0
Annika Falkengren
President and CEO



                           Merrill Lynch
                    Banking & Insurance
  ...
The starting point: SEB has a strong competitive position
A long-term relationship bank


Strong income, focus on efficien...
SEB – A relationship bank
Strong customer base              Product excellence

        Large                   #1 Cash m...
A strong large corporate franchise
Nordic target market                           Strong growth in core markets
          ...
Rightly positioned to leverage
recovery of markets
Mutual Funds Net Sales Sweden                                          ...
Growing franchise of Swedish Retail
High customer interaction: 24h – 7 – 365d




                                 No of c...
The starting point: SEB has a strong competitive position
A long-term relationship bank


Strong income, focus on efficien...
Stability from a diversified platform
      Share of pre-provision earnings* Jan – Jun 2009
                              ...
Resilient income generation
12-month rolling earnings generation excluding one-off effects
SEK bn
 50
                    ...
Efficiency and productivity
Exploiting cost synergies from increased integration while developing continuous
productivity ...
Financial strategy
 Establish and maintain a strong capital and liquidity position

Core capital                          ...
The starting point: SEB has a strong competitive position
A long-term relationship bank


Strong income, focus on efficien...
The "perfect storm"
   hts iss
           ue scenario...
    rig
From ch 2009
   Mar

  We prepared for “the worst”:
  ●Ex...
...has not materialised

 Sweden, other Nordics and
  Germany already turning the corner
  with stable asset quality

 L...
SEB’s Baltic lending relative the market                                                          SEB
     Per cent, Q2 20...
The Baltics: problematic, but contained
Actions                                Non performing loans
                      ...
Stable and well diversified credit portfolio
Credit portfolio Q2-09                                               Gross im...
The starting point: SEB has a strong competitive position
A long-term relationship bank


Strong income, focus on efficien...
Sweden – Positioned for recovery
         Improved situation for manufacturing                             Household debt...
Baltics – Stabilisation on a low level
          A broader recovery in 2011
          First signs of improved economic s...
Multiple growth opportunities

                      Merchant Banking
                      Market penetration*

         ...
The big unknown: A new financial landscape
– Still limited visibility and no level playing field

                Capital ...
 SEB well positioned to support our customers and
  seize growth opportunities on a selective basis
 Stabilising economy...
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Merrill Lynch Banking & Insurance Sept 2009

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Merrill Lynch Banking & Insurance CEO Conference in London. 30 September 2009.

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Transcript of "Merrill Lynch Banking & Insurance Sept 2009"

