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Swedbank’s first quarter 2011 resultsMichael Wolf, CEOErkki Raasuke, CFOGöran Bronner, CRO
Strong start to the year• Net profit of SEK 3.9bn for Q1• Core Tier 1 capital ratio of 14.9 per cent• Return on equity of ...
Follow-up on priorities 2011• Customer focus• Growth in selected segments• Quality and effectiveness• Robust and low-risk ...
Net interest incomeNII supported by higher interest rates• One-offs and higher stability fee shadowing underlying NII grow...
Net gains/losses on financial items, fair valueNGL affected by funding effects• Strong trading result in LC&I, but higher ...
ExpensesStable year-on-year expenses• Enhancing internal capabilities          – Key recruitments in Q1          – Lower c...
First quarter 2011 resultsIncome statementSEKm                                  Q1 11    Q4 10       Δ    Q1 10Net interes...
First quarter 2011 resultsKey ratiosVolumes, SEKbn                                                Q1 11   Q4 10    Δ    Q1...
Liquidity & FundingSEK 91bn term funding issued in Q1 2011•   First US covered bond issue (144A),       Issuance Q1 & matu...
Risk highlightsContinued improvements• Asset quality    – Decreasing impaired loans    – FR&R/Ektornet according to plan• ...
Asset qualityNet recoveries of SEK 972m in Q1                         Credit impairmentsSEKm2 500                         ...
Asset qualityOne-off income in US commercial real estate lending• One-off pre-tax income of SEK 716m in Q1 after  agreemen...
Capital managementCorporate risk weights – focus on capital efficiency                       Corporate risk weights,90    ...
Capital managementBuy-back programme     14.9%             Excess capital (SEK 9.9bn)           • As of 31 March the exces...
Appendix           15
Impaired loans decreasing• Excl. FX effect down SEK 2.5bn in Q1• Underlying decreases in all business areas in Q1SEKm45 00...
-50                                              0                                                       100              ...
Asset qualityProvisions – work-out portfolios slowly decliningSEKm30 000              65.9%              63.5%            ...
Asset qualityRepossessed assetsSEKm4 5004 0003 5003 0002 5002 0001 5001 000 500    0           Q1 10                     Q...
1 000                                                                                                                     ...
Liquidity & fundingLong-term funding• Continued focus on covered bonds with Q1 issuance of SEK 85bn• SEK 4bn in senior uns...
Liquidity & fundingRemaining government guaranteed debt• Exited the programme on 30 April 2010• No issuance under the prog...
Liquidity and fundingLimited unsecured funding needLending to the public, less deposits, covered bondpool and retail bonds...
Liquidity reserve*                                                                               SEKmCash and holdings in ...
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Swedbanks first quarter results 2011 CEO presentation

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Swedbank's CEO Michael Wolf presents the first quarter results 28 April 2011.

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Swedbanks first quarter results 2011 CEO presentation

  1. 1. Swedbank’s first quarter 2011 resultsMichael Wolf, CEOErkki Raasuke, CFOGöran Bronner, CRO
  2. 2. Strong start to the year• Net profit of SEK 3.9bn for Q1• Core Tier 1 capital ratio of 14.9 per cent• Return on equity of 16.1 per cent in Q1 Net profit performanceLehman contribution Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 2
  3. 3. Follow-up on priorities 2011• Customer focus• Growth in selected segments• Quality and effectiveness• Robust and low-risk balance sheet 3
  4. 4. Net interest incomeNII supported by higher interest rates• One-offs and higher stability fee shadowing underlying NII growth• Improving deposit margins in Retail• Government guarantee cost kept within Treasury LC&I Baltic Russia, Treasury, Retail Banking Ukraine Other 4 527 173 117 29 4 527 188 4 023 -171 997 3 980 -148 3 799 850 2 925(SEKm) -433 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 4
