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080218 London Mikael Inglander

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Swedbank was founded in 1820, as Sweden’s first savings bank was established. Today, our heritage is visible in that we truly are a bank for each and every one and in that we still strive to ...

Swedbank was founded in 1820, as Sweden’s first savings bank was established. Today, our heritage is visible in that we truly are a bank for each and every one and in that we still strive to contribute to a sustainable development of society and our environment. We are strongly committed to society as a whole and keen to help bring about a sustainable form of societal development. Our Swedish operations hold an ISO 14001 environmental certification, and environmental work is an integral part of our business activities.

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    080218 London Mikael Inglander 080218 London Mikael Inglander Presentation Transcript

    • London roadshow 18-19 February 2008 Mikael Inglander CFO
    • 2007 – A successful and eventful year • Profit attributable to shareholders increased 10% to SEK 12bn – Net interest income increase by 20% – Net commission income increased by 11% • Swedish Banking show a stable result, low risks and high return on equity • Record result in Baltic Banking with balanced risks • Swedbank Markets’ results on same level as last year’s all time high A successful year despite global credit turmoil and Baltic slowdown (2)
    • Q4 2007 – Good development and strong results • Good volume development in Sweden – Stable margins on new lending • Continued strong results in Baltic banking – Economic slowdown align with expectations • Strong finish of the year for Swedbank Markets – Success in fixed income trading and structured investment products in Sweden and corporate finance in Norway • Swedbank Ukraine continues to develop well Profit increased 7% compared with Q4 2006 (3)
    • Solid profit development SEKm SEKm 17,000 17,000 15,000 15,000 13,000 13,000 11,000 11,000 9,000 9,000 7,000 7,000 5,000 5,000 3,000 3,000 1,000 1,000 -1,000 -1,000 2000 2001 2002 2003 2004 2005 2006 2007 Profit before loan losses Capital gains EnterCard and KIAB Loan losses, net* Operating profit (excl. capital gains) (4) *Loan losses, net = write-offs + provisions – recoveries + change in property taken over
    • Strong position for profitability and growth Sweden Baltics Ukraine and Russia Swedbank is the leading bank in The Baltic economies are Swedbank has a small but Sweden. Profitability is high and experiencing strong economic growing presence in Ukraine and stable and the bank is growth that is expected to remain Russia . Long-term, a significant consolidating its market shares in for many years. As the largest share of Swedbank’s growth will important segments in both the bank in the region, growing with be generated in these markets. private and corporate sectors. the market ensures Swedbank an attractive earnings growth. Growth and Future growth and Stable base experience profitability Share of profit Share of profit Share of profit 2007: 66% 2007: 32% 2007: 2% Share of lending Share of lending Share of lending 2007: 80% 2007: 16% 2007: 2% (5)
    • Minor direct effects from the credit turmoil Q4 Q3 Valuation- and accounting effects, SEK M 2007 2007 Swedbank Markets – 40 – 60 Group Treasury, liquidity portfolio –5 – 68 Group Treasury, intra-group lending 20 – 90 Swedbank Mortgage 66 – 129 (6)
    • Business volumes Savings Lending SEKbn SEKbn 500 1,200 1,103 398 401 1,000 919 400 334 289 800 300 600 475 200 425 390 400 333 102 100 84 200 24 31 53 77 74 100 13 19 34 61 0 0 Deposits, Deposits, AM funds, AM funds, Structured Lending, Private, Corporate, Private, Corporate, Other Sweden Baltics Sweden Baltics products, Group Sweden Sweden Baltics Baltics bonds Dec, 2006 Dec, 2007 Dec, 2006 Dec, 2007 (7)
