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Presentation of Swedbank's first quarter 2012 results
Presentation of Swedbank's first quarter 2012 results
Presentation of Swedbank's first quarter 2012 results
Presentation of Swedbank's first quarter 2012 results
Presentation of Swedbank's first quarter 2012 results
Presentation of Swedbank's first quarter 2012 results
Presentation of Swedbank's first quarter 2012 results
Presentation of Swedbank's first quarter 2012 results
Presentation of Swedbank's first quarter 2012 results
Presentation of Swedbank's first quarter 2012 results
Presentation of Swedbank's first quarter 2012 results
Presentation of Swedbank's first quarter 2012 results
Presentation of Swedbank's first quarter 2012 results
Presentation of Swedbank's first quarter 2012 results
Presentation of Swedbank's first quarter 2012 results
Presentation of Swedbank's first quarter 2012 results
Presentation of Swedbank's first quarter 2012 results
Presentation of Swedbank's first quarter 2012 results
Presentation of Swedbank's first quarter 2012 results
Presentation of Swedbank's first quarter 2012 results
Presentation of Swedbank's first quarter 2012 results
Presentation of Swedbank's first quarter 2012 results
Presentation of Swedbank's first quarter 2012 results
Presentation of Swedbank's first quarter 2012 results
Presentation of Swedbank's first quarter 2012 results
Presentation of Swedbank's first quarter 2012 results
Presentation of Swedbank's first quarter 2012 results
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Presentation of Swedbank's first quarter 2012 results

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Presentation of Swedbank's first quarter 2012 results by CEO MIchael Wolf, CFO Göran Bronner and CRO Håkan Berg.

Presentation of Swedbank's first quarter 2012 results by CEO MIchael Wolf, CFO Göran Bronner and CRO Håkan Berg.

Published in: Economy & Finance, Business
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  • 1. Swedbank’s first quarter 2012 resultsMichael Wolf, CEOGöran Bronner, CFOHåkan Berg, CRO
  • 2. Progress in many areas• Focus on customer relations and operational efficiency• Good business activity – Increased lending business pipeline in LC&I/Retail – Capital markets related products – Commissions in Baltic shows healthy economic activity• Cost ambitions on track• Capital position further strengthened 2
  • 3. RetailStrong income growthSEKm Q1 11 Q4 11 Q1 12 Q/Q • Repricing moving aheadNet interest income 2 918 3 244 3 407 +163Net commissions 1 314 1 259 1 261 +2 • Cost trend according to planTotal income 4 613 4 904 5 123 +219Total expenses 2 415 2 486 2 342 -142 • Good credit qualityProfit before 2 198 2 418 2 781 +363impairmentsCredit Impairments 5 216 24 -192ROE 28.5 25.7 26.5C/I ratio 0.52 0.51 0.46 3
  • 4. Large Corporates & InstitutionsStrong result and activitySEKm Q1 11* Q4 11* Q1 12 Q/Q • Favourable market conditionsNet interest income 823 845 887 +42 - of which LC/FI**Net commissions 433 420 563 269 652 434 +89 +165 • Good activity in corporateNet gains and losses 366 224 648 +424 finance and in bond issuesTotal income 1 621 1 328 1 980 +652Expenses excl variable 656 818 607 -211 • Repricing trend, continuedstaff costVariable staff costs 83 13 106 +93 stable growth in LargeProfit before 882 497 1 267 +770 Corporates NIIImpairmentsCredit Impairments -105 4 14 +10 • Cost improvement visibleROE 22.3 9.4 19.1C/I ratio 0.46 0.63 0.36* Excluding Lehman one-off ** Large Corporates/Financial Institutions 4
