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
Attachments
