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 2008 The first six months of 2008 were characterised by maintained high income and profit levels despite negative effects from volatile and weakened financial markets. NBF's total income increased by 18% to EUR 1,394m (1,179) and total expenses by 7% to EUR 484m (452). (The comparison figures in brackets refer to the first six months of 2007.) NBF's operating profit was up by 19% compared to the same period in 2007 and amounted to EUR 884m (743). Return on equity was 12.9% (9.4%) and the cost/income ratio 35% (38%). Loan losses amounted to EUR 26m (16m positive loan losses). Net profit increased by 25% to EUR 689m (552). Market development in the first half of 2008 In Finland, economic growth slowed down in the first half of 2008, but remained robust. Employment grew strongly and unemployment continued to drop. However, the global rise of oil and food prices caused inflation to accelerate to over 4% in the spring. High inflation also turned the market rates up again. The price and rate rise as well as worrying news about the global economy weakened consumer confidence at the beginning of summer. Share prices fell as well. Income Total income increased by 18% to EUR 1,394m. The income growth is driven by volume growth as well as the high activity level in the customer-driven capital markets operations. The strong growth in net interest income continued, supported by positive trends both in lending and deposits. Net interest income totalled EUR 855m (744). Total lending to the public increased by 18% year-on-year to EUR 66.5bn. Deposits and borrowings from the public increased by 16% year-on-year to EUR 43.1bn. Net commission income decreased by 8% to EUR 146m, with savings related commissions negatively affected by the weak equity markets, lower transaction activity and a shift from funds to savings deposit accounts. Lending-related commissions increased somewhat whereas payment commissions were stable. Development in other commissions was favourable as commissions from securities issues increased. Total commission expenses increased by 15% mainly due to higher transaction volumes. 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. Net gains/losses at fair value increased by 52% to EUR 379m (249). The customer-driven capital markets operations continued to perform strongly, with the continued high transaction activity. All product areas were able to perform better than in the previous year. The negative impact on net gains/losses from specific valuation losses due to the credit market turmoil has continued to be limited. Profit from companies accounted for under the equity method increased to EUR 1m (-1). Other operating income decreased to EUR 13m (28) as no major capital gains realised during the first half of 2008. Expenses Total operating expenses increased by 7% and amounted to EUR 484m (452). Staff costs increased by 9% to EUR 276m (254) following a higher number of employees, investments in growth areas and wage inflation. The number of full-time employees increased by approximately 320 year-on-year, largely in the Baltic area. Other operating expenses totalled EUR 193m (184), up by 5% compared to last year. The higher activity level and investments in growth areas mainly explain the increase. Depreciation of tangible and intangible assets increased slightly to EUR 15m (14). The cost/income ratio was 35% compared to 38% in the first half of 2007. Loan losses As expected recoveries and reversals were lower than last year, whereas new provisions were nearly at unchanged and modest levels. Net loan losses of EUR 26m (positive loan losses 16m) were recorded in the first half year. Taxes The effective tax rate for the first half of 2008 was approximately 22%. In the first half of 2007, the effective tax rate was approximately 26%. Net profit Net profit increased by 25% to EUR 689m (552) corresponding to a return on equity of 12.9% compared to 9.4% in the first half of last year. Balance sheet (Comparison figures in brackets refer to December 2007 figures) The total assets of NBF amounted to EUR 177bn (147). The change mainly reflects strong growth in lending, higher balance sheet values of derivatives as well as increased intra-group transactions. Despite the higher interest rate levels the growth rate of the housing loan stock was still double digit in Finland. In the Baltic area the growth rate has been very strong despite the more challenging macroeconomic development. Loans