  • 5. Baltic BankingNII pressureSEKm Q1 11 Q4 11 Q1 12 Q/Q • Underlying NII under pressureNet interest income 997 901 912 +11Net commissions 317 380 371 -9 - Deposits from falling EuriborTotal income 1 471 1 521 1 452 -69 - Further deleveragingTotal expenses 651 719 620 -99Profit before 820 802 832 +30 • Net recoveries in all threeimpairmentsCredit Impairments -382 -117 - 134 -17 countriesROE 13.9 -18.9 14.5 • Good business pipeline butC/I 0.44 0.47 0.43 weak consumer confidence 5
  • 6. Cost developmentCost reductions running according to plan• Target to reduce underlying costs by SEK 1bn 2012• Year on year underlying cost decrease of SEK 185m• Biggest reductions in staff (SEK 90m) and consultancy costs (SEK 75m)• Further cost effects to be seenCost Trend (SEKm) Q1 2011 Q1 2012 Y/YTotal expenses 4 513 4 413 - 100Variable staff costs 146 208 + 62Compensation to savings banks 129 152 + 23Underlying cost 4 238 4 053 - 185 6
  • 7. Group resultsSolid developmentSEKm Q1 11 Q4 11 Q1 12 Q/Q Y/Y • Strong NIINet interest income 4 501 4 967 5 208 +241 +707 - Repricing lendingNet commissions 2 456 2 291 2 405 +114 -51 - Lower cost governmentNet gains and losses 255 559 759 +200 +504 guaranteed fundingOther income 1 369 839 809 - 30 -560Total income 8 581 8 656 9 181 +525 +600 - Shrinking deposit marginsTotal expenses 4 513 4 947 4 413 -534 - 100 • Cost management on trackProfit before 4 068 3 709 4 768 +1 059 +700impairmentsCredit impairments -972 -174 172 +346 +1 144 • Higher client activity - Corporate financeProfit for the period 3 852 965 3 425 +2 460 - 427 - FX/Fixed incomeROE 16.1 3.9 14.0 - Bond originationC/I 0.53 0.57 0.48CT1-ratio 14.9 15.7 15.9 7
  • 8. Liquidity and funding Continued conservative stance • Significantly improved environment • Continued high issuance of long-term debt, SEK 56bn during Q1 • Estimated issuance SEK 100-120bn for full year • Higher degree of senior unsecured funding • Awaiting new regulatory landscape of capital and funding Long-term debt issued in Q1 Outstanding short-term debt SEKm SEKm30 000 60 00025 000 50 00020 000 40 000 Q4 1115 000 30 000 Q1 1210 000 20 000 5 000 10 000 0 0 Domestic Euro CB USD CB Other CB Senior Domestic ECP/CD USCP Yankee French Finnish CB (144A) unsecured CP CD CD CD 8
  • 9. Risk highlightsStable asset qualityCredit impairments (SEKm) Q1 12 • Impaired loans decreasingRetail 24 • Continued resilience in SwedenLC&I 14Baltic Banking -134 • Further improvements in the Baltic Estonia -78 portfolio Latvia -21 • Ukraine remains risk area Lithuania -35 – SEK 200m additional provisionsGroup Functions & Other 268 Russia -65 Ukraine 333Swedbank Group 172 9
  • 10. Asset quality Impaired loans decreasing • Excluding FX effect, down SEK 2.4bn in Q1 • Improvements for corporates in all areasSEKm 45 000 2 391 40 328 40 000 35 000 Share of - 4 088 - 3 853 impaired 30 000 - 3 031 loans, gross - 1 078 -1 926 22 139 25 000 -3 938 20 000 -2 666 Ukraine 61% 4 965 702 Russia 12% 15 000 4 349 Lithuania 12% 10 000 6 798 Latvia 19% 5 000 Estonia 6% 3 353 294 LCI 0.12% 1 678 Retail 0.18% 0 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q1 12 10
