Review of the leasing market and prospects for development

Where next for leasing industry in Europe

Jukka SalonenCEO Nordea Finance16/05/2013

• Agenda

• Dawn of end or end of dawn?

• Who are we?

• Innovation or reinvention?

• 16/05/2013

2 •

Leasing is underperforming …

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012P-35%

-25%

-15%

-5%

5%

15%

25%

-5%

0%

5%

10%

15%

20%

25%(23,0 %) Leaseurope

penetration (right)

(18,5 %)

GDP Growth (Euroarea) Corporate LendingEquipment Leasing New Business Leaseurope penetration

% Y

oY

Down Drivers• Financial crisis• Recession• Regulation• Banking groups’

strategies• Unclear position

Source: Leaseurope, Nordea Markets

• 16/05/2013

3 •

… potential is out there

• 16/05/2013

4 •

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012P-35%

-25%

-15%

-5%

5%

15%

25%

-5%

0%

5%

10%

15%

20%

25%(23,0 %) Leaseurope

penetration (right)

(18,5 %)

GDP Growth (Euroarea) Corporate LendingEquipment Leasing New Business Leaseurope penetration

% Y

oY

54bn€

Up Drivers to sell 280bn€ not 226bn€• Need for economic growth• Low RWAs – low risk• Innovation

Source: Leaseurope, Nordea Markets

• 16/05/2013

5 •

Dawn of the end ? Or end of the dawn?

• Agenda

• Dawn of end or end of dawn?

• Who are we?

• Innovation or reinvention?

• 16/05/2013

6 •

Who are we?

• 16/05/2013

7 •

Finance

Service

Product

Industry

Service integrator

Integrated branded offering

Based on service

Basic

Business models for different type of players

• 16/05/2013

8 •

Outstanding profitability

Value for manufacturers sales

Specialisation

Cost efficiencyBank product unit

Bank owned multi asset specialist

Global captive

Independent niche player

Business model Key requirement Service elements

Leasing – a product providing finance

• 16/05/2013

9 •

SuppliersCapital and funding sourcesIT & consulting

Ba

rga

inin

g p

ow

er

of

bu

yers

Threat of substitute solutions

Ba

rga

inin

g p

ow

er

of

sup

plie

rs

Threat of new entrants

Potential entrantsGlobal actors expanding their scope

Industry competitorsBank product unitsCaptives, Independent

SubsituesBanking loanCash

Buyers- Lessees- Manufacturers ,Vendors and Brokers

Change the angle

• 16/05/2013

10 •

From Finance

Delivery of Asset Use of Asset

to Services

Leasing – an Industry providing Services

• 16/05/2013

11 •

SuppliersCapital and funding sourcesIT & consulting

Ba

rga

inin

g p

ow

er

of

bu

yers

Threat of substitute solutions

Ba

rga

inin

g p

ow

er

of

sup

plie

rs

Threat of new entrants

Potential entrantsGlobal actors expanding their scope

New players – e.g. Google, Amazon, Apple, Telecom

Industry competitorsBank product unitsCaptives, Independent

Multi asset specialist Service providers

SubsituesBanking loanCash

Peer-to-peer borrowingService packagesUser pools

Buyers- Lessees- Manufacturers ,Vendors and Brokers

- Asset users- Service users

- Asset and service suppliers

- Manufacturers and vendors

Finance Product vs. Service Industry

• 16/05/2013

12 •

Value proposition: Alternative finance product, usage of collateral

Distribution: Own network

Customer relationship: Core clients

Source of innovation : Cost & productivity

Trend: Banks consolidating their leasing companies to be product units, cutting down funding

High Relative cost LowR

ela

tive

bu

yer

be

ne

fitL

ow

H

igh

Value proposition: Ease of deliver and use

Distribution: Digital and global with specialised sales forces

Customer relationship: Integrated value chain

Source of innovation : Need and value based

Trend: Large customer databases used for offering finance. Service demand, e.g. Mobility, Communication

High Relative cost Low

Re

lativ

e b

uye

r b

en

efit

Lo

w

Hig

h

• Agenda

• Dawn of end or end of dawn?

• Who are we?

• Innovation or reinvention?

• 16/05/2013

13 •

Innovation – Finance Product

14 •

Profitability

Value creation

Access to

sustainable

position

• 16/05/2013

Income• Revenue models

Cost• Operating models

Risk• Portfolio management

Products• IT-systems

Concepts• Operating models

Human Resources• Talent management

Reinvention – Service Industry

15 •

Needs SolutionProfitabl

e Growth

• 16/05/2013

Delivery of asset• Value chains

Use of asset• Mobility• Communication• Daily life

Environment• Recycling

Logistics• Networks

Digitalisation• ICT

Image• Branding

Investors• Value

• 10/04/2013

16 •

The Future is out there…

Review of the leasing market and prospects for development

Where next for leasing industry in Europe

Jukka SalonenCEO Nordea Finance16/05/2013