  5. 5. Net gains/losses on financial items, fair valueNGL affected by funding effects• Strong trading result in LC&I, but higher portion of income reported as NII• Russia & Ukraine returning to normalised levels• Basis swap gains of 2010 partly reversed, benefits euro funding cost 809 Baltic Russia, Treasury, 647 Retail LC&I Banking Ukraine Other 574 255 9 55 315 105(SEKm) -34 369 -70 -39 -22 40 -218 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 5
  6. 6. ExpensesStable year-on-year expenses• Enhancing internal capabilities – Key recruitments in Q1 – Lower consultancy costs• Improving cost/income ratio driven by one-off income 0.57 0.57 0.55 0.58 0.52 Retail LC&I Baltic Russia, Treasury, Banking Ukraine Other 4 391 4 423 4 590 4 384 4 238 -30 -18 -39 -39 -80 502 172 658 859(SEKm) 2 193 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 6
  7. 7. First quarter 2011 resultsIncome statementSEKm Q1 11 Q4 10 Δ Q1 10Net interest income 4 527 4 527 0 4 023Net commission income 2 301 2 538 -237 2 282Net gains/losses 255 315 -60 647Other 1 369 578 791 715Total income 8 452 7 958 494 7 667Total expenses 4 384 4 590 -206 4 391Profit before impairments 4 068 3 368 700 3 276Total impairments - 970 - 77 -893 2 260Operating profit 5 038 3 445 1 593 1 016Tax expense 1 182 693 489 469Profit attributable to shareholders 3 852 2 750 1 102 536 7
  8. 8. First quarter 2011 resultsKey ratiosVolumes, SEKbn Q1 11 Q4 10 Δ Q1 10Lending to the public 1 141 1 146 -5 1 168Deposits from the public 502 517 -15 496Covered bonds 477 410 66 389Key ratios Q1 11 Q4 10 Q1 10Return on equity, % 16.1 11.7 2.4Cost-income ratio 0.52 0.58 0.57Core funding ratio, %* 114 121 127Core Tier 1 capital ratio, %** 14.9 13.9 12.3* Lending/(deposits+covered bonds+retail bonds), ** Basel 2 8
  9. 9. Liquidity & FundingSEK 91bn term funding issued in Q1 2011• First US covered bond issue (144A), Issuance Q1 & maturities full year 2011 (nominal SEKbn) dual tranche of USD 1bn each 60• Two EUR benchmark covered bonds 40 20• Maturities of nominal SEK 121bn for the remainder of 2011 0 -20• Average maturity of wholesale funding, including short-term funding, 30 months -40 (39 months for covered bonds) -60 -80 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 9
  10. 10. Risk highlightsContinued improvements• Asset quality – Decreasing impaired loans – FR&R/Ektornet according to plan• Substantial recoveries – all countries• Lehman income• RWA decreased by SEK 22.3bn in Q1 – SEK 11.0bn lower credit risk – SEK 8.7bn lower market risk• Strong funding position 10
  11. 11. Asset qualityNet recoveries of SEK 972m in Q1 Credit impairmentsSEKm2 500 • Net recoveries in all CEE 2 210 countries2 000 • Sweden – also recoveries1 500 963 • Collateral revaluations,1 000 repayments and rating migration 500 120 0 -500 -483-1 000 -972-1 500 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Retail LC&I Baltic Banking Russia & Ukraine Other 11
  12. 12. Asset qualityOne-off income in US commercial real estate lending• One-off pre-tax income of SEK 716m in Q1 after agreement with Lehman• Remaining gross exposure was USD 1.1bn as of 31 March 2011, consisting of 35 assets• No. of repossessed assets are expected to increase (2 as of today)• Over-collateralisation still intact 12
  13. 13. Capital managementCorporate risk weights – focus on capital efficiency Corporate risk weights,90 % development Q1 09 - Q4 10 • Several different work streams80 • Expected gradual effect in small steps7060 • History not enough to predict future50 – Stress tests key steering tool40 – Transparency3020100 Handelsbanken Swedbank SEB NordeaSource: SEB Enskilda Equity Research 13
  14. 14. Capital managementBuy-back programme 14.9% Excess capital (SEK 9.9bn) • As of 31 March the excess 13.0% capital amounts to SEK 9.9bn Extra buffer due to prevailing circumstances • Gradually during four quarters (SEK 15.6bn) 10.0% • Both A-shares and preference Risk appetite (ICAAP buffer, shares SEK 15.6bn) 7.0% Regulatory requirement (SEK 36.3bn) 14
  15. 15. Appendix 15
