -501-508-1,030

[1] Refers to IT operations, service expenses and consultant fees. Total IT-related costs including staff etc, were EUR 103m in the first half of 2010 (EUR 97m in the first half of 2009).

 

Note 6   Net loan losses      
    Jan-JunJan-JunFull year
EURm   201020092009
Loan losses divided by class      
Loans to credit institutions   -9-9
Loans to the public   -139-177-399
– of which provisions   -156-180-417
– of which write-offs   -71-25-104
– of which allowances used for covering write-offs  431839
– of which reversals   30852
– of which recoveries   15231
Off-balance sheet items   -282627
Total   -167-160-381
       
Key ratios      
    Jan-JunJan-JunFull year
    201020092009
Loan loss ratio, basis points[1]   514756
– of which individual   423539
– of which collective   91217

[1] Net loan losses (annualised) divided by opening balance of loans to the public (lending)

 

Note 7   Loans and their impairment      
   Total
    30 Jun31 Dec30 Jun
EURm   201020092009
Loans, not impaired   125,719123,723115,193
Impaired loans   1,7941,8011,626
– Performing   939937870
– Non-performing   855864756
Loans before allowances   127,513125,524116,819
       
Allowances for individually assessed impaired loans  -504-447-353
– Performing   -289-223-220
– Non-performing   -215-224-133
Allowances for collectively assessed impaired loans  -344-316-239
Allowances   -848-763-592
       
Loans, carrying amount   126,665124,761116,227

Note 7, continued

 Credit institutionsThe public
 30 Jun31 Dec30 Jun30 Jun31 Dec30 Jun
EURm201020092009201020092009
Loans, not impaired57,97859,03848,86367,74164,68566,330
Impaired loans2524251,7691,7761,601
– Performing25939937845
– Non-performing25240830839756
Loans before allowances58,00359,06248,88869,51066,46167,931
       
Allowances for individually assessed impaired
loans
-25-25-25-479-422-328
– Performing-25-289-223-195
– Non-performing-25-250-190-199-133
Allowances for collectively assessed impaired
loans
000-344-316-239
Allowances-25-25-25-823-738-567
       
Loans, carrying amount57,97859,03748,86368,68765,72367,364
Allowances and provisions      
    30 Jun31 Dec30 Jun
EURm   201020092009
Allowances for items in the balance sheet   -848-763-591
Provisions for off balance sheet items   -49-22-21
Total allowances and provisions   -897-785-612
       
       
Key ratios      
    30 Jun31 Dec30 Jun
    201020092009
Impairment rate, gross[1], basis points   141143139
Impairment rate, net[2], basis points   101108109
Total allowance rate[3], basis points   676151
Allowances in relation to impaired loans[4], %   282522
Total allowances in relation to impaired loans[5], %   474236
Non-performing, not impaired[6], EURm   588912

[1] Individually assessed impaired loans before allowances divided by total loans before allowances.
[2] Individually assessed impaired loans after allowances divided by total loans before allowances.
[3] Total allowances divided by total loans before allowances.
[4] Allowances for individually assessed impaired loans divided by individually assessed impaired loans before allowances.
[5] Total allowances divided by total impaired loans before allowances.
[6] Past due loans, not impaired due to future cash flows (included in Loans, not impaired).

 

Note 8   Classification of financial instruments

EURmLoans
and
receiv-
ables
Held
to
maturity
Held
for
trading
Fair
value
option
Derivat-
ives
used
for
hedging
Avail-
able
for
sale
Total
Financial assets       
Cash and balances with central
banks
1,016     1,016
Treasury bills   1,675   1,675
Loans to credit institutions54,642 2,455881  57,978
Loans to the public68,687     68,687
Interest-bearing securities 6,592989   7,581
Financial instruments
pledged as
collateral
  274   274
Shares  1,10326  1,129
Derivatives  120,170 266 120,436
Fair value changes of the hedged
items in portfolio hedge of interest
rate risk
149     149
Other assets3,223  5,460  8,683
Prepaid expenses and accrued
income
258  16  274
Total 30 Jun 2010128,8726,592126,6666,3832660267,882
        
Total 31 Dec 2009132,4606,71778,9092,459575220,607
Total 30 Jun 2009117,1913,35280,5025,090565206,196
        
        
EURm  Held for
trading
Fair
value
option
Derivatives
used for
hedging
Other
financial
liabilities
Total
Financial liabilities       
Deposits by credit
institutions
  279  45,84846,127
Deposits and 
borrowings from
the public
     46,48746,487
Debt securities in issue  6,371  30,56136,932
Derivatives  118,714 282 118,996
Fair value changes
of the hedged
items in portfolio 
hedge of interest
rate risk
     55
Other liabilities  13,880 4,0327,913
Accrued expenses
and prepaid
income
   60 174234
Subordinated 
liabilities
     509509
Total 30 Jun 2010  125,3653,940282127,616257,203
        
Total 31 Dec 2009  79,0272,130372128,027209,556
Total 30 Jun 2009  81,7932,105401111,194195,493

 

Note 9   Financial instruments

 

 