  • 11. Asset qualityContinued focus on risk-weighted assets• Minor change Q1 2012 – Credit volume mix quality improvement – Recalibration Baltic Banking – Increased bond portfolio and holdings of unrated bonds• Focus areas 2012 – Review of small and mid-sized corporates Sweden – Retail mortgage risk-weights – Credit processes Retail and Baltic Banking 11
  • 12. Strong first quarter but uncertain macro • Net profit SEK 3.4bn • Core Tier 1 capital ratio 15.9 per cent • Return on equity 14.0 per cent SEKm Profit before impairments6 0004 0002 000 0 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 12
  • 13. Q&A
  • 14. Appendix 14
  • 15. Mortgage loans gross margin (3 months) %65 Net margin4 The gross margin should cover: Cost of liquidity ~0,3%3 Administrative costs ~0,3% Cost of capital ~ 0,13% Credit impairments ~ 0,03%210Q1 03 Q1 04 Q1 05 Q1 06 Q1 07 Q1 08 Q1 09 Q1 10 Q1 11 Q1 12 Gross margin Swedbanks funding cost Stibor 3 months Swedish Riksbanks reporate 15
  • 16. Large Corporates & InstitutionsStrong result and activitySEKm Q1 11* Q2 11 Q3 11 Q4 11* Q1 12*Net interest income 823 884 756 845 887 of which LC & FI** 433 444 519 563 652 of which Markets 390 440 237 282 235Commission income 420 334 317 269 434 of which LC & FI* 315 221 241 261 278 of which Markets 105 113 77 8 156Total income LC&I 1 621 1 247 1 184 1 328 1 980 of which LC & FI** 758 682 770 832 946 of which Markets 863 565 414 496 1 034Total expenses, excl 656 685 659 818 607variable payVariable staff costs 83 50 6 13 106Profit bef 882 512 519 497 1 267impairments of which LC & FI** 536 481 567 574 735 of which Markets 346 31 -48 -77 532Total impairments -105 -20 -68 21 14C/I ratio 0.46 0.59 0.56 0.63 0.36* Excluding Lehman one-off ,**Large corporates and Financial institutions 16
  • 17. Cost management Cost target 2012• Target to reduce underlying costs SEK 1bn 2012SEKbn 20 18.4 18 17.1 - 0.4 16.1 16 - 0.4 - 0.5 14 12 10 8 6 4 2 0 Total expenses 2011 Variable staf f costs Restructuring costs Compensation to Underlying costs Cost target 2012 (af ter restatements) Savings Banks 2011 17
  • 18. Swedbank regulatory compliant – transition completed• Transformation of: – Maturity structure liabilities – Liquidity reserve – Capital buffer• Significantly reduced risk in balance sheet• Cost for regulatory compliance takenRatio Swedbank Expected requirementsCT1-ratio, Basel 3 14.9%  10% (2013) 12% (2015)Liquidity coverage ratio 116%  100% (2015) EUR/USDNet stable funding ratio 96%  100% (2018) 18
  • 19. Liquidity and funding Long-term funding maturity profile• FY 2012 maturities amount to nominal SEK 86bn − Of which SEK 46bn for the remainder of 2012 Long-term funding maturity profile SEKbn 200 Government guaranteed debt 150 Senior unsecured debt 100 Covered bonds 50 0 2012 2013 2014 2015 2016 2017 2018- Source: Swedbank Mar 31, 2012 19
  • 20. Liquidity and fundingRemaining government guaranteed debt• Exited the programme on 30 April 2010• No issuance under the programme since summer 2009• Maturities of SEK 9bn in government guaranteed debt for the remainder of 2012 Maturity profile as per Q1 2012 SEKbn40 JPY CHF20 USD SEK EUR 0 2012 2013 2014Source: Swedbank March 31, 2012 20
