Our priorities for 2019 are very clear
– It is now all about execution

Dear Shareholder,
Last year was a historical year for Nordea when we finalized our re-domi- ciliation into the Banking Union and Finland. This move is part of Nordea´s overall strategic direction, enabling us to operate in an environment that offers stability, predictability and a leveled playing field.

I am happy to say that Nordea is now repositioned to be a truly Nordic focused bank in the heart of the banking union, with a very clear and simple structure, a record strong balance sheet and a much more improved risk and compliance platform, enabling us to be an even bet- ter bank for our customers, while at the same time structurally bring down costs and increase efficiency.

Since 2016 Nordea has conducted a significant transformation of the bank, in line with the strategic priorities com- municated during the second half of 2015. The transformation consists of four key elements.

The first key element – the risk and compliance setup – has gone through a radical transformation in recent years. During the last three years we have invested more than EUR 730m within risk and compliance and resilience and recruited approximately 1,300 compli- ance professionals. These investments have significantly strengthened the risk and compliance platform and provide vital support to our financial crime pre- vention efforts with more rigorous stan- dards, KYC quality assurance processes and sanctions screening capability, mak- ing Nordea a safer and more trusted bank.

The second key element of the trans- formation – simplification – has been conducted through a large range of actions during the last five years. In 2013 we divested our Polish operations, followed by a reduction of our Russian exposure and non-Nordic Shipping, Oil and Offshore lending during 2013–2017. Last year, we performed several trans- actions that continued to reduce risks and increase our operational focus on the Nordics. The divestment of parts of our Luxembourg-based private banking business was completed in October and in September, we announced the divest- ment of our Baltic operations with the sale of Luminor. The acquisition of Gjen- sidige Bank including a partnership with Gjensidige Forsikring was made public in July and is expected to be closed in the first quarter of 2019. Final- ly, as of 1 October 2018, Nordea is domi- ciled in Finland creating a streamlined legal structure with a Finnish parent company, with fully owned product companies and significant branches in the other Nordic countries.

Another part of the simplification proj- ect is a significant investment in building modern platforms that will enable end- to-end digital solutions for customers and future development. This involves the replacement of our legacy banking systems, where over 400 systems are being converged into a new core banking platform, a payment platform, a custom- er and counterparty master solution and a common data warehouse. We have made significant progress towards our ambitions. Since early 2018, household customers in Finland have been able to open new savings accounts and fixed term deposits on the new Core Banking Platform. In spring, close to 750,000 Finnish customers savings accounts were successfully moved onto the plat- form. In autumn, a stepwise implemen- tation of loans commenced. Today, applying for a loan via Nordea Mobile involves just a few easy steps, with instant access to funds for eligible cus- tomers in Finland. Furthermore, all Sin- gle Euro Payments area (SEPA) pay- ments are now running on the new Pay- ment Platform and Nordea has a completely new Group Common Data Platform.

Our digital strategy – the third key element – has resulted in a significant number of new digital offerings to our customers. In 2016–2018 Nordea has invested above EUR 200m in digital solutions. Our customers are expecting smart tools and easy digital ways of handling their everyday banking. One of our latest solutions is a digital savings robot that we have called Nora which has been introduced in all Nordic coun- tries in 2018 and has conducted more than 115,000 advisory meetings. To ful- fill our customer vision, we are seeking new partners and collaborations. Last year we launched the blockchain-based platform we.trade in collaboration with eight European banks, that will allow companies to trade in a fast, easy and transparent way. Furthermore, we expanded our digital payment offering by adding Google Pay, a mobile pay- ment solution for Android phones.

Cost and capital efficiency is the fourth key element in our strategy. Our transformation and heavy investments in digital development and compliance has undoubtedly led to cost increases in 2016–2017, however Nordea has now a foundation for a long-term improve- ment in cost efficiency. We are well on track to reach our 2021 target to reduce costs by 3 percent compared to 2018 (excluding EUR 141m in goodwill impairment in 2018 related to Russia). There is also potential to reduce costs beyond 2021 when the new Core Bank- ing Platform is implemented, and we can start decommissioning the legacy systems.

With the transformation of the bank we are finding new ways of working. We are creating a flatter organisation, which will result in increased empower- ment for employees. This will also ensure a quicker decision making and more agile ways of working.

2018 was a year characterized by challenges in terms of revenues; driven by margin pressure in household lend- ing, muted volume growth and pressure on savings and market making reve- nues. On the other hand, I am pleased to see that we were delivering on our cost efficiency plans, our credit quality remains strong and the balance sheet is robust. Thus, we are prepared to man- age the bank successfully through the cycle. We delivered the following results for full-year 2018 (excluding items affecting comparability): Income, EUR 8,435m, Costs, EUR 4,738m, Loan loss ratio, 7 bps, Return on equity, 8,5%.

Personal Banking
During 2018, we have launched an array of new services and solutions for our customers, in addition to improving availability and accessibility.

As an example, we improved our dig- ital daily banking experience for our customers via the launch of the com- pletely redesigned mobile banking app in both Finland and Sweden in 2018. Via the new app the bank is available any- where at any time and personalized to the preferences of the customer.

In 2018, we also expanded our digital payment offering by adding Google Pay. Nordea is the first bank in the Nordics to offer the Google Pay contactless pay- ment app to Android device users in Denmark, Sweden, Norway and Finland.

