Presentation of Swedbank's Year-End Report 2012

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Swedbank presents its Year-End results for 2012.

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Presentation of Swedbank's Year-End Report 2012

  1. 1. Swedbank’s year-end 2012 resultsMichael Wolf, CEOGöran Bronner, CFOHåkan Berg, CRO
  2. 2. RetailStable developmentSEKm Q2 Q3 Q4 Q/Q • Deposit margins pressureNet interest income 3 404 3 447 3 407 -40Net commissions 1 248 1 269 1 320 +51 • Repricing lendingTotal income 5 138 5 209 5 107 -102Total expenses 2 345 2 357 2 432 +75 • Increased sales of fundsProfit beforeimpairments 2 793 2 852 2 675 -177 support commissionsCredit impairments 100 69 102 +33 • Solid asset qualityROE, % 24.6 24.4 26.2C/I ratio 0.46 0.45 0.48 2
  3. 3. Large Corporates & InstitutionsImproved profitabilitySEKm Q2 Q3 Q4 Q/Q • Continued growth in LargeNet interest income 825 852 824 -28 - of which LC/FI* 666 689 729 +40 Corporates NIINet commissions 346 379 443 +64Net gains and • High activity debt capital 316 341 412 +71losses markets and corporateTotal income 1 499 1 581 1 703 +122Expenses excl. finance (Norway) 602 638 612 -26variable staff costsVariable staff costs 118 66 71 +5 • Equities continue to be slowProfit before 779 877 1 020 +143ImpairmentsCredit impairments 54 -35 152 +187 • Credit impairment – one large exposureROE, % 9.8 14.2 17.5C/I 0.48 0.45 0.40* Large Corporates/Financial Institutions 3
  4. 4. Baltic BankingSlow banking environmentSEKm Q2 Q3 Q4 Q/Q • Lower Euribor affected NIINet interest income 870 755 761 +6Net commissions 378 360 351 -9 • Small lending growth in EURTotal income 1 430 1 273 1 275 +2Total expenses 588 553 631 +78 • One-off in Lithuania SEK -35mProfit beforeimpairments 842 720 644 -76 affecting commissionsCredit impairments -204 -18 -329 -311 • Seasonally higher expensesROE, % 14.8 11.0 13.7C/I 0.41 0.43 0.49 • Recoveries continued • Further efficiency focus needed 4
  5. 5. Group resultsStrong quarterSEKm Q3 Q4 2011 2012 • One-offs affecting quarter 5 263 5 465 19 014 21 188Net interest income - Net gains in TreasuryNet commission income 2 381 2 504 9 597 9 636 - Tax gain of SEK 505mNet gains and losses 568 752 1 584 2 534 9 051 9 491 34 045 36 620 • Stable NII Q/QTotal incomeTotal expenses 3 998 4 287 18 399 16 949 - Shrinking deposit marginsProfit before impairments 5 053 5 204 15 646 19 671Impairment of tangible assets 102 199 174 466 - RepricingCredit impairments 204 11 -1 911 687 - Treasury effectsTax 1 220 640 3 669 4 039Profit for the period 3 511 4 340 11 744 14 438 • Higher market related incomeReturn on equity, % 14.1 16.7 12.2 14.4 • Seasonally higher costCost-income ratio 0.44 0.45 0.54 0.46 • Stable asset quality in home markets 5
  6. 6. Focus 2013Focus on customer and efficiency Russia & Ektornet Other Ukraine Customer IT service investments Expenses Expenses 2012 2013 6
  7. 7. Capital situationCapital – continued accumulation % Common Equity Tier 1 ratio20 17.4 • Management’s view is that 13-1816 15.7 14.3 15.4 15% CET1-ratio is required1412 • Capital efficiency focus remains108 • IRB-A application filed64 • New dividend policy: 75% of the2 profit for the year (previously 50)0 2007 2008 2009 2010 2011 2012 Basel 2 Basel 3 incl IAS 19 7
