Presentation Swedbank's First Quarter 2014 results

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Presentation Swedbank's First Quarter 2014 results

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Presentation Swedbank's First Quarter 2014 results

  1. 1. © Swedbank Swedbank’s first quarter 2014 results Michael Wolf, CEO Göran Bronner, CFO Anders Karlsson, CRO
  2. 2. © Swedbank Stronger market position in southern Sweden • Acquisition of 100 per cent of Sparbanken Öresund • Creation of Sweden’s largest savings bank Sparbanken Skåne – Swedbank will own 22 per cent of Sparbanken Skåne • Significant financial upside for Swedbank – Cost and capital synergies • Awaiting approval from the Swedish FSA 2 Market position Swedbank: 27 Sparbanken Öresund: 16 Number of branches: Sparbanken Skåne: 45
  3. 3. Stable results • Lower deposit margins – Stibor – Number of days effect • Stable mortgage margins • Good economic activity supports fee income • Solid asset quality 3 Swedish Banking SEKm Q1 14 Q4 13 Q1 13 ▲ Q/Q ▲ Y/Y Net interest income 3 314 3 448 3 331 - 134 -17 Net commissions 1 649 1 649 1 589 0 60 Total income 5 422 5 536 5 378 -114 44 Total expenses 2 443 2 526 2 399 -83 44 Profit before impairments 2 979 3 010 2 979 -23 0 Credit impairments 31 140 55 -109 -24 ROE, % 28.3 27.7 28.1 C/I ratio 0.45 0.46 0.45
  4. 4. Strong Return on Equity • Strong client activity within Debt Capital Markets and Corporate finance • Positive deposit volume trend • Solid asset quality • Planned cost increases 4 Large Corporates & Institutions SEKm Q1 14 Q4 13 Q1 13 ▲ Q/Q ▲ Y/Y Net interest income 867 889 783 -22 84 Net commissions 630 558 420 72 210 Net gains and losses 565 491 579 74 -14 Total income 2 099 1 986 1 813 113 286 Total expenses 834 881 733 -47 101 Profit before impairments 1 265 1 105 1 080 160 185 Credit impairments -30 5 74 -35 -104 ROE, % 26.9 20.1 16.8 C/I ratio 0.40 0.44 0.40
  5. 5. Solid performance • Continued re-pricing • Good underlying customer activity • Latvian EUR-entry – Decreased risk – Negative income impact • Continued net recoveries • Uncertain growth prospect due to geopolitical situation in Russia and Ukraine 5 Baltic Banking SEKm Q1 14 Q4 13 Q1 13 ▲ Q/Q ▲ Y/Y Net interest income 874 844 742 30 132 Net commissions 429 454 388 -25 41 Total income 1 465 1 512 1 282 -47 183 Total expenses 607 664 589 -57 18 Profit before impairments 858 848 693 10 165 Credit impairments -101 -177 -70 -76 -31 ROE, % 15.2 15.0 12.6 C/I ratio 0.41 0.44 0.46
  6. 6. • Mixed margin development - Lower deposit margins - Stable mortgage margins • Continued solid asset quality • Risk position enables competitive funding • Continued customer and cost focus Stable quarter 6 Group results SEKm Q1 14 Q4 13 Q1 13 ▲Q/Q ▲Y/Y Net interest income 5 483 5 626 5 353 -143 130 Net commission income 2 693 2 699 2 388 -6 305 Net gains and losses 345 461 557 -116 -212 Total income 9 320 9 652 9 082 -332 238 Total expenses 4 226 4 484 4 043 -258 183 Profit before impairments 5 094 5 168 5 039 -74 55 Credit impairments -100 -32 60 -68 -160 Other impairments 135 323 85 -188 50 Tax 1 074 1 212 976 -138 98 Profit from continuing operations 3 985 3 665 3 918 320 67 ROE continuing operations, % 14.6 13.6 15.3 Cost/income ratio 0.45 0.46 0.45 CET1 Capital ratio, % 18.3 18.3 16.4
  7. 7. Strong asset quality • Legacy impaired portfolios almost worked-out • Ektornet – continued asset sales • Russia and Ukraine exited – limited remaining exposures 7 Asset quality Credit impairments, SEKm Q1 14 Q4 13 Q1 13 Swedish Banking 31 140 55 Large Corporates & Institutions -30 5 74 Baltic Banking -101 -177 -70 Group Functions & Other 0 0 1 Swedbank Group -100 -32 60 0 5 10 15 20 25 30 35 40 45 Impaired loans, SEKbn * Russia and Ukraine reported as discontinued operations.
