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Swedbank’s first quarter 2013 resultsMichael Wolf, CEO        WolfGöran Bronner, CFOHåkan Berg, CRO
Retail bankingCustomer requirements drive new ways of banking           q                      y           g• Focus on fun...
Swedbank and Savings BanksFast increase of digital usage                   g        g•   Internet Bank, private and corpor...
RetailStable resultsSEKm                  Q1 12   Q4 12   Q1 13   ▲ Q/Q   ▲ Y/Y   • Stable NIINet interest income   3 371 ...
Large Corporates & InstitutionsGood returnSEKm                     Q1 12   Q4 12   Q1 13   ▲ Q/Q   ▲ Y/Y   • Stable NIINet...
Baltic BankingFocus on costsSEKm                  Q1 12   Q4 12   Q1 13   ▲ Q/Q   ▲ Y/Y   • Stable NII in local currencyNe...
Group resultsRobust earnings             gSEKm                            Q1 12   Q4 12   Q1 13   ▲Q/Q    ▲Y/Y    • Stable...
Capital situationContinued strengthening capital position               g      g p       p                  Common Tier 1 ...
Strong credit quality     g        q     yCredit impairments, SEKm                Q1 12        Q4 12        Q1 13    • Con...
Swedbank’s first quarter 2013 resultsQ&A
Appendix
Loans past due 60 days – performance Q/Q      p             y    pEURm                       Estonia                      ...
Provisions – well provided for                  pSEKm25 000                                                               ...
Credit portfolio - RetailCorporate portfolio drives capital efficiency   p      p                  p              y       ...
Credit portfolio – Large Corporates & InstitutionsShipping and Offshore   pp g                                            ...
Credit portfolioAgriculture g                                               • Segmentation definitions                    ...
Liquidity and fundingCore balance sheet* structure                  Assets                                         Liabili...
Liquidity and fundingSenior unsecured debt strategy                            gy• Limited need given Swedbank’s balance s...
Liquidity and fundingLower funding needs            g• LCR 139% (Swedish FSA definition FFFS 2012:6)• NSFR 93%• Expanded i...
Liquidity and fundingConservative funding plan                   gp• Issued SEK 40bn of term-funding in Q1• Term funding p...
Liquidity and fundingLong-term funding maturity p   g            g        y profile• FY 2013 maturities amount to nominal ...
Liquidity and fundingLimited need for USD-funding                           g•       USD-funding need covered for more tha...
Liquidity and fundingLiquidity reserve  q     yAccording to the template defined by the Swedish Bankers Association       ...
Liquidity and fundingProlonged survival horizon      gSEKbn      SEKbn300250200150100 50  0      0   20   40     60       ...
Liquidity and fundingConservative liquidity levels               q     y• Short-term funding mainly a tool for cash manage...
Liquidity and fundingAsset encumbranceEncum bered assets - distribution by type of liability (row ) and asset (colum n)   ...
Swedish housing and mortgage marketSwedish mortgage market            g g•    No securitisation (on balance sheet), no sub...
Swedish housing and mortgage marketReal estate prices – Sweden 12 months development            p                         ...
0                                                                                                                         ...
Mortgage loans, gross margin (3 months)    g g         g        g (          )%654                                        ...
