Swedbank New York and Boston roadshow, September 24 26, Mikael Inglander, Chief Financial Officer

Transcription

1 Swedbank New York and Boston roadshow, September 24 26, 27 Mikael Inglander, Chief Financial Officer

2 The leading bank in four small countries Sweden Total population: 9.m Private customers: 4.1m Corp. customers: 262, Organisations: 12, Branches: 472 Typical market share: 25% GDP growth 26: 4.4% Estonia Total population: 1.3m Private customers: 1.2m Corp. customers: 84, Branches: 96 Typical market share: 5% GDP growth 26: 11.2% Share of group lending Latvia Total population: 2.3m Private customers:.7m Corp. customers: 47, Branches: 76 Typical market share: 3% GDP growth 26: 11.5% Lithuania Total population: 3.4m Private customers: 2.9m Corp. customers: 73, Branches: 127 Typical market share: 3% GDP growth 26: 7,4% 84% Sweden 6% 5% 4% Estonia Latvia Lithuania 1% Others Potential home markets: Russia and Ukraine Supporting markets: Denmark, Finland, Norway, Russia, Ukraine, USA, Luxemburg, China, Japan and Spain 2

3 Swedbank overview Swedish Banking Baltic Banking Swedbank Markets Asset management and Insurance Shared and New Operations Retail and corporate banking in Sweden. Retail and corporate banking, including asset management, in Estonia, Latvia and Lithuania. Corporate banking in Russia. Investment and merchant banking in Sweden, Norway and New York. Banking branch in Shanghai. Asset management and life insurance, Sweden. IT development and IT operations, common support functions. Nordic branches, rep. offices in Tokyo and Kiev Share of Group s net profit attr. to shareholders (Jan-Jun 7), % Swedish Banking Baltic Banking Swedbank Markets Asset Mgmt & Insurance Shared and New Operations 3

4 Strong position for profitability and growth Sweden Swedbank is the leading bank in Sweden. Profitability is high and stable and the bank is gaining market share in important segments such as retail mortgages and deposits. Stable base Baltics The Baltic economies are experiencing strong economic growth that is expected to remain for many years. As the largest bank in the region, growing with the market ensures Swedbank an attractive earnings growth. Growth and experience Russia and Ukraine Swedbank has a small but growing presence in Russia and Ukraine. Longterm, a significant share of Swedbank s growth will be generated in these markets. Future growth and profitability Customer satisfaction Profitability Attractive employer Swedbank had the highest increase in customer satisfaction in Sweden during 26. Customer satisfaction in the Baltics is rising from an already high level. 72 Swedbank s average annual growth of earnings per share the last 5 years was 16.5 percent. The peer group average was 15.5 percent. 25 In Sweden, Swedbank is ranked as the most attractive employer in the financial services sector*. In the Baltics we have been able to attract the best talent for a long period of time * According to Universum 4

5 Excellent long-term growth potential in Ukraine Acquisition of TAS-Kommerzbank was completed July 9th Ukraine is expected to have a continued high GDP growth Under penetrated banking market Retail loans/gdp, cards, current accounts Clear strategy focusing on retail- and SME segments Retail Loans / GDP (%) 3% 25% 2% 15% 1% 5% % Ukraine Es tonia Latvia Lithuania High Growth Potential 2 Czech R. Slovakia Poland Hungary Norway Denmark GDP / Capita Latvia Poland Lithuania 2 25 Slovakia 25 Hungary Es tonia Sweden Finland Czech R. Estonia Latvia Lithuania Russia Ukraine 5 Source: EIU, Global Insights World Overview, broker reports

6 Expansion to Russian retail market Swedbank given green light to resume Russian banking operations The already successful corporate banking will be complemented by retail banking services The Russian retail market has a substantial growth potential, strong GDP growth and increased demand for traditional retail banking products such as mortgages, cards and savings products Leverage on our experience in fast growing markets Initially, branches in prime locations in Moscow and St. Petersburg ATMs, telephone and Internet banks Profitable organic growth. 6

7 Market position home markets 7

8 Swedbank profit trend Operating profit SEK m 6 Sale of KIAB Total assets SEK bn Sale of EnterCard Q1-2 Q2-2 Q3-2 Q4-2 Q1-3 Q2-3 Q3-3 Q4-3 Q1-4 Q2-4 Q3-4 Q4-4 Q1-5 Q2-5 Q3-5 Operating profit Total assets Operating profit incl. capital gains Q4-5 Q1-6 Q2-6 Q3-6 Q4-6 Q1-7 Q Operating profit according to IFRS as of Q1, 24