to the public grew by 10% compared with the end of 2007. The book values of derivatives have increased due to revaluations and volume growth. Deposits and borrowings from the public increased from the year-end level and amounted to EUR 43.1bn (41.7). Capital position and capital management At the end of June, NBF's risk-weighted amounts (RWA) were EUR 73.3bn excluding transition rules, compared to EUR 66.1bn at year-end 2007. The increase is explained by volume increases. RWA including transition rules increased by EUR 5.7bn to EUR 76.7bn. Excluding transition rules, the tier 1 ratio was 13.4% and the total capital ratio was 14.9%. Including transition rules, the tier 1 ratio was 12.8% and the total capital ratio was 14.2%. Profit for the period has not been included in tier 1. During 2008, Nordea has an ongoing approval process for its internal-rating-based (IRB) models for its Retail credit portfolio. Credit portfolio Total lending was EUR 66.5bn (60.6) at the end of June 2008. The share of lending to corporate customers was 54%. There was no major change in the composition of the credit portfolio. Credit quality in the well diversified lending portfolio remained strong, with no industry sector showing any material change in credit strength since the beginning of the year. Impaired loans gross increased to EUR 755m at the end of June 2008 compared to EUR 616m at the end of December. EUR 51m of this increase is attributable to the Baltic countries. Individually assessed impaired loans, net, amounted to EUR 569m (430) representing 0.6% of total loans and receivables before allowances, which was on the same level as at year-end 2007. Off-balance sheet commitments The total amount of off-balance sheet commitments increased to EUR 34.7bn (30.0). The increase mainly related to guarantees, as the centralisation of guarantee operations to NBF continued. The volumes of derivatives have continued to grow and they amounted to EUR 3,450bn (3,017). Changes in the group structure Nordea Bank Finland Plc has increased its ownership in Realia Holding Oy. NBF's share of the total capital invested is 36.8%. Changes in the Board of Directors President Markku Pohjola and the President's deputy Carl-Johan Granvik resigned from their positions as of 31 May 2008. The Board elected Carl-Johan Granvik President and Ari Kaperi his deputy as from 1 June 2008. Carl-Johan Granvik was elected the Deputy Chairman of the Board on 6 May 2008. Markku Pohjola resigned from his position as member of the Board as of 31 May 2008 and Michael Rasmussen was elected member of the Board as from 1 June 2008. Christian Clausen continues as Chairman of the Board and Arne Liljedahl and Peter Schütze as members of the Board. Markku Pohjola will retire on 31 July 2008. Risks and uncertainties Nordea's revenue base reflects the Group's business with a large and diversified customer base, comprising both retail and corporate customers, representing different geographic areas and industries. Nordea has mainly an exposure to the general and industry specific economic development in the geographical areas in which the Group operates. Nordea's main risk exposure is credit risk. The Group also assumes market risk, liquidity risk and operational risk. There is no major change to the risk composition of the Group compared to what is disclosed in the 2007 Annual Report. 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 normal business operations, the Group faces claims in civil lawsuits and other disputes, most of which involve relatively limited amounts. None of these disputes is considered likely to have any significant adverse effect on the Group or its financial position in the next six months. New Group organisation from 1 June 2008 Nordea's Group organisation was revised from 1 June 2008, in line with the next steps in the development of the Group's operating model. To further strengthen customer-orientation and local market focus and teamwork, a new position as national Head of Banking responsible for customer relations has been established in each of the four Nordic markets reporting to the Head of Nordic Banking. Product development and product management will be enhanced by the establishment of a new product area, Capital Markets and Savings. High quality and efficiency in product deliveries, technology and support will be targeted in the new combined product and operations area, Banking Products and Group Operations. Outlook 2008 Signs of slowing international economic growth