  8. 8. Risk highlightsStable asset qualityCredit impairments(SEKm) Q3 Q4 2012 • Continued high credit quality inRetail 69 102 295 SwedenLC&I -35 152 185 • Net recoveries Baltic BankingBaltic Banking -18 -329 -685 Estonia 2 -242 -343 • Exit costs Ukraine continue Latvia 8 86 -124 Lithuania -28 -173 -218 SEK bn 35 Impaired loans 31.7Group Functions & 188 86 892 30Other 25 Russia 28 -30 -43 20 Ukraine 140 117 915 14.0 15 Other 20 -1 20 10Swedbank Group 204 11 687 5 0 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Q3 12 Q4 12 8
  9. 9. Digital channelsHigh ambition to make it easy for our customers Customer contacts by channel 2012 Mobile Bank Sweden: log-ins per month 25 000 000 2% 5% +150% Y/Y (7%) 20 000 000 26% (9%) 15 000 000 68% (83%) 10 000 000 5 000 000 0 Internetbank Mobilebank Telephonebank Branches Jan 2010 Jan 2011 Jan 2012 Dec 2012 9
  10. 10. Q&A
  11. 11. Appendix 11
  12. 12. Large Corporates & InstitutionsImproved profitabilitySEKm Q4 11* Q1 12 Q2 12 Q3 12 Q4 12Net interest income 845 887 825 852 824 of which LC & FI** 563 652 666 689 729 of which Markets 282 235 159 163 95Commission income 269 434 346 379 443 of which LC & FI* * 261 278 278 311 290 of which Markets 6 156 68 68 153Total income LC&I 1 328 1 980 1 499 1 581 1 703 of which LC & FI** 832 946 947 1 008 1 030 of which Markets 496 1 034 552 573 673Total expenses, excl 818 607 602 638 612variable payVariable staff costs 13 106 118 66 71Profit before 497 1 267 779 877 1 020impairments of which LC & FI** 574 735 740 757 792 of which Markets -77 532 39 120 228Total impairments 21 14 58 -35 152C/I ratio 0.63 0.36 0.48 0.45 0.40* Excluding Lehman one-off ,**Large corporates and Financial institutions 12
  13. 13. Cost performanceStrong execution on costs 2012• Staff costs -847m and consultancy costs -241m year on yearCost trend (SEKm) FY 2011 FY 2012 YTDTotal expenses 18 399 16 949 -1 450Variable staff costs -395 -738Compensation to savings banks -530 -622Restructuring cost -430 -2FX effects -87Underlying cost 16 957 15 587 -1 370 13
  14. 14. Risk weighted assets Reduced RWA – continued focus RWA developmentSEKbn • RWA down SEK 11bn in quarter480 - Positive P/D changes • Application for IRB-A filed Q4 475.5475 - 1.2470 - 8.2 + 1.9 - 4.1465 464.3 + 0.4460 2012 Q3 Volume Rating Credit risk Other Market risk 2012 Q4 (EAD) migration FX-ef f ects credit risk 14
  15. 15. Liquidity and fundingCore balance sheet* structure Assets LiabilitiesSEKbn SEKbn1 400 1 400 Suppl. cap CET11 200 1 200 Government guaranteed debt Estonia Senior CEE lending1 000 Other corporate 1 000 lending, Sweden & other Nordic coun. Deposits 800 800 Other private, Sweden 600 600 Swedish 400 mortgage loans 400 Covered bonds 200 200 0 0 Q4 2012 Q4 2012Source: Swedbank, Dec 31, 2012 * Simplified balance sheet 15
  16. 16. Liquidity and fundingLower funding needs• LCR139% (Swedish FSA definition FFFS 2012:6)• NSFR 91%• Expanded investor base Term funding issuance – completed and plannedSEKbn Covered bonds Senior unsecured120100 80 60 40 20 0 16
  17. 17. Liquidity and fundingConservative funding plan• Issued SEK 142bn of term-funding FY 2012, maturities of SEK 86bn• Term funding plan in 2013 of SEK 120bn, maturities of SEK 86bn SEKm Long-term debt issued SEKm Outstanding short-term debt30 000 70 000 60 00025 000 50 00020 000 Q1 12 40 000 Q1 1215 000 Q2 12 Q2 12 30 000 Q3 12 Q3 1210 000 Q4 12 Q4 12 20 000 5 000 10 000 0 0 Domestic Euro CB USD CB Other CB Senior Domestic ECP/CD USCP Yankee CD French CD Finnish CD CB (144A) unsecured CPSource: Swedbank, Dec 31, 2012, nominal amounts 17
