Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

Swedbank's Third Quarter 2011 Results Presentation

2,112 views

Published on

Swedbank's presentation of the third quarter 2011 results

Published in: Economy & Finance, Business
  • Be the first to comment

  • Be the first to like this

Swedbank's Third Quarter 2011 Results Presentation

  1. 1. Swedbank’s third quarter 2011 resultsMichael Wolf, CEO WolfGöran Bronner, CFOHåkan Berg, CRO
  2. 2. Stable result but increased macro uncertainty y• Net profit of SEK 3 475m• Core Tier 1 capital ratio of 15.1 per cent• Return on equity of 14 4 per cent in Q3 14.4• Pause in buy-backs Profit for the period Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 2
  3. 3. Well prepared to meet increased uncertainty p p y• Increased macro uncertainty – lower growth• Income pressure likely – Interest rates – Lower activity• Intensified cost focus• Strong position capital and liquidity 3
  4. 4. Potential long-term effectsIncreased cost of doing banking g g• Lower leverage – Governments banks, businesses and households Governments, banks• Reshaping of savings market• Long-term regulatory changes – Demarcation line tax payers/shareholders – Cost of senior funding – Ring fencing of certain banking activities g g g – Increased cost for cross border banking• Increased cost of doing banking will affect all stakeholders 4
  5. 5. RetailSolid performance pSEKm Profit before impairments • Improved NII2 8002 4002 000 • Stable asset quality1 6001 200 800 • Good cost control 400 0 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 • High interest rate sensitivitySEKm Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 • Transaction to relation (T2R)Net interest income 2 499 2 752 2 925 3 026 3 143Net commission income 1 019 1 132 1 073 1 051 1 089Total income 3 981 4 349 4 395 4 593 4 683Total expenses 2 100 2 223 2 193 2 237 2 082Profit bef impairments 1 881 2 126 2 202 2 356 2 601Total impairments -3 136 5 5 106C/I ratio 0.53 0.51 0.50 0.49 0.44 5
  6. 6. Large Corporates & InstitutionsTurbulent market conditionsSEKm Q1 11* Q2 11 Q3 11 SEKm Profit before impairments 1 100Net interest income 850 884 778 of which LC & FI** 450 485 557 of which Capital markets 370 378 184 700Commission income 505 412 399 of which LC & FI** f C ** 289 202 225 300 of which Capital markets 215 211 174Total income LC&I 1 755 1 344 1 311 -100 Q3 10 Q4 10 Q1 11* Q2 11 Q3 11 of which LC & FI** FI 781 731 827 of which Capital markets 943 589 415Total expenses, excl variable pay 776 778 772 • Poor capital markets incomeVariable staff costs 83 50 6Profit bef impairments 896 516 533 • Strong customer related of which LC & FI** 514 473 594 income of which Capital markets 364 31 -127Credit impairments -105 -19 -66 • Continued re-pricingC/I ratio 0.49 0.62 0.59 • Increased volumes* Excluding Lehman one-off ,**Large corporates and Financial institutions 6
  7. 7. Baltic BankingStable development p Profit before impairmentsSEKm1 000 • Slowing deleveraging 800 • Continued recoveries 600 400 • Increased activity 200 0 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 • High interest rate sensitivitySEKm Q3 10 Q4 10 Q1 11 Q2 11 Q3 11Net interest income 919 1 168 997 1 017 994Net commission income 386 383 317 365 392Total income 1 561 1 632 1 472 1 568 1 606Total expenses 624 697 658 653 649Profit bef impairments 937 935 814 915 957C/I ratio 0.40 0.43 0.45 0.42 0.40 7
  8. 8. Group resultsSolid core development p SEKm 9M 10 9M 11 Q2 11 Q3 11 • Lower asset management and Net interest income 11 802 14 124 4 740 4 857 corporate finance fees Net commission income 6 987 6 837 2 244 2 292 Net gains and losses 2 043 1 025 511 259 Other income 2 254 3 011 860 782 • Negative funding related Total income 23 086 24 997 8 355 8 190 valuation effects in Treasury l ti ff t i T Total expenses 13 052 13 060 4 345 4 331 Profit before impairments 10 034 11 937 4 010 3 859 • Good cost control Total impairments 3 524 -1 733 - 309 - 454 – One-off cost of SEK 100m Profit for the period 4 694 10 779 3 452 3 475 in Ukraine Return on equity, % 6.9 15.0 14.4 14.4 – Cost increase in Ektornet Cost-income ratio 0.57 0.52 0.52 0.53 Core Tier 1 capital ratio, %* 13.4 15.1 14.8 15.1 Risk-weighted assets, SEKbn* 560 497 509 497 • Deposit g p growth Deposits and borrowings 524 555 529 555 from the public* Basel 2 8