particularly in the US and in large parts of Europe, are becoming increasingly apparent. The Nordic economies have so far been relatively resilient in the face of the international slowdown, but the uncertainty has gradually increased. Nordea Group's lending growth is expected to be lower in the remaining part of the year, but still at a high level. Corporate lending margins are expected to increase further. Consensus for international equity markets continues to be fairly negative and therefore, Nordea Group does not foresee any significant improvement in commission income in the medium term. In view of the uncertainty of Nordic macroeconomic growth prospects, the development in equity markets and the volatile financial markets, the uncertainty as to Nordea Group's outlook has increased correspondingly. Nordea Group still expects customer operations to deliver according to plans. Nordea Group previously has communicated an expected growth in risk-adjusted profit of 5-10%. Nordea Group now expects to deliver a growth of approx. 5%, excluding the gain from the sale of NCSD. However, the development in the financial markets will affect the outcome and determine whether the growth will be somewhat above or below 5%. Nordea Bank Finland is expected to contribute to the growth. Cost growth for Nordea Group for 2008 is expected to be somewhat higher than the growth rate in 2007. The overall quality of the credit portfolio of Nordea Group remains strong, only the Baltic countries show increasing impaired loans although from a very low level. For the second half of 2008, Nordea Group expects somewhat higher net loan loss charges than in the first half of the year. Stockholm, 21 July 2008 Board of Directors Key financial figures Income statement Jan-Jun Jan-Jun Change Full year EURm 2008 2007 % 2007 Net interest income 855 744 15 1,531 Net fee and commission income 146 159 -8 315 Net gains/losses on items at fair value 379 249 52 586 Equity method 1 -1 -200 2 Other income 13 28 -54 169 Total operating income 1,394 1,179 18 2,603 Staff costs -276 -254 9 -515 Other expenses -193 -184 5 -375 Depreciation of tangible and intangible assets -15 -14 7 -29 Total operating expenses -484 -452 7 -919 Profit before loan losses 910 727 25 1,684 Loan losses -26 16 -263 20 Impairment of securities held as financial non-current assets 0 0 0 Disposals of tangible and intangible assets 0 0 0 Operating profit 884 743 19 1,704 Income tax expense -195 -191 2 -339 Net profit for the period 689 552 25 1,365 Business volumes, key items 30 Jun 30 Jun Change 31 Dec Change EURm 2008 2007 % 2007 % Loans and receivables to the public 66,500 56,404 18 60,597 10 Deposits and borrowings from the public 43,085 37,067 16 41,709 3 Equity 10,629 10,032 6 10,793 -2 Total assets 176,666 136,995 29 147,254 20 Ratios and key figures Jan-Jun Jan-Jun Full year 2008 2007 2007 Return on equity, % 12.9 9.4 11.2 Cost/income ratio, % 35 38 35 Tier 1 capital ratio[1],[2], % 12,8 13.7 13.7 Total capital ratio[1],[2], % 14,2 15.5 15.3 Tier 1 capital[1],[2], EURm 9,833 9,107 9,725 Risk-weighted assets[1], EURm 76,749 66,460 71,044 Number of employees (full-time equivalents)[1] 9,631 9,307 9,347 [1] End of period. [2] Jan-Jun figures excluding profit for the 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) Half-year development Jan-Jun Jan-Jun Net fee and commission income, EURm 2008 2007 Asset Management commissions 23 27 Life insurance 4 7 Brokerage 10 22 Custody 26 19 Deposits 2 2 Total savings related commissions 65 77 Payments 73 73 Cards 22 22 Total payment commissions 95 95 Lending 37 44 Guarantees and documentary payments 39 28 Total lending related commissions 76 72 Other commission income 34 23 Fee and commission income 270 267 Payment expenses -29 -23 Other commission expenses -95 -85 Fee and commission expenses -124 -108 Net fee and commission income 146 159 Jan-Jun Jan-Jun General administrative expenses, EURm 2008 2007 Staff -276 -254 Information technology[1] -61 -59 Marketing -18 -15 Postage, telephone and office expenses -21 -19 Rents, premises and real estate expenses -42 -40 Other -51 -51 Total -469 -438 [1] Refers to IT operations, service expenses and consultant fees. Total IT-related costs including staff etc, were EUR 85m in the first half of 2008 (EUR 77m in the first half of 2007). Segment reporting Customer Areas Inst. & Other Nordic International customer Banking Banking operations Total customer areas EURm Jan-Jun Jan-Jun Jan-Jun Jan-Jun Customer responsible units 