Capital markets day 2008 - Kjell Hedman

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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 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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Capital markets day 2008 - Kjell Hedman

  1. 1. 1 Swedish Banking Mr Kjell Hedman Head of Swedish Banking Capital Markets Day Kiev, 5 March 2008 © Swedbank 2 Content • Strategy • Strong performance 2003-2007 • Improved efficiency • Future growth areas
  2. 2. 2 Strategy © Swedbank 4 Continued growth Prioritized segments • Corporates • AM and WM • Metropolitan areas Increased customer satisfaction SKI private customers 71 => 75 SKI corporate customers 68 => 75 Developed channel availability • Opening hours, branches • 24/7 telephone & internet • New channels Enhanced competence • Expert knowledge • Results orientation • Ethics & morale Improved cost efficiency Every SEK 1 of cost/expense … … should correspond to more than SEK 2 of revenue Swedish Banking general strategic direction
  3. 3. 3 © Swedbank 5 A customer-driven strategy • Through service leadership – To always be accessible, uncomplicated and proactive – To have customers in focus in every given situation and to be perceived as professional and easy to do business with • To get the most satisfied customers – SKI 70 => 75 private customers – SKI 71 => 75 corporate customers © Swedbank 6 Continuous adaptation of sales channels and products • Through continuous development of existing channels – All channels are sales channels and are coordinated in order to capture and complete business • Through availability and service level – New sales channels will be added as technologies develop and customer behaviour changes (contactless cards, mobile payments) – Third-party products and white label solutions are natural to work with • Market shares – Increased market shares in high-growth products like pensions, consumer finance and credit cards and recapture our market share regarding mutual funds
  4. 4. 4 Strong performance 2003-2007 © Swedbank 8 Streamlined sales process means increased cross selling • Training – Sales-oriented corporate culture – Sales methodology – Coaching • 4,500 employees • 500 branch managers • 31,000 business days have been invested • Number of sold products per employee in the branches has increased by 33% since the training started 0.0 1.0 2.0 3.0 4.0 5.0 6.0 Private Banking Prioritized customers Mass market Corporate 2003 2007 0 100 200 300 400 500 600 700 800 900 2003 2004 2005 2006 2007 Payments/channels Lending Savings/deposits Non-life insurance Number of products/customer Number of sold products per employee
  5. 5. 5 © Swedbank 9 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 Metropolitan areas Sweden excl. metropolitan ares 2003 2005 2007 -13% +3% 0 100 200 300 400 500 600 700 800 900 1,000 Metropolitan areas Sweden excl. metropolitan ares 2003 2005 2007 +79% +46% Swift reallocation of resources resulting in higher sales volumes Number of employees 2003-2007 Business volume (SEKbn) 2003-2007 % change from 2003 to 2007 © Swedbank 10 Increased market shares in most areas Increased market share of total savings 30 Sept 2007 (30 June 2007) Swedish state, 3.5 (3.4) Alecta, 9.9 (9.8) Folksam, 3.8 (3.8) LF, 4.8 (4.8) AMF, 7.4 (7.5) Handelsbanken, 11.5 (11.4) Nordea, 8.6 (8.5) Skandia, 10.1 (10.1) Swedbank, 14.7 (14.6) SEB, 14.3 (14.0)Others, 11.3 (12.0) 0 5 10 15 20 25 30 35 40 2001 2002 2003 2004 2005 2006 2007 % Deposits Mortgage lending (incl JK) Leasing & factoring Total lending Bank lending Asset management (Sep 07) Equity linked bonds
  6. 6. 6 © Swedbank 11 Good response from our customers Recent business development • Fund supermarket (WWW) • External fund suppliers • Non-life insurance with Tre Kronor • Structural deal with Folksam regarding fund, capital management and pension solutions – An industrial logic to cut costs 0 25 50 75 100 Internet payments White collar pensions Occupational pensions PPM Private Banking Non-life insurance Well positioned in the corporate segment. Increased number of clients, higher volumes and revenues High revenue growth in our focused markets and products This has resulted in increased customer satisfaction (index) 500 % % 40 50 60 70 80 90 100 Private Corporate 2002 2003 2004 2005 2006 2007 0 10 20 30 40 50 60 70 2003 2005 2007 Share of total no. of clients Share of total business volume Share of total revenue Improved efficiency