  9. 9. Liquidity and fundingFunding development Q3 g p• SEK 60bn of long-term debt issued in Q3• Demand f S db k short-term paper continued D d for Swedbank h t t ti d• USD-funding need covered for more than 12 months Long-term debt issued in Q3 Outstanding short-term debtSEKm SEKm SEK35 000 Q2 11 60 000 Q3 1130 000 50 00025 000 40 00020 000 30 00015 000 20 00010 000 5 000 10 000 0 0 Domestic Euro CB USD CB Other CB Senior Domestic CP ECP USCP Yankee CD CB (144A) unsecured 9
  10. 10. Liquidity and fundingTerm funding at a slower pace going forward g p g g• Over SEK 600bn term funding issued since Q3 2009• Significantly lengthened maturities• All government guaranteed debt pre-fundedSEKbn100 Term funding issuance Average term funding issuance Pre-funded term maturities 75 Average term funding need 50 25 0 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q1 2011 Q2 2011 Q3 2011 Q4 2011 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 10
  11. 11. LiquidityConservative liquidity levels q y• Short-term funding mainly a tool for cash managementSEKbn350300250 Next 12-month Other pledgeable and/or liquid assets term funding200 maturities Additional liquidity q y reserve assets150 Commercial Central bank deposits papers/ Certificate of deposits and100 net interbank funding 50 0Source: Swedbank 30 Sep 2011 11
  12. 12. LiquidityConservative liquidity levels q y• Short-term funding mainly a tool for cash management• More th 15 months pre-funded M than th f d dSEKbn350300250 Next 12-month Other pledgeable and/or liquid assets term funding200 maturities Additional liquidity reserve assets150 Commercial Central bank deposits papers/ Certificate of deposits and100 net interbank funding 50 0Source: Swedbank 30 Sep 2011 12
  13. 13. Capital management – Core Tier 1 ratioUncertain regulatory demand – Swedbank well positioned g y p • Still large regulatory uncertainty regarding minimum CT1 ratio and 15.1% different buffers Excess capital (SEK 10.4bn) • Basel 3 13% Extra buffer – CT1 ratio impact 100bp due to prevailing circumstances – LCR 212% (SEK 14.9bn) 10% – NSFR 92% Risk appetite (ICAAP buffer, SEK 14.9bn) 7% Minimum requirement (SEK 34.8bn) 13
  14. 14. Risk highlightsImprovement but increased macro uncertainty p y• Improved asset quality – Decreased impaired loans – Continued recoveries – Positive rating migration – Improved loan-to-value developments in Estonia, Latvia and Lithuania• Increased macro economic uncertainty – World economy slowing – House market in Sweden slowing down 14
  15. 15. Asset qualityNet recoveries of SEK 441m in Q3 Credit impairments, SEKm • Continued recoveries in CEE 120 – Positive development in the Baltic corporate portfolio – Mortgage provisions in Ukraine • Solid Swedish performance -324 -441 441 -483 -972 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Retail LC&I Baltic Banking Russia & Ukraine Other 15
  16. 16. Continues actions to ensure proactive risk management p g• Review of potentially exposed sectors in Retail and LC&I – P Proactive work ti k – Ensure customers’ buffers• Complementary stress tests shows strong resilience – Prudent mortgage lending in Sweden• Ukrainian and Latvian mortgage books most exposed – Limited total impact 16
  17. 17. Focus on risk-weighted assets g RWA development • Future focus areasSEKbn515 – Review of small and mid-sized corporates Sweden 4.8 – Advanced IRB510 509.3 509 3 -8.0 80 • Potential regulatory development – Mortgages505 -4.8500 -2.1 -2.2 497.1495 2011 Volume Def inition Rating Other credit Market 2011 Q2 (EAD) change* migration risk risk Q3* Corporate size definition 17
