bank of america merill lynch banking & insurance ceo
TRANSCRIPT
Bank of America Merill Lynch Banking & Insurance CEO Conference 2010London, 30 September 2010
CEO Rune Bjerke
Strong post-crisis position
Source: Factset 31 Aug 2010
EUR mill
EUR mill EUR mill
EUR mill EUR mill
EUR mill
Europe Global
DnB NOR DnB NOR0
20000
40000
60000
80000
100000
120000
140000
160000
180000
200000
Nordic countries
Europe Global
Post-crisis market capitalisation 27 Sep 2010
Pre-crisis market capitalisation 27 Sep 2007
Nordic countries
0
20.000
40.000
60.000
80.000
100.000
120.000
140.000
160.000
180.000
200.000
74
DnB NORDnB NOR
2
0
5.000
10.000
15.000
20.000
25.000
30.000
35.000
0
20.000
40.000
60.000
80.000
100.000
120.000
140.000
160.000
DnB NOR
21
4
DnB NOR0
20.000
40.000
60.000
80.000
100.000
120.000
140.000
160.000
30 91
0
5.000
10.000
15.000
20.000
25.000
30.000
35.000
Strong performance throughout the crisis
Write-downs estimated and actual (NOK billion)
* Capital Markets Day March 2009** Q2 presentation July 2010
Development in pre-tax operation profits before write-down (NOK billion)
0
1
2
3
4
5
6
7
8
9
10
Estimated 2009*
Actual 2009 Estimated 2010**
1st half-year 2010
8-10
7.7
4-5
1.8
15.115.6
18.7
10.2
0
2
4
6
8
10
12
14
16
18
20
3007 2008 2009 1st half-year 2010
6,77,3
9,3 9,39,39,6
11,7 11,9
0
2
4
6
8
10
12
31 Dec 2008 30 June 2009*
31 Dec 2009 30 June 2010*
Tier 1 capital ratio Full IRB
Strong performance throughout the crisis
Tier 1 capital ratio (%)¹
1) Including 50 per cent of profit for the period
463
954
1249
1405 1400
1700
2000
0
200
400
600
800
1000
1200
1400
1600
1800
2000
4Q08 1Q09 1Q10 2Q10 4Q10 4Q11 4Q12
Annualised cost savings (NOK million)
463
954
1249
1405 1400
1700
2000
0
200
400
600
800
1000
1200
1400
1600
1800
2000
4Q08 1Q09 1Q10 2Q10 4Q10 4Q11 4Q12
Targeted annualised cost savings
Annualised realised cost savings
Basel III: DnB NOR is among the least affected banks in Europe
Leverage ratio
- Strong capitalisation and business model
Deposit guarantee scheme
- Already above EUR 100 000 and well funded
Net stable funding ratio
- Small shortfall after the July 2010 amendments; important adjustment of requirement for mortgages
Liquidity coverage ratio
- Compliant as of today
New capital requirements (Basel III)
- Including conservation buffer and countercylical buffer (0-2,5%)
Ambitions 2012 Long-term ambitions
Persistent financial ambitions
Be among the best capitalised banks in the Nordics
NOK 2 billion in cost reductions
NOK 22-25 billion in pre-tax operating profits before write-downs
Cost/income ratio below 46 per cent
Return on equity above 13 per cent
Approx 50 per cent dividend
Long-term AA rating
Private individuals
47 %
SME16 %
Large corporates
37 %
Where to grow?
Share of group income, 30 June 2010
Share of group income, 30 June 2010
Norwegian units
84 %
DnB NORD5 %
International units 11%
Share of net lending, per segment - 30 June 2010
International growth ambitions, but Norway will still be dominant
Share of group income, 30 June 2010
Share of group income, 30 June 2010
Norwegian units
84 %
DnB NORD5 %
International units 11%
Share of net lending, per segment - 30 June 2010
Private individuals
47 %
SME16 %
Large corporates
37 %
How to balance the growth?
A balanced portfolio - also in the future
Opportunities in Norway
Two drivers:
1. Strong macro-economic development
2. DnB NOR's capacity and potential in the Norwegian market
Norwegian public finances are sound
-113-105
-70 -67 -62 -58
-33
17
140
-120
-70
-20
30
80
130
Net public assets in per cent of GDP, 2009
Sources: IMF and OECD Outlook, May 2010
Budget deficit (per cent), 2009
-5,2
-7,2
-3,3
-7,6
-11,3 -11 -11,2
-1,1
9,7
-15
-10
-5
0
5
10
15
Norwegian GDP growth expected to be about 3 per cent over the next three years
GDP % change y/y
Source: Statistics Norway Sept 2010
1.8
-1.4
1.5
2.9 2.8
3.3
0.4
-4.1
1.51.1 1.2
1.7
-5
-4
-3
-2
-1
0
1
2
3
4
2008 2009 2010 2011 2012 1013
Mainland Norway Euro-zone
Strong distribution power - available through traditional and untraditional channels
• 218 bank branches
• 50 corporate advisory centres
• 37 investment advisory centres
• 13 regional investment banking centres
• 122 real estate broking locations
• Internet banking
• Telephone banking
• 975 in-store banking outlets
• 208 post offices
• 1 233 in-store postal outlets
• Mobile banking
• Applications for smart-phones
High number and reach:
Unique elements:
0
100.000
200.000
300.000
400.000
500.000
600.000
700.000
Jan
09
Mar
09
May
09
July
09
Sep
09
Nov
09
Jan
10
Mar
10
May
10
July
10
Uniqe customers using SMS-services
675.000
