Swedbank s third quarter 2013 results

Transcription

1 Swedbank s third quarter 213 results Michael Wolf, CEO Göran Bronner, CFO Anders Karlsson, CRO Swedbank

2 Retail Stable results SEKm Q3 12 Q2 13 Q3 13 Q/Q Y/Y Net interest income Net commissions Total income Total expenses Profit before impairments Impairments ROE, % C/I ratio Stable NII Loan growth Stable back book margins Improved funding cost Improved deposit margins Stronger loan growth in Stockholm Solid asset quality 2

3 Large Corporates & Institutions Robust customer activity SEKm Q3 12 Q2 13 Q3 13 Q/Q Y/Y Net interest income Net commissions Total income Expenses excl. variable staff costs Variable staff costs Profit before impairments Impairments Stable NII Slightly weaker trading income Stable expenses Solid asset quality ROE, % C/I ratio

4 Baltic Banking Increasing customer activity SEKm Q3 12 Q2 13 Q3 13 Q/Q Y/Y Net interest income Net commissions Total income Improved NII Recoveries Total expenses Profit before impairments Impairments ROE, % C/I ratio

5 Group results Stable earnings SEKm Q3 12 Q2 13 Q3 13 Q/Q Y/Y Net interest income Net commission income Net gains and losses Total income Total expenses Profit before impairments Credit impairments Other impairments Tax Profit from continuing ops ROE continuing operations, % C/I ratio Improved NII Mortgage loan growth Treasury Margins in Baltic Banking and LC&I Stable commission income Weaker NGL Stable expenses Continued solid asset quality CET 1 ratio, % (Basel 3)

6 Capital Reduced RWA SEKbn Basel Basel Swedbank s Risk-Weighted Assets development Basel Basel Basel Basel Mix change Rating migration FX Market risk

7 Asset quality Continued strong asset quality Credit impairments, SEKm Q3 12 Q2 13 Q3 13 Retail Large Corporates & Institutions Baltic Banking Estonia Latvia Continued solid asset quality in Sweden Net recoveries in the Baltic countries Lithuania Swedbank Group

8 Swedbank s third quarter 213 results Q & A

9 Appendix

10 Swedish customer satisfaction index (SKI) Average rating Industry average Swedbank Source: SKI/EPSI 1

11 Swedish housing market Regulatory initiatives targeting the mortgage market Swedbank s equity doubled Total equity, SEKbn 25 Q3 213 LTV cap of 85% Amortisation Risk-weight floor of 15% on mortgage loans Capital and liquidity requirements High minimum regulatory requirements (including SiFi buffer) Countercyclical buffer? Leverage ratio? Source: Swedbank 11

12 Number of apartments Number of homes / persons, thousands Swedish housing market Shortage of housing 8 Housing completions Population and housing growth 7 6 Apartment buildings Single-family dwellings Acc increase in population Acc increase in housing completions Source: Sweden statistics and Swedbank 12

13 Q3-12 Q4-12 Q1-13 Q2-13 Q3-13 Q3-12 Q4-12 Q1-13 Q2-13 Q3-13 Q3-12 Q4-12 Q1-13 Q2-13 Q3-13 Loans past due 6 days performance Q/Q EURm 5 Estonia Latvia Lithuania

14 Provisions well provided for SEKm 2 Provision ratio, % Q % % % % 54% 53% Retail 63 LC&I 43 Baltic Banking 52 Group Q2-12 Q3-12 Q4-12 Q1-13 * Q2-13* Q3-13* Individual provisions Portf olio provisions Provision ratio * Russia and Ukraine reported as discontinued operations 14

15 Credit portfolio - Retail Corporate portfolio drives capital efficiency Total portfolio SEK 222bn Swedbank Mortgage AB Swedbank Finans AB Other Segments excl. Swedbank Mortgage and Swedbank Finance Volume (SEKbn) Secured (%) Agriculture Manufacturing Public sector and utilities Construction Retail Transportation Shipping.1 95 Hotels and restaurants Information & communication.8 46 Finance and insurance Property management Professional service Other Total

