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Swedbank’s year-end 2011 results
 

Swedbank’s year-end 2011 results

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Swedbank presents the year-end results for 2011.

Swedbank presents the year-end results for 2011.

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    Swedbank’s year-end 2011 results Swedbank’s year-end 2011 results Presentation Transcript

    • Swedbank’s year-end 2011 resultsMichael Wolf, CEOGöran Bronner, CFOHåkan Berg, CRO
    • Delivered according to last years prospects• Net profit of SEK 11.7bn for 2011• Core Tier 1 capital ratio of 15.7 per cent• Return on equity of 12.2 per cent for 2011• Proposed dividend of SEK 5.30 per share 2
    • All stakeholders affected by new environment• Shareholders – Two share issues totalling SEK 27bn – Buy-back programme halted – Goodwill write-downs – Harder to reach ROE target• Staff – Number of employees down by about 6 000 since end of 2007 – Overhaul of remuneration systems will reduce variable pay• Customers – Increased cost of money 3
    • Group resultsContinued stable developmentSEKm FY FY Q3 11 Q4 11 • Goodwill write-down in Latvia 2010 2011Net interest income 16 329 19 118 4 857 4 994 SEK 1913mNet commission income 9 525 8 963 2 292 2 126 • SEK 330m restructuringNet gains and losses 2 400 1 584 259 559 chargeOther income 2 790 3 850 782 839 • Increased capital marketsTotal income 31 044 33 515 8 190 8 518 income and positive valuationTotal expenses 17 642 17 869 4 331 4 809 effectsProfit beforeimpairments 13 402 15 646 3 859 3 709 • Cost reduction 2012: SEK 1bn CT1 ratio, %* 13.9 15.7 • Continued focus on capital efficiency Return on equity, % 8.1 12.2* Basel 2 4
    • Liquidity and fundingSignificantly lower issuance volumes going forward• SEK 44bn of long-term debt issued in Q4 (incl. SEK 7bn of senior unsecured)• Over-collateralisation in covered-bond pool increased to 29% (25%)• Continued strong liquidity reservesSEKbn Term funding issuance80 Average term funding issuance Maturities 201260 Average term funding need4020 0 Q3 2010 Q4 2010 Q3 2012 Q2 2013 Q3 2013 Q2 2014 Q3 2014 Q1 2010 Q2 2010 Q1 2012 Q2 2012 Q4 2012 Q1 2013 Q4 2013 Q1 2014 Q4 2014 Q3 2011 Q1 2011 Q2 2011 Q4 2011 5
    • 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 14.7%  10% (2013) 12% (2015)Liquidity coverage ratio 139%  100% (2015) EUR/USDNet stable funding ratio 94%  100% (2018) 6
    • Capital management• Current capitalisation targets withdrawn• Dividend policy of 50%• Other capital repatriation on hold• Proposal to issue convertible debt instruments• Return target of 15% 7
    • Risk highlightsNet recoveries of SEK 174m in Q4 Credit impairments, SEKm • Credit impairments in Sweden still low – Known problems – Limited inflow of watch list and problem loans -324 -174 • Collective provisions mortgage loans in Latvia and Ukraine -441 -483 -972 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Retail LC&I Baltic Banking Russia & Ukraine Other 8
    • Risk highlightsFocus on risk-weighted assets RWA development • Significant achievements 2011SEKbn550 – Full organisational involvement – Credit volumes 4.4540 – Customer quality -22.3 – Market risks530 • Focus areas 2012520 – Review of small and mid-sized corporates Sweden -21.2510 541.3 – Retail mortgage risk-weights500 -7.4 -2.6490 492.3 Increase Decrease480 2010 Q4 Volume Migrations Other Market Operational 2011 Q4 (EAD) credit risk risk 9
    • Risk highlightsMany factors impacting outlook• Challenging economic situation in Europe• Real estate Sweden: Risk picture is going down• Positive outlook in Baltic countries 10