  18. 18. Liquidity and fundingLong-term funding maturity profile• FY 2013 maturities amount to nominal SEK 86bn Long-term funding maturity profileSEKbn200 Government guaranteed debt Senior unsecured 150 debt Covered bonds 100 50 0 2013 2014 2015 2016 2017 2018-Source: Swedbank Dec 31, 2012 18
  19. 19. Liquidity and fundingSenior unsecured debt strategy• Limited need given Swedbank’s balance sheet structure• Secure OC• Fund liquidity reserves Senior unsecured debt maturity profile House price sensitivity of the cover pool Senior unsecured debt 40%SEKbn60 35% 30% OC, Q412 25% Over-collateralisation 20%40 15% 10% 5%20 0% -5% -10% 0 -15% 2013 2014 2015 2016 2017 2018- 0% -5% -10% -15% -20% -25% -30% -35% -40% -45% -50%Source: Swedbank, Dec 31, 2012, nominal amounts House price drop 19
  20. 20. Liquidity and fundingLiquidity reserveAccording to the template defined by the Swedish Bankers Association SEKmCash and holdings in central banks 130 984Deposits in other banks available overnight 1 500Securities issued or guaranteed by sovereigns, central banks or multilateral development banks 22 666Securities issued or guaranteed by municipalities or Public sector entities 389Covered bonds 58 381 - Issued by other institutions 58 381 - Own issuedSecurities issued by non-financial corporatesSecurities issued by financial corporates (excl. covered bonds) 2 340OtherTotal1 216 260Additional liquid assets, Group2 57 8751 95% of the securities in the liquidity reserve per Q4 2012 are rated AAA2 87% of the additional liquid assets fulfill the Liquidity Reserve definition by the Swedish Bankers’ Association exceptfrom that they are held outside the Treasury department.Source: Swedbank Fact book, Dec 31, 2012 20
  21. 21. Liquidity and fundingProlonged survival horizon*SEKbn300250200150100 50 0 0 20 40 60 80 100 120 140 160 180 200 220 240 260 280 300 320 340 365 360 Days forward * For definition see Swedbank factbookSource: Swedbank Dec 31, 2012 21
  22. 22. Liquidity and fundingConservative liquidity levels• Short-term funding mainly a tool for cash management• More than 12 months pre-fundedSEKbn400 400350 350 Additional pledgeable300 300 and/or liquid assets Next 12-month term250 250 1 funding maturities Liquidity reserve,200 securities 200 CP / CDs and net150 150 Liquidity reserve,1 interbank funding, central bank deposits, SEKm100 SEKm 100 50 50 0 0Source: Swedbank Dec 31, 2012 1 As defined by the Swedish Bankers’ Association 22
  23. 23. Liquidity and funding Limited need for USD-funding• USD-funding need covered for more than 12 months• Issued USD 1.5bn of covered bonds (144a) YTD 2012SEKbn180 Interest-bearing160 securities140 Lending to the public120 Loans to credit institutions100 Cash and balances with80 central banks60 Deposits and borrowings from the public40 Amounts owed to credit institutions20 Debt securities in issue 0 Assets LiabilitiesSource: Swedbank Fact book, Dec 31, 2012 23
