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ISEB nvestor Dinner Presentation Nov 2008
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ISEB nvestor Dinner Presentation Nov 2008

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  • 1. Investor presentation Dinner 4 November 2008 1
  • 2. Outline Q3 recap Asset quality Baltics Capitalisation 2
  • 3. Highlights Q3 2008 Resilient underlying business; collective provisions in the Baltics Negative financial effects due to financial crisis Accelerated cost management due to economic downturn Financial crisis impacts profit… …but underlying income generation is stable 5 000 10,000 4 000 8,000 3 000 6,000 2 000 4,000 1 000 2,000 0 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2007 2008 2007 2008 Lehman Brothers-related losses Other income** Portfolio losses Net fee and commission income Reported operating profit* Net interest income * Excluding sales of Baltic properties in Q4 2007 of SEK 785m ** Net financial income, Net insurance income and Other income 3
  • 4. Net financial income Group SEK m 1,000 500 + corp fin intäkter I 0 marknaden? -500 FX Equities Capital CPM Other incl. -1,000 Markets Treasury Q3 07 Q2 08 Q3 08 Merchant Banking Investment portfolio Structured SEK SEK m Q1 08 Q2 08 Q3 08 credits 12bn Financial P/L -872 -66 -348 SEK institutions SEK 63bn Equity -1,630 -56 -2,134 55bn Covered -2,502 -122 -2,482 bonds etc 4
  • 5. Group credit exposure By geography By sector Total exposure = SEK 1,805bn Total exposure = SEK 1,805bn Banks Public Corporate admin. 14% Nordics 6% 66% 40% 26% Germany 14% 24% House- Lithuania holds Property 5% Estonia Latvia management 3% 2% 5
  • 6. Households Credit Portfolio SEK bn Mortgage Other 79 78 76 73 68 235 235 227 219 186 22 21 20 20 27 11 11 11 10 72 70 68 67 10 55 50 47 45 44 28 Dec Dec Mar Jun Sep Dec Dec Mar Jun Sep Dec Dec Mar Jun Sep '06 '07 '08 '08 '08 '06 '07 '08 '08 '08 '06 '07 '08 '08 '08 Nordic Germany Baltic 6
  • 7. Corporate Credit Portfolio SEB Group, SEK bn 720 12% 19% 573 11% 463 458 10% 27% 18% 3% Finance and insurance Wholesale and retail Transportation Other service sectors Dec Dec Dec Sep Construction Manufacturing 2005 2006 2007 2008 Other 7
  • 8. Corporate Credit Portfolio SEB Group, SEK 720bn 500 450 400 350 300 250 200 150 100 50 0 quot;Nordicquot; Larger German Larger Baltic Clients Swedish Retail Other Clients Clients Clients Dec '06 Jun '07 Dec '07 Jun '08 Sep '08 8
  • 9. Property Management Credit Portfolio SEB Group, SEK 245bn Credit exposure SEKbn 120 3%1% Dec '06 Jun '07 Dec '07 8% Jun '08 Sep '08 100 6% 2% 80 42% 3% 60 40 20 35% 0 German Nordic Nordic Baltic Sweden Germany Estonia Clients Larger Retail Clients Latvia Lithuania Other Nordic Other European Other Clients Clients * By obligor’s domicile 9
  • 10. Asset quality Estonia 1.31 Latvia 0.96 Impaired Loans Volumes Net Credit Losses Lithuania 0.43 % of Credit Portfolio* % of lending Baltics 0.85 3% 1.00 SEB Group Germany Nordic Baltic Germany Baltics Nordics SEB Group 0.80 2% 0.60 1.5% 1.4% 0.40 1% 0.6% 0.20 0.2% 0.00 0% 2006 2007 Q1 Q1-Q2 Q1-Q3 Mar Jun SepDec Mar Jun Sep Dec Mar Jun Sep 2008* 2008* 2008* '06 '06 '06 '06 '07 '07 '07 '07 '08 '08 '08 *Annualised figures 10
  • 11. Baltics – macro development GDP, % Lengthy recession in Estonia Estonia Latvia Lithuania and Latvia; negative growth both 15 in 2008 and 2009 10 Weak growth in less overheated 5 Lithuanian economy 0 Domestic demand remains -5 depressed 2002 2003 2004 2005 2006 2007 2008 2009 2010 (f) (f) (f) Increased exchange rate risk in Estonia and Latvia Retail sales, Y-o-Y % Estonia Latvia Lithuania Large imbalances will dampen: 40 30 – Wage inflation declines 20 sharply 10 – Large current account deficits 0 -10 will shrink, but still high 2010 -20 01 02 03 04 05 06 07 08 11
  • 12. Baltic countries – Credit exposure On and off balance, SEK bn SEB Estonia SEB Latvia SEB Lithuania 89 Total 76 Banks 26 56 22 52 50 Public 44 15 41 41 13 13 Administration 34 20 19 8 Households 14 14 14 10 8 8 6 5 45 8 4 39 34 Property 22 22 22 21 17 18 Management Corporate Dec Dec Sep '08 Dec Dec Sep '08 Dec Dec Sep '08 '06 '07 '06 '07 '06 '07 2006 2007 2008 YTD 2006 2007 2008 YTD 2006 2007 2008 YTD +4% +40% +18% +47% +30% +13% +38% +17% +1% Growth rates in local currency 12
  • 13. Baltics – currency profile Lending & Leasing portfolio USD Corporate 63% 68% EUR 83% Local 33% 30% 15% Households USD 62% 78% 85% EUR Local 38% 22% 13% SEB Estonia SEB Latvia SEB Lithuania 13