    • Credit quality, group % 0.64 0.56 0.48 0.40 0.32 0.24 0.16 0.08 0.00 -0.08 2000 2001 2002 2003 2004 2005 2006 2007 Loan loss ratio, net Share of impaired loans Share of provisions (8)
    • Margins % Lending Deposits % 6.0 6.0 5.0 5.0 4.0 4.0 3.0 3.0 2.0 2.0 1.0 1.0 0.0 0.0 Q3- Q4- Q1- Q2- Q3- Q4- Q3- Q4- Q1- Q2- Q3- Q4- 06 06 07 07 07 07 06 06 07 07 07 07 Estonia Latvia Estonia Latvia Lithuania Sweden Lithuania Sweden (9)
    • Swedish Banking • Continued stable earnings and high profitability SEKm % • Strong corporate lending during Q4 5,000 0.7 – Total lending increased by 4% vs. Q3 and 14% 4,500 during the full year 0.6 4,000 • Continued good deposit trend 3,500 0.5 – Deposits increased by 3% vs. Q3 and 15% during 3,000 0.4 the full year 2,500 • Share of new savings from households 0.3 2,000 increased to 18% (17% in Dec 06) 1,500 0.2 • Rise in funding costs are gradually, but with 1,000 certain delay, passed on through higher lending 0.1 500 rates 0 0.0 • Minor valuation effects as a consequence of the Q2 Q3 Q4 Q1 Q2 Q3 Q4 turmoil on the credit market 06 06 06 07 07 07 07 • Covered bonds as from Q2 2008 • In agreement to sell 8 branches to savings Income Costs C/I-ratio banks • Swedish economy still relatively strong. (10)
    • Baltic Banking Operations • Continued high profitability SEKm % • Net interest income increased 7% vs. Q3 2,400 0.5 2,200 • Lending growth in 2007 was 33%, the gradual 2,000 0.4 slowdown is expected to continue 1,800 1,600 • Weak trading income due to market turmoil 1,400 0.3 • Costs affected by 1,200 1,000 – Annual wage increases in Latvia and Lithuania, 0.2 800 hits P&L as of October every year 600 – Investments in operational excellence project 0.1 400 for increased productivity 200 0 0.0 – High marketing costs. Q2 Q3 Q4 Q1 Q2 Q3 Q4 06 06 06 07 07 07 07 Income Costs C/I-ratio (11)
    • Credit quality, Baltic Banking 2.0% Share of impaired loans (12 month old portfolio) 1.5% 1.0% 0.5% 0.0% 2002 2003 2004 2005 2006 2007 Estonia Latvia Lithuania Baltics Group 2.0% Loan loss ratio, net (average portfolio) 1.2% 0.4% -0.4% 2002 2003 2004 2005 2006 2007 -1.2% -2.0% (12) Estonia Latvia Lithuania Group
    • Decreasing Baltic lending growth 8,000 Hansabank, Estonia 60% 7,000 Hansabank, Latvia 100% 90% 7,000 6,000 50% 80% 6,000 5,000 70% 40% 5,000 60% 4,000 4,000 30% 50% 3,000 40% 3,000 20% 30% 2,000 2,000 20% 10% 1,000 1,000 10% 0 0% 0 0% 05/Jun 06/Jun 07/Jun 05/Jun 06/Jun 07/Jun 05/Mar 06/Mar 07/Mar 05/Mar 06/Mar 07/Mar 05/Sep 06/Sep 07/Sep 05/Sep 06/Sep 07/Sep 05/Dec 06/Dec 07/Dec 05/Dec 06/Dec 07/Dec 6,000 Hansabank, Lithuania 70% 20,000 Baltic Banking 70% 18,000 5,000 60% 60% 16,000 50% 14,000 50% 4,000 40% 12,000 40% 3,000 10,000 30% 8,000 30% 2,000 6,000 20% 20% 1,000 4,000 10% 10% 2,000 0 0% 0 0% 05/Jun 06/Jun 07/Jun 05/Jun 06/Jun 07/Jun 05/Mar 06/Mar 07/Mar 05/Mar 06/Mar 07/Mar 05/Sep 06/Sep 07/Sep 05/Sep 06/Sep 07/Sep 05/Dec 06/Dec 07/Dec 05/Dec 06/Dec 07/Dec 1 1 0 0 (13) 0 Total lending, EURm YoY growth 0 , 0 % 0 0
    • Baltic macro development • Economic slowdown in Estonia continues: GDP growth slows from ~7% in 2007 to ~5% in 2008; the bottom of the cycle is expected to be in Q2 2008 • In Latvia growth slows from ~10.5% to 6% in 2008, the bottom of the cycle is expected to be in H2 of 2008 • Slowdown in Lithuania started in Q4 2007: GDP growth will slow from 2007’s 8.7% to ~7.5% in 2008 • Weak domestic demand reduces imports and exports growth continues. Trade and current account deficits are falling. CPI will peak in Q1 2008. Long term GDP growth (6-7%) will be above EU average. Real GDP growth CPI growth 12% 12% 10% 10% 8% 8% 6% 6% 4% 4% 2% 2% 0% 0% 2005 2006 2007F 2008F 2009F 2005 2006 2007 2008F 2009F Est Lat Lit Est Lat Lit (14) Source: Hansabank Market
