Swedbanks fourth quarter 2010 CEO presentation

8/7/2019 Swedbanks fourth quarter 2010 CEO presentation

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Swedbanks fourth quarter 2010 results8 February 2011

Michael Wolf, CEOErkki Raasuke, CFOGran Bronner, CRO


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Favourable rofit trend

Net profit of SEK 7.4bn for 2010

Core Tier 1 ratio of 13.94 per cent

-. ,SEK 4.80 per preference share

Net profit performance

2

Q4 09 Q1 10 Q2 10 Q3 10 Q4 10


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Priorities 2010

Summing u the ear

Customer satisfaction

Lower risk level

Liquidity and capitalisation

3


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Making rogress but still more to doPriorities 2010 Customer satisfaction

New service concepts in Retail yields result

Sector focus in LC&I

Baltic Banking implementing same customer approach asRetail in the branch network

Enhanced ca ital markets offerin to meet increased demands

4


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Significantl reduced riskPriorities 2010 Lower risk level

Continued reduced CEE lending7 500

Credit impairments, SEKm

Estonia joined the EMU

1 Jan 2011

6 500

Decreased RWA

Reduced need for senior fundin4 500

2 500

3 500

1 500

-500

500

8 9 9 9 9 1 0

1 0

1 0

1 0

5

Q 4

Q 1

Q 2

Q 3

Q 4

Q 1

Q 2

Q 3

Q 4


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Pre- rovision earnings starting to im rovePriorities 2010 Earnings

Net profit increased by7 000

Net interest income, SEKm

credit impairments

6 000

,

Expenses adopted to lower 5 000

3 000

2 000

* In Q4 NII in Baltic Banking was positively affected by about0

1 000

8 9 9 9 9 0 0 0 0

6

SEK 200m attributable to the reclassification of penalty fees

and late interest, previously recognised as other income. Q 4 0

Q

1 0

Q

2 0

Q

3 0

Q

4 0

Q

1 1

Q

2 1

Q

3 1

Q

4 1


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Strengthened funding ositionPriorities 2010 Liquidity and capitalisation

Average maturity of capitalSEKbnmar e un ng ex en eto 27 months

500Covered bonds

Central bank and

guaranteed funding

Left the state guaranteeprogramme in April

400

State guaranteed funding andcentral bank repos reduced to300

200

7

Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10


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New ca italisation target and dividend olic

Core Tier 1 capital ratio of at least 13 per cent until 2013

Long-term core Tier 1 capital ratio of at least 10 per cent

-

New dividend policy from 2011 50 er cent a -out ratio

8


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Growing NIINet interest income

Increasing interest rates in SEK

Restated Baltic Banking late payment feesRetail Baltic Russia Treasur

4 702

4 023 3 980

Banking

Ukraine

Other

253 91249

13 159

-59

4 527

733

2 752

( S E K m

)

9

-

Q4 09 Q1 10 Q2 10 Q3 10 Q4 10


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Strong commission incomeNet commission income

Strong syndicated lending fees

ow ro erage ees n

Corporate finance picking up

2 361 2 2822 395 2 310

Retail LC&I BalticBanking

Russia,Ukraine

Asset mgmt,Other

11394 -3 1 23 428

2 538

383

20

1 132

( S E K m

)

10

Q4 09 Q1 10 Q2 10 Q3 10 Q4 10(Excluding non-recurring items)


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Lower gains with higher ualitNet gains/losses on financial items, fair value

Strong end of the year from LC&I

ance a on o epos n uss a

Treasury valuation effects turned to negative

RetailLC&I

BalticBanking

Russia,Ukraine

Treasury,Other

647

809

574 38

180 29

-71 315

K m

) 223 439-435

( S 74-96

-179

11

(Excluding non-recurring items)Q4 09 Q1 10 Q2 10 Q3 10 Q4 10


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Ex enses seasonall higherExpenses

Accelerated IT development

expenses a

FR&R and Ektornet 2010 expenses SEK 714m

0.540.57 0.57 0.55 0.58

4 300 4 391 4 423 4 238

Retail LC&I a c

Banking

,

Ukraine

,

Other 123 152 73 9

211-5 582

4 590

877

697

2 223

( S E K m

)

12

Q4 09 Q1 10 Q2 10 Q3 10 Q4 10


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SEK 265bn term funding issued in 2010Liquidity & Capital management

Issued & matured full year 2010 Full year 2011 maturities of nominalSEK 180bn (nominal SEKbn)

Of which SEK 80bn in guaranteedfunding

Of which SEK 86bn in covered bonds 020

40

Average maturity of wholesale funding,including short-term funding, 27 months38 months for covered bonds

-60

-40

-20

Maturit profile full ear 2011

-80

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

(nominal SEKbn)

-20

0

-80

-60

-40

13

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec


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Fourth quarter 2010 results

Income statementSEKm Q4 10 Q3 10 QoQ % Q4 09

Income 7 958 7 647 4% 7 982

Expenses 4 590 4 238 8% 4 300

Profit before impairments 3 368 3 409 -1% 3 682

Impairment of intangible assets 23

Impairment of tangible assets 406 30 352

Credit impairments - 483 120 5 003

Operating profit 3 445 3 236 6% -1 673

Tax expense 693 638 9% 115

Profit attributable to shareholders 2 750 2 591 6% -1 804

Return on equity, % 11.7 11.3 -8.3

- . . .