9 Group financial objectives The return on equity shall exceed the average of all other large, publicly listed Nordic banks*. (Current status: RoE 19.5 percent for Jan-June 27 > peers) Swedbank will maintain sustainable growth in earnings per share exceeding the average for comparable banks. (Current status: has out-grown peers last 5-year period) Operational efficiency is measured as the relation between costs and income, the C/I-ratio. The long-term goal is that the group s C/I ratio before loan losses will be less than.5. (Current status: C/I-ratio amounts to.5) The tier 1 capital ratio will average 6.5 percent. (Current status: Tier 1 stands at 6.7 percent prior to completion of TAS acquisition) The dividend, excluding one-offs, will amount to around 4 percent of after-tax earnings. (Current status: Dividend ratio for 26 was 4 percent) * The comparable banks are SEB, SHB, Nordea, Danske Bank and DnB NOR 9

10 Positioning strategy Values Customer perception Results-oriented Open Innovative Committed Service Leadership Accessible Uncomplicated Proactive 1

11 Strategic focus Sweden Effectively leverage on Sweden s largest customer base and interface Retain high market shares in key product areas Utilize potential in growth segments in retail and corporate sectors Pension savings Cash management Credit cards Leasing / administrative services Private banking FX, interest rate derivatives Non-life insurance Maintain excellent asset quality Pursue and increase cost efficiency 11

12 Strategic focus Baltics Capture market growth opportunity Convergence towards EU average will continue during many years Sustainable lending growth will be well above EU average level for many years Large potential in up coming savings market Many other financial services are yet immature Pursue favourable revenue and cost trends Minimizing risks and maintaining organizational flexibility Maintain excellent asset quality, Readiness for slowdown, Operational excellence Manage challenging macro scenario 12

13 Summary Q2 27 (Q1 27) Continued improved results: SEK 3,112m (2,91 in Q1 27) Earnings per share increased 7% compared with Q1 27 Net interest income was up for the fifth consecutive quarter For the first half year, earnings per share rose 19 percent Swedish Banking: SEK 1,484m (1,632) Continued strong volume growth in both lending and deposits Lending margins under pressure Higher costs partly driven by one-off investments Baltic Banking: SEK 1,18m (995) Yet another record result Good development across the board Continued slowdown of credit growth, although the overheating risks in the economies persist Swedbank Markets: SEK 236m (313) Continued positive business volume development Equities and corporate finance had a good quarter, while profits in fixed income decreased TAS-Kommerzbank acquisition completed July 9th. 13

14 Business volumes, savings SEKbn Growth Q2-7, SEKbn SEKbn Balance, June Deposits, Sweden 3 Deposits, Baltics AM funds, Group Deposits, Sweden Deposits, Baltics AM funds, Group 14

15 Business volumes, lending 5 4 SEKbn Growth Q2-7, SEKbn SEKbn Balance, June 27 1, 1, Lending, Group Private, Sweden Corporate, Sweden 6 5 Private, Baltics Corporate, Baltics 4 2 Lending, Group 449 Private, Sweden 362 Corporate, Sweden 66 Private, Baltics 95 Corporate, Baltics 15

16 Margins % Lending Q1-6 Q2-6 Q3-6 Q4-6 Q1-7 Q2-7 % Q1-6 Q2-6 Deposits Q3-6 Q4-6 Q1-7 Q2-7 Market interest rates increased substantially during the quarter. Margins expected to decrease during Q3 due to market rates falling back Lending margin in Baltic Banking increased by 5 bps during Q2 Estonia Lithuania Latvia Sweden Estonia Lithuania Latvia Sweden 16

17 Swedish Banking 4,5 4, 3,5 3, 2,5 2, 1,5 1, 5 SEKm % Q1 6 Q2 6 Q3 6 Q4 6 Q1 7 Q2 7 Income Costs C/I-ratio Continued strong volume growth Lending margin pressure in all segments Higher asset management- and payment volumes boosts commission income Switch-over costs due to change in suppliers of cash handling and non-life insurance Staff costs affected by periodization effects Swedbank s market share of the households total net new savings increased to 17 percent during the first 6 months (16). 17

18 Baltic Banking 2,4 2,2 2, 1,8 1,6 1,4 1,2 1, SEKm % Q1 6 Q2 6 Q3 6 Q4 6 Q1 7 Q2 7 Income Costs C/I-ratio Another all time high quarter Earnings grew 19 percent to SEK 1,18m (995) Cost/income ratio was.4 Continued credit growth slow-down but overheating risk still persists Anti inflation plans implemented in Latvia Signs of soft landing in Estonia Good growth of savings volumes Staff increase to meet demand of personal service, partly temporarily summer staff Credit quality still very good. 18

