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Swedbank’s year-end 2013 results
 

Swedbank’s year-end 2013 results

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Swedbank's presentation of the results for 2013.

Swedbank's presentation of the results for 2013.

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    Swedbank’s year-end 2013 results Swedbank’s year-end 2013 results Presentation Transcript

    • Swedbank’s year-end 2013 results Michael Wolf, CEO Göran Bronner, CFO Anders Karlsson, CRO © Swedbank
    • Swedish Banking Stable results SEKm Q4 13 Q3 13 ▲ Q/Q Net interest income 3 448 3 473 -25 Net commissions 1 649 1 577 72 Total income 5 536 5 491 45 Total expenses 2 533 2 389 144 Profit before impairments 3 003 3 102 -99 Credit impairments 140 106 34 ROE, % 27.6 28.1 C/I ratio 0.46 • Stable NII 0.44 – Loan growth – Stable back-book mortgage margins – Lower deposit margins • Strong commission income • Solid asset quality 2
    • Large Corporates & Institutions Good performance SEKm Q4 13 Q3 13 ▲Q/Q Net interest income 889 864 25 Net commissions 559 467 92 1 987 1 755 232 878 759 119 1 109 996 7 – Loan and deposit growth 113 5 • Improved NII -2 Total income Total expenses Profit before impairments Credit impairments ROE, % 20.3 0.44 • Strong commission income 18.3 C/I ratio • Better trading income 0.43 3
    • Baltic Banking Continued improvement Q4 13 Q3 13 ▲Q/Q Net interest income 844 807 37 Net commissions 454 446 8 1 511 1453 58 Total expenses 661 604 57 Profit before impairments 850 849 1 Credit impairments -177 -147 -30 ROE, % 15.1 C/I ratio 0.44 • Improved NII 16.6 0.42 SEKm Total income – Continued re-pricing – Deposit growth • Strong commission income • Operational efficiency • Continued recoveries 4
    • Group results Improving revenue and increasing cost SEKm Q4 13 Q3 13 ▲Q/Q Net interest income 5 626 5 641 -15 Net commission income 2 699 2 520 179 461 170 9 652 9 225 427 Total expenses 4 484 3 995 489 Profit before impairments 5 168 5 230 -62 Credit impairments -32 -56 24 Other impairments 323 95 228 Tax 1 212 998 214 Profit from continuing operations 3 665 4 193 -528 – Volume growth – Margins 291 Total income • Stable NII Net gains and losses ROE continuing operations, % 13.6 16.2 C/I ratio 0.46 0.43 CET 1 ratio, % (Basel 3) 18.3 18.0 • Strong commission income • Improved NGL – Trading – Valuation effects • Increased cost – Provision for staff restructuring – Variable pay – General cost pressure • Continued solid asset quality – Ektornet 5
    • Expenses Focus on customer activities • Flat expenses target for 2014 Ektornet Group functions Efficiency measures Customer IT related development cost Expenses Expenses 2012 2013 Expenses Expenses 2013 2014 6
    • Capital Increased RWA • Loan growth Swedbank’s RWA development SEKbn 455 11.1 2.2 450 -2,9 445 440 435 Basel 2 441.6 - 1.8 Basel 2 451.9 2.5 -0,8 0.0 • Positive rating migration • Market risk • FX 430 425 420 7
    • Capital Regulatory uncertainty – higher capital requirements 16.5 - ? % • Countercyclical buffer Other? • RW floor on mortgages 25% Risk weight floor on Swedish mortgages 15% Risk weight floor on Swedish mortgages • Pillar 2 • Hard limits vs buffers 0-2.5% Countercyclical buffer 12% Minimum CET1 (Pillar 1) requirement (incl. SIFI-buffer and Capital conservation buffer) • Leverage ratio – corporate risk weights CET1 ratio 8
    • Asset quality Continued strong asset quality Credit impairments, SEKm ▲Q/Q Q4 13 Q3 13 140 106 34 5 7 -2 -177 -147 -30 -139 -38 -101 50 -70 120 -88 -39 -49 Group Functions & Other 0 -22 22 Swedbank Group -32 -56 • Continued solid asset quality in Sweden 24 Swedish Banking Large Corporates & Institutions Baltic Banking Estonia Latvia Lithuania • Net recoveries in Baltic Banking • Ektornet 9