Loan-deposit ratio, % 222 233 240

Core Tier 1 capital ratio, %* 13.94 13.39 11.97

- *

14

. . .

* Basel 2


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Continued im rovementsAsset quality

All indicators in the right direction 60 days overdue Declining in all countries Watch list

ecrease y . n n Positive rating migration on nue e- everag ng n a c coun r es

Recoveries in CEE portfolio Further tightened lending criteria in Swedish mortgage market

15


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Credit im airments of SEK -483mAsset quality

Net recoveries in Baltic Bankingand Russia & Ukraine

6 000SEKm

Minor credit impairments in5 000

Write-down of tangible assets,3 000

2 210

963

2 000

120

0

1 000

-483-1 000Q4 09 Q1 10 Q2 10 Q3 10 Q4 10

16

Retail LC&I Baltic Banking Russia & Ukraine Other


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Provisions work-out ortfolios slowl decliningAsset quality

30 000SEKm

,

Retail 99

LC&I 1065 1354 684 4 104

3 606

64.8% 65.9% . 63.9%

62.7%25 000

a c an ng

Russia 57

Ukraine 65

15 000

Group 6320 882 21 889 21 06818 494

3 311 3 9534 603

5 919

5 000

10 000

0Q4 2009 Q1 10 Q2 10 Q3 10 Q4 10

17

- , ,


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Euro ean eer com arison core Tier 1 ratiosCapital management

16%

Core Tier 1 ratios (Basel 2) European banks*

13.9

12.2 12.112%

14%

10.3

8%

10%

4%

6%

0%

2%

r r l t

U B

S w e

d b a n

S E

D e x

i

S H

N .

B .

O f G r e e c

D n

B N O

S t a n

C h a r

H S B

R B

N o r d e a

B a r c

l a y

D a n s

k e B a n

C r e

d i t S u

i s s

E F G E u r o

B a n

B a n

k o

f I r e

l a n

d

B N

P o p u

l a r

E s p a n

B N

L l o y

d

S o c

G e

S a n

t a n

d e

B a n c o

P a s

t o

B a n e s

t

B B V

U n

i C r e

d i t

I n t e s

M P

B a n c o

S a

b a

d e

l

M a r f

i

P i r a e u s

B a n

U B I B a n c

E r s

t e B a n

p o

l a r e

d i M i l a n

B C

A a r e a

l B a n

B a n

k I n t e

R a

i f f e i s e n

I n

B .

B .

P o

18

*Source: Deutsche Bank Research, Q4 10 estimates (Swedbank, SEB and Nordea actual Q4 figures)


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Assets significantl reduced risk level since Q4 08Capital management

Estonia joined the EMU, 1 Jan 20111 400(SEKbn)

RWA reduced from SEK 697bn to

SEK 541bn1 200

CEE lending-108

Reduced need for unsecuredfunding of about SEK 150bn

1 000

Other corporatelending, Sweden &

Estonia

+600

800

Other private,Sweden

-57

400 Swedishmortgage loans

200

19

0Q4 08 Q4 10


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Liabilities significantl reduced risk level since Q4 08Capital management

1 400(SEKbn)

efficient funding sources

1 200 Central banks +

Government guaranteed-182 second rights issue1 000

Senior unsecured

Covered bonds

-46

Liquidity buffer established600

800 +140

Limited, if any, need for

unsecured funding400

Deposits

200

Supplementary capitalCore Tier 1 ca ital+

20

0

Q4 08 Q4 10


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Ca italisation solid to meet risk rofile and uncertaintiesCapital management Core Tier 1

CT1-ratio to stay above13.0%

Excess capital ( SEK 4.9bn)13.9%

Perception

Unclear regulatory framework

Extra bufferdue to prevailing

circumstances(SEK 16.2bn)

Uncertain macro economicenvironmentRisk appetite

(ICAAP buffer,

10.0%

.

7.0% Long-term CT1-ratio of at least10 per cent

Regulatory requirement

CT1-ratio to stay aboveregulatory minimum in ICAAPstressed scenario.