  18. 18. Swedbank’s resilience strong g• Solid credit portfolio• Strong capitalisation• Resilient funding position – No short-term funding dependence – Limited dependence on senior funding – Well matched USD funding – High q g quality covered bond p y pool 18
  19. 19. Swedbank’s cover poolHouse price sensitivity of the cover p p y poolOvercollaterlisation • Resilient LTV-structure with30% an approximate 2-to-1 2 to 125% OC relationship between house20% price drops and cover pool15% size10% 5% 0% -5%-10%-15%-20% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% House price drop 19
  20. 20. Appendix 20
  21. 21. Asset qualityImpaired loans decreasing p g• Excluding FX effect down SEK 2.5bn in Q3• Minor increase in Retail in Q3SEKmSEK45 000 42 719 38 631 40 132 40 328 2 391 -4 088 34 77840 000 35 770 4 362 196 -3 853 3 31 74735 000 Share of 6 113 -3 031 30 669 29 657 28 743 impaired -1 07830 000 -1 926 loans, gross25 000 5 840 Ukraine 63% 1 378 Russia 22%20 000 5 810 Lithuania 15%15 000 29 65710 000 9 079 Lativa 23% 5 000 Estonia 7.9% 4 532 LCI 0.12% 400 1 704 Retail 0.19% 0 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q3 11 21
  22. 22. -90 -70 -50 -30 -10 -110 -150 -130 10 30 EURm Q Q3 10 Q Q4 10 Q Q1 11 p Asset quality Estonia Q Q2 11 Q Q3 11 Q Q3 10 Q Q4 10 Q Q1 11 Latvia Q Q2 11 Q Q3 11 y Q Q3 10 Q Q4 10 p Q Q1 11 Lithuania Q Q2 11 Q Q3 11 Q Q3 10 Q Q4 10 Q Q1 11 Ukraine Q Q2 11 Loans past due 60 days – performance Q/Q Q Q3 11 Q Q3 10 Q Q4 10 Q Q1 11 Russia Q Q2 11 Q Q3 1122
  23. 23. Asset qualityProvisions – well provided for p• Individual provisioning rates maintained• Work out Work-out portfolios slowly declining• Positive rating migrationsSEKm30 000 Provision ratios, % Q3 11 63.9% Retail 8725 000 3 606 62.7% LC&I 103 61.0% 60.0% Baltic Banking 5420 000 21 068 3 297 59.8% 2 769 Russia 62 18 494 2 436 2 409 Ukraine 6715 000 16 598 15 952 14782 Group G 6010 000 6 306 5 204 2 099 4 373 5 000 1 449 0 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Individual provisions Portf olio provisions Write-of f s, gross, cum f rom 2010 Provision ratio 23
  24. 24. Asset qualityRepossessed assets pSEKm7 0006 0005 0004 0003 0002 0001 000 0 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Real Estate Residential Real Estate Commercial Passenger & Commercial Transport Shares Other 24
  25. 25. Asset qualityCredit impairments by category p y g ySEKm2 0001 5001 000 120 500 0 - 500 - 324 - 441-1 000 - 483 - 972-1 500 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Portfolio provisions Individual provisions Recoveries Write-offs net 25
  26. 26. Real estate prices – Sweden 2011 p Single-family homes Tenant owner rights Purchase price / 12M Δ Price (SEK) per Sqm* 12M Δ assessed tax value* value Jan/11 1,58 1% 21 909 8% Feb/11 1,59 1% 22 074 7% Mar/11 1,59 0% 22 004 7% Apr/11 1,6 0% 21 884 5% May/11 1,6 16 -1% 1% 21 584 4% Jun/11 1,6 -1% 21 286 3% Jul/11 1,58 -2% 21 196 1% Aug/11 1,56 -2% 21 264 -1% Sep/11 1,56 -2% 21 480 -1%*3 months moving averageSource: Mäklarstatistik (www.maklarstatistik.se) 26
  27. 27. 20 40 60 80 0 100 120 140 0 100 120 140 20 40 60 80 2007-01 2007-01 2007-03 2007-03 2007-05 2007-05 2007-07 2007-07 2007-09 2007-09 Total volume 2007-11 2007-11 Total volume 2008-01 2008-01 2008-03 2008-03 2008-05 2008-05 2008-07 2008-07 2008-09 2008-09 2008-11 2008-11 2009-01 2009-01 p 2009-03 Stockholm (index) Götaland (index) 2009-03 2009-05 2009-05 2009-07 2009-07 2009-09 2009-09 2009-11 2009-11 2010-01 2010-01 2010-03 2010-03 2010-05 2010-05 Single-family homes - by region* 2010-07 Svealand (index) 2010-07 2010-09 * 20 larger geographically distributed cities excl Stockholm, Gothenburg and Malmö Gothenburg (index) Single-family homes - major cities 2010-09 2010-11 2010-11 2011-01 2011-01 