    • Swedbank’s year-end 2013 results Q&A
    • Appendix
    • Swedish housing market Regulatory initiatives targeting the mortgage market Swedbank’s equity doubled Total equity, SEKbn • LTV cap of 85% • Amortisation 120 • Risk-weight floor of up to 25% on mortgage loans 100 80 60 • Capital and liquidity requirements 40 20 0 2005 Q4 2013 – High minimum regulatory requirements (including SiFi buffer) – Countercyclical buffer? – Leverage ratio? Source: Swedbank 12
    • Swedish housing market Shortage of housing Number of housing units 70 000 Housing completions 1975-2012 Apartment buildings Population and housing growth 1990-2012 Single-family dwellings 1 200 Number of homes / persons, thousands 80 000 60 000 50 000 40 000 30 000 20 000 Acc increase in population Acc increase in housing completions 1 000 800 600 400 200 10 000 0 0 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 90 92 94 96 98 00 02 04 06 08 10 12 Source: Statistics Sweden and Swedbank 13
    • Asset quality Conservative provision ratio SEKm 20 000 64% Provision ratio, % 62% 57% 54% 53% 54% 15 000 Q413 Swedish Banking LC&I Baltic Banking Group 65% 73 42 51 54 2 040 1 774 10 000 1 545 5 000 10 951 1 420 9 934 1 398 7 077 1 325 1 256 4 429 4 047 * 3 570 * 2 818 Q213* Q313* Q413* * 0 Q212 Q312 Q412 Individual provisions Q113* Portfolio provisions Provision ratio * Russia and Ukraine reported as discontinued operations 14
    • Credit portfolio – Large Corporates & Institutions Shipping and offshore Shipping and Offshore SEKbn 30 • Lending exposure to Shipping & Offshore sector of SEK 25.5 bn – Portfolio duration 4-5y – Average fleet age 7y – Strong employment profiles 24 26 23 25 26 4 20 6 10 16 0 Q4-12 0.2 RORO Container Dry bulk Gas (LNG/LPG) Crude oil Product Chemical Floating production Accommodation Supply Oil service Drilling & exploration Cruise Q2-13 Offshore Shipping and offshore portfolio by subsegment, SEKbn Q1-13 Tanker Q3-13 Q4-13 Other Shipping and offshore portfolio by currency, SEKbn Q4-13 0.1 0.1 JPY Q3-13 0.2 Q4-13 Q3-13 NOK 0.1 0.2 0.1 USD 0.2 0.1 EUR 0.4 0.1 0.8 SEK 0.1 0.0 0.2 0.4 0.6 0.8 1.0 0 5 10 15 20 25 15
    • Liquidity and funding Lower funding needs • LCR 142% (Swedish FSA definition FFFS 2012:6) • NSFR 89% • Issued SEK 103bn of term-funding FY 2013 of which SEK 14bn in Q4 Term funding issuance – completed and planned SEKbn Covered bonds Senior unsecured 120 100 80 60 40 20 0 Source: Swedbank, Dec 31, 2013, nominal amounts 16
    • Liquidity and funding Long-term funding maturity profile • Funding plan of SEK 120bn to meet next 12 months’ nominal SEK 103bn maturities Long-term funding maturity profile, by funding source SEKbn 200 Government guaranteed debt Senior unsecured debt Covered bonds 150 100 50 0 2014 2015 2016 2017 2018 2019- Source: Swedbank Dec 31, 2013 17
    • Liquidity and funding Liquidity reserve According to the template defined by the Swedish Bankers' Association SEKm Cash and holdings in central banks Deposits in other banks available overnight Securities issued or guaranteed by sovereigns, central banks or multilateral development banks Securities issued or guaranteed by municipalities or public sector entities Covered bonds - Issued by other institutions - Own issued Securities issued by non-financial corporates Securities issued by financial corporates (excl. covered bonds) Other Total1 Additional liquid assets, Group2, 3 1 59 382 397 68 054 54 002 54 002 2 096 183 931 52 510 90% of the securities in the liquidity reserve per Q4 2013 are rated AAA 82% of the additional liquid assets fulfill the Liquidity Reserve definition by the Swedish Bankers’ Association except for that they are held outside Group Treasury. 3 80% of the additional assets are rated AAA 2 Source: Swedbank Fact book, Dec 31, 2013 18