19 Decreasing Baltic lending growth 8, Hansabank, Estonia 7, 6, 5, 4, 3, 2, 1, 6% 5% 4% 3% 2% 1% % 6, Hansabank, Latvia 5, 4, 3, 2, 1, 1% 9% 8% 7% 6% 5% 4% 3% 2% 1% % 19 5/Mar 5/Jun 5/Sep 5/Dec 6/Mar 6/Jun 6/Sep 6/Dec 7/Mar 7/Jun 5/Mar 5/Jun 5/Sep 5/Dec 6/Mar 6/Jun 6/Sep 6/Dec 7/Mar 7/Jun 5, Hansabank, Lithuania 4,5 4, 3,5 3, 2,5 2, 1,5 1, 5 7% 6% 5% 4% 3% 2% 1% % 2, Baltic Banking 18, 16, 14, 12, 1, 8, 6, 4, 2, 7% 6% 5% 4% 3% 2% 1% % 5/Mar 5/Jun 5/Sep 5/Dec 6/Mar 6/Jun 6/Sep 6/Dec 7/Mar 7/Jun 5/Mar 5/Jun 5/Sep 5/Dec 6/Mar 6/Jun 6/Sep 6/Dec 7/Mar 7/Jun Total lending, EURm YoY growth

20 Income statement, Group Q2 27 Q1 27 % Q2 26 % SEKm Net interest income 4,591 4,51 2 4,29 14 Net commission income 2,552 2, ,353 8 Net gains/losses on financial items at fair value Other income Total income 8,226 7, ,578 9 Staff costs 2,16 1, , Profit-based staff costs Other expenses 1,699 1, ,699 Total expenses 4,124 3, ,92 6 Profit before loan losses 4,12 3, , Loan losses Operating profit 4, 3,87 5 3,792 5 Tax Profit for the period 3,144 2, ,854 1 Attributable to Swedbank's shareholders 3,112 2,91 7 2,

21 Net interest income, by business area SEKm Q2 27 Q1 27 % Q2 26 % Swedish Banking 2,99 2,95 1 2,85 2 Baltic Banking Operations 1,496 1, Baltic Banking Investment Swedbank Markets Asset Management and Insurance Shared Services and New Operations Eliminations 6 8 Total net interest income 4,591 4,51 2 4,

22 Loan losses, Group SEKm % Credit quality still excellent on all markets Increase in reported loan losses, but from very low levels Q1-3 Q2-3 Q3-3 Q4-3 Q1-4 Q2-4 Q3-4 Q4-4 Q1-5 Q2-5 Q3-5 Q4-5 Q1-6 Q2-6 Q3-6 Q4-6 Q1-7 Q Impaired loans stable Group s low risk profile confirmed by Basel II, which indicates a reduction of RWAs of approx. 3 percent. Loan losses Loan loss level 22

23 Key figures Jan - Jun, 27 Jan - Jun, 26 Return on equity, % Earnings per share, SEK Equity per share, SEK C/I ratio before loan losses.5.53 Loan loss ratio, net, %.3.2 Share of impaired loans, %.8.9 Provision ratio for impaired loans, % Tier 1 capital ratio, % Capital adequacy ratio, %

24 All business areas improved their results for the first six months 27 Continued increase of Group results, up 19 percent to SEK 6,22m (5,56 first 6 months 26) Group cost/income ratio amounted to.5 Strong development of business volumes Continued very good credit quality on all markets. 24

25 Summary - Strong position for profitability and growth A leading bank in Sweden, Estonia, Latvia and Lithuania Strong and stable earnings in Sweden set to continue Effectively leverage on Sweden s largest customer base and interface Capture growth potential in Baltic Business Set to continue although at a slower pace Long-term growth potential in Ukraine and Russia. 25

26 Appendix 26

27 Exposure FAQ Minimal exposure towards sub prime Swedbank has invested about USD95m in two mortgage institutions with a marginal exposure in US subprime Minimal exposure towards structured credits Swedbank holds a very small CDO trading stock (no proprietary trading). The CDOs are built on about 125 underlying companies well diversified both with regards to geography and industry No off balance structured credit exposure Hedge fund exposure is about SEK4.5bn, all collateralized Exposure towards private equity owned companies (incl. subsidiaries) is about SEK1bn, all towards top rated local Nordic private equity firms. Exposures have extensive covenant packages No conduits or SIVs. 27

28 Funding and liquidity FAQ Excellent access to funding during recent market turmoil Strategy is to develop and maintain a well diversified and broad investor base in all core markets. Long term target of funds raised outside Sweden should be around 5 percent. Well diversified funding base with diversified sources of funding Deposit surplus in parent bank, Swedbank is market leader in deposits Capital markets funding, mainly to finance mortgage lending, is mostly programme financed, 9 percent is from interbank funding Domestic mortgage bonds, US CP, CDE and ECP, EMTN programmes Conversion of mortgage bonds to covered bonds (AAA realistic) during H1 28 Funding of Baltic operation in hard currency is performed by Group Treasury Conservative view at liquidity risk, continuously revised Substantial liquidity reserves, both at Group level and legal reserves in Baltic operations. 28