  8. 8. Swedbank’s first quarter 2014 results Q & A
  9. 9. Appendix
  10. 10. Focus on customer activities • Flat expenses target for 2014 10 Expenses Expenses 2012 Expenses 2013 Customer related cost IT development Ektornet Group functions Efficiency measures Expenses 2013 Expenses 2014
  11. 11. Other? 25% Risk weight floor on Swedish mortgages 15% Risk weight floor on Swedish mortgages 0-2.5% Countercyclical buffer 12% Minimum CET1 (Pillar 1) requirement (incl. SIFI-buffer and Capital conservation buffer) Regulatory uncertainty – higher capital requirements • Countercyclical buffer • RW floor on mortgages • Pillar 2 • Hard limits vs buffers • Leverage ratio – corporate risk weights 11 Capital 16.5 - ? % CET1 ratio
  12. 12. Conservative provision ratio 12 Asset quality * Russia and Ukraine reported as discontinued operations SEKm 10 951 9 934 7 077 4 429 4 047 3 570 2 818 2 514 2 040 1 774 1 545 1 420 1 398 1 325 1 256 1 238 64% 65% 62% 57% 54% 53% 54% 60% 0 5 000 10 000 15 000 20 000 Q212 Q312 Q412 Q113* Q213* Q313* Q413* Q114* Individual provisions Portfolio provisions Provision ratio Provision ratio, % Q114 Swedish Banking 76 LC&I 196 Baltic Banking 51 Group 60
  13. 13. Shipping and offshore 16 5 4 24 23 26 25 26 25 0 10 20 30 Q4-12 Q1-13 Q2-13 Q3-13 Q4-13 Q1-14 SEKbn Shipping and Offshore Offshore Tanker Other 13 Credit portfolio – Large Corporates & Institutions • Lending exposure to Shipping & Offshore sector of SEK 25.0bn - Portfolio duration 3.77 years (weighted on commitments) - Average fleet age 7 years - Strong employment profiles 0.5 7.4 1.5 3.4 1.3 1.5 0.6 2.4 0.7 3.0 0.2 0.7 1.8 0 2 4 6 8 10 Cruise Drilling & exploration Oil service Supply Accommodation Floating production Chemical Product Crude oil Gas (LNG/LPG) Dry bulk Container RORO Q1-14 Q4-13 0 5 10 15 20 25 SEK EUR USD NOK JPY Q1-14 Q4-13 Shipping and Offshore Portfolio by currency, SEKbn Shipping and Offshore Portfolio by subsegment, SEKbn Source: Swedbank, Mar 31, 2014
  14. 14. 0 20 40 60 80 100 120 Covered bonds Senior unsecured Lower funding needs • LCR 144% (Swedish FSA definition FFFS 2012:6) • NSFR 89% / 102% (Basel committee) • Issued SEK 36bn of term-funding in Q1 2014 • FY 2014 funding plan of SEK 120bn 14 Liquidity and funding Term funding issuance – completed and planned SEKbn Source: Swedbank, Mar 31, 2014, nominal amounts
  15. 15. 0 50 100 150 200 2014 2015 2016 2017 2018 2019 2020- Government guaranteed debt Senior unsecured debt Covered bonds 15 Long-term funding maturity profile • Funding plan of SEK 120bn to meet next 12 months’ nominal SEK 125bn maturities Long-term funding maturity profile, by funding source Source: Swedbank Mar 31, 2014 Liquidity and funding SEKbn
  16. 16. 0 50 100 150 200 250 0 20 40 60 80 100 120 140 160 180 200 220 240 260 280 300 320 340 365 Prefunded in excess of 12 months 16 Liquidity and funding SEKbn Source: Swedbank Mar 31, 2014 Days forward
  17. 17. Real estate prices – Sweden 12-month development 17 Swedish housing and mortgage market Single-family homes1 Tenant-owner rights2 Combined3 12M Δ 12M Δ 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
  18. 18. 0 200 400 600 800 1 000 1 200 1 400 1 600 1 800 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Tallinn Nr.of deals EUR/m2 Baltic countries Real estate prices 18 EUR/m2 /Nr of deals EUR/m2 /Nr of deals EUR/m2 /Nr of deals 0 200 400 600 800 1 000 1 200 1 400 1 600 1 800 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Riga Nr.of deals EUR/m2 0 200 400 600 800 1 000 1 200 1 400 1 600 1 800 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Vilnius Nr.of deals EUR/m2

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