    • Priorities going forwardIncreased focus on operational efficiency• Improve customer satisfaction• Increase decision-making close to our customers• Improve quality and cost effectiveness 11
    • Q&A
    • Appendix 13
    • Mortgage loans gross margin (3-months) Swedbanks price towards 6.0 customer (3 months) Swedbanks funding cost 5.0 Stibor 3 months Swedish Riksbanks reporate 4.0 Should cover: Liquidy costsPercent 3.0 Cost of adminis- tration Credit Impairments 2.0 Profit 1.0 0.0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 03 03 03 03 04 04 04 04 05 05 05 05 06 06 06 06 07 07 07 07 08 08 08 08 09 09 09 09 10 10 10 10 11 11 11 11
    • Development of ROE and net interest marginROE % NIM %30 1.625 1.420 1.215 1.010 0.8 5 0.6 0 2 004 2 005 2 006 2 007 2 008 2 009 2 010 2 011 0.4 -5-10 0.2-15 ROE (left hand scale) NIM (right hand scale) 0.0 15
    • Liquidity and fundingFunding development Q4• SEK 44bn of long-term debt issued in Q4 (mainly domestic covered bonds and senior unsecured private placements)• Demand for Swedbank short-term paper continued• USD funding need covered for more than 12 monthsSEKm Long-term debt issued in Q4 SEKm Outstanding short-term debt35 000 60 00030 000 50 00025 000 40 00020 000 Q4 11 Q3 11 30 000 Q4 1115 000 20 00010 000 10 000 5 000 0 0 Domestic CB Euro CB Other CB Senior Domestic ECP/CD USCP Yankee Finnish French unsecured CP CD CD CD 16
    • Liquidity and fundingFunding development FY 2011• SEK 254bn of long-term debt issued and SEK 180bn of maturities at beginning of 2011• Good demand for Swedbank short-term paperSEKm Issued long-term debt SEKm Outstanding short-term debt160 000 50 000140 000 40 000120 000100 000 30 000 2010 80 000 2011 2011 20 000 60 000 40 000 10 000 20 000 0 0 Domestic Euro CB USD CB Other CB Senior Domestic ECP/CD USCP Yankee Finnish French CB (144A) unsecured CP CD CD CD 17
    • Liquidity and fundingLong-term funding maturity profile• Maturities for 2012 amount to nominal SEK 86bn Long-term funding maturity profileSEKbn200 Government guaranteed debt Senior unsecured150 debt Covered bonds100 50 0 2012 2013 2014 2015 2016 2017- 18
    • Liquidity and fundingRemaining government guaranteed debt• Exited the programme on 30 April 2010• No issuance under the programme since summer 2009• SEK 37bn of government guaranteed debt matures in April 2012SEKbn Maturity profile as of Q4 201140 USD SEK20 EUR CHF HKD JPY 0 2012 2013 2014 19
    • Swedbank’s cover poolHouse price sensitivity of the cover pool House price sensitivity of the cover poolOver-collateralisation35%30%25% OC20%15%10% 5% 0%-5%-10%-15%-20% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% House price drop 20
    • Liquidity and fundingLiquidity reserve SEKmAccording to the template defined by the Swedish Bankers Association1Cash and holdings in central banks 163 215Deposits in other banks available overnightSecurities issued or guaranteed by sovereigns, central banks or multilateral development banks 27 880Securities issued or guaranteed by municipalities or Public sector entitiesCovered bonds 54 132 - Issued by other institutions 54 132 - Own issuedSecurities issued by non-financial corporatesSecurities issued by financial corporates (excl. covered bonds) 1 715OtherTotal 246 942 Additional liquid assets, Group 2 62 082 Other, over-collateralisation in the cover pool 149 500 Total 458 524 1 96% of the securities in the liquidity reserve as of Q4 2011 are rated AAA 2 80% of the additional liquid assets fulfill the Liquidity Reserve definition by the Swedish Bankers’ Association except from that they are held outside Group Treasury. 21