16 Credit portfolio Agriculture Private: Residential 2% Agriculture 45% Segment definitions Corporate agriculture: Businesses that derive their main income from agricultural activities Private investments: Private individuals who own the agricultural properties for living or investment purposes Private: Forestry 22% Forestry 13% Lending exposure to the agriculture industry SEK 64.3bn Corporate agriculture: (58%) Agriculture 45% Forestry 13% Private investments (42%) Residential: 2% Forestry: 22% 16

17 Credit portfolio Large Corporates & Institutions Shipping and offshore Lending exposure to Shipping & Offshore sector SEK 24.5bn. Decrease over the quarter mainly due to FX Portfolio duration 4-5y Average fleet age 7y Strong employment profiles Shipping and offshore SEKbn -2.4% 3-7.2% Q3-12 Q4-12 Q1-13 Q2-13 Q3-13 Offshore Tanker Other Shipping and offshore portfolio by subsegment RORO 2. Container 1. Dry bulk.7 Gas (LNG/LPG) 2. Crude oil.5 Q3-13 Product 2. Q2-13 Chemical.7 Floating production 1.7 Accommodation 1.2 Supply 3.9 Oil service 1.2 Drilling & exploration 7.1 Cruise JPY NOK USD EUR SEK Shipping and offshore portfolio by currency Q3-13 Q

18 Liquidity and funding Core balance sheet* structure SEKbn 1 4 Assets SEKbn 1 4 Liabilities 1 2 Estonia CEE lending 1 2 Suppl. cap CET1 Government guaranteed debt Senior 1 Other corporate lending, Sweden & other Nordic countries 1 Deposits 8 Other private, Sweden Swedish mortgage loans 4 Covered bonds 2 2 Q3 213 Q3 213 * Simplified balance sheet Source: Swedbank Sep

19 Over-collateralisation Liquidity and funding Senior 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 SEKbn Senior unsecured debt 5% 6 4% OC, Q313 3% 4 2% 2 1% % % % -5% -1% -15% -2% -25% -3% -35% -4% -45% -5% House price drop Source: Swedbank Sep 213, nominal amounts 19

20 Liquidity and funding Lower funding needs LCR 147% (Swedish FSA definition FFFS 212:6) NSFR 91% Issued SEK 89bn of term-funding YTD of which SEK 2bn in Q3 Term funding issuance completed and planned SEKbn 12 Covered bonds Senior unsecured Source: Swedbank, 3 Sep 213, nominal amounts 2

21 Liquidity and funding Long-term funding maturity profile Term funding plan for the next 12 months of SEK 12bn to meet maturities of SEK 98bn Long-term funding maturity profile SEKbn 2 15 Government guaranteed debt Senior unsecured debt Covered bonds Source: Swedbank 3 Sep

22 Liquidity and funding Liquidity reserve According to the template defined by the Swedish Bankers' Association SEKm Cash and holdings in central banks Deposits in other banks available overnight 443 Securities issued or guaranteed by sovereigns, central banks or multilateral development banks Securities issued or guaranteed by municipalities or public sector entities Covered bonds Issued by other institutions Own issued Securities issued by non-financial corporates Securities issued by financial corporates (excl. covered bonds) Other Total Additional liquid assets, Group 2, % of the securities in the liquidity reserve per Q3 213 are rated AAA 2 81% of the additional liquid assets fulfill the Liquidity Reserve definition by the Swedish Bankers Association except from that they are held outside the Treasury department. 3 78% of the additional assets are rated AAA Source: Swedbank Fact book, Sep 3,

23 Liquidity and funding Prefunded in excess of 12 months SEKbn Days forward SEKbn Source: Swedbank Jun 3, Additional pledgeable 3 and/or liquid assets 25 1 Liquidity reserve, securities Liquidity reserve, central bank deposits, 1 SEKm 5 1 As defined by the Swedish Bankers Association Next 12-month term funding maturities CP / CDs and net interbank funding, SEKm 23