  • 14. Baltics - asset quality Impaired loans in SEB’s portfolio Provisioning to build up reserves Per cent SEK m Specific Collective Estonia Latvia Lithuania 350 2,0% 250 1,5% 150 1,0% 50 0,5% -50 0,0% mar-07 jun-07 sep-07 dec-07 mar-08 jun-08 sep-08 Q4-07 Q1-08 Q2-08 Q3-08 Managed credit growth slowdown Targeted credit portfolio reviews Joint local and head-office work-out team Early conservative provisioning 14
  • 15. Baltics - profit development Profit before credit losses Net credit losses Profit after credit losses SEK m SEK m SEK m Estonia Latvia Lithuania Estonia Latvia Lithuania Estonia Latvia Lithuania 4 000 4 000 4 000 3 000 3 000 3 000 2 000 2 000 2 000 1 000 1 000 1 000 0 0 0 2005 2006 2007 Jan- 2005 2006 2007 Jan- 2005 2006 2007 Jan- Sep Sep Sep 2008 2008 2008 15
  • 16. Baltics - customer growth Private customer Corporate customer Q1 2005 – Q3 2008 Sweden Baltics Number of customers Product penetration 3,000 3.0 2.5 2,000 2.0 1,000 1.5 1.0 0 16
  • 17. Capitalisation and RWA growth Tier 1 capital ratio Risk-weighted assets Per cent SEK bn Basel I Basel II 1,200 15% Without transition rules Tier 1 With transition rules 9,9 % 900 10% 600 Tier 1 8,1 % 6% Stability 5% 300 package 4% Swedish FSA's 0 minimum rules Q1 Q2 Q3 Q4 Q1 Q2 Q3 0% 2007 2007 2007 2007 2008 2008 2008 september 2008 17
  • 18. Basel II Tier 1 ratios – Nordic banks Last reported Basel II tier 1 ratios, excluding capital floors Last reported Basel II tier 1 ratios, including capital floors 14.0 5 11.5 10.5 4 10.0 10.1 12.0 9.9 2 8.2 9.4 6.7 1.7 8.1 7.3 1 10.0 7.9 1.3 1.0 0.6 1.5 1.2 7.0 0.9 8.0 1.4 0.9 0.8 0.5 6.0 9.8 9.2 9.2 9.2 9.0 8.4 8.2 8.1 4.0 7.3 7.2 7.0 6.7 2.0 0.0 5 (0.9) (1.2) 2 (1.8) (2.0) (2.2) (3.3) (2.0) (4.0) 3 SEB DnB NOR Danske Bank Nordea SHB Swedbank Core capital ratio (excl. 100% of insurance and capital floors) Impact of insurance capital (100% ) Impact of hybrid capital Impact of Basel II capital floor (as per Q3 08) Notes: 1 RWA adjusted for life insurance impact (life insurance assets risk weighted under statutory disclosure) to allow comparison 2 According to guidance on RWA under full Basel II implementation and Vital RWA given on Q3 conference call 3 Including capital rasing announced 27 October 2008 4 Stated figure includes a 50% deduction of insurance capital from tier 1 capital. Adjusted for this deduction, Danske’s Tier 1 ratio is 10.3% 5 Assuming 1%-point improvement of core capital ratio (excluding hybrid and insurance capital) under full implementation, RWA only disclosed including Basel II transition rule adjustment Source: UBS 18
  • 19. Basel II Tier 1 ratios – British banks Pre announced capital increase (Q2 2008) Stated Basel II tier 1 ratios as per 30/06/2008, including capital floors 14.0 12.0 8.7 8.6 8.6 8.6 10.0 7.9 0.9 0.9 8.0 1.2 1.3 0.2 1.4 0.8 1.0 2.1 1.0 6.0 1.4 1.4 1.2 2.6 4.0 7.7 6.7 6. 6. 5.7 5.1 5.0 4.5 2.0 3.6 5 2 0.0 HBOS2 HSBC Lloyds TSB RBS Barclays Core capital (excluding insurance capital) Impact of insurance capital (100% ) Impact of preference shares Impact of hybrid Post announced capital increase (Q2 2008)1 12.7 14.0 12.1 12.1 11.3 0.9 12.0 1.2 1.3 8.7 1.4 3.1 10.0 1.7 1.7 2.3 1.4 0.9 1.2 8.0 2.6 0.2 1.0 6.0 9.1 4.0 7.7 7.6 9.1 7.6 8.8 6.7 6.5 7.7 2.0 0.0 HSBC HBOS Lloyds TSB RBS Barclays 2 Core capital (excluding insurance capital) Impact of insurance capital (100% ) Impact of preference shares Impact of hybrid Notes: 1 Capital raisings post 30 June 2008, HSBC: 0, HBOS: £8.5bn of ordinary shares, £3.0bn of preference shares, Lloyds TSB: £4.5 of ordinary shares, £1.0bn of preference shares Barclays: £5.1bn of ordinary shares, £3.0bn of preference shares, RBS: £15.0bn of ordinary shares, £5.0bn of preference shares 2 RWA adjusted for life insurance impact (life insurance assets risk weighted under statutory disclosure) to allow comparison Source: UBS 19
  • 20. Swedish stability package - Guarantee pricing Maximum scope: for each bank: its outstanding debt maturing until April 30th, 2009; for the system: SEK 1,500bn Participating banks to pay a risk-based fee for the guarantee; Fee level: somewhere between today's funding costs in the market and the notional funding costs under normal market circumstances Allowed instruments: senior term debt with maturities between 3 months and 5 years, including covered bonds! Unsecured <1 year: 50bps Unsecured >1 year: 50bps+28bps (CDS) = 78bps Covered bonds: 25bps+ ~10bps (AAA-CDS) = ~35bps 20
  • 21. Going forward ● Holistic balance sheet management ● Robust capital and good liquidity ● Resilient customer business ● Lower absolute costs 21
  • 22. 22