Determination of fair value from quoted market prices or valuation techniques

EURmQuoted prices in
active markets for
same instrument
 (Level 1)
Valuation
technique using
observable data
(Level 2)
Valuation
technique using
non-observable
data
(Level 3)
Total
Assets2,697127,3733,245133,315
Loans to credit institutions 3,336 3,336
Loans to the public    
Debt securities[1]2,453485 2,938
Shares118 1,0111,129
Derivatives126118,0762,234120,436
Other assets 5,460 5,460
Prepaid expenses and accrued income 16 16
     
Liabilities102127,3452,140129,587
Deposits by credit institutions 279 279
Deposits and borrowings from the public    
Debt securities in issue 6,371 6,371
Derivatives101116,7552,140118,996
Other liabilities13,880 3,881
Accrued expenses and prepaid income 60 60

[1] Of which EUR 1,675m Treasury bills and EUR 989m Interest-bearing securities (the portion held at fair value in Note 8). EUR 274m relates to the balance sheet item Financial instruments pledged as collateral.

 

Note 10   Derivatives     
       
Fair value30 Jun 201031 Dec 200930 Jun 2009
EURmAssetsLiabilitiesAssetsLiabilitiesAssetsLiabilities
Derivatives held for trading      
Interest rate derivatives99,53498,15560,71859,35757,86457,080
Equity derivatives8741,0588591,047839845
Foreign exchange derivatives17,45317,35810,70110,41014,54014,170
Credit derivatives1,3861,2861,3541,2942,9152,896
Other derivatives923857831757943873
Total120,170118,71474,46372,86577,10175,864
       
Derivatives used for hedging      
Interest rate derivatives751764417450190
Equity derivatives
Foreign exchange derivatives191106131986211
Total2662825737256401
       
Total fair value      
Interest rate derivatives99,60998,33160,76259,53157,91457,270
Equity derivatives8741,0588591,047839845
Foreign exchange derivatives17,64417,46410,71410,60814,54614,381
Credit derivatives1,3861,2861,3541,2942,9152,896
Other derivatives923857831757943873
Total120,436118,99674,52073,23777,15776,265
Nominal amount30 Jun31 Dec30 Jun
EURm201020092009
Derivatives held for trading   
Interest rate derivatives4,212,3753,652,1993,425,662
Equity derivatives17,46817,82317,177
Foreign exchange derivatives902,656747,053732,143
Credit derivatives69,66083,768105,821
Other derivatives14,08011,19411,931
Total5,216,2394,512,0374,292,734
    
Derivatives used for hedging   
Interest rate derivatives12,68411,19110,095
Equity derivatives -
Foreign exchange derivatives1,6522,33811,632
Total14,33613,52921,727
    
Total nominal amount   
Interest rate derivatives4,225,0593,663,3903,435,757
Equity derivatives17,46817,82317,177
Foreign exchange derivatives904,308749,391743,775
Credit derivatives69,66083,768105,821
Other derivatives14,08011,19411,931
Total5,230,5754,525,5664,314,461

Note 11   Capital adequacy

Capital Base&nbsp
;
30 Jun 31 Dec 30 Jun
EURm 2010[1] 2009 2009[1]
Tier 1 capital 10,103 10,099 9,784
Total capital base 10,585 10,548 10,140

[1] Excluding profit

       
Capital requirement30 Jun30 Jun31 Dec31 Dec30 Jun30 Jun
 201020102009200920092009
EURmCapital
requirement
RWACapital
requirement
RWACapital
requirement
RWA
Credit risk5,35466,9295,16364,5405,23165,382
IRB2,73734,2132,59032,3752,63632,947
 - of which corporate1,87223,4011,70721,3371,84823,101
 - of which institutions4896,1115176,4604735,915
 - of which retail3514,3863444,3013073,840
of which residential real estate1712,1331742,1761371,707
of which other1802,2531702,1251712,133
 - of which other2531522277791
       
Standardised2,61732,7162,57332,1652,59532,435
 - of which sovereign243004151515184
 - of which retail3924,9003884,8473984,969
of which residential real estate111441114411143
of which qaulifying revolving
of which other3804,7563774,7033864,826
 - of which other2,20127,5172,14426,8032,18327,282
       
Market risk3234,0422362,9462733,414
 - of which trading book, VaR1792,2411031,2871892,357
 - of which trading book, non-VaR1441,8011331,659851,057
 - of which FX, non-VaR000000
       
Operational risk4215,2583684,6063684,606
Standardised4215,2583684,6063684,606
Sub total6,09876,2295,76772,0925,87273,402
       
Adjustment for transition rules      
Additional capital requirement according to
transition rules
Total6,09876,2295,76772,0925,87273,402
       
Capital ratio 30 Jun 31 Dec 30 Jun
  2010[1] 2009 2009[1]
Tier I ratio, % 13.3 14.0 13.3
Capital ratio, % 13.9 14.6 13.8

[1] Excluding profit

 

Analysis of capital requirements      
Exposure class, 30 Jun 2010  Average risk weight
(%)
Capital requirement
(EURm)
Corporate   59 1,872
Institutions   23 489
Retail IRB   14 351
Retail SA   76 392
Sovereign   2 24
Other   38 2,227
Total credit risk   35 5,354

Asiakirjat