24 Liquidity and funding Limited need for USD funding USD funding need covered for more than 12 months Issued USD 1bn of covered bonds (144a) and USD 1bn of senior (144a) YTD 213 SEKbn 25 Assets held for sale 2 Interest-bearing securities Lending to the public 15 Loans to credit institutions 1 Cash and balances with central banks Deposits and borrowings from the public 5 Amounts owed to credit institutions Debt securities in issue Assets Liabilities Source: Swedbank Fact book, 3 Sep

25 Liquidity and funding Asset encumbrance Encumbered assets - distribution by type of liability (row ) and asset (column) Government Central banks and supranational Debt instruments issued by Securities issued by debt debt Covered credit corporate and SEKm instruments instruments bonds institutions other issuers ABS Mortgage loans Cash Total of w hich received collateral (offbalance) Central bank funding Intraday settlement Repurchase agreements 1) Derivative 2) Covered bonds 3) Other 4) Total Financial assets pledged for insurance policy holders Unencumbered assets - additional assets available for secured funding Central banks and SEKm Government debt instruments supranational debt instruments Covered bonds Debt instruments issued by credit institutions Securities issued by corporate and other issuers ABS Mortgage loans Cash Total of w hich received collateral (offbalance) Securities 5, 6) Cover pool over collateralisation 7) Cover pool eligible assets 8) Total ) Repoed securities. 2) Collateral posted under CSA agreements, gross (3-year, SEKm, High: , Low : 1 86, Average: ). 3) Of w hich accrued interest of encumbered assets in the cover pool, SEK 2 173m as of 3 September ) Collateral pledged in securities lending activities and w ith exchanges. 5) Reversed repos are included. 6) All type of securities, including securities non pledgeable at central banks, of w hich 82% are rated AAA, 2% are rated below A- and 7% are not rated. 7) Of w hich accrued interest of assets in the cover pool overcollateralisation, SEK 96m as of 3 September ) Securities received as collateral in for example reversed repo transactions that; either have (encumbered) or have not (unencumbered), been used as collateral by Sw edbank. Source: Swedbank Facts Q

26 Swedish housing and mortgage market Swedish mortgage market No securitisation (on balance sheet), no sub-prime market, no 3 rd party origination, insignificant buy-to-let market 7% home ownership 1 Rental market is regulated Transparent credit information (credit information agency, 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 system 1 Source: Boverket,

27 Swedish housing and mortgage market Real estate price performance Sweden 12 months Single-family homes 1 Tenant-owner rights 2 Combined 3 12M Δ 12M Δ 12M Δ Oct-12 1% 6% 3% Nov-12 3% 7% 4% Dec-12 4% 7% 6% 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% 1% 6% Jul-13 4% 9% 6% Aug-13 5% 11% 7% Sep-13 5% 11% 7% 1 HOXHOUSESWE, 2 HOXFLATSWE, 3 HOXSWE Source: Valuegard (Based on data from Mäklarstatistik), 27

28 Jan-5 Jul-5 Jan-6 Jul-6 Jan-7 Jul-7 Jan-8 Jul-8 Jan-9 Jul-9 Jan-1 Jul-1 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jan-5 Jul-5 Jan-6 Jul-6 Jan-7 Jul-7 Jan-8 Jul-8 Jan-9 Jul-9 Jan-1 Jul-1 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-5 Jul-5 Jan-6 Jul-6 Jan-7 Jul-7 Jan-8 Jul-8 Jan-9 Jul-9 Jan-1 Jul-1 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Real estate prices Baltic countries EURm Tallinn EURm Riga 2 2 Nr.of deals EUR/m2 Nr.of deals EUR/m2 Source: Swedbank, Estonian Land Board Source: Land book database EURm Vilnius Nr.of deals Source: Swedbank. State Enterprise Centre of Registers EUR/m2 28

29 Mortgage loans, gross margin (3 months) % Net margin The gross margin covers: Cost of liquidity ~.2% Administrative costs ~.3% Credit impairments ~.3% Tax (22 % on profit before tax) Gross margin Swedbank's funding cost Stibor 3 months Swedish Riksbank's repo rate 29