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Swdbank's First Quarter 2013 Results Presentation from thenalysts Conference Call

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Swdbank's First Quarter 2013 Results Presentation from thenalysts Conference Call

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Transcript of "Swdbank's First Quarter 2013 Results Presentation from thenalysts Conference Call"

  1. 1. Swedbank’s first quarter 2013 resultsMichael Wolf, CEO WolfGöran Bronner, CFOHåkan Berg, CRO
  2. 2. Retail bankingCustomer requirements drive new ways of banking q y g• Focus on functionality and ease of usemillion Monthly logins Swedbank and Savings Banks302520151050Jan 2010 Jan 2011 Jan 2012 Jan 2013 Mobile bank Internet bank 2
  3. 3. Swedbank and Savings BanksFast increase of digital usage g g• Internet Bank, private and corporate (since March 1997) – Number of users: >3.5 million• Mobile Bank, private (since Dec 2009) – Number of users: >1.3 million• Mobile Bank Youth (since March 2013) – Number of users: 6 700• Mobile Bank Corporate (since March 2013) – Number of users: >8 000• Ipad (since Oct 2012) – Number of users: >200 000• Swish (since Dec 2012) ( ) – Number of users: ~100 000 3
  4. 4. RetailStable resultsSEKm Q1 12 Q4 12 Q1 13 ▲ Q/Q ▲ Y/Y • Stable NIINet interest income 3 371 3 353 3 332 -21 -39Net commissions 1 538 1 554 1 589 35 51 • Solid asset qualityTotal income 5 346 5 255 5 377 122 31TotalT t l expenses 2 429 2 474 2 406 -68 68 -23 23 • New organisationProfit before 2 917 2 781 2 971 190 54impairmentsCredit impairments 21 91 55 -36 34ROE, % 28.4 28.0 27.9C/I ratio ti 0.45 0 45 0.47 0 47 0.45 0 45 4
  5. 5. Large Corporates & InstitutionsGood returnSEKm Q1 12 Q4 12 Q1 13 ▲ Q/Q ▲ Y/Y • Stable NIINet interest income 728 795 783 -12 55Net commissions 485 536 419 -117 -66 • Low activity in CorporateTotal income 2 071 1 857 1 814 -43 -257 FinanceExpenses excl variable pe ses e c a ab e 661 668 646 -22 22 -15 15staff costsVariable staff costs 105 75 88 13 -17 • Structural challenges inProfit beforeimpairments 1 305 1 114 1 080 -34 -225 Equities qCredit impairments 17 162 74 -88 57 • Solid credit qualityROE, % 18.9 18.3 16.7C/I ratio 0.37 0.40 0.40 5
  6. 6. Baltic BankingFocus on costsSEKm Q1 12 Q4 12 Q1 13 ▲ Q/Q ▲ Y/Y • Stable NII in local currencyNet interest income 910 760 742 -18 -168Net commissions 386 366 388 22 2 • Increased customer activityTotal income 1 468 1 289 1 281 -8 -187TotalT t l expenses 629 633 586 -47 47 43 -43 • RecoveriesProfit before 839 656 695 39 -144impairmentsCredit impairments -134 -329 -70 -259 -64 • Increased efficiency in focusROE, % 14.6 13.3 12.6C/I ratio ti 0.43 0 43 0.49 0 49 0.46 0 46 6
  7. 7. Group resultsRobust earnings gSEKm Q1 12 Q4 12 Q1 13 ▲Q/Q ▲Y/Y • Stable NIINet interest income 4 895 5 346 5 353 7 458 – RepricingNet commission income 2 398 2 502 2 388 -114 -10 – Funding costsNet gains and losses 979 830 557 -273 -422Total income 9 072 9 437 9 082 -355 10 – Lower deposit marginsTotal expenses 4 327 4 142 4 043 -99 -284Profit before impairments 4 745 5 295 5 039 -256 294 • Net gains and lossesImpairment of tangible assets 40 141 85 -56 45 one-off gain in Q4 12 gCredit impairments -96 -76 60 136 -156Tax 1 108 786 976 190 -132 • Lower costsProfit from continued ops. 3 693 4 427 3 918 -509 225Profit from discontinued ops. -279 -174 -390 -216 -111 • Continued good asset qualityProfit for the period 3 410 4 252 3 525 -727 115Return on equity, % 14.1 16.9 13.8 • Ukraine and RussiaROE continuing operations, % 15.3 17.5 15.3 discontinued operationsCost/income ratio 0.48 0.44 0.45 7
  8. 8. Capital situationContinued strengthening capital position g g p p Common Tier 1 capital ratio • 13-15% CET1 Basel 2* Basel 3 16.7 17.3 16.4 15.4 15 4* As of 2012 incl. IAS 19 • CRD/CRR IV – less impact • IRB Advanced • Waiting for regulatory clarity 2007 2008 2009 2010 2011 2012 Q1 13 Changes in B3 CET1 ratio Q4-Q1 0.55% 16.38% 0.24% -0.13 0.14% 0.14% 15.45% Q4 2012 Profit Q1 IAS 19 RWA SME & Other Q1 2013 change Q1 CVA Basel 3 (Basel 3) changes Increase Decrease 8