    • Asset qualityImpaired loans decreasing• Excluding FX effect down SEK 3.4bn in Q4• Corporate portfolio quality improvementsSEKm45 000 42 719 38 631 40 132 40 328 2 39140 000 -4 088 34 778 35 770 4 362 196 -3 853 31 74735 000 Share of 6 113 -3 031 30 669 29 657 28 743 impaired -1 078 24 80530 000 -1 926 loans, gross -3 93825 000 5 366 Ukraine 61%20 000 1 281 Russia 20%15 000 4 792 Lithuania 13% 29 65710 000 7 696 Latvia 21% 5 000 Estonia 6.6% 3 620 319 LCI 0.13% 1 731 Retail 0.19% 0 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q4 11 22
    • Asset qualityLoans past due 60 days – performance Q/QEURm 30 10 -10 -30 -50 -70 -90-110-130-150 Q1 11 Q2 11 Q3 11 Q4 11 Q1 11 Q2 11 Q3 11 Q4 11 Q1 11 Q2 11 Q3 11 Q4 11 Q1 11 Q2 11 Q3 11 Q4 11 Q1 11 Q2 11 Q3 11 Q4 11 Q4 10 Q4 10 Q4 10 Q4 10 Q4 10 Estonia Latvia Lithuania Ukraine Russia 23
    • Asset qualityProvisions – well provided for• Individual provisioning rates maintained• Additional portfolio provisions in Latvian and Ukrainian mortgages• Positive rating migrationsSEKm30 000 Provision ratios, % Q4 11 Retail 90 62.7%25 000 LC&I 135 61.0% Baltic Banking 55 3 297 60.0% 59.8% 61.5%20 000 Russia 46 2 769 18 494 2 436 Ukraine 72 2 40915 000 16 598 15 952 14 782 2 435 Group 62 12 82110 000 8 206 9 255 6 306 5 204 5 000 4 373 0 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Individual provisions Portf olio provisions Write-of f s, gross, cum f rom 2010 Provision ratio 24
    • Asset qualityRepossessed assetsSEKm7 0006 0005 0004 0003 0002 0001 000 0 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Real Estate Residential Real Estate Commercial Passenger & Commercial Transport Shares Other 25
    • Asset qualityCredit impairments by categorySEKm1 000 500 0 - 500 - 324 - 441-1 000 - 174 - 972 - 483-1 500 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Portfolio provisions Individual provisions Recoveries Write-offs net 26
    • Credit portfolio – Large Corporates & InstitutionsShipping and offshore• Lending exposure to the shipping and Shipping and offshore portfolio offshore sector is SEK 22.7bn plus Tanker 26% unutilised commitments of SEK 6.1bn – Portfolio duration 4-5y – Average fleet age 7y Offshore 58% – Other represents dry bulk (4%), Other 16% ro/ro/car (7%), container (5%) – Strong employment profilesNote: Portfolio breakdown based on total exposure (lending + unutilised commitments). 27
    • Swedish housing and mortgage marketReal estate prices – Sweden 2011 Single-family homes1 Tenant owner rights2 Combined3 12M Δ 12M Δ 12M ΔJan 0% 8% 2%Feb 2% 7% 3%Mar 2% 6% 3%Apr 1% 6% 3%May 0% 6% 2%Jun 0% 5% 2%Jul 0% 6% 2%Aug -2% 3% -1%Sep -3% 1% -2%Oct -4% -1% -3%Nov -5% -4% -5%Dec -7% -4% -6%Source: Valuegard www.valuegard.se (Based on data from Mäklarstatistik), 1 HOXHOUSESWE, 2 HOXFLATSWE, 3 HOXSWE 28
    • Real estate prices – Baltic countries Tallinn Riga1 800 2 000 1 616 1 7621 600 1 8001 400 1 6001 200 1 400 976 1 2001 000 1 000 800 800 590 600 600 400 400 200 200 0 0 Jan-05 Jun-11 Dec-07 Jul-08 Nov-10 Aug-05 Sep-09 Jan-05 Jan-06 Jan-08 Jan-09 Jan-10 Jan-07 Jan-11 Sep-05 Sep-06 Sep-07 Sep-09 Sep-10 Sep-11 Sep-08 Mar-06 Oct-06 May-07 Feb-09 Apr-10 May-06 May-07 May-08 May-11 May-05 May-09 May-10 Nr.of deals EUR/m2 Nr.of deals EUR/m2Source: Swedbank, Estonian Land Board Source: Swedbank Vilnius2 0001 800 1 7311 6001 400 1 1031 2001 000 800 600 400 200 0 Jan-05 Jun-11 Dec-07 Jul-08 Nov-10 Aug-05 Sep-09 Mar-06 Oct-06 May-07 Feb-09 Apr-10 Nr.of deals EUR/m2Source: Swedbank, State Enterprise Centre of Registers 29
    • Swedish housing marketNew private lending in Sweden• Internal LTV limit of 75% having a clear impact on average LTV levels of new origination Weighted average LTV on new lending787674727068666462 2009 2010 2011 1 Tenant owner rights Single-family houses Total1 Total of Tenant owner rights and Single-family houses 30