    • Liquidity and funding Prefunded in excess of 12 months SEKbn 250 200 150 100 50 0 0 20 40 60 80 100 120 140 160 180 200 220 240 260 280 300 320 340 360 Days forward Source: Swedbank Dec 31, 2013 19
    • Liquidity and funding Asset encumbrance Encum bered assets - distribution by type of liability (row ) and asset (colum n) Central banks Debt and instruments Securities Government supranational issued by issued by debt debt Covered credit corporate and SEKm instruments instruments bonds institutions other issuers Central bank funding Intraday settlement Repurchase agreements 1) Derivative 2) Covered bonds 3) Other 4) Total 1 912 19 272 968 ABS Mortgage loans 9 243 7 475 1 266 Cash 7 178 514 186 22 152 17 984 860 860 514 186 510 7 688 Financial assets pledged for insurance policy holders 39 699 32 925 80 358 14 248 9 157 ABS Mortgage loans Cash 705 5 397 7 314 2 12 713 32 925 80 358 14 248 9 157 705 226 029 Total of w hich received collateral (offbalance) 177 092 226 029 226 029 39 699 11 155 26 747 9 412 514 186 1 370 562 870 118 627 Unencum bered assets - additional assets available for secured funding Central banks Debt and instruments Securities Government supranational issued by issued by debt debt Covered credit corporate and SEKm instruments instruments bonds institutions other issuers Securities 5, 6) Cover pool over collateralisation 7) Cover pool eligible assets 8) Total Total of w hich received collateral (offbalance) 0 23 761 403 121 23 761 Total assets (Balance sheet): SEKm 1 820 807 1) 2) 3) 4) 5) Repoed securities. Collateral posted under CSA agreements, gross (3-year, SEKm, High: 21 572, Low: 10 086, Average: 14 223). Of which accrued interest of encumbered assets in the cover pool, SEKm 2 091 as of 31 Dec 2013. Collateral pledged in securities lending activities and with exchanges. Reversed repos are included. 6) 7) 8) All type of securities, including securities non pledgeable at central banks, of which 78% are rated AAA, 2% are rated below A- and 7% are not rated. Of which accrued interest of assets in the cover pool overcollateralisation, SEKm 932 as of Dec 2013. Securities received as collateral in for example reversed repo transactions that: either have (encumbered) or have not (unencumbered), been used as collateral by Swedbank. Source: Swedbank Facts Dec 2013 20
    • Swedish housing and mortgage market Real estate prices – Sweden 12-month development Single-family homes1 12M Δ Tenant-owner rights2 12M Δ Combined3 12M Δ Jan/13 3% 7% 5% Feb/13 4% 7% 5% Mar/13 3% 7% 5% Apr/13 2% 8% 4% May/13 4% 8% 5% Jun/13 4% 10% 6% Jul/13 4% 9% 6% Aug/13 5% 11% 7% Sep/13 5% 11% 7% Oct/13 6% 11% 8% Nov/13 4% 13% 7% Dec/13 4% 13% 7% Source: Valuegard www.valuegard.se (Based on data from Mäklarstatistik), 1 HOXHOUSESWE, 2 HOXFLATSWE, 3 HOXSWE 21
    • Nr.of deals Jul-13 Jan-13 Jul-12 Jan-12 Jul-11 Jan-11 Nr.of deals Jul-10 Jan-10 Jul-09 Jan-09 EUR/m2 /Nr of deals EUR/m2 Nr.of deals Jul-13 Jan-13 Jul-12 Jan-12 Jul-11 Jan-11 200 0 Jul-10 400 200 Jan-10 600 400 Jul-09 800 600 Jan-09 EUR/m2 /Nr of deals Jul-08 1 000 800 Jan-08 1 200 1 000 Jul-07 1 400 1 200 Jan-07 1 600 1 400 Jul-06 1 800 1 600 Jan-06 1 800 Jul-05 Tallinn Jan-05 Jul-13 Jan-13 Jul-12 Jan-12 Jul-11 Jan-11 Jul-10 Jan-10 Jul-09 Jan-09 Jul-08 Jan-08 Jul-07 Jan-07 Jul-06 Jan-06 Jul-05 Jan-05 EUR/m2 /Nr of deals Jul-08 Jan-08 Jul-07 Jan-07 Jul-06 Jan-06 Jul-05 Jan-05 Real estate prices Baltic countries Riga 0 EUR/m2 1 800 Vilnius 1 600 1 400 1 200 1 000 800 600 400 200 0 EUR/m2 22