21


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Excess ca ital no need to increase ca ital furtherCapital management

Large capital buffer in relation to current risk level

ncreas ng pro genera on

RWA growth expected to be moderate Continued focus on capital efficiency

22


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Pro osalCapital management

AGM to decide on buy-back programme to manage capitalisation

p o per cen o ou s an ng s ares nc . acqu s on o ownshares through the securities operations)

-

Full flexibility to chose between A and preference shares

23


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Priorities 2011

Customer focus

Growth in selective segments

Quality and effectiveness

Robust and low-risk balance sheet

24


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Welcome to Swedbanks Ca ital markets da23 February 2011

Registration at www.swedbank.com/ir


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Appendix

26


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Loan to de osit ratio im roved

SEKbn 2010 2009

-Retail - deposits 347 318 29

LC&I - loans 130 150 -20LC&I - deposits 74 69 5

BB - loans 130 170 -40

BB - deposits 93 103 -10

R&U - loans 13 18 -5R&U - deposits 3 7 -4

Group - loans 1 146 1 192 -46Group - deposits 517 497 20

27


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Business area erformance

Profit before im airments Q4 10 Q3 09 8Q development

Retail 2 126 1 881 245

Institutions 895 664 231

Baltic Banking 935 937 -2

Asset management 188 179 9

- - -

Other -660 -197 -463

Group 3 368 3 409 -41Q4 10Q1 09

28


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Im aired loans decreasing

Excl. FX effect down SEK 3bn in Q4

Underlying decreases in all business areas in Q4

4 362 196 2 391-4 088

35 770

40 132 40 32842 719

40 000

45 000

SEKm

Impaired loans as %

6 113

-

29 657

34 778

25 000

30 000

35 000

1 939

7 957 Ukraine 62%

Russia 22%

of gross lending

29 65715 000

20 000

11 259

6 529 Lithuania 17%

Latvia 26%

0

5 000

10 000

1 602770

4 722 Estonia 7.7%LC&I 0.25%Retail 0.18%

29

Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10 Q4 10


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Loans ast due 60 da s erformance Q/Q

200

250

EURm

100

150

-50

0

-150

-100

4

0 9

1

1 0

2

1 0

3

1 0

4

1 0

4

0 9

1

1 0

2

1 0

3

1 0

4

1 0

4

0 9

1

1 0

2

1 0

3

1 0

4

1 0

4

0 9

1

1 0

2

1 0

3

1 0

4

1 0

4

0 9

1

1 0

2

1 0

3

1 0

4

1 0

Estonia Latvia Lithuania RussiaUkraine

30

A l i


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Re ossessed assetsAsset qualtiy

4 000

SEKm

3 000

3 500

2 500

1 500

500

0Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10

Real Estate Residential Real Estate Commercial Passenger & Commercial Transport Shares Other

31


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Real estate ricesTallinn

16161 500

1 800

1 500

1 800 2 000 2 000

Riga*

813

669600

900

1 200

E U R / m 2

600

900

1 200

o o

f t r a n s a c

t i o n s

617

1 000

1 500

f t r a n s a c

t i o n s

1 000

1 500

E U R / m 2

0

300

Q4 06 Q2 07 Q4 07 Q2 08 Q4 08 Q2 09 Q4 09 Q2 10 Q4 100

300

No of deals Average price

0

Q4 02 Q4 03 Q4 04 Q4 05 Q4 06 Q4 07 Q4 08 Q4 09 Q4 10

N o . o

0

1 800 1 800Vilnius

Source: Swedbank, Estonian Land Boardource: we an

1 731

. ,

600

900

1 200

E U R / m 2

600

900

1 200

o f t r a n s a c

t i o n s

1 070

0

300

Q1.05 Q4.05 Q3.06 Q2.07 Q1.08 Q4.08 Q3.09 Q2.100

300 N

o o ea s verage pr ce

32

Source: Swedbank, State Enterprise Centre of Registers

Liquidity & funding


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Long-term fundingLiquidity & funding

Continued focus on covered bonds with full-year issuance of SEK 238bn

SEK 23bn in senior unsecured issuance

4 EUR-denominated covered bond benchmark deals, each in the size of EUR 1bn

1 EUR-denominated senior unsecured benchmark deal of EUR 1bn

1 1 1 1 1 1 1 1 1 2

1 2

1 2

1 2

1 3

1 3

1 3

1 3

1 4

1 4

1 4

1 4

1 5

1 5

1 5

1 5

Long-term funding maturity profile, SEKbn

-10

0 Q 1 2 0

Q 2 2 0

Q 3 2 0

Q 4 2 0

Q 1 2 0

Q 2 2 0

Q 3 2 0

Q 4 2 0

Q 1 2 0

Q 2 2 0

Q 3 2 0

Q 4 2 0

Q 1 2 0

Q 2 2 0

Q 3 2 0

Q 4 2 0

Q 1 2 0

Q 2 2 0

Q 3 2 0

Q 4 2 0

2 0 1 6 -

-40

-30

-20

-70

-60

-50

3333

-90

-

Other NON-SEK Covered Bonds SEK Covered Bonds

Liquidity & funding


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Remaining government guaranteed debtLiquidity & funding

Exited the programme on April 30, 2010

SEK 75bn of government guaranteed debt matured during 2010

Maturit rofile, SEKbn

-20

0 USD

SEKEURCHF

-60

-40 JPY

-

-80

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Swedbanks fourth quarter 2010 CEO presentation

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