2011-03 2011-03 2011-05 2011-05 2011-07 2011-07 2011-09 2011-09 0 Norrland (index) 0 Malmö (index) 1 000 2 000 3 000 4 000 5 000 6 000 500 Volume Real estate prices – Sweden Volume 1 000 1 500 2 000 2 500 3 000 0 0 100 120 140 100 120 140 160 180 20 40 60 80 20 40 60 80 2007-01 2007-01 2007-03 2007-03 2007-05 2007-05 2007-07 2007-07 2007-09 2007-09 ( 2007-11 Total volume 2007-11 2008-01 2008-01 2008-03 2008-03 Total volume (index) ) 2008-05 2008-05 2008-07 2008-07 2008-09 2008-09 2008-11 2008-11 ( 2009-01 2009-01 ( 2009-03 2009-03 ) Stockholm (index) 2009-05 2009-05 Götaland (index) ) 2009-07 2009-07 2009-09 2009-09 2009-11 2009-11 2010-01 2010-01 2010-03 2010-03 2010-05 ( 2010-05 Gothenburg ( Tenant owner rights - by region* 2010-07 Tenant owner rights - major cities 2010-07 2010-09 2010-09 Svealand (index) ) ) g (index) 2010-11 2010-11 2011-01 2011-01 2011-03 2011-03 2011-05 2011-05 2011-07 2011-07 ( ( 2011-09 2011-09 0 0 ) Malmö (index) Norrland (index) ) 1 000 2 000 3 000 4 000 5 000 6 000 7 000 8 000 9 000 2 000 4 000 6 000 8 000 Volume 10 000 10 000 12 000 Volume27 Source: Mäklarstatistik, Swedbank
  28. 28. Real estate prices – Baltic countries p Tallinn Riga1 800 2 000 1 616 1 7621 600 1 8001 400 1 6001 200 1 400 939 1 2001 000 1 000 800 800 598 600 600 400 400 200 200 0 0 May-05 May-06 May-07 May-08 May-09 May-10 May-11 Mar-06 May-07 Feb-09 Apr-10 Jan-05 Sep-05 Jan-06 Sep-06 Jan-07 Sep-07 Jan-08 Sep-08 Jan-09 Sep-09 Jan-10 Sep-10 Jan-11 Sep-11 Jan-05 Aug-05 Dec-07 Jul-08 Sep-09 Nov-10 Jun-11 Oct-06 Nr.of deals EUR/m2 Nr.of deals EUR/m2Source: Swedbank, Estonian Land Board Source: Swedbank Vilnius2 0001 800 1 7311 6001 400 1 0681 2001 000 800 600 400 200 0 Mar-06 May-07 Feb-09 Apr-10 Jan-05 Aug-05 Dec-07 Jul-08 Sep-09 Nov-10 Jun-11 Oct-06 Nr.of deals EUR/m2Source: Swedbank, State Enterprise Centre of Registers 28
  29. 29. Liquidity and fundingLiquidity reserve* q y SEKm SEKAAA-rating**Cash and holdings in central banks 190 843Deposits in other banks available overnight p g 759Securities issued or guaranteed by sovereigns, central banks or multilateral development banks 32 854Securities issued or guaranteed by municipalities or Public sector entitiesCovered bonds 54 383 - Issued by other institutions 54 383 - Own issuedSecurities issued by non-financial corporatesSecurities issued by financial corporates (excl. covered bonds) 929OtherTotal 279 768*According to the template defined by the Swedish Bankers AssociationAdditional liquid assets, Group 57 287Other, over-collateralisation in the cover pool 130 000Total 467 055**100% of the securities in the liquidity reserve per Q3 2011 are rated AAA f th iti i th li idit t d 29
  30. 30. Liquidity and fundingLong-term funding g g• Continued focus on covered bonds with Q3 issuance of SEK 60bn• Term funding of SEK 210bn issued first 9M 2011, with maturities of SEK 97bn during the same period• Maturities for the remainder of 2011 amount to nominal SEK 69bn• Nominal figures term funding Q3 2011: • Covered bonds SEK 58bn; Senior unsecured SEK 2bnLong-term funding maturity profile, SEKbn200 200150 Covered bonds 150 Senior unsecured Guaranteed bonds100 100 50 50 0 0 2011 2012 2013 2014 2015 2016 2017- 2011 2012 2013 2014 2015 2016 2017- 30
  31. 31. Liquidity and fundingRemaining government guaranteed debt gg g• Exited the programme on 30 April 2010• No issuance under the programme since summer 2009 p g• SEK 39bn of government guaranteed debt matured during the first nine months of 2011• Maturities of SEK 41bn for the remainder of 2011Maturity profile as per Q3 2011, SEKbn6040 USD SEK EUR CHF HKD20 JPY 0 2011 2012 2013 2014 31
  32. 32. Liquidity and fundingLimited unsecured funding need gLending to the public, less deposits, covered bondpool and retail bondsSEKbn 200 150 100 50 0 -50-100 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2008 2009 2009 2009 2009 2010 2010 2010 2010 2011 2011 2011 32

×