  1. 1. Annika Falkengren President and CEO Merrill Lynch Banking & Insurance CEO Conference London 30 September 2009 1
  2. 2. The starting point: SEB has a strong competitive position A long-term relationship bank Strong income, focus on efficiency and balance sheet Robust liquidity and capital position Mitigating effects from the financial crises Current status with a stable and diversified credit portfolio Going forward Economic outlook and the new financial landscape 2
  3. 3. SEB – A relationship bank Strong customer base Product excellence Large  #1 Cash management globally companies  #1 Scandinavian currencies globally 1,800  #1Nordic stock broker Financial  #1Nordic and Baltic investment institutions bank  #1 Custody Nordics and Baltics 700  #2 Nordic asset management SMEs  #1 SME offering Sweden 400,000 Private individuals 5 million 3
  4. 4. A strong large corporate franchise Nordic target market Strong growth in core markets 100 Income Nordic “top 50” Core (public companies) banking relation- ships +79% % Large corporates Nordics +33% Large corporates Sweden -100 Perceived 0 quality* 100 H1 08 H1 09 2006 2008 2009 Sweden Other Nordic * Relative to peer group 4
  5. 5. Rightly positioned to leverage recovery of markets Mutual Funds Net Sales Sweden Assets under Management Cumulative Jan 2005 – Aug 2009, including PPM June 30, 2009, SEK bn SEK m 1 478 Nordea 70,000 60,000 SEB SEB 1 267 50,000 SHB 40,000 Robur Sw edbank 743 30,000 Nordea 20,000 10,000 Danske Bank 617 0 -10,000 DnB NOR 595 -20,000 -30,000 Handelsbanken 224 Source: Morgan Stanley Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 SEB Market share Competitors Market shares SEB Rank Gross premium Sweden* 26 1 income, unit-linked Denmark** 9 2 insurance %, Q1 2009 Estonia 14 3 Latvia 14 3 * Q2 2009 ** Full year 2008 Lithuania 28 1 5
  6. 6. Growing franchise of Swedish Retail High customer interaction: 24h – 7 – 365d No of corporate customers Thousands ROE 150 19% 145 140 135 130 Net credit loss 125 120 level 12 bps 115 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2007 2008 2009 6
  7. 7. The starting point: SEB has a strong competitive position A long-term relationship bank Strong income, focus on efficiency and balance sheet Robust liquidity and capital position Mitigating effects from the financial crises Current status with a stable and diversified credit portfolio Going forward Economic outlook and the new financial landscape 7
  8. 8. Stability from a diversified platform Share of pre-provision earnings* Jan – Jun 2009 Baltic Retail Wealth countries Banking Management Life 14% Nordics 4% Germany 23% 9% 8% 26% 52% 64% Sweden * Adjusted for goodwill impairments Merchant Geography – Adjusted for Other and SEK 1,3bn capital gain on repurchased bond Banking Divisions – Adjusted for Other 8
  9. 9. Resilient income generation 12-month rolling earnings generation excluding one-off effects SEK bn 50 Operating income 40 30 Profit before credit losses 20 and goodwill 10 Operating profit 0 Q1 - Q2 Q3 Q4 Q1- Q2 Q3 Q4 Q1 - Q2 Q3 Q4 Q1 - Q2 Q3 Q4 Q1 - Q2 05 06 07 08 09 Diversified income generation SEK m Net interest income Non-interest income * 8,000 7,000 6,000 +21%* 5,000 4,000 H1 2009 3,000 vs. H1 2008 2,000 1,000 0 Q1Q2Q3Q4 Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4 Q1Q2 -05 -06 -07 -08 -09 * Income adjusted for capital gains 9
  10. 10. Efficiency and productivity Exploiting cost synergies from increased integration while developing continuous productivity enhancements through SEB Way FTE development Group Operations Cost/transaction SEB Group, thousands 21.6 No. of transaction, millions -6% y-o-y 20.4 12 10 19.3 8 6 CEE 4 2 Non-CEE 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Dec 06 Jun 08 Jun 09 07 08 09 Efficiency and productivity gains offset inflation on a comparable basis Total cost base reported Excluding pensions, redundancies, CEE goodwill impairment and FX effect 30 28 Rolling 12 m costs in Q2 26 2009 24 up SEK 0.3bn 22 or 6% vs. FY 20 2006 Q4 06 Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 10
  11. 11. Financial strategy Establish and maintain a strong capital and liquidity position Core capital Long-term funding (>1 year) SEK bn SEK bn 103.2 Other 13.9 117.3 Covered bonds 45.9 60.7 74.7 Hybrid 7.5 capital +36.2 89.3 52.4 48.7 41.8 "Book 53.1 71.4 17.5 equity " 40.2 31.2 32.9 7.1 Dec 2006 Jun 2009 H1 08 H2 08 H1 09 Q3 09 Core Tier 8.2% 1 ratio 11.3% ~15 months matched funding 11
  12. 12. The starting point: SEB has a strong competitive position A long-term relationship bank Strong income, focus on efficiency and balance sheet Robust liquidity and capital position Mitigating effects from the financial crises Current status with a stable and diversified credit portfolio Going forward Economic outlook and the new financial landscape 12