    • Swedbank Markets SEKm • Good end to the year despite the capital 500 market turmoil 450 400 • Strong results in, above all, fixed income and 350 FX trading, structured investment products 300 and corporate finance fees First Securities 250 • Minor valuation effects due to market turmoil, 200 SEK - 40m 150 100 • Continued market leader in corporate bonds, 50 new issues in SEK 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 • Sustained growth and market leading 06 06 06 06 07 07 07 07 position in structured products, sales grew by Profit for the period attributable to shareholders 39% in 2007. of Swedbank (15)
    • International Banking SEKm • Continued strong lending growth in Ukrainian 100 Banking, + 112% to SEK 11bn in 2007 75 • Loan loss ratio, net in Ukrainian Banking 50 decreased after adjusting calculation method 25 to Swedbank Group’s principles 0 • Annual lending growth in Russian Banking -25 was 50% to SEK 10bn -50 • Following positive court rulings regarding VAT -75 dispute in leasing operations, a reversal of -100 SEK 60m was made in Russian Banking Q2 Q3 Q4 Q1 Q2 Q3 Q4 06 06 06 07 07 07 07 • Lending in Nordic branches more than doubled in 2007, reaching SEK 13bn. International Banking, profit for the period of which Russian Banking of which Ukrainian Banking Operations (16)
    • Income statement, group Q4 Q3 Q4 SEKm 2007 2007 % 2006 % Net interest income 5,259 4,806 9 4,303 22 Net commission income 2,536 2,503 1 2,309 10 Net gains/losses on financial items at fair value 386 196 97 908 – 57 Other income 693 526 32 392 77 Total income 8,874 8,031 10 7,912 12 Staff costs 2,111 2,075 2 1,878 12 Profit-based staff costs 522 337 55 302 73 Other expenses 1,893 1,720 10 1,917 –1 Total expenses 4,526 4,132 10 4,097 10 Profit before loan losses 4,348 3,899 12 3,815 14 Loan losses 238 230 3 – 72 – 431 Operating profit 4,110 3,669 12 3,887 6 Tax 950 793 20 928 2 Profit for the period 3,160 2,876 10 2,959 7 Attributable to shareholders of Swedbank 3,108 2,866 8 2,913 7 (17)
    • 4,600 4,800 5,000 5,200 5,400 Net interest SEKm income 4,806 Q3-07 Swedish 1 Banking Baltic Banking Operations 101 Baltic Banking - 10 Investment International 12 Banking Swedbank 359 Markets Net interest income Q4-07 (Q3-07) Shared Services and - 10 other Net interest income 5,259 Q4-07 (18)
    • Net interest income Swedish Banking, change Q4 2007 Q4 2007 SEKm vs Q3 2007 vs Q4 2006 Net interest income Q3 2007 2,926 Net interest income Q4 2006 2,943 Changes: Higher lending volumes 46 215 Decreased lending margins – 81 – 306 Higher deposit volumes 43 122 Higher deposit margins 52 142 Other changes – 59 – 189 Total change 1 – 16 Net interest income Q4 2007 2,927 2,927 (19)
    • Baltic Banking, change in net interest income Q4 2007 Q4 2007 SEKm vs Q3 2007 vs Q4 2006 Net interest income Q3 2007 1,487 Net interest income Q4 2006 1,126 Changes: Higher lending volumes 61 273 Higher lending margins 14 Decreased lending margins -10 FX-effects, lending 4 12 Higher deposit volumes 2 56 Higher deposit margins 84 260 FX-effects, deposits 2 6 Other changes -66 -135 Total change 101 462 Net interest income Q4 2007 1,588 1,588 (20)
    • Net commission income, Group SEKm 5,000 4,000 3,000 2,000 1,000 0 management Insurance Payments Lending Brokerage Other Corporate finance Asset 2007 2006 (21)
    • Expenses Q4 Q3 Q4 SEKm 2007 2007 % 2006 % Swedish Banking 2,279 2,208 3 2,327 –2 Baltic Banking 1,062 864 23 811 31 International Banking 272 279 –3 126 Of which Ukrainian Banking 163 134 22 Swedbank Markets 560 416 35 535 5 Other business areas 353 365 –3 298 18 Total expenses 4,526 4,132 10 4,097 10 of which staff costs in: Swedish Banking 1,096 1,093 0 998 10 Baltic Banking 587 511 15 450 30 International Banking 155 134 16 49 Swedbank Markets 351 225 56 345 2 (22)