2008 2007 2008 2007 2008 2007 2008 2007 % Income statement Net interest income 550 509 85 64 12 12 647 585 11% Net fee and commission income 230 278 54 47 -83 -81 201 244 -18% Net gains/losses on items at fair value 76 56 26 17 249 161 351 234 50% Equity method 1 0 0 0 0 0 1 0 Other income 5 6 1 0 0 0 6 6 0% Total operating income 862 849 166 128 178 92 1,206 1,069 13% Staff costs -146 -144 -31 -25 -21 -24 -198 -193 3% Other expenses -236 -222 -23 -24 13 5 -246 -241 2% Depreciations of tangible and intangible assets -2 0 -1 -2 0 0 -3 -2 50% Total operating expenses -384 -366 -55 -51 -8 -19 -447 -436 3% Loan losses -8 41 -21 -35 0 0 -29 6 -583% Disposals of tangible and intangible assets 0 0 0 0 0 0 0 0 Operating profit 470 524 90 42 170 73 730 639 14% Balance sheet Loans and receivables to the public 46,562 38,038 13,728 4,286 0 0 60,290 42,324 42% Other assets 528 484 35,872 1,276 52,507 38,257 88,907 40,017 122% Total assets 47,090 38,522 49,600 5,562 52,507 38,257 149,197 82,341 81% Deposits and borrowings from the public 32,323 26,616 6,850 2,303 0 0 39,173 28,919 35% Other liabilities 14,297 11,382 42,660 3,217 52,337 38,184 109,294 52,783 107% Total liabilities 46,620 37,998 49,510 5,520 52,337 38,184 148,467 81,702 82% Equity 470 524 90 42 170 73 730 639 14% Total liabilities and equity 47,090 38,522 49,600 5,562 52,507 38,257 149,197 82,341 81% Segment reporting, continued Other Group Group Corporate Group Functions Centre and Eliminations Total EURm Jan-Jun Jan-Jun Jan-Jun Customer responsible units 2008 2007 2008 2007 2008 2007 % Income statement Net interest income 180 137 28 22 855 744 15% Net fee and commission income -1 -1 -54 -84 146 159 -8% Net gains/losses on items at fair value -4 -4 32 19 379 249 52% Equity method 0 0 0 -1 1 -1 -200% Other income 2 2 5 20 13 28 -54% Total operating income 177 134 11 -24 1,394 1,179 18% Staff costs -4 -2 -74 -59 -276 -254 9% Other expenses -8 -12 61 69 -193 -184 5% Depreciations of tangible and intangible assets 0 0 -12 -12 -15 -14 7% Total operating expenses -12 -14 -25 -2 -484 -452 7% Loan losses 0 0 3 10 -26 16 -263% Disposals of tangible and intangible assets 0 0 0 0 0 0 Operating profit 165 120 -11 -16 884 743 19% Balance sheet Loans and receivables to the public 142 121 6,068 13,959 66,500 56,404 18% Other assets 76,252 59,645 -54,993 -19,071 110,166 80,591 37% Total assets 76,394 59,766 -48,925 -5,112 176,666 136,995 29% Deposits and borrowings from the public 3,865 4,273 47 3,875 43,085 37,067 12% Other liabilities 72,364 55,373 -58,706 -18,260 122,952 89,896 37% Total liabilities 76,229 59,646 -58,659 -14,385 166,037 126,963 31% Equity 165 120 9,734 9,273 10,629 10,032 6% Total liabilities and equity 76,394 59,766 -48,925 -5,112 176,666 136,995 29% Income statement Jan-Jun Jan-Jun Full year EURm Note 2008 2007 2007 Operating income Interest income 2,741 2,338 4,909 Interest expense -1,886 -1,594 -3,378 Net interest income 855 744 1,531 Fee and commission income 270 267 532 Fee and commission expense -124 -108 -217 Net fee and commission income 146 159 315 Net gains/losses on items at fair value 2 379 249 586 Profit from companies accounted for under the equity method 1 -1 2 Dividends - - - Other operating income 13 28 169 Total operating income 1,394 1,179 2,603 Operating expenses General administrative expenses: Staff costs -276 -254 -515 Other expenses -193 -184 -375 Depreciation, amortisation and impairment charges of tangible and intangible assets -15 -14 -29 Total operating expenses -484 -452 -919 Loan losses 3 -26 16 20 Impairment of securities held as financial non-current asset 0 0 0 Disposals of tangible and intangible assets 0 0 0 Operating profit 884 743 1,704 Income tax expense -195 -191 -339 Net profit for the period 689 552 1,365 Attributable to: Shareholders of Nordea Bank Finland Plc 688 551 1,363 Minority interests 1 1 2 Total 689 552 1,365 Balance sheet 30 Jun 31 Dec 30 Jun EURm Note 2008 2007 2007 Assets Cash and balances with central banks 1,712 1,953 1,965 Treasury bills and other eligible bills 1,995 2,149 2,230 Loans and receivables to credit institutions 4 56,395 45,549 41,365 Loans and receivables to the public 4 66,500 60,597 56,404 Interest-bearing securities 2,292 2,215 1,090 Financial instruments pledged as collateral - - 25 Shares 982 1,465 986 Derivatives 6 43,686 30,731 30,440 Fair value changes of the hedged items in portfolio hedge of interest rate risk -106 -45 -95 Investments in associated undertakings 79 76 78 Intangible assets 53 48 23 