  • 21. Liquidity and funding Senior unsecured debt strategy • Secure OC-level • Fund liquidity reserves House price sensitivity of the cover pool 35% 30% 25% OC 20%Over-collateralisation 15% 10% 5% 0% -5% -10% -15% -20% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% House price drop Source: Swedbank, Mar 31, 2012, Nominal amounts 21
  • 22. Liquidity and fundingLiquidity reserveAccording to the template defined by the Swedish Bankers Association SEKmCash and holdings in central banks 169 795Deposits in other banks available overnight 134Securities issued or guaranteed by sovereigns, central banks or multilateral development banks 22 983Securities issued or guaranteed by municipalities or Public sector entitiesCovered bonds 57 905 - Issued by other institutions 57 905 - Own issuedSecurities issued by non-financial corporatesSecurities issued by financial corporates (excl. covered bonds) 2 713OtherTotal1 253 531Additional liquid assets, Group2 67 7951 94% of the securities in the liquidity reserve per Q1 2012 are rated AAA2 86% of the additional liquid assets fulfill the Liquidity Reserve definition by the Swedish bankers’ association except fromthat they are held outside the Treasury department. 22
  • 23. Swedish housing and mortgage marketReal estate prices – Sweden 12 months development Single-family homes1 Tenant owner rights2 Combined3 12M Δ 12M Δ 12M Δ Apr/11 1% 6% 3% May/11 0% 6% 2% Jun/11 0% 5% 2% Jul/11 0% 6% 2% Aug/11 -2% 3% -1% Sep/11 -3% 1% -2% Oct/11 -4% -1% -3% Nov/11 -5% -4% -5% Dec/11 -7% -4% -6% Jan/12 -4% -2% -4% Feb/12 -4% -1% -3% Mar/12 -4% 1% -3%Source: Valuegard www.valuegard.se (Based on data from Mäklarstatistik), 1 HOXHOUSESWE, 2 HOXFLATSWE, 3 HOXSWE 23
  • 24. Baltic real estate prices Real estate prices – Baltic countries Tallinn Riga1800 1 8001600 1 6001400 1 4001200 1 2001000 1 000 800 800 600 600 400 400 200 200 0 0 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jul-05 Jul-06 Jul-07 Jul-08 Jul-09 Jul-10 Jul-11 Jul-05 Jul-06 Jul-07 Jul-08 Jul-09 Jul-10 Jul-11 Nr.of deals EUR/m2 Nr.of deals EUR/m2 Source: Swedbank, Estonian Land Board Source: Swedbank Vilnius1 8001 6001 4001 2001 000 800 600 400 200 0 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jul-05 Jul-06 Jul-07 Jul-08 Jul-09 Jul-10 Jul-11 Nr.of deals EUR/m2 Source: Swedbank, State Enterprise Centre of Registers 24
  • 25. -80 -60 -40 -20 0 -100 20 EURm Q1 11 Q2 11 Q3 11 Asset quality Estonia Q4 11 Q1 12 Q1 11 Q2 11 Latvia Q3 11 Q4 11 Q1 12 Q1 11 Q2 11 Lithuania Q3 11 Q4 11 Q1 12 Q1 11 Q2 11 Ukraine Q3 11 Loans past due 60 days – performance Q/Q Q4 11 Q1 12 Q1 11 Q2 11 Q3 11 Russia Q4 11 Q1 1225
  • 26. Asset qualityProvisions – well provided for• Increased individual provisioning rates• Additional provisioning private portfolio Ukraine• Positive rating migrations in home marketsSEKm30 000 Provision ratios, % Q1 12 Retail 90 61.0%25 000 LC&I 135 60.0% Baltic Banking 54 59.8% 61.5% 65.0%20 000 Russia 64 2 769 2 436 Ukraine 79 2 40915 000 16 598 15 952 2 435 Group 65 14 782 2 478 12 821 10 80110 000 9 255 11 915 8 206 6 306 5 204 5 000 0 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Individual provisions Portf olio provisions Write-of f s, gross, cum f rom 2010 Provision ratio 26
  • 27. Asset qualityCredit impairments by business area, SEKm 172 -324 -174 -441 -972 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Retail LC&I Baltic Banking Other (Russia/Ukraine) 27

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