Morgan Stanley European Financials Conference, London 27 March Jan Erik Back CFO SEB

Transcription

1 Morgan Stanley European Financials Conference, London 27 March 212 Jan Erik Back CFO SEB

2 In the new world, what are SEB s priorities? Relationship banking as the key franchise driver Response to the new regulatory landscape Structural enhancement of profitability Morgan Stanley Conference London 2

3 Relationship banking as key franchise driver

4 Fundamentals remain robust in Northern Europe Nordic GDP growth (per cent) E 213E Finland Norway Sweden Estonia Denmark Latvia Lithuania Eurozone GDP growth (per cent) Germany E 213E Morgan Stanley Conference London 4

5 SEB s Core Markets enjoy strong sovereign finances % of GDP Sovereign debt Estonia Luxemburg Slovenia Lithuania Sweden Denmark Latvia Norway Finland Poland Spain Cyprus Netherland Malta Austria Hungary UK France Germany Portugal Ireland Belgium Italy Greece % 5% 1% 15% Budget deficit Norway Estonia Sweden Luxemburg Finland Denmark Germany Malta Belgium Hungary Italy Austria Cyprus Netherlands Slovenia France Lithuania Latvia Poland Portugal Spain UK Greece Ireland -4% -2% % 2% Current Account Balance Norway Luxemburg Netherland Sweden Germany Denmark Estonia Finland Latvia Austria Lithuania Belgium Hungary Ireland Slovenia France UK Italy Spain Poland Malta Cyprus Portugal Greece -2% -1% % 1% 2% Source: Datastream Morgan Stanley Conference London 5

6 Successful repositioning in the Swedish SME market Growing number of clients Availability and offerings 14, 12, 1, 8, 6, 4, +11, Corporate loans and commitments, SEK bn bn Market share 14% 12% 1% 8% 6% 4% 2% % Note: Active cash management customers Morgan Stanley Conference London 6

7 Nordic and German corporate expansion delivers Nordic & German large corporate expansion Large cap clients (#) Customers intention to expand banking services over next 12 months (net) % Client executives (#) +6% +6% Loans and commitments (SEK bn) +3% +3% SEB Note: Loans and commitments at constant exchange rates Source: Corporate Banking year-end 211 Nordics Morgan Stanley Conference London 7

8 Example: SEB in Finland Transforming the business Increased customer satisfaction (Quality index) Value for SEB Target A true relationship perception SEB An advisory perception Increased income and credit exposure (EUR m) 2 Corporates Non-corporates From 15 1 A product provider perception Value for the Customer Credit Exposure EUR 3bn Credit Exposure EUR 8bn Morgan Stanley Conference London 8

9 Increased presence in the Swedish household mortgage market reflects SEB s customer base Swedish mortgages, SEK bn 218 Dec '8 247 Dec '9 272 Dec '1 322 Dec '11 Selective origination Over-proportionally represented in higher income segments Above market average credit quality* LTV on new lending <6% Multi-product focus Low LTVs by regional and global standards Loan-to-value Share of portfolio >85% 2% 51-85% 22% -5% 76% Strict credit policy Affordability LTV and leverage caps Amortisation Stress tests * Source: Swedish Credit Bureau ( UC AB ) Morgan Stanley Conference London 9

10 Resilient mortgage market with repricing features Majority of Assets and Debt held by households with higher income Share of total debt Share of real assets Income group 1 has the lowest disposable income Income group 5 the highest Income group 1 Income group 2 Source: Sveriges Riksbank Nov 29 Income group 3 Share of financial assets Income group 4 Income group 5 Mortgage lending rates are going up due to stricter regulatory framework Germany Denmark Spain Netherlands USA Sweden Source: Reuters EcoWin Morgan Stanley Conference London 1

11 SEB s response to the new regulatory landscape

12 Swedish finish on regulation Capital Liquidity Common Equity Tier 1 Ratio > 1% by 213 Liquidity Coverage Ratio > 1% by 213 Common Equity Tier 1 Ratio [TBD] > 12% by 215 Countercyclical buffer -2.5% by 213 Net Stable Funding Ratio [TBD] > 1% by 218/ Morgan Stanley Conference London 12

13 Strong capital situation Core Tier 1 ratio (per cent) Basel II 15% 13% 11% 9% 7% 5% Regulatory target range Basel II Basel III 12.5 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q Maintain buffer to minimum regulatory levels RWA stable in continuing operations. Lending to highquality customers and increased use of collateral for RWA purposes offset Basel 2.5 effects and volume growth. Regulatory treatment of IAS 19 still not clarified Morgan Stanley Conference London 13

14 SEB has maintained conservatism across all customer segments in terms of risk modelling RWA Basel II total IRB risk weight, per cent, Q1 29 Q Peer 1 Peer 2 Peer 3 SEB Morgan Stanley Conference London 14

15 SEB has the most conservative view on the residential mortgage market despite highest quality The highest quality of mortgage customers Household Mortgage Sweden - UC risk score (similar to FICO) The most conservative average risk weight Basel II reported risk-weight for residential mortgage lending. Dec Total Market SEB Regulatory target range? SEB Peer 1 Peer 2 Peer 3 SEB s market share 16%, shared #3 in the market Morgan Stanley Conference London 15