  24. 24. Liquidity and fundingRemaining government guaranteed debt• Exited the programme on 30 April 2010• No issuance under the programme since summer 2009• Remaining outstanding debt of SEK 30bn maturing during 2013 and 2014 of which SEK 10bn matured in January 2013Nom, SEKbn Maturity profile as per Q4 201240 JPY CHF20 USD SEK EUR 0 2013 2014Source: Swedbank Dec 31, 2012 24
  25. 25. Liquidity and fundingAsset encumbranceDistribution by type of liability and asset 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 TotalCentral bank fundingIntraday settlement collateral 1) 2 12 369 12 371Repurchase agreements 2) 12 992 13 496 26 488Derivative collateral 3) 162 862 14 120 15 144Covered bonds 4) 516 749 516 749Accrued interest of assets inthe cover pool 2 330 2 330Other 5) 366 366Total 13 156 26 727 519 079 14 486 573 448Financial assets pledged for insurance policy holders 103 083Additional assets available for secured funding 6) 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 7, 8) 26 883 3 265 84 045 11 393 8 203 1 059 134 848Cover pool overcollateralisation incl. accr.interest 4) 181 828 181 828Cover pool eligible assets 9) 11 608 11 608Total 26 883 3 265 84 045 11 393 8 203 1 059 193 436 328 2841) Pledged securities on balance sheet. 6) Assets not currently encumbered.2) Repoed securities on balance sheet. 7) Reversed repos are included.3) Collateral posted under CSA agreements, gross (3-year, SEKm, High: 21 572, 8) All type of securities, including securities non pledgeable at central banks, ofLow : 10 945, Average: 13 644). w hich 82% are rated AAA, 2% are rated below A- and 8% are not rated.4) Nominal amount excluding accrued interest. 9) Type of loans; Residential 84.4%, Forestry & Agriculture 15.3%, Commercial5) Collateral pledged in securities lending activities and w ith exchanges 0.3%.Source: Swedbank Facts Q4 2012 25
  26. 26. Swedish housing and mortgage marketSwedish mortgage market• No securitization (on balance sheet), no sub-prime market, no 3rd party origination, no 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 26
  27. 27. Swedish housing and mortgage marketReal estate prices – Sweden 12 months development Single-family homes1 Tenant-owner rights2 Combined3 12M Δ 12M Δ 12M Δ Jan/12 -4% -2% -4% Feb/12 -4% -1% -3% Mar/12 -4% 1% -3% Apr/12 -2% 2% -1% May/12 -2% 3% -1% Jun/12 -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%Source: Valuegard www.valuegard.se (Based on data from Mäklarstatistik), 1 HOXHOUSESWE, 2 HOXFLATSWE, 3 HOXSWE 27
  28. 28. Baltic real estate prices Real estate prices – Baltic countries Tallinn Riga1800 1 8001600 1 6001400 1 4001200 1 2001000 1 000800 800600 600400 400200 200 0 0 Jan-05 Jan-06 Jan-08 Jan-09 Jan-11 Jan-07 Jan-10 Jan-12 Jul-05 Jul-07 Jul-08 Jul-10 Jul-11 Jul-06 Jul-09 Jul-12 Jan-06 Jan-07 Jan-08 Jan-10 Jan-11 Jan-12 Jan-05 Jan-09 Jul-06 Jul-07 Jul-08 Jul-10 Jul-11 Jul-12 Jul-05 Jul-09 Source: Swedbank, Estonian Land Board Source: Swedbank Nr.of deals EUR/m2 Nr.of deals EUR/m2 Vilnius 1 800 1 600 1 400 1 200 1 000 800 600 400 200 0 Jan-06 Jan-07 Jan-08 Jan-10 Jan-11 Jan-12 Jan-05 Jan-09 Jul-06 Jul-07 Jul-08 Jul-10 Jul-11 Jul-12 Jul-05 Jul-09 Nr.of deals EUR/m2 28
  29. 29. -250 -200 -150 -100 50 -50 0 EURm Q4 11 Q1 12 Q2 12 Asset quality Q3 12 Estonia Q4 12 Q4 11 Q1 12 Latvia Q2 12 Q3 12 Q4 12 Q4 11 Q1 12 Q2 12 Lithuania Q3 12 Q4 12 Q4 11 Q1 12 Q2 12 Ukraine Loans past due 60 days – performance Q/Q Q3 12 Q4 12 Q4 11 Q1 12 Q2 12 Russia Q3 12 Q4 1229