Property and equipment 112 110 94 Investment property 4 4 4 Deferred tax assets 2 136 332 Current tax assets 83 21 10 Retirement benefit assets 66 59 55 Other assets 2,067 1,412 1,421 Prepaid expenses and accrued income 744 774 568 Total assets 176,666 147,254 136,995 Liabilities Deposits by credit institutions 38,432 26,789 22,054 Deposits and borrowings from the public 43,085 41,709 37,067 Debt securities in issue 32,968 29,635 30,208 Derivatives 6 44,134 32,012 30,869 Fair value changes of the hedged items in portfolio hedge of interest rate risk -57 -77 -139 Current tax liabilities 113 56 40 Other liabilities 4,940 3,970 4,264 Accrued expenses and prepaid income 1,075 979 907 Deferred tax liabilities 47 33 24 Provisions 52 45 89 Retirement benefit obligations 44 40 46 Subordinated liabilities 1,204 1,270 1,534 Total liabilities 166,037 136,461 126,963 Equity 7 Minority interests 6 7 6 Share capital 2,319 2,319 2,319 Share premium account 599 599 599 Other reserves 2,928 2,929 2,899 Retained earnings 4,777 4,939 4,209 Total equity 10,629 10,793 10,032 Total liabilities and equity 176,666 147,254 136,995 Assets pledged as security for own liabilities 8,699 7,311 7,018 Other assets pledged - - 252 Contingent liabilities 16,693 13,201 10,675 Commitments excluding derivatives 17,962 16,787 16,138 Derivative commitments 3,449,783 3,016,978 2,714,442 Statement of recognised income and expense Jan-Jun Jan-Jun Full year EURm 2008 2007 2007 Currency translation differences during the period 0 2 2 Available-for-sale investment: Valuation gains/losses taken to equity -1 - 1 Group contribution - - -54 Tax on items taken directly to or transferred from equity 0 - 0 Net income recognised directly in equity -1 2 -51 Net profit for the period 689 552 1,365 Total recognised income and expense for the period 688 554 1,314 Attributable to: Shareholders of Nordea Bank Finland Plc 687 553 1,312 Minority interests 1 1 2 Total 688 554 1,314 Cash flow statement Jan-Jun Jan-Jun Full year EURm 2008 2007 2007 Operating activities Operating profit 884 743 1,704 Adjustments for items not included in cash flow 45 142 -31 Income taxes paid -50 -55 -69 Cash flow from operating activities before changes in operating assets and liabilities 879 830 1,604 Changes in operating assets and liabilities 4,269 151 1,907 Cash flow from operating activities 5,148 981 3,511 Investing activities Sale/acquisition of group undertakings - 13 73 Sale/acquisition of associated undertakings -7 6 24 Property and equipment -17 -26 -63 Intangible assets -15 -3 -33 Other financial fixed assets 19 0 -4 Cash flow from investing activities -20 -10 -3 Financing activities Issued/amortised subordinated liabilities -43 -131 -415 Dividend paid -850 -4,000 -4,000 Other changes -2 2 -126 Cash flow from financing activities -895 -4,129 -4,541 Cash flow for the period 4,233 -3,158 -1,033 Cash and cash equivalents at beginning of period 15,434 16,467 16,467 Exchange rate difference 0 - 0 Cash and cash equivalents at end of period 19,667 13,309 15,434 Change 4,233 -3,158 -1,033 Cash and cash equivalents 30 Jun 30 Jun 31 Dec The following items are included in cash and cash equivalents (EURm): 2008 2007 2007 Cash and balances with central banks 1,712 1,965 1,953 Loans and receivables to credit institutions, payable on demand 17,955 11,344 13,481 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 and receivables to credit institutions, payable on demand include liquid assets not represented by bonds or other interest-bearing securities. Notes Note 1 Accounting policies NBF's consolidated financial statements are prepared in accordance with the International Financial Reporting Standards (IFRS) endorsed by the EU, the Finnish Accounting Act and to applicable parts according to the Finnish Credit Institutions Act, the Financial Supervision Authority's regulations and Guidelines and the Decree of the Ministry of Finance on the financial statements and consolidated financial statements of credit institutions. 