Advanced technological capabilities:New DnB NOR applications on the top-five list in Norway
Bank application
Real estate application
Pension blog
Consumer blog
Chat
Business development
Utilize DnB NOR's capacity and potential in the Norwegian market
1. Unique customer base
2. Strong distribution power
3. Deep and broad product range
4. Advanced technological capabilities
International opportunities
Two drivers:
1. Norwegian traditional industries
2. Positive macro-economic development in the Baltic countries
We are based in a country with a few major export industries
Norwegian exports by sector 1970 - 2009
0 %
10 %
20 %
30 %
40 %
50 %
60 %
70 %
80 %
90 %
100 %
1970
1973
1976
1979
1982
1985
1988
1991
1994
1997
2000
2003
2006
2009
Oil/gas Pulp/paper
Machinery Chemicals
Food/seafood Tourism
Metals Shipping
DnB NOR’s global industry strategy:
• Energy
• Shipping
• Seafood
Strongest growth potential within energy
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
1980 2000 2007 2015 2030
Coal Oil Gas Nuclear Renewables
Forecast of world energy demand
Energy
4 %
Private individuals
42%
Corporate54%
DnB NORD4%
Exposure at default 30 June 2010, NOK billion
MTOE
Shipping 8%
Continuous support of our customers have paid off
Source: Thomson Reuters Loan Pricing Corporation
Investment grade US Oil and Gas Bookrunner (Syndicated Loans)
1H 2010
Rank Bank
Total Volume
(USD Million)
1 Wells Fargo 6.025
2Bank ofAmerica 5.850
3 JP Morgan 5.815
4 Citi 5.650
5 BNP Paribas 2.510
6 Barclays 2.510
7 DnB NOR 2.350
8 PNC Bank 1.450
9 BBVA 700
10 Deutsche Bank 650
2009
Rank Bank
Total Volume
(USD Million)
1 DnB NOR 3.937
2 JP Morgan 3.715
3 Bank of America 3.695
4 Wells Fargo 3.556
5 BNP Paribas 1.960
6 Calyon 1.650
7 Citi 1.500
8 Barclays 1.300
9Royal Bank of Scotland 1.200
10Toronto Dominion 1.000
EMEA Oil & Gas Mandate Lead Arranger
1H 2010
Rank Bank
Pro Rata (USD
Million)
1 Credit Agricole 2.546
2 BNP Paribas 2.162
3SocieteGenerale 1.708
4 DnB NOR 1.619
5 Natixis 1.395
6 RBS 1-332
7 Citi 1.213
8 ING 1.209
9 HVB 1.016
10 SMFG 930
2009
Rank Bank
Pro Rata (USD
Million)
1 BNP Paribas 23.648
2 Calyon 2.238
3Societegenerale 2.113
4 BTMU 2.007
5 ING 1.685
6 DnB NOR 1.468
7 SMBC 1.346
8 Unicredit Group 1.108
9 RBS 998
10 Dautsche Bank 938
0
2000
4000
6000
8000
10000
12000
Total seaborne trade
Crude oil Refined products and chemicals LPG/LNG Dry bulk Container General cargo
Total seaborne trade declined in 2009, but rebounded in 2010 and is expected to grow further
Mill ton
Sources: MSI, Lorentzen & Stemoco
DnB NOR has remained an active shipping bank
Category Company Winner Comment
Public debt Europe Bonheur ASA DnB NOR Alone
Public debt US General Maritime DnB NOR Shared
Export Credit Seadrill DnB NOR Shared
Editor’s Choice Diana and NATS DnB NOR Shared
Pos Bookrunner Deal Value ($) (m) No
1 Mitsubishi UFJ Financail Group 4,020 14
2 DnB NOR 2,327 14
3 ING 1,614 6
4 Sumitomo Mitsui Banking Corp 1,605 17
5 Nordea 990 5
6 Wells Fargo Securities 823 3
7 Mizuhe 813 12
8 SBI Capital markets 572 1
9 Bank of America Merrill Lynch 548 2
10 BNP Paribas 546 8
Top 10 bookrunner Table – Syndicated Shippingloans Full year 2009
Marine Money 2009 Awards
We believe in long-term retail growth in the Baltics
• The joint venture DnB NORD will be dissolved
• NORD/LB has not excercised its option to take over the operation in Poland
• All conclusions regarding values will be made no later than end-January 2011
-20
-15
-10
-5
0
5
10
15
1998 2000 2002 2004 2006 2008 2010 2012
Latvia Estonia Lithuania
GDP per cent (y/y)
Sources: DnB NOR Markets and Datastream
Per cent
Positive volume outlook
Net lending (NOK billion)
0
200
400
600
800
1000
1200
1400
30
June
2008
30
Sept.
2008
31
Dec.
2008
31
March
2009
30
June
2009
30
Sept.
2009
31
Dec.
2009
31
March
2010
30
June
2010
Net lending to customers Exchange rate adjusted
Private individuals Corporate lending
NOK billion
• 3-5 per cent volume growth in 2010
• 5-7 per cent volume growth from 2011
Solid outlook for combined spreads
0.81
0.97
1.34
1.58 1.60 1.63 1.61 1.58 1.60
1.301.16
0.68 0.33 0.30 0.290.23 0.29 0.32
0.98 1.041.12
1.16 1.16 1.16 1.13 1.12 1.15
6.40 6.60
5.91
3.45
2.46
1.89 2.052.27
2.52
2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10
Per cent
2)
Lending spread
Deposit spread
Combined spread- weighted average
3-month NIBOR
1) Excluding lending to and deposits from credit institutions and impaired loans
Development in average interest rate spreads 1)
Long-term fundamentals are positive
• Positive development so far this year: Credit growth and stable margins
• High credit quality; write-downs markedly reduced
• Continued cost focus
• Strong funding position