  30. 30. Asset quality Provisions – well provided forSEKm25 00020 000 65.0% 63.7% 65.2% 61.5% 61.9%15 000 Provision ratios, % Q4 12 2 435 2 478 12 821 2 040 Retail 75 11 915 1 77410 000 10 951 LC&I 166 9 934 1 545 Baltic Banking 52 7 077 Russia 64 5 000 Ukraine 78 Group 62 0 Q4 11 Q1 12 Q2 12 Q3 12 Q4 12 Individual provisions Portf olio provisions Provision ratio 30
  31. 31. Credit portfolio – Retail Corporate Retail portfolio will drive capital efficiency Total portfolio SEK 231bn Segments excl. Swedbank Volume Secured Mortgage and Swedbank Finance (SEKbn) (%) Agriculture 6.0 82 Manufacturing 11.3 70Swedbank Mortgage Public sector and utilities 4.7 86AB 94 Construction 4.4 85Leasing (Swedbank 113Finance AB) Retail 8.8 89Other Transportation 2.0 78 24 Shipping 0.1 95 Hotels and restaurants 3.0 90 Information & communication 0.9 49 Finance and insurance 3.3 79 Property management 54.9 96 Professional service 6.7 59 Other 6.4 61 Total 113 86 31
  32. 32. Credit portfolio – Large Corporates & Institutions Shipping and Offshore Shipping and offshore SEKbn 0.4% -3.6% 30• 26 Lending exposure to shipping and offshore sector of 24 24 25 24 SEK 24.2bn plus unutilised commitments of SEK 4 20 7.9bn 6 – Portfolio duration 4-5y 10 – Average fleet age 7y 14 – Strong employment profiles 0 Q4-11 Q1-12 Q2-12 Q3-12 Q4-12 Offshore Tanker Other Shipping and Offshore Portfolio by Subsegment Shipping and Offshore Portfolio by Currency RORO 1.7 Container 1.0 JPY Dry bulk 0.7 Q4-12 Gas (LNG/LPG) 1.2 Q3-12 Q4-12 Crude oil 0.7 NOK Product 2.4 Q3-12 Chemical 0.2 USD Floating production 1.9 Accommodation 1.2 3.6 EUR Supply Oil service 1.9 Drilling & exploration 7.0 SEK Cruise 0.5 0 5 10 15 20 25 0 2 4 6 8 32
  33. 33. Credit portfolio – Agriculture Sweden • Segmentation Definitions – Corporate Agriculture: Business that derive their Private: main income from Agricultural activities Residential – Private Investments: Private individuals who own 20% the agricultural properties for living or investment purposes Agriculture 45% • Lending to the Agriculture Industry 62.9bn – Corporate Agriculture: (58%) Private: • Agriculture 45% Forestry • Forestry 13% 22% – Private Investments (42%) • Residents: 20% Foresty • Forestry: 22% 13% 33
  34. 34. ICAAP 2012 ICAAP Scenario – Deep recession without recovery Triggers Outcome • Europe enters into deep • Sharp GDP drop with no recession recovery (10-15% from 2011 level) • Limited possibilities for fiscal stimulus • Severe drop in house prices • European bank runs (25-37% from 2011 level) • Credit contraction • Depreciated EUR and appreciated SEK • Closed funding markets • Devaluation in Latvia and Lithuania 34
  35. 35. ICAAPHigh capitalisation even in extremely stressed scenario• Revenue decrease 31 percent• Credit impairments SEK 64bn over 5 year• Scenario effects on Core Tier 1 ratio -165bp• Well above 12% Core Tier 1 ratio at low point even in extremely stressed scenario in new regulatory environment 35
  36. 36. ICAAP 2012 ICAAP dcenario – Deep recession without recovery105 GDP - Index 105 Real Estate prices - index100 95 95 85 90 75 85 65 80 55 2011 2012 2013 2014 2015 2016 2011 2012 2013 2014 2015 2016 Sweden Estonia Latvia Lithuania Sweden Estonia Latvia Lithuania3.0% Interest rates – 3m 14 FX scenario2.5% 12 102.0% 81.5% 61.0% 4 20.5% 00.0% 2011 2012 2013 2014 2015 2016 2011 2012 2013 2014 2015 2016 Euribor Stibor USD/SEK EUR/SEK GBP/SEK 36