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 Annual Report 2007, except for the presentation of received dividends and income from private equity funds and other shares in the income statement. Dividends received from group undertakings and associated undertakings are recognised on the separate income line "Dividends" in the parent company. In the group, dividends from group undertakings are eliminated and dividends from associated undertakings are reclassified to "Investments in associated undertakings". All other received dividends are recognised as "Net gains/losses on items at fair value". Comparative figures have been restated accordingly. Investments in private equity funds have been reclassified to be valued at fair value through profit and loss according to IAS 28 rules regarding venture capital investors. Profits and losses from these investments have been reclassified from "Other operating income" to "Net gains/losses on items at fair value". Comparative figures have been restated accordingly. The table below shows the impact on the income statement in the first half of 2008 and on the comparative figures. The impact on the balance sheet figures is insignificant. Jan-Jun 2008 Jan-Jun 2007 Full year 2007 Pre policy EURm Reported change Restated Reported Restated Reported Net interest income[1] 855 855 744 797 1,531 1,531 Net gains/losses on items at fair value 379 364 249 185 586 541 Dividends - 5 - 1 - 24 Other operating income 13 23 28 38 169 190 [1] For further information on the restatement of "Net interest income", see Annual Report 2007 note 1 "Accounting policies". Note 2 Net gains/losses on items at fair value Jan-Jun Jan-Jun Jan-Dec EURm 2008 2007 2007 Shares/participations and other share-related instruments 53 26 89 Interest-bearing securities and other interest-related instruments 168 107 287 Other financial instruments 45 19 3 Foreign exchange gains/losses 113 97 207 Total 379 249 586 Note 3 Loan losses Jan-Jun Jan-Jun Jan-Dec EURm 2008 2007 2007 Loan losses divided by class, net Loans and receivables to credit institutions -1 0 -1 - of which write-offs and provisions -1 0 -1 - of which reversals and recoveries - - 0 Loans and receivables to the public -17 26 -5 - of which write-offs and provisions -55 -50 -123 - of which reversals and recoveries 38 76 118 Off-balance sheet items[1] -8 -10 26 - of which write-offs and provisions -8 -11 -4 - of which reversals and recoveries 0 1 30 Total -26 16 20 Specification of loan losses Changes of allowance accounts in the balance sheet -33 6 -3 - of which Loans and receivables -25 16 -29 - of which Off-balance sheet items[1] -8 -10 26 Changes directly recognised in the income statement 7 10 23 - of which realised loan losses -3 -1 -3 - of which realised recoveries 10 11 26 Total -26 16 20 [1] Included in Provisions in the balance sheet. Note 4 Loans and receivables and their impairment Total 30 Jun 31 Dec 30 Jun EURm 2008 2007 2007 Loans and receivables, not impaired 122,485 105,856 97,458 Impaired loans and receivables: 755 616 606 - Performing 481 405 401 - Non-performing 274 211 205 Loans and receivables before allowances 123,240 106,472 98,064 Allowances for individually assessed impaired loans -186 -186 -200 - Performing -112 -101 -116 - Non-performing -74 -85 -84 Allowances for collectively assessed impaired loans -159 -140 -95 Allowances -345 -326 -295 Loans and receivables, carrying amount 122,895 106,146 97,769 Credit institutions The public 30 Jun 31 Dec 30 Jun 30 Jun 31 Dec 30 Jun EURm 2008 2007 2007 2008 2007 2007 Loans and receivables, not impaired 56,398 45,551 41,366 66,087 60,305 56,092 Impaired loans and receivables: - - - 755 616 606 - Performing - - - 481 405 401 - Non-performing - - - 274 211 205 Loans and receivables before allowances 56,398 45,551 41,366 66,842 60,921 56,698 Allowances for individually assessed impaired loans - - - -186 -186 -200 - Performing - - - -112 -101 -116 - Non-performing - - - -74 -85 -84 Allowances for collectively assessed impaired loans -3 -2 -1 -156 -138 -94 Allowances -3 -2 -1 -342 -324 -294 Loans and receivables, carrying amount 56,395 45,549 41,365 66,500 60,597 56,404 Note 4, continued Reconciliation of allowance accounts for impaired loans Credit institutions The public Total Indi- Indi- Collec- vidually Collec- Indi- Collec- Loans and vidually tively assessed tively vidually tively receivables, EURm assessed assessed assessed assessed assessed Total Opening balance at 1 Jan 2008 - -2 -186 -138 -186 -140 -326 Provisions - -1 -36 -16 -36 -17 -53 Reversals - 0 24 4 24 4 28 Changes through the income statement - -1 -12 -12 -12 -13 -25 Allowances used to cover write-offs - - 9 - 9 0 9 Currency translation differences and reclassifications - - 3 -6 3 -6 -3 Closing balance at 30 Jun 2008 - -3 -186 -156 -186 -159 -345 Opening balance at 1 Jan 2007 - - -263 -122 -263 -122 -385 Provisions - 0 -12 -37 -12 -37 -49 Reversals - - 48 18 48 18 66 Changes through the income statement - 0 36 -19 36 -19 17 Allowances used