16 Solid funding and deposit situation Balance sheet structure Dec 211, SEK bn 1,8 Banking book Household Lending Other Lending 1,27 Stable funding Funding, remaining maturity >1 year Deposits from the General Public Structurally sound balance sheet Loan-to-deposit ratio excluding household mortgage lending 92% Unutilised capacity for covered bonds SEK 123bn vs total LT senior funding of SEK 18bn Assets Equity Equity & Liabilities +19bn more stable funding Morgan Stanley Conference London 16

17 Loan growth funded through deposit growth and issued long-term covered and senior bonds Household lending, deposits and covered bond funding Dec- 7 Lending Deposits Covered Bonds Net = lending - deposits - outstanding cov bonds 8 Dec- 8 9 Dec- 9 1 Dec- 1 Retail Germany disposal 11 Dec- 11 Corporate & public lending, deposits and senior bonds Lending Deposit Senior Debt Net = Lending - deposits - senior debt Dec- 7 8 Dec- 8 9 Dec- 9 1 Dec Dec- 11 Stable net funding base Morgan Stanley Conference London 17

18 SEB s stable corporate business is not captured in Basel III Example: accredited stability in structural liquidity ratio ( NSFR ) SEB s household deposits, SEK bn SEB s corporate deposits, SEK bn dec 7 dec 8 92% dec 9 dec Balance sheet amount Basel III funding stability 1 dec 11 dec Jun dec 7- Jun dec 8- Jun dec 9- Jun 38% dec 1- Jun Balance sheet amount Basel III funding stability dec 11- Jun dec Morgan Stanley Conference London 18

19 Inbound flight-path to NSFR compliance by 218 Long-term funding activities (SEK bn) Issued Covered Bonds Issued Senior Unsecured Matured Covered Bonds Matured Senior Unsecured Reduced long-term debt dependence for current lending due to proactive pre-funding Issuance exceeding maturities Modest refinancing needs NSFR below 1% due to exclusion from Available Stable Funding of a number of funding sources - e.g. 5% allowance of unsecured wholesale / corporate deposits % allowance of all other (nondeposit, non-stable, financial corporates etc) Morgan Stanley Conference London 19

20 SEB will be LCR compliant by 213 Liquid resources / Short-term funding December 31, 211, SEK bn Credit Institutions Net Trading Assets Cash & Deposits in CB SEK 19bn more in liquid assets than the ST funding Credit Institutions SEB has a very liquid balance sheet LCR at 95 per cent end of 211 and above 1 per cent in EUR and USD 6 per cent of core liquidity reserve invested in central banks due to limited availability of AAA-rated papers in local markets LCR varying heavily due to its shortterm nature deposit base development excess liquidity investments 1 Liquidity Portfolio Funding <1y Assets Liabilities Morgan Stanley Conference London 2

21 Structural enhancement of profitability

22 Flat costs Cost by type (SEK bn) Income and cost trends, 12m rolling (SEK bn) Staff costs IT & Other costs Q1-9 Q2 Q3 Q4 Q1-1 Q2 Q3 Q4 Q1-11 Q2 Q3 Q4 Operating income Operating expenses SEK 24bn cost cap met (SEK bn) Cost cap 24bn New ambition Morgan Stanley Conference London 22

23 Example: Efficiency boost from off shoring Established support centre in Riga 26 and in Vilnius employees Group Operations, Accounting, HR and IT As-is/In-house Labor arbitrage SEK.3-.5 million/fte + Efficiency gains +15% efficiency gains per transferred FTE Total savings.4-.6 millions / FTE equaling +5% of cost The business case for captive sourcing is strong, with 5%+ savings of cost base Morgan Stanley Conference London 23

24 Substantial reduction of SEB s non-performing loans Non-performing loans, SEK bn 3-25% 25 Individually assessed - impaired loans with specific reserves Portfolio assessed - past due >6 days 2-23% 15-2% 1-43% 5 Dec '8 Mar '9 Jun '9 Sep '9 Dec '9 Mar '1 Jun '1 Sep '1 Dec '1 Mar '11 Jun '11 Sep '11 Dec '11 Dec '8 Mar '9 Jun '9 Sep '9 Dec '9 Mar '1 Jun '1 Sep '1 Dec '1 Mar '11 Jun '11 Sep '11 Dec '11 Dec '8 Mar '9 Jun '9 Sep '9 Dec '9 Mar '1 Jun '1 Sep '1 Dec '1 Mar '11 Jun '11 Sep '11 Dec '11 Dec '8 Mar '9 Jun '9 Sep '9 Dec '9 Mar '1 Jun '1 Sep '1 Dec '1 Mar '11 Jun '11 Sep '11 Dec '11 Group Nordic countries Germany Baltic countries NPL % of lending: 1.4%.3% 1.% 1.9% NPL coverage ratio: 64% 73% 8% 59% 6 bps credit loss level outside Baltics (average over 1 year period) Morgan Stanley Conference London 24

25 Sum-up

26 Robust region Cost management Balanced growth High asset quality Morgan Stanley Conference London 26

27 The leading relationship bank in our part of the world