  37. 37. ICAAP 2012 ICAAP – Main scenario results SEK bn Net Interest Income • NII decreases by 39% throughout the 30 20.7 scenario 20 10 12.6 0 2011 2012 2013 2014 2015 2016 • Credit Impairments total SEK 64bn Credit impairments over the scenario period SEK bn 30 23.4 20 10 0 2011 2012 2013 2014 2015 2016 -10 • RWA decreases due to significant SEKbn RWA incl. reg effects credit impairments and deleveraging 700 600 500 414 400 300 2011 2012 2013 2014 2015 2016 37
  38. 38. ICAAP 2012 ICAAP – Income statement TotalIncome statement (SEKbn) 2011 2012 2013 2014 2015 2016 2012 - 2016Total net interest income 20.7 19.5 16.7 14.2 13.0 12.6 75.9Total income 34.7 31.8 34.0 25.4 24.3 24.1 139.6Total expenses 20.9 17.6 18.7 18.0 18.0 17.8 90.1Profit before credit losses 13.8 14.2 15.3 7.4 6.3 6.2 49.5Credit losses -1.8 8.2 23.4 17.4 9.3 5.4 63.6Operating profit 15.5 6.1 -8.1 -10.0 -3.0 0.9 -14.1 Appropriations 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Tax 3.7 1.6 0.0 0.0 0.0 0.2 1.8Profit for the year 11.8 4.5 -8.1 -10.0 -3.0 0.6 -16.0 Minority interest 0.3 0.1 0.0 0.0 0.0 0.0 0.1Profit for the year attr to shareholders 11.5 4.4 -8.1 -10.0 -3.0 0.6 -16.1 Dividend 5.8 2.2 0.0 0.0 0.0 0.3 2.5Profit after tax, min. int. & dividend 5.7 2.2 -8.1 -10.0 -3.0 0.3 -18.6 38
  39. 39. ICAAP 2012 ICAAP – Credit impairments EAD 2011 Acc. loss ratio Credit impairments (%) (SEKbn) 2012 2013 2014 2015 2016 2012 - 2016 Total 1,384.4 0.6 1.8 1.5 0.9 0.5 4.6 of which LC & I 309.8 0.5 2.3 2.0 0.8 0.6 5.4 Retail 950.8 0.3 1.2 1.0 0.7 0.3 3.2 Estonia 52.5 1.2 2.5 2.2 1.8 1.7 6.6 Latvia 30.6 2.7 6.1 5.6 4.4 4.6 15.0 Lithuania 31.1 2.4 4.1 3.0 2.4 2.2 9.5 Russia & Ukraine 9.6 5.2 20.9 10.5 3.7 1.6 41.9The accumulated losses constitute SEK 63.6bn.Credit impairments in LC&I and Retail constitute 74% of total accumulated credit impairments Credit impairments LC & I and Retail EAD 2011 Acc. loss ratio (SEKbn) 2012 2013 2014 2015 2016 (%) 2012 - 2016 Agriculture, forestry and fishing 25.8 0.5 1.4 1.3 1.0 0.2 3.7 Manufacturing 39.3 1.0 2.6 2.5 1.2 0.5 6.7 Public sector and utilities 11.6 0.6 1.8 2.1 1.3 0.4 5.3 Construction 15.1 1.2 3.4 3.4 1.9 0.4 8.5 Retail 22.8 1.3 4.6 5.4 4.0 2.4 14.0 Transportation 8.6 2.1 8.2 5.7 3.4 1.2 16.1 Shipping 31.2 0.4 8.5 6.2 0.6 0.5 14.4 Hotels and restaurants 3.8 2.7 6.3 6.3 3.7 0.7 15.0 Information and communication 5.0 0.6 1.7 1.9 1.0 0.5 4.9 Finance and insurance 20.4 0.3 0.8 1.2 0.6 0.3 2.8 Property management 125.1 0.9 3.9 3.8 2.0 1.0 9.6 Cooperative housing associations 75.4 0.3 1.1 1.2 0.5 0.1 2.8 Other corporate lending 75.5 0.9 1.4 1.2 0.7 0.3 3.9 Professional services 14.9 1.0 2.7 3.2 2.1 0.7 8.0 Bank 128.2 0.5 1.3 1.1 0.9 0.8 3.9 Private 657.8 0.1 0.4 0.3 0.3 0.2 1.2 Total 1,260.5 0.4 1.5 1.3 0.7 0.4 3.7 39