We aim at serving our customer fast- er and more efficiently. Besides the launch of our financial roboadvisor Nora, our service robot Nova is now live in all markets, helping our customers to chat with their bank. In Norway, robot- ics is now used so that loan promises are given to customers within minutes.

Commercial & Business Banking
Last year we launched an enhanced Corporate Netbank, Nordea Business, which will be our primary channel to serve our corporate customers remotely, enabling easy access to an ecosystem of products and services for self- service. More than 50,000 customers in Sweden have been invited and we maintain the Nordic momentum in 2019.

Another example is the establish- ment of dedicated Start-up and growth units in all countries, strengthening our advisory capacity towards entrepre- neurs and start-ups with scaling oppor- tunities for global reach.

The development of Nordea’s Open Banking platform is progressing and is now live in Denmark, Sweden and Fin- land, where approximately 2,500 exter- nal developers are forming part of our digital ecosystem, creating ideas and solutions for our customers.

Wholesale Banking
A subject for rejoicing in 2018 was that Nordea Corporate & Investment Bank- ing (C&IB) was chosen as the best cor- porate bank among large Nordic corpo- rates with an all-time high customer satisfaction score in the 2018 Prospera survey. In both Finland and Denmark, Nordea was ranked as number one among peers, with all-time high cus- tomer satisfaction scores.

2018 was a very successful year for C&IB, with top ranking in the league tables for both Nordic M&A and Nordic ECM. This is the first time ever that Nordea has been positioned as the num- ber 1 M&A and ECM house across the Nordics, and a major achievement. The strong M&A performance was under- pinned by Nordea´s key roles in various deals e.g. the merger of Tele2/Com Hem and public takeover for TDC. We contin- ued to be the leading bank in Nordic ECM and successfully executed multiple IPOs, including BetterCollective in Swe- den, Elkem in Norway and the largest Finnish IPO in over a decade in Kojamo.

Asset & Wealth Management
In 2018, we continued to substantially invest in responsible investments to ensure future strength within active ownership, ESG research and integra- tion. In December, Nordea Asset Man- agement was rewarded as Best ESG investment process in Europe for the fifth year in a row by the European magazine Capital Finance International.

Furthermore, Nordea Funds was rec- ognised as the best Nordic Fund House in 2018 by Thomson Lipper, also award- ing 12 Nordea funds sold in the Nordics for their long-term performance. Life & Pensions has scaled up the use of robots across the Group, automating processes and tasks in the back office, increasing efficiency. Life & Pensions has also taken the first steps in the field of artificial intelligence (A.I.) by introduc- ing a chatbot in customer interaction.
Several promising A.I. related projects are in the pipeline for 2019 and beyond.

Sustainable Finance
As an essential initiative, Nordea aims to take a leadership position within sus- tainable finance, enabling our custom- ers to transition to a sustainable future. Nordea strongly supports this major shift by engaging actively to ensure that there is a market for these solutions, and that capital is allocated to them.

In 2018, we continued to take new ini- tiatives within sustainable finance and participating in international sustain- ability forums. Together with the United Nations and 27 other banks from around the world, we were co-founder of the Principles for Responsible Bankin launched in Paris last autumn. The prin- ciples aim to align the financial sector with the UN Sustainable Development Goals and the Paris Climate Agreement. Another international commitment was when Nordea was selected in the Euro- pean Commission’s technical expert group on sustainable finance.

Sustainability and responsible bank- ing is at the heart of what Nordea wants to be and we are integrating sustainabil- ity into our day-to-day business at an increasing pace. As an example, we were the first Nordic bank to introduce a Green corporate loan product to small and medium-sized enterprises. This is offered to customers undertaking initia- tives that have a clear environmental impact. Additionally, in September we launched a green mortgage for our per- sonal customers in Sweden – a discount- ed mortgage for all customers living in climate-smart homes. Furthermore, Nordea Life & Pensions has decided to improve the environmental profile of all its pension products and has already cut the carbon footprint of its traditionally managed equity portfolio by 70 %.

Our efforts within sustainability has been internationally acknowledged. For the second year in a row, Nordea was ranked as one of the top 100 most sus- tainable corporations in the world by the specialised media and investment research firm Corporate Knights and was the only Nordic bank to qualify among the top 100.

Going forward, our beacon will con- tinue to be: Everything we do, we do for the benefit of the customer. With a financial industry going through the largest transformation in decades, Nordea has, by listening to our custom- ers thoughts, worries and complaints, through dedicated projects, developed into a better and more accessible bank with easier services. Fortunately, our efforts are paying off. In 2018 we have made progress in Personal Banking in terms of increasing customer satisfac- tion particularly in Sweden. We also saw a continued positive trend in both Private Banking and Business Banking, and we retain our very strong position in the large corporate sector. We will con- tinue to push more and better solutions and products to our customers fulfilling their banking needs – easy and the way they want it – with the clear ambition to further improve customer satisfaction.

Our employees are key in succeeding with this ambition. I would like to express my gratitude to all Nordea employees, who during the year have worked whole- hearted to always put the customer first. I am confident that their efforts will con- tinue to bear fruit, to the benefit of both our customers and our shareholders.

For 2019, our priorities are very clear. We are now placed to intensify our cus- tomer efforts and increase business momentum while at the same time con- tinuing to drive structural cost efficiency We are now shifting into a more cus- tomer-oriented phase with more time and resources to spend on our custom- ers. I am very excited going forward into this new environment.

Best regards,



Casper von Koskull
President and Group CEO