  9. 9. Strong credit quality g q yCredit impairments, SEKm Q1 12 Q4 12 Q1 13 • Continued high credit qualityRetail 21 91 55 in SwedenLarge Corporates & Institutions 17 162 74Baltic Banking -134 -329 -70 • Slower net recoveries in Estonia E t i -78 78 -242 242 -54 54 Baltic Banking B lti B ki Latvia -21 86 4 Lithuania -35 -173 -20 • Exiting Russia and Ukraine gSwedbank Group -96 -76 60SEKbn Impaired loans35 31.730252015 10.310 5 0 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Q3 12 Q4 12 Q1 13** Russia and Ukraine reported as discontinued operations. 9
  10. 10. Swedbank’s first quarter 2013 resultsQ&A
  11. 11. Appendix
  12. 12. Loans past due 60 days – performance Q/Q p y pEURm Estonia Latvia Lithuania 50 0 -50-100-150-200-250 Q1 12 2 Q2 12 2 Q3 12 2 Q4 12 2 Q1 13 3 Q1 12 2 Q2 12 2 Q3 12 2 Q4 12 2 Q1 13 3 Q1 12 2 Q2 12 2 Q3 12 2 Q4 12 2 Q1 13 3 12
  13. 13. Provisions – well provided for pSEKm25 000 Provision ratios, % Q1 13 Retail 7020 000 LC&I 76 65.0% 63.7% 65.2% Baltic Banking 52 61.9% 57.0% Group 5715 000 2 478 2 040 11 915 1 77410 000 10 951 9 934 1 545 7 077 5 000 1 420 4 429 0 Q1 12 Q2 12 Q3 12 Q4 12 Q1 13* Individual provisions Portf olio provisions Provision ratio* Russia and Ukraine reported as discontinued operations. 13
  14. 14. Credit portfolio - RetailCorporate portfolio drives capital efficiency p p p y Total portfolio SEK 222bn Segments excl. Swedbank Volume Secured Mortgage and Swedbank Finance (SEKbn) (%) Agriculture A i lt 5.9 59 81 Manufacturing 9.7 74 Public sector and utilities 5.1 92 94 Construction 4.7 82 104 Retail 9.0 88 Transportation 1.9 85 Shipping 0.1 95 Hotels and restaurants 3.1 91 24 Information & communication 0.9 46 Swedbank Mortgage AB Finance and insurance 2.0 66 Swedbank Finans AB Property management 49.4 97 Other Professional service 6.7 65 Other 6.0 72 Total 104.4 87 14
  15. 15. Credit portfolio – Large Corporates & InstitutionsShipping and Offshore pp g SEKbn Shipping and Offshore g -3.0% -3.0% 30• Exposure to Shipping & Offshore 24 26 25 24 23 sector was SEK 23.5bn plus 4 20 unutilised commitments of SEK 7.7bn 5 – Portfolio duration 4-5y 10 – Average fleet age 7y g g y 15 – Strong employment profiles 0 Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Offshore Tanker Other Shipping and Offshore Portfolio by subsegment Shipping and Offshore portfolio by currency RORO 1.6 bn Container 0.9 JPY Dry bulk 0.7 Q1-13 Gas (LNG/LPG) 1.4 Q4-12 Q1-13 Crude oil 0.7 NOK Product 2.3 Q4-12 Chemical 0.2 USD Floating p g production 1.9 Accommodation 1.2 EUR Supply 3.5 Oil service 1.6 Drilling & exploration 6.8 SEK Cruise 0.5 05 0 5 10 15 20 0 2 4 6 8 SEKbn 15
  16. 16. Credit portfolioAgriculture g • Segmentation definitions – Corporate Agriculture: Businesses that derive their main income from Private: Residential agricultural activities 20% – Private Investments: Private individuals who own agricultural p p g properties for residential or investment purposes Agriculture 45% • Lending to the agricultural sector Private: Forestry SEK 63.3bn 22% – Corporate Agriculture: (58%) • Agriculture 45% • Forestry 13% Forestry 13% – Private Investments (42%) • Residential: 20% • Forestry: 22% 16
  17. 17. Liquidity and fundingCore balance sheet* structure Assets LiabilitiesSEKbn SEKbn1 400 1 400 Suppl. cap S CET1 Government guaranteed debt1 200 1 200 Senior Estonia CEE lending1 000 Other corporate 1 000 lending, Sweden & Deposits other Nordics 800 800 Other i t S d Oth private, Sweden 600 600 Swedish mortgage loans 400 400 Covered bonds 200 200 0 0 Q1 2013 Q1 2013* Simplified balance sheetSource: Swedbank, 31 March, 2013 17