to cover write-offs - - 10 0 10 0 10 Currency translation differences and reclassifications[1] - -1 17 47 17 46 63 Closing balance at 30 Jun 2007 - -1 -200 -94 -200 -95 -295 [1] Mainly reclassification to off-balance items Allowances and provisions 30 Jun 31 Dec 30 Jun EURm 2008 2007 2007 Allowances for items in the balance sheet -345 -326 -295 Provisions for off balance sheet items -41 -33 -73 Total allowances and provisions -386 -359 -368 Key ratios 30 Jun 31 Dec 30 Jun 2008 2007 2007 Impairment rate, gross[2], % 0.6 0.6 0.6 Impairment rate, net[3], % 0.5 0.4 0.4 Total allowance rate[4], % 0.3 0.3 0.3 Allowance rate, impaired loans[5], % 24.6 30.2 33.0 Non-performing loans and receivables, not impaired[6], EURm 25 6 5 [2] Individually assessed impaired loans and receivables before allowances divided by total loans and receivables before allowances, % [3] Individually assessed impaired loans and receivables after allowances divided by total loans and receivables before allowances, % [4] Total allowances divided by total loans and receivables before allowances, % [5] Allowances for individually assessed impaired loans and receivables divided by individually assessed impaired loans and receivables before allowances, % [6] Past due loans and receivables, not impaired due to future cash flows (included in Loans and receivables, not impaired). Note 5 Classification of financial instruments Deri- vati- ves Loans Held Assets used Avai- and to Held at for lable receiv- matu- for fair hedg- for EURm ables rity trading value ing sale Total Financial assets Cash and balances with central banks 1,712 - - - - - 1,712 Treasury bills and other eligible bills - - 1,995 - - - 1,995 Loans and receivables to credit institutions 49,888 - 558 5,949 - - 56,395 Loans and receivables to the public 66,500 - - - - - 66,500 Interest-bearing securities - - 530 1,757 - 5 2,292 Financial instruments pledged as collateral - - - - - - - Shares - - 958 24 - 0 982 Derivatives - - 43,538 - 148 - 43,686 Fair value changes of the hedged items in portfolio hedge of interest rate risk -106 - - - - - -106 Other assets 1,201 - - 861 - - 2,062 Prepaid expenses and accrued income 489 - - - - - 489 Total 30 Jun 2008 119,684 - 47,579 8,591 148 5 176,007 Total 31 Dec 2007 103,733 - 35,011 7,605 171 6 146,526 Total 30 Jun 2007 100,275 - 35,015 754 218 5 136,267 Deriva- Liabi- tives Other lities used finan- Held at for cial for fair hedg- liabi- EURm trading value ing lities Total Financial liabilities Deposits by credit institutions 177 - - 38,255 38,432 Deposits and borrowings from the public - - - 43,085 43,085 Debt securities in issue 5,234 - - 27,734 32,968 Derivatives 43,764 - 370 - 44,134 Fair value changes of the hedged items in portfolio hedge of interest rate risk - - - -57 -57 Other liabilities 7 - - 4,924 4,931 Accrued expenses and prepaid income - - - 705 705 Subordinated liabilities - - - 1,204 1,204 Total 30 Jun 2008 49,182 - 370 115,850 165,402 Total 31 Dec 2007 36,925 1,910 398 96,726 135,959 Total 30 Jun 2007 35,620 - 244 90,597 126,461 Note 6 Derivatives Fair value 30 Jun 2008 31 Dec 2007 30 Jun 2007 EURm Assets Liabilities Assets Liabilities Assets Liabilities Derivatives held for trading Interest rate derivatives 29,367 30,088 19,325 19,792 22,370 22,848 Equity derivatives 1,158 1,533 1,386 1,909 1,551 1,906 Foreign exchange derivatives 8,318 7,564 7,382 7,445 4,699 4,305 Credit derivatives 2,208 2,140 1,163 1,177 664 634 Other derivatives 2,487 2,439 1,304 1,291 938 932 Total 43,538 43,764 30,560 31,614 30,222 30,625 Derivatives used for hedging Interest rate derivatives 147 46 171 84 152 112 Equity derivatives - - - - - - Foreign exchange derivatives 1 324 0 314 66 132 Total 148 370 171 398 218 244 Total fair value Interest rate derivatives 29,514 30,134 19,496 19,876 22,522 22,960 Equity derivatives 1,158 1,533 1,386 1,909 1,551 1,906 Foreign exchange derivatives 8,319 7,888 7,382 7,759 4,765 4,437 Credit derivatives 2,208 2,140 1,163 1,177 664 634 Other derivatives 2,487 2,439 1,304 1,291 938 932 Total 43,686 44,134 30,731 32,012 30,440 30,869 Nominal amount 30 Jun 31 Dec 30 Jun EURm 2008 2007 2007 Derivatives held for trading Interest rate derivatives 2,569,170 2,183,814 2,005,625 Equity derivatives 23,196 21,962 24,873 Foreign exchange derivatives 723,008 676,382 555,220 Credit derivatives 100,974 94,624 85,695 Other derivatives 11,745 10,472 10,563 Total 3,428,093 2,987,254 2,681,976 Derivatives used for hedging Interest rate derivatives 18,299 26,139 