    • Business areas Swedish Baltic Internat. Swedbank Asset Banking Banking Banking Markets Mgmt 2007 vs 2006, SEKm 2007 % 2007 % 2007 % 2007 % 2007 % Net interest income 11,701 5,667 986 1,343 83 Net commission income 4,504 1,854 196 1,441 1,868 Other income 1,473 1,252 97 773 232 Total income 17,678 4 8,773 42 1,279 3,557 1 2,183 19 Staff costs 4,296 2,044 405 1,239 425 Other expenses 4,704 1,502 366 753 463 Total expenses 9,000 3 3,546 32 771 1,992 3 888 31 Profit before loan losses 8,678 5 5,227 50 508 1,565 0 1,295 13 Loan losses 71 450 170 0 0 Operating profit 8,607 -2 4,777 49 338 1,565 -1 1,295 13 Tax 2,413 455 70 427 320 Profit for the period 6,194 4,322 268 1,138 975 To Swedbank's shareholders 6,182 –2 4,322 46 268 1,010 3 975 11 Return on allocated equity % 23.2 31.2 6.9 24.2 57.0 (23)
    • Key figures Jan - Dec, Jan - Dec, 2007 2006 Return on equity, % 18.9 19.3 Earnings per share, SEK 23.28 21.11 Equity per share, SEK 131.96 116.37 C/I ratio before loan losses 0.51 0.52 Loan loss ratio, net, % 0.07 – 0.02 Share of impaired loans, % 0.13 0.07 Dividend, SEK* 9.00 8.25 Tier 1 capital ratio, new principles, % 8.5 - Tier 1 capital ratio, transition principles, % 6.2 6.5 ** Capital adequacy ratio, new principles, % 12.7 9.8 ** *according to Board of Directors’ proposal **according to old principles (24)
    • Tier-1 ratio, Group % % 10 10 • Tier 1 ratio amounted to 8.5% 9 9 • Tier 1 ratio, according to transition 8 8 principles, was 6.2% 7 7 6 6 • As of January 1, 2008, tier 1 ratio 5 5 according to transition principles, 4 4 increased by 31 bps due to the gradual 3 3 implementation of Basel 2 regulations. 2 2 1 1 0 0 Q1-05 Q2-05 Q3-05 Q4-05 Q1-06 Q2-06 Q3-06 Q4-06 Q1-07 Q2-07 Q3-07 Q4-07 Tier 1 ratio, Basel 2 Tier 1 ratio, transition rules Target Tier 1 ratio (25)
    • 2007 – A successful and eventful year • Profit attributable to shareholders increased 10% to SEK 12bn – Net interest income increase by 20% – Net commission income increased by 11% • Swedish Banking show a stable result, low risks and high return on equity • Record result in Baltic Banking with balanced risks • Swedbank Markets’ results on same level as last year’s all time high A successful year despite global credit turmoil and Baltic slowdown (26)
    • Capital Markets Day 2008 • 5 March, Kiev • Prel. schedule, registration, accommodation, flights etc.: swedbank.com/cmd (27)
    • Appendix (28)
    • Credit quality, group % % 225 0.32 200 0.28 175 0.24 150 0.20 125 0.16 100 0.12 75 0.08 50 0.04 25 0.00 0 -0.04 1999 2000 2001 2002 2003 2004 2005 2006 2007 Share of impaired loans (right scale) Provision ratio, total (left scale) Provision ratio, individual (left scale) Loan loss ratio (right scale) (29)
    • Group lending by sectors – Baltic Banking Portfolio, December 2007 Portfolio growth, Q4 07 Individuals 8,282 42% 452 39% Real-estate 82 7% 3,012 15% mgmt Retail & 111 10% 1,736 9% Wholesale Industry 1,692 8% 42 4% Transport 1,111 6% 34 3% Construction 546 3% 0 0% Other 2,786 14% 231 20% 0 2,000 4,000 6,000 8,000 0 250 500 % - share of portfolio and portfolio growth (30)
    • Exposure FAQ • No direct US Sub-Prime exposure – Minimal indirect exposure through investments of EUR 57m in bonds issued by US mortgage institutions who, in their turn, have exposures towards US sub-prime • Total exposure towards structured credits is minimal – No commitments towards conduits or SIV’s of any kind – Negligible exposure towards CDO’s • Swedbank holds a very small CDO trading stock for client trades in CDO’s which we have issued ourselves with mainly large Cap’s as underlying risk • 80% of the tranches held are rated Aaa and 20% are rated A • Total holdings was EUR 27m at year end – Exposure towards Mortgage Backed Securities is appr. EUR 719m • European Aaa and mainly residential • Held for EUR liquidity purposes and client trading • Hedge fund exposure is appr. EUR 500m, all collateralized • Exposure towards private equity firms and their target companies is about EUR 1 380m in total – Nordic related LBO’s • In total, above mentioned exposures represent less than 1.6 % of total assets (31)
    • Additional questions? Antonia Gibson Investor relations antonia.gibson@swedbank.se +46858592336 Mikael Inglander CFO mikael.inglander@swedbank.com