  18. 18. Liquidity and fundingSenior unsecured debt strategy gy• Limited need given Swedbank’s balance sheet structure• Secure OC• Fund liquidity reserves Senior unsecured debt maturity profile House price sensitivity of the cover poolSEKbn Senior unsecured debt 40%60 30% OC, Q113 tion 20% ver-collateralisat40 10% 0% Ov20 -10% 0 -20% 20% 2013 2014 2015 2016 2017 2018 2019- 0% -5% -10% -15% -20% -25% -30% -35% -40% -45% -50%Source: Swedbank, 31 March, 2013, nominal amounts House price drop 18
  19. 19. Liquidity and fundingLower funding needs g• LCR 139% (Swedish FSA definition FFFS 2012:6)• NSFR 93%• Expanded investor base Term funding issuance – completed and plannedSEKbnSEKb Covered bonds Senior unsecured120100 80 60 40 20 0Source: Swedbank, 31 March, 2013, nominal amounts 19
  20. 20. Liquidity and fundingConservative funding plan gp• Issued SEK 40bn of term-funding in Q1• Term funding plan in 2013 of SEK 120bn full year 120bn, full-year maturities of SEK 86bn SEKm Issued long-term debt SEKm Outstanding short-term debt 70 000 60 000 60 000 50 000 50 000 40 000 40 000 FY 2012 Q1 13 30 000 Q4 12 30 000 20 000 Q1 13 20 000 10 000 10 000 0 0 Domestic Euro CB USD CB Other CB Senior Domestic CP ECP/CD USCP Yankee CD French CD CB (144A) unsecuredSource: Swedbank, 31 March, 2013, nominal amounts 20
  21. 21. Liquidity and fundingLong-term funding maturity p g g y profile• FY 2013 maturities amount to nominal SEK 86bn, of which SEK 46bn for the remainder of 2013 Long-term funding maturity profileSEKbn200 Government guaranteed debt Senior unsecured150 debt Covered bonds100 50 0 2013 2014 2015 2016 2017 2018 2019 2019-Source: Swedbank Mar 31, 2013 21
  22. 22. Liquidity and fundingLimited need for USD-funding g• USD-funding need covered for more than 12 months• Issued USD 1bn of covered bonds (144a) and USD 1bn of senior (144a) YTD 2013 ( ) ( )SEKbn300 Interest-bearing securities250 Lending to the public200 Loans to credit institutions150 Cash and balances with central banks100 Deposits and borrowings from the public50 Amounts owed to credit institutions Debt securities in issue 0 Assets LiabilitiesSource: Swedbank Fact book, Mar 31, 2013 22
  23. 23. Liquidity and fundingLiquidity reserve q yAccording to the template defined by the Swedish Bankers Association SEKmCash and holdings in central banks 210 251Deposits in other banks available overnight 1 290Securities issued or guaranteed by sovereigns, central banks or multilateral development banks 27 751Securities issued or guaranteed by municipalities or Public sector entities 378Covered bonds 58 284 - Issued by other institutions 58 284 - Own issuedSecurities issued by non-financial corporatesSecurities issued by financial corporates (excl. covered bonds) y ( ) 2 532Other 1Total 300 486 2, 2 3Additional li id assets, GAdditi l liquid t Group 56 4721 95% of the securities in the liquidity reserve per Q1 2013 are rated AAA2 84% of the additional liquid assets fulfill the Liquidity Reserve definition by the Swedish Bankers’ Association except forthe fact that they are held outside the Treasury department.3 82% of the additional assets are rated AAASource: Swedbank Fact book, 31 March, 2013 23
  24. 24. Liquidity and fundingProlonged survival horizon gSEKbn SEKbn300250200150100 50 0 0 20 40 60 365 80 100 120 140 160 180 200 220 240 260 280 300 320 340 360 Days forw ard Days forwardSource: Swedbank 31 March, 2013 24
  25. 25. Liquidity and fundingConservative liquidity levels q y• Short-term funding mainly a tool for cash management• More than 12 months pre funded pre-fundedSEKbn400 400350 350 Additional pledgeable300 300 and/or liquid assets Next 12-month term250 250 1 funding maturities f Liquidity reserve,200 securities 200 CP / CDs and net150 1 150 interbank funding, Liquidity reserve, central bank deposits deposits, SEKm100 SEKm 100 50 50 0 01As defined by the Swedish Bankers’ AssociationSource: Swedbank 31 March, 2013 25
