Associated Company Nordea Bank Ab
On 31 December 2010 Sampo plc held 830,440,497 Nordea shares corresponding to a holding of 20.5 per cent. The average price paid per share amounted to EUR 6.39 and the book value in the Group accounts was EUR 6.85 per share. The closing price as at 31 December 2010 was EUR 8.16.
As Sampo's holding exceeds 20 per cent, Nordea is accounted as an associated company in Sampo Group's accounts since 31 December 2009. Sampo's share of Nordea's net profit is shown on the face of Sampo Group's profit and loss account on the line Share of associate´s profit/loss.
The following text is based on Nordea's full-year 2010 result release published on 2 February 2011.
2010 showed record-high total income, up 3 per cent compared to last year. Operating profit increased 18 per cent, due to higher income and lower net loan losses. Risk-adjusted profit decreased by 6 per cent compared to the same period last year.
Net interest income decreased 2 per cent compared to last year as a result of lower deposit income and higher funding costs. The combined negative effect is more than EUR 400 million. This income drop was successfully compensated through strong growth in both lending and deposits as well as higher lending margins. Lending increased 11 per cent and deposit volumes 15 per cent. Corporate lending margins were higher, while deposit margins were largely unchanged compared to last year.
Net fee and commission income has recovered strongly and increased 27 per cent. Asset management commission income is up 42 per cent driven by assets under management, which are up 21 per cent in the last 12 months and a more attractive product mix.
Net result from items at fair value decreased by 6 per cent compared to very high levels last year. The customer driven capital markets operations continued to be strong with increasing volumes. The income drop in Group Treasury and Capital Markets unallocated income was approximately EUR 450 million and almost compensated by higher income in the customer areas. Premium income in Life &Pensions was at an all-time-high. Income under equity method was EUR 66 million and other income was EUR 116 million.
Total expenses increased 7 per cent compared to last year. Staff costs increased 2 per cent. In local currencies, total expenses increased 2 per cent and staff costs decreased 2 per cent. Excluding the adjustment of pension plans in Norway, total expenses increased 3 per cent and staff costs were down 1 per cent in local currencies.
Net loan losses decreased 41 per cent to EUR 879 million, compared to last year, corresponding to a loan loss ratio of 31 basis points (56 basis points). Net profit increased 15 per cent to EUR 2,663 million, due to lower net loan losses.
Risk-adjusted profit decreased 6 per cent compared to last year to EUR 2,622 million, mainly due to the exceptionally strong results in Treasury and Markets in 2009.
Activities related to the Group initiatives launched in early 2010 are on track in all areas. In 2010, the initiatives have generated more than EUR 300 million in additional income, i.e. above the target for the year. The efficiency gains amounted to approximately EUR 70 million, in line with earlier expectations. During the fourth quarter, total investments amounted to EUR 77 million, of which EUR 22 million were accounted for as expenses in the income statement. In the full year 2010, total investments amounted to approximately EUR 200 million, of which EUR 74 million were accounted for as expenses in the income statement. The investments are expected to be somewhat higher in 2011.
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