Swedbank s year-end 2011 results. Michael Wolf, CEO Göran Bronner, CFO Håkan Berg, CRO

Transcription

1 Swedbank s year-end 2011 results Michael Wolf, CEO Göran Bronner, CFO Håkan Berg, CRO

2 Delivered according to last years prospects Net profit of SEK 11.7bn for 2011 Core Tier 1 capital ratio of 15.7 per cent Return on equity of 12.2 per cent for 2011 Proposed dividend of SEK 5.30 per share 2

3 All stakeholders affected by new environment Shareholders Two share issues totalling SEK 27bn Buy-back programme halted Goodwill write-downs Harder to reach ROE target Staff Number of employees down by about since end of 2007 Overhaul of remuneration systems will reduce variable pay Customers Increased cost of money 3

4 Group results Continued stable development SEKm FY 2010 FY 2011 Q3 11 Q4 11 Net interest income Net commission income Net gains and losses Other income Total income Total expenses Goodwill write-down in Latvia SEK 1913m SEK 330m restructuring charge Increased capital markets income and positive valuation effects Profit before impairments Cost reduction 2012: SEK 1bn CT1 ratio, %* Return on equity, % Continued focus on capital efficiency * Basel 2 4

5 Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Liquidity and funding Significantly lower issuance volumes going forward SEK 44bn of long-term debt issued in Q4 (incl. SEK 7bn of senior unsecured) Over-collateralisation in covered-bond pool increased to 29% (25%) Continued strong liquidity reserves SEKbn 80 Term funding issuance Average term funding issuance Maturities Average term funding need

6 Swedbank regulatory compliant transition completed Transformation of: Maturity structure liabilities Liquidity reserve Capital buffer Significantly reduced risk in balance sheet Cost for regulatory compliance taken Ratio Swedbank Expected requirements CT1-ratio, Basel % 10% (2013) 12% (2015) Liquidity coverage ratio 139% 100% (2015) EUR/USD Net stable funding ratio 94% 100% (2018) 6

7 Capital management Current capitalisation targets withdrawn Dividend policy of 50% Other capital repatriation on hold Proposal to issue convertible debt instruments Return target of 15% 7

8 Risk highlights Net recoveries of SEK 174m in Q4 Credit impairments, SEKm Credit impairments in Sweden still low Known problems Limited inflow of watch list and problem loans Collective provisions mortgage loans in Latvia and Ukraine Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Retail LC&I Baltic Banking Russia & Ukraine Other 8

9 Risk highlights Focus on risk-weighted assets SEKbn RWA development Significant achievements 2011 Full organisational involvement Credit volumes Customer quality Market risks 530 Focus areas Review of small and mid-sized corporates Sweden Retail mortgage risk-weights Increase Decrease Q4 Volume (EAD) Migrations Other credit Market risk Operational risk 2011 Q4 9

10 Risk highlights Many factors impacting outlook Challenging economic situation in Europe Real estate Sweden: Risk picture is going down Positive outlook in Baltic countries 10

11 Priorities going forward Increased focus on operational efficiency Improve customer satisfaction Increase decision-making close to our customers Improve quality and cost effectiveness 11

12 Q & A

13 Appendix 13

14 Percent Mortgage loans gross margin (3-months) Swedbanks price towards customer (3 months) Swedbank's funding cost Stibor 3 months Swedish Riksbanks reporate Should cover: Liquidy costs Cost of administration Credit Impairments Profit Q1 03 Q2 03 Q3 03 Q4 03 Q1 04 Q2 04 Q3 04 Q4 04 Q1 05 Q2 05 Q3 05 Q4 05 Q1 06 Q2 06 Q3 06 Q4 06 Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 Q

15 Development of ROE and net interest margin ROE % 30 NIM % ROE (left hand scale) NIM (right hand scale)

16 Liquidity and funding Funding development Q4 SEK 44bn of long-term debt issued in Q4 (mainly domestic covered bonds and senior unsecured private placements) Demand for Swedbank short-term paper continued USD funding need covered for more than 12 months SEKm Long-term debt issued in Q4 SEKm Outstanding short-term debt Q Q3 11 Q Domestic CB Euro CB Other CB Senior unsecured 0 Domestic CP ECP/CD USCP Yankee CD Finnish CD French CD 16

17 Liquidity and funding Funding development FY 2011 SEK 254bn of long-term debt issued and SEK 180bn of maturities at beginning of 2011 Good demand for Swedbank short-term paper SEKm Issued long-term debt SEKm Outstanding short-term debt Domestic CB Euro CB USD CB (144A) Other CB Senior unsecured 0 Domestic CP ECP/CD USCP Yankee CD Finnish CD French CD 17