  16. 16. Impaired loans decreasing• Excl. FX effect down SEK 2.5bn in Q1• Underlying decreases in all business areas in Q1SEKm45 000 42 719 40 132 40 32840 000 -4 088 4 362 196 2 391 35 770 -3 853 Impaired loans as %35 000 38 631 of gross lending 6 113 34 778 -3 031 29 65730 000 31 747 6 695 Ukraine 61%25 000 Russia 23% 1 555 6 357 Lithuania 17%20 00015 000 10 468 Latvia 25% 29 65710 000 5 000 4 505 Estonia 7.7% 586 LC&I 0.21% 1 581 Retail 0.18% 0 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q1 11 16
  17. 17. -50 0 100 150 200 250 -150 -100 50 EURm Q1 10 Q2 10 Q3 10 Estonia Q4 10 Q1 11 Q1 10 Q2 10 Q3 10 Latvia Q4 10 Q1 11 Q1 10 Q2 10 Q3 10 Q4 10 Lithuania Q1 11 Q1 10 Q2 10 Q3 10 Loans past due 60 days – performance Q/Q Ukraine Q4 10 Q1 11 Q1 10 Q2 10 Q3 10 Russia Q4 10 Q1 1117
  18. 18. Asset qualityProvisions – work-out portfolios slowly decliningSEKm30 000 65.9% 63.5% Provision ratios, % Q1 11 63.9%25 000 4 684 4 104 Retail 97 3 606 62.7% LC&I 116 3 297 61.0%20 000 Baltic Banking 56 2 769 Russia 5815 000 Ukraine 64 21 889 23 028 16 598 21 068 18 494 Group 6110 000 5 000 5 204 4 373 1 449 2 099 807 0 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Individual provisions Portf olio provisions Write-of f s, gross, cum Provision ratio 18
  19. 19. Asset qualityRepossessed assetsSEKm4 5004 0003 5003 0002 5002 0001 5001 000 500 0 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Real Estate Residential Real Estate Commercial Passenger & Commercial Transport Shares Other 19
  20. 20. 1 000 1 200 1 400 1 600 1 800 200 400 600 800 0 1 000 1 200 1 400 1 600 1 800 2 000 200 400 600 800 0 Jan-05 Jan-05 May-05 May-05 Sep-05 Sep-05 Jan-06 Jan-06 May-06 May-06 Sep-06 Sep-06 Jan-07 Jan-07 May-07 May-07 Source: Swedbank, Estonian Land Board Sep-07 Sep-07 Nr.of deals Nr.of deals Jan-08 Tallin Jan-08 Vilnius May-08 May-08 Real estate prices Sep-08 Source: Swedbank, State Enterprise Centre of Registers Sep-08 Jan-09 EUR/m2 Jan-09 EUR/m2 May-09 May-09 Sep-09 Sep-09 Jan-10 Jan-10 May-10 May-10 Sep-10 Sep-10 Jan-11 Jan-11 821 1 084 1 000 1 200 1 400 1 600 1 800 2 000 200 400 600 800 0 Jan-05 May-05 Sep-05 Source: Swedbank Jan-06 May-06 Sep-06 Jan-07 May-07 Sep-07 Nr.of deals Jan-08 Riga May-08 Sep-08 Jan-09 EUR/m2 May-09 Sep-09 Jan-10 May-10 Sep-10 Jan-1120 606
  21. 21. Liquidity & fundingLong-term funding• Continued focus on covered bonds with Q1 issuance of SEK 85bn• SEK 4bn in senior unsecured issuance• 2 USD-denominated covered bond benchmark deals - of EUR 1bn each• 2 EUR-denominated covered bond benchmark deals of EUR 1bn and EUR 1.5bn• Total term funding maturities for the remainder of 2011 - of nominal SEK 121bnLong-term funding maturity profile, SEKbn200 200150 Covered bonds 150 Senior unsecured Guaranteed bonds100 100 50 50 0 0 2011 2012 2013 2014 2015 2016 2011 2012 2013 2014 2015 2016 21
  22. 22. Liquidity & fundingRemaining government guaranteed debt• Exited the programme on 30 April 2010• No issuance under the programme since summer 2009• SEK 25bn of government guaranteed debt matured during Q1 2011• Maturities of SEK 53bn for the remainder of 2011Maturity profile as per Q1 2011, SEKbn6040 USD SEK EUR CHF20 HKD JPY 0 2011 2012 2013 2014 22
  23. 23. Liquidity and fundingLimited unsecured funding needLending to the public, less deposits, covered bondpool and retail bondsSEKbn200150100 50 0-50 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2008 2009 2009 2009 2009 2010 2010 2010 2010 2011 23
  24. 24. Liquidity reserve* SEKmCash and holdings in central banks and deposits in other banks available o/n 63 437Securities issued or guaranteed by sovereigns, central banks or multilateral development banks 29 214Securities issued or guaranteed by municipalities or PSEs 0Covered bonds 53 366 - Issued by other institutions 53 272 - Own issued 93Securities issued by non-financial corporates 0Securities issued by financial corporates (excl. covered bonds) 1 869Other 0Total 147 886* As defined by the Swedish FSALiquid assets outside Treasury organisation 103 737Total 251 623 24

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