  7. 7. 7 © Swedbank 13 Increased organizational efficiency • Leaner operational structure – From six to four operational regions – From 75 to 42 business areas • Branch structure – 89 small branches were closed between 2003 and 2007 – SEK 200m in cost reduction © Swedbank 14 Higher productivity and economies of scale remain focus areas 0 10 20 30 40 50 60 2005 2007 Mortgage loan process in minutes 0 200 400 600 800 2003 2007 Sold products per employee +34% Number of internet payments (millions) 0 40 80 120 160 2003 2007 +69% Number of debit card transactions (millions) 0 100 200 300 400 500 600 700 2003 2007 +52% - 40%
  8. 8. 8 © Swedbank 15 Swedbank as the largest retail bank in Sweden gains a lot through new customer behaviour • Large cost reductions so far • More cost reductions to come • Swedbank the largest gainer as regards new customer behaviour 50 70 90 110 130 150 170 Cashier Postal giro payments ATM Card purchases Internet payments 2004 2005 2006 2007 Various services – level of usage (index) Swift adaptation of new sales channels – Number of contacts 2003-2007 0 20 40 60 80 100 Purchase of shares Purchase of funds Purchase of equity linked bonds Payments Money transfers (standing orders) Telephone - Personal Service Internet New channels contribute to lower costs (share of branch office costs) 0 50 100 150 200 2003 2004 2005 2006 2007 Personal service calls Self-service calls Log-ins InternetBank % © Swedbank 16 Improved productivity – so far Index 2003 = 100 40 60 80 100 120 140 160 180 2004 2005 2006 2007 No. employees/branch No. customers/branch No. of customers/employee Business volume/employee (SEK) ofof
  9. 9. 9 © Swedbank 17 • Branch structure – Increased efficiency through change in locations and streamlined work process • Telephone Bank – Automation and streamlined work process • Automate customer service – New functionality toward unidentified customers • Cash handling – Structural approach • Credit application process – Reduce manual work, electronic ID • Card processing – Increased volumes Ongoing process to cut costs Total expenses SEK 2bn Future growth areas
  10. 10. 10 © Swedbank 19 Good market response on our initiatives • Private banking & wealth management work in progress – Business volume +55% since 2005 • Metropolitan areas work in progress – Business volume +36% since 2005 • Corporate market work in progress – Business volume +42% since 2005 • Life and pension start up • Non-life insurance start up • Credit cards start up © Swedbank 20 Life and pension – growth ambition until 2010 0 20 40 60 80 100 120 140 160 180 200 current position 2010 Endowment Private pension Corporate pension Market shares Premium income growth and product mix (index) Current position = 100 0% 5% 10% 15% 20% 25% 30% Corporate pension Private pension Endowment current position ambition 2010
  11. 11. 11 EnterCard – a success story © Swedbank 22 Stockholm Oslo Copenhagen Heritage • Long history and experience within credit cards and regional banking • Undoubted balance sheet strength • Best-in-class risk management and controls • EnterCard created mid-2005 EnterCard • Leveraging on the global capability and local expertise of the parents • Offices in Stockholm, Oslo and Copenhagen • Today > 1,100,000 accounts • 230 employees • 7 partner card programmes Market transformation • Re-defining the credit card customer proposition • Re-establishing the credit card as the smartest way to pay • Introducing a real credit card consumer brand in the market • Bringing credit card penetration to European levels In 2005 Swedbank and Barclays joined forces to create a regional credit card issuer EnterCard was created drawing on global credit card competence and local expertise EnterCard is redefining the market EnterCard has brought global competence, combined with local expertise, to the Nordic market re-defining the credit card category
  12. 12. 12 © Swedbank 23 Good start – aggressive growth plans for the future 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 2004 2005 2006 2007 Actual JV Start Average pre JV 2004 1 IKANO 37% 2 ICA 16% 3 Handelsbanken 10% 4 SEB 9% 5 EnterCard 7% 6 KF 4% 7 Nordea 4% 8 Others 13% 2006 1 IKANO 33% 2 ICA 15% 3 EnterCard 10% 4 Handelsbanken 9% 5 SEB 9% 6 KF 5% 7 GE 5% 8 Nordea 4% 9 Others 10% In Sweden, EnterCard has jumped from 5th to 3rd largest credit card issuer EnterCard Sweden balance development (SEKm) Card issues © Swedbank 24 There is more work to be done 0.42 0.44 0.46 0.48 0.50 0.52 0.54 0.56 0.58 2003 2004 2005 2006 2007 Group Swedish Banking C/I ratios after deduction of extraordinary profits
  13. 13. 13 © Swedbank 25 Summary • Strong performance • Our market initiatives have been well received • Increasing market shares in most areas • Increased customer satisfaction • Clear strategy for growth • Focus on our three new growth areas – Life and pension – Non-life insurance – EnterCard • Increased focus on operational costs

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