  40. 40. ICAAP 2012 ICAAP Main adverse scenario results Capital assessment RWA & Capital (SEKbn) 2011 2012 2013 2014 2015 2016 RWA 492.3 489.5 504.1 433.9 395.2 365.0 RWA inc 15% mortgage riskweight * 565.3 552.2 557.1 482.4 442.6 414.4 RWA inc regulatory effects ** 588.1 575.0 557.1 482.4 442.6 414.4 Core Tier 1 77.3 79.7 62.1 52.4 49.5 49.8 Core Tier 1 inc regulatory effects ** 73.6 76.0 62.1 52.4 49.5 49.8 Total Capital base 93.2 88.3 70.9 61.5 57.2 55.2 Capital assessment (%) 2011 2012 2013 2014 2015 2016 Core Tier 1 ratio 15.7 16.3 12.3 12.1 12.5 13.6 Core Tier 1 ratio inc 15% mortgage riskweight * 13.7 14.4 11.1 10.9 11.2 12.0 Core Tier 1 ratio inc. regulatory effects ** 12.5 13.2 11.1 10.9 11.2 12.0 Total capital ratio inc. 15% mortgage riskweight * 16.5 16.0 12.7 12.7 12.9 13.3 * The effect of a 15% average riskweight on the Swedish Mortgage portfolio ** Includes assessed effects of Basel 3, IAS 19 and changed mortgage risk-weights 40
  41. 41. The Riksbanks Financial Stability Report 2012:2• Swedbank has the overall strongest capitalisation among Swedish peers• Swedbank has the strongest liquidity metrics among Swedish peers,• Swedbank is the most reciliant bank in a stressed scenario, only Swedbank makes a profit every year of the stress• Swedbank is the transparency leader All subsequent slides are taken from the Riksbank’s Financial Stability Report 2012:2 41
  42. 42. Core Tier 1 capital ratios according to Basel III Percent 18 16 14 12 10 8 6 4 2 0 Handels- Nordea SEB Swedbank banken March 2012 June 2012 September 2012Chart 1:13 Sources: Bank reports and the Riksbank
  43. 43. Adjusted Leverage ratio December 2011, per cent UBS Intesa Sanpaolo HSBC RBS St. Chartered Erste Group Bank BBVA Barclays BNP Paribas UniCredit Credit Agricole Société Générale Lloyds Raiffeisen Swedbank SEB DNB Credit Suisse Commerzbank Danske Bank Nordea Deutsche Bank Handelsbanken 0 2 4 6 8 10 12Chart 4:10 Sources: Liquidatum and the Riksbank
  44. 44. Level of loan losses in the main scenario, percent 0.30 0.25 0.20 0.15 0.10 0.05 0.00 Handels- Nordea SEB Swedbank Totalt banken 2013 2014 2015Chart 5:3 Source: The Riksbank
  45. 45. CET 1 capital ratio according to Basel III, initially and in the Riksbank’s stress test Percent 18 16 14 12 10 8 6 4 2 0 12 13 14 15 12 13 14 15 12 13 14 15 12 13 14 15 Q3 Q3 Q3 Q3 Handelsbanken Nordea SEB SwedbankChart 5:9 Sources: Bank reports and the Riksbank
  46. 46. P&L in the Riksbank stress test
  47. 47. The Riksbank’s short-term liquidity measure Survival period, number of days 120 100 80 60 40 20 0 Handels- Nordea SEB Swedbank banken September 2011 December 2011 March 2012 June 2012 September 2012Chart 5:12 Sources: Liquidatum and the Riksbank
  48. 48. The Riksbank’s structural liquidity measure Stable funding in relation to illiquid assets, per cent 120 100 80 60 40 20 0 Handels- Nordea SEB Swedbank banken September 2011 December 2011 March 2012 June 2012 September 2012Chart 5:14 Sources: Liquidatum and the Riksbank
  49. 49. The Riksbanks short-term and structural liquidity measure (European Banks) June 2012 180 160 Short-term liquidity measure (days) 140 120 100 Handelsbanken 80 SEB Swedbank Nordea 60 40 20 0 70 80 90 100 110 120 Structural liquidity measure (per cent)Chart 5:17 Sources: Liquidatum and the Riksbank
  50. 50. Transparency, liquidity risk 50
  51. 51. Mortgage loans, gross margin (3 months) %654 Net margin The gross margin should cover:3 Cost of liquidity ~0.2% Administrative costs ~0.3% Credit impairments ~ 0.03% Tax (22 % on profit before tax)210 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Gross margin Swedbanks funding cost Stibor 3 months Swedish Riksbanks reporate 51

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