  13. 13. The "perfect storm" hts iss ue scenario... rig From ch 2009 Mar We prepared for “the worst”: ●Extreme stress scenario – Scenario with simultaneous severe recessions with significant contraction in all SEB’s geographic markets for 3 consecutive years ●Significant decline in pre- provision earnings ●Significant increase in RWAs from risk class migration 13
  14. 14. ...has not materialised  Sweden, other Nordics and Germany already turning the corner with stable asset quality  Limited impact from risk migration; on the contrary RWA decline due to lower demand for lending and efficiency gains  Flight to quality; SEB increased share of wallet among large corps and resilient life insurance operations 14
  15. 15. SEB’s Baltic lending relative the market SEB Per cent, Q2 2005 – Q2 2009 Lending total SEB Lending Estonia Latvia Lithuania EURbn EURbn EURbn 40 40% 40 40% 40 40% 30 30% 30 30% 30 30% 20 20% 20 20% 20 20% 10 10% 10 10% 10 10% 0 0% 0 0% 0 0% Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q2 - Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 05 06 07 08 09 05 06 07 08 09 05 06 07 08 09 Excluding Leasing portfolio Source: Central Banks and SEB 15
  16. 16. The Baltics: problematic, but contained Actions Non performing loans % of lending Portfolio assessed, past due > 60 days  Gradual tightening of credit and Individually assessed 15% portfolio policies requirements since Q4 2005 10% 5%  Accelerated collective 0% provisions Lending Estonia 45 Latvia 39 Lithuania 75 (SEK bn)  Substantial work-out resources Provisioning to build-up Baltic reserves SEK m Specific Collective  Review of all loans >€1m 2,000 completed 65% collective 1,500 provisions  Separate division 1,000 500  Full goodwill write-off in CEE 0 Q1-08 Q2-08 Q3-08 Q4-08 Q1-09 Q2-09 16
  17. 17. Stable and well diversified credit portfolio Credit portfolio Q2-09 Gross impaired loans* Q2-09 SEK 1,806bn Distribution of SEK 16,690m within SEB Group Norway 7% Denmark 3% 85% Finland 3% Sweden Germany Baltic 48% 24% Germany countries Estonia 3% Latvia 3% 34% 5% Other Lithuania 5% 10% 5% 49% Impaired loans*- change Q2-09 vs. Q4-08 SEK m 10% Sweden 7% Denmark Norway Finland Estonia Sweden Latvia Other Lithuania Germany Other -500 0 500 1,000 1,500 2,000 2,500 3,000 *Individually assessed 17
  18. 18. The starting point: SEB has a strong competitive position A long-term relationship bank Strong income, focus on efficiency and balance sheet Robust liquidity and capital position Mitigating effects from the financial crises Current status with a stable and diversified credit portfolio Going forward Economic outlook and the new financial landscape 18
  19. 19. Sweden – Positioned for recovery  Improved situation for manufacturing Household debt service burden Percent of disposable income  Low mortgage rates support 12 consumption, debt service burden 10 8 historically low 6  GDP bounces back 4 2  Riksbank starts to increase rates 0 spring 2010 1981 1985 1989 1993 1997 2001 2005 2009 GDP growth New export orders Yearly growth, percent Manufacuring industry, net OECD Sweden Orders Expected orders 8 80 6 60 4 40 2 20 0 -2 0 -4 -20 -6 -40 -8 -60 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 Source: SEB Nordic Outlook, 1 Sept 2009 19
  20. 20. Baltics – Stabilisation on a low level  A broader recovery in 2011  First signs of improved economic sentiment  GDP deficits leaves the negative territory  Wage cuts continue Economic sentiment Current accounts Index Percent of GDP Euro-zone Estonia Latvia Lithuania Estonia Latvia Lithuania 140 5 0 120 -5 100 -10 80 -15 -20 60 -25 40 -30 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 01 02 03 04 05 06 07 08 09 Source: SEB Nordic Outlook, 1 Sept 2009 20
  21. 21. Multiple growth opportunities Merchant Banking Market penetration* Penetration to date Untapped potential Bank relationship – Recognised a closer tie product excellence * indicative Leading Nordic asset manager and bancassurance business! 21
  22. 22. The big unknown: A new financial landscape – Still limited visibility and no level playing field Capital requirements Liquidity regimes Regulatory environment Government ownership SEB has a strong balance sheet 15 months Liquidity Reserve Tier 1 Loan/deposit match reserves ratio 72% 13.1% ratio 154% funding >10% assets 22
  23. 23.  SEB well positioned to support our customers and seize growth opportunities on a selective basis  Stabilising economy for 90 per cent of credit portfolio  Full attention and actions on Baltic challenges 23
  24. 24. 24
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