27,756 Equity derivatives - - - Foreign exchange derivatives 3,391 3,585 4,710 Total 21,690 29,724 32,466 Total nominal amount Interest rate derivatives 2,587,469 2,209,953 2,033,381 Equity derivatives 23,196 21,962 24,873 Foreign exchange derivatives 726,399 679,967 559,930 Credit derivatives 100,974 94,624 85,695 Other derivatives 11,745 10,472 10,563 Total 3,449,783 3,016,978 2,714,442 Note 7 Equity Attributable to shareholders of Nordea Bank Finland Plc Share Share premium Other Retained Minority Total EURm capital[1] account reserves earnings Total interests equity Opening balance at 1 Jan 2008 2,319 599 2,929 4,939 10,786 7 10,793 Net change in available-for-sale investments, net of tax - - -1 - -1 - -1 Currency translation differences - - - 0 0 - 0 Net income recognised directly in equity - - -1 0 -1 - -1 Net profit for the period - - - 688 688 1 689 Total recognised income and expense in equity - - -1 688 687 1 688 Share-based payments - - - 0 0 - 0 Dividend for 2007 - - - -850 -850 - -850 Other changes - - - 0 0 -2 -2 Closing balance at 30 Jun 2008 2,319 599 2,928 4,777 10,623 6 10,629 Attributable to shareholders of Nordea Bank Finland Plc Share Share premium Other Retained Minority Total EURm capital[1] account reserves earnings Total interests equity Opening balance at 1 Jan 2007 2,319 599 2,899 7,656 13,473 6 13,479 Net change in available-for-sale investments, net of tax - - 1 - 1 - 1 Group contribution - - - -54 -54 - -54 Currency translation differences - - 0 2 2 - 2 Net income recognised directly in equity - - 1 -52 -51 - -51 Net profit for the year - - - 1,363 1,363 2 1,365 Total recognised income and expense in equity - - 1 1,311 1,312 2 1,314 Share-based payments - - - 1 1 - 1 Dividend for 2006 - - - -4,000 -4,000 - -4,000 Other changes - - 29 -29 0 -1 -1 Closing balance at 31 Dec 2007 2,319 599 2,929 4,939 10,786 7 10,793 Attributable to shareholders of Nordea Bank Finland Plc Share Share premium Other Retained Minority Total EURm capital[1] account reserves earnings Total interests equity Opening balance at 1 Jan 2007 2,319 599 2,899 7,656 13,473 6 13,479 Currency translation differences - - - 2 2 - 2 Net income recognised directly in equity - - - 2 2 - 2 Net profit for the period - - - 551 551 1 552 Total recognised income and expense in equity - - - 553 553 1 554 Share-based payment - - - 0 0 - 0 Dividend for 2006 - - - -4,000 -4,000 - -4,000 Other changes - - - - - -1 -1 Closing balance at 30 Jun 2007 2,319 599 2,899 4,209 10,026 6 10,032 [1] Total number of shares registered was 1,030.8 million (31 Dec 2007: 1,030.8 million, 30 Jun 2007: 1,030.8 million). Note 8 Capital adequacy Capital Base 30 June 31 Dec 30 Jun EURm 20081 2007 2007[1] Tier 1 capital 9 833 9 725 9 107 Total capital base 10 908 10 875 10 311 [1] Excluding profit. Figures as of 30 June 2007 are revised. 30 31 30 Jun Jun 31 Dec Dec 30 Jun 30 Jun 2008 2008 2007 2007 2007[2] 2007[2] Capital Capital Capital EURm requirement RWA requirement RWA requirement RWA 67 61 Credit risk 5 387 340 4 923 539 4 836 60 446 25 22 IRB foundation 2 015 192 1 838 971 1 938 24 228 - of which 19 18 corporate 1 556 448 1 468 341 1 515 18 935 - of which 4 institutions 444 5 548 352 403 392 4 897 - of which other 15 196 18 227 31 396 42 38 Standardised 3 372 148 3 085 568 2 897 36 218 - of which 15 14 retail 1 253 657 1 187 838 1 224 15 301 - of which sovereign 2 19 6 77 5 66 - of which 26 23 other 2 117 472 1 892 653 1 668 20 851 1 Market risk 161 2 007 95 189 85 1 063 - of which trading book, VaR 111 1 379 78 982 60 750 - of which trading book, non-VaR 50 628 17 207 25 313 - of which FX, non-VaR 0 0 0 0 0 0 Operational 3 risk 318 3 975 272 403 272 3 403 3 Standardised 318 3 975 272 403 272 3 403 73 66 Sub total 5 866 322 5 290 131 5 193 64 912 Adjustment for transition rules Additional capital requirement according to transition 4 rules 274 3 427 394 913 103 1 288 76 71 Total 6 140 749 5 684 044 5 296 66 200 30 Capital ratio Jun 31 Dec 30 Jun 2008 2007 2007[2] Tier I ratio, %, incl. profit 13,7 13,7 14,5 Capital ratio, %, incl. profit 15,1 15,3 16,4 Tier I ratio, %, excl. profit 12,8 11,8 13,8 Capital ratio, %, excl. profit 14,2 13,4 15,6 [2] Figures as of 30 June 2007 are revised. Analysis of capital requirements Average Capital risk-weight, requirement, Exposure class % EURm Corporate 55 1 556 Institutions 24 444 Retail 51 1 253 Sovereign 0 2 Other 37 2 132 Total credit risk 5 387
Nordea Bank Finland Plc: Interim Report January-June 2008
| Source: Nordea Pankki Suomi Oyj