  26. 26. Liquidity and fundingAsset encumbranceEncum 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 MortgageSEKm s u e s instruments s u e s instruments bo ds bonds institutions other issuers s u o s o e ssue s ABS S oa s loans Cas Cash TotalCentral bank funding 0Intraday settlement 1 028 10 772 11 800Repurchase agreements 1) 18 448 12 765 31 213Derivative 2) 74 1 949 13 125 15 148Covered bonds 3) 514 795 514 795Other 4) 0 736 284 1 020Total 19 550 0 25 486 736 0 0 514 795 13 409 573 976Financial assets pledged for insurance policy holders 109 813Unencum 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 MortgageSEKm instruments instruments bonds institutions other issuers ABS loans Cash TotalSecurities 5, 6) , ) 30 948 11 213 73 812 12 671 8 238 984 137 866Cover pool overcollateralisation 7) 192 782 192 782Cover pool eligible assets 8) 12 031 12 031Total 30 948 11 213 73 812 12 671 8 238 984 204 813 0 342 679Total assets 1 917 2271) Repoed securities on balance sheet. 6) All type of securities, including securities non pledgeable at central2) Collateral posted under CSA agreements, gross (3-year, SEKm, banks, of w hich 80% are rated AAA, 2% are rated below A-High: 21 572, Low : 10 945, Average: 13 975). and 8% are not rated.3) Of w hich accrued interest of assets in the cover pool, SEK 2 389m 7) Of w hich accrued interest of assets in the cover poolas of Q1 2013 overcollateralisation, SEK 831m as of Q1 20134) Collateral pledged in securities lending activities and w ith 8) Type of loans; Residential 84.3%, Forestry & Agriculture 15.4%,exchanges Commercial 0.3%.5) Reversed repos are included. Source: Swedbank Fact book Q1 2013 26
  27. 27. Swedish housing and mortgage marketSwedish mortgage market g g• No securitisation (on balance sheet), no sub-prime market, no 3rd party origination, insignificant buy-to-let market• 70% home ownership1• Rental market is regulated• Transparent credit information (credit information agency, www.uc.se) – Publicly available information regarding income, debt, payment track record etc• Consumer credit legislation requires affordability calculations including stress test of higher interest rate• Very limited debt forgiveness possibilities (full recourse)• Strong social security and generous unemployment benefit system1 Source: Boverket, 2011 27
  28. 28. Swedish housing and mortgage marketReal estate prices – Sweden 12 months development p p Single-family homes1 Tenant-owner rights2 Combined3 12M Δ 12M Δ 12M Δ Apr/12 -2% 2% -1% May/12 -2% 3% -1% Jun/12 -1% 1% 4% 0% Jul/12 0% 4% 1% Aug/12 2% 4% 3% Sep/12 2% 5% 3% Oct/12 1% 6% 3% Nov/12 3% 7% 4% Dec/12 4% 7% 6% Jan/13 3% 7% 5% Feb/13 4% 7% 5% Mar/13 3% 7% 5%Source: Valuegard www.valuegard.se (Based on data from Mäklarstatistik), 1 HOXHOUSESWE, 2 HOXFLATSWE, 3 HOXSWE 28
  29. 29. 0 200 400 600 800 1000 1200 1400 1600 1800 1 000 1 200 1 400 1 600 1 800 0 200 400 600 800 Ja an-05 J an-05 J ul-05 J Jul-05 Ja an-06 J an-06 J ul-06 J Jul-06 an-07 Ja J an-07 J ul-07 J Jul-07 Real estate prices Ja an-08 Source: Swedbank, Estonian Land Board J an-08 J ul-08 Nr.of deals Nr.of deals J Jul-08 an-09 Ja J an-09 Baltic countries Tallinn Vilnius J ul-09 Source: Swedbank, State Enterprise Centre of Registers J Jul-09 Ja an-10 J an-10 J ul-10 EUR/m2 EUR/m2 J Jul-10 Ja an-11 J an-11 J ul-11 J Jul-11 Ja an-12 J an-12 J ul-12 an-13 Ja J Jul-12 J an-13 1 000 1 200 1 400 1 600 1 800 0 200 400 600 800 J Jan-05 Jul-05 J Jan-06 Jul-06 Source: Land book database J Jan-07 Jul-07 J Jan-08 Nr.of deals Jul-08 J Jan-09 Riga Jul-09 J Jan-10 EUR/m2 Jul-10 J Jan-11 Jul-11 J Jan-12 Jul-12 J Jan-1329
  30. 30. Mortgage loans, gross margin (3 months) g g g g ( )%654 Net margin3 The gross margin covers: Cost of liquidity ~0.2%2 Administrative costs ~0.3% Credit i C dit impairments ~ 0.03% i t 0 03% Tax (22 % on profit before tax)10 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Gross margin Swedbanks f unding cost Stibor 3 months Swedish Riksbanks repo rate 30
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