18 Liquidity and funding Long-term funding maturity profile Maturities for 2012 amount to nominal SEK 86bn SEKbn Long-term funding maturity profile Government guaranteed debt Senior unsecured debt Covered bonds

19 Liquidity and funding Remaining government guaranteed debt Exited the programme on 30 April 2010 No issuance under the programme since summer 2009 SEK 37bn of government guaranteed debt matures in April 2012 SEKbn 40 Maturity profile as of Q USD SEK EUR CHF HKD JPY

20 Swedbank s cover pool House price sensitivity of the cover pool House price sensitivity of the cover pool Overcollateralisation 35% 30% 25% OC 20% 15% 10% 5% 0% -5% -10% -15% -20% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% House price drop 20

21 Liquidity and funding Liquidity reserve According to the template defined by the Swedish Bankers' Association 1 SEKm Cash and holdings in central banks Deposits in other banks available overnight 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 Other, over-collateralisation in the cover pool Total % of the securities in the liquidity reserve as of Q are rated AAA 2 80% of the additional liquid assets fulfill the Liquidity Reserve definition by the Swedish Bankers Association except from that they are held outside Group Treasury. 21

22 Asset quality Impaired loans decreasing Excluding FX effect down SEK 3.4bn in Q4 Corporate portfolio quality improvements SEKm Share of impaired loans, gross Ukraine 61% Russia 20% Lithuania 13% Latvia 21% Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q Q4 11 Estonia 6.6% LCI 0.13% Retail 0.19% 22

23 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Asset quality Loans past due 60 days performance Q/Q EURm Estonia Latvia Lithuania Ukraine Russia 23

24 Asset quality Provisions well provided for Individual provisioning rates maintained Additional portfolio provisions in Latvian and Ukrainian mortgages Positive rating migrations SEKm Provision ratios, % Q % % % 59.8% 61.5% Retail 90 LC&I 135 Baltic Banking 55 Russia 46 Ukraine 72 Group 62 0 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Individual provisions Portf olio provisions Write-of f s, gross, cum f rom 2010 Provision ratio 24

25 Asset quality Repossessed assets SEKm Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Real Estate Residential Real Estate Commercial Passenger & Commercial Transport Shares Other 25

26 Asset quality Credit impairments by category SEKm Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Portfolio provisions Individual provisions Recoveries Write-offs net 26

27 Credit portfolio Large Corporates & Institutions Shipping and offshore Lending exposure to the shipping and offshore sector is SEK 22.7bn plus unutilised commitments of SEK 6.1bn Portfolio duration 4-5y Average fleet age 7y Other represents dry bulk (4%), ro/ro/car (7%), container (5%) Strong employment profiles Shipping and offshore portfolio Offshore 58% Tanker 26% Other 16% Note: Portfolio breakdown based on total exposure (lending + unutilised commitments). 27

28 Swedish housing and mortgage market Real estate prices Sweden 2011 Single-family homes 1 Tenant owner rights 2 Combined 3 12M Δ 12M Δ 12M Δ Jan 0% 8% 2% Feb 2% 7% 3% Mar 2% 6% 3% Apr 1% 6% 3% May 0% 6% 2% Jun 0% 5% 2% Jul 0% 6% 2% Aug -2% 3% -1% Sep -3% 1% -2% Oct -4% -1% -3% Nov -5% -4% -5% Dec -7% -4% -6% Source: Valuegard (Based on data from Mäklarstatistik), 1 HOXHOUSESWE, 2 HOXFLATSWE, 3 HOXSWE 28

29 Jan-05 Aug-05 Mar-06 Oct-06 May-07 Dec-07 Jul-08 Feb-09 Sep-09 Apr-10 Nov-10 Jun-11 Jan-05 May-05 Sep-05 Jan-06 May-06 Sep-06 Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09 Jan-10 May-10 Sep-10 Jan-11 May-11 Sep-11 Jan-05 Aug-05 Mar-06 Oct-06 May-07 Dec-07 Jul-08 Feb-09 Sep-09 Apr-10 Nov-10 Jun-11 Real estate prices Baltic countries Tallinn Riga 590 Nr.of deals Source: Swedbank, Estonian Land Board EUR/m2 Source: Swedbank Nr.of deals EUR/m Vilnius Nr.of deals Source: Swedbank, State Enterprise Centre of Registers EUR/m2 29

30 Swedish housing market New private lending in Sweden Internal LTV limit of 75% having a clear impact on average LTV levels of new origination 78 Weighted average LTV on new lending Tenant owner rights Single-family houses Total 1 1 Total of Tenant owner rights and Single-family houses 30