HANSABANK GROUP. September 2007

Transcription

1 HANSABANK GROUP September 20

2 I Introduction of the Hansabank Group II Market shares and results III Baltic markets 2

3 Hansabank is a fully owned subsidiary of Swedbank Group. The Group has 2,750 employees, more than 9 million private customers and 0.5 million corporate customers in its home markets Sweden, Estonia, Latvia, Lithuania, Russia and Ukraine. Hansabank Group is the largest financial institution in the Baltic countries with total assets exceeding EUR 23.6 billion and shareholders equity over EUR.75 billion (based on the September 20 results). 3 Hansabanka s headquarters in Riga

4 Our target market is the Baltics and Russia. As a universal bank our business model is based on a large customer base. Acquisition and retention of new customers is a key goal for us. Our main focus is on medium-sized companies and private individuals with above average purchasing power, however, we serve all customer groups. With close to 2 million active customers, 300 branches and 9,2 employees, Hansabank is a leading financial institution in all three Baltic countries. Estonia Latvia Lithuania St. Petersburg Kaliningrad St. Petersburg Moscow Estonia Latvia Lithuania Baltic Population, mil Active customers, mil Internet customers, mil Cards, mil Branches ATMs ,2 Russia Customers Corporate Retail Branches Employees 4, , Employees 4 3,227 2,50 3,384 9,2 data as of September 20

5 Growing importance of Hansabank in Swedbank Group September 20 9 months 20 Net loans 7% 83% Swedbank (excl HB) HB Pretax profit 38% 62% Swedbank (excl HB) HB September 20 September 20 Employees 43% 57% Swedbank (excl HB) HB Private customers 54% 46% Swedbank (excl HB) HB 5

6 History 99 July establishment of Hansabank 996 June expansion into Latvia through acquisition 998 July move to the retail market through a merger with the Estonian Savings Bank 998 Autumn Swedbank becomes Hansabank s strategic shareholder 999 July expansion into Lithuania through a greenfield start-up 200 July acquisition of the largest retail bank in Lithuania 2002 November expansion into Russia through leasing 2005 March acquisition of Kvest bank in Moscow 2005 March Swedbank buyout of Hansabank s minority shareholders - Hansabank becomes a fully-owned subsidiary in Swedbank Group 2005 September Bank branch opened in Moscow 20 March Bank branch opened in St. Petersburg 20 August Bank branch opened in Kaliningrad 20 August Hansa Property Insurance launched 6

7 Values We believe that the Group s strong performance and growing international recognition is the result of a performance-oriented culture, transparent communication, willingness to change and the high commitment of our employees. The Group values are: Result-oriented we want to achieve good results in everything we do. Open we are transparent and open in our communication. Innovative we are learning and ready to change. Committed we are building a long-term sustainable business. 7

8 Goal Hansabank s strategy and long-term objectives have predominantly remained the same for the last seven years. However, each year we introduce certain modifications and changes to ensure that the strategy is compatible with market developments and to secure the balanced development of the company. We want to be a clear leader in each Baltic market. Biggest growth in volumes (in absolute terms) Highest profit (in absolute terms) Highest customer satisfaction We want to be a leading universal bank in North-West of Russia: Distribution network in Moscow, St. Petersburg and Kaliningrad Over.5 million clients Over 5% contribution to Swedbank Group net profit. 8

9 How do we reach our goal? By having strong performance and sales culture By service leadership By deep business intelligence By widest distribution By excellent crediting know-how and skills By offering continuous development opportunities for our people By running our business locally 9

10 Key figures Earnings per share In euros.53 56% Cost-income ratio % 46% 49% 46% m m 20 portfolio annual growth Lending 4,874 8,793 Return on equity 3% 4,396 5,924 3,329 29% 32% 35% 9,37 58% 59% 42% 26% 23% 23% 2% 26% Sep m % 4.4% 2.4% 5.7% 3.9%.9% Margins 5.2% 3.5%.7% 4.8% 3.%.8% yield of assets spread cost of liabilities 5.2% 6.0% 2.8% 2.4% 2.8% 3.% m was very successful for Hansabank. In an environment of rapid growth, we set new records throughout our entire organization. The continuously fast growth and positive economic environment exceeded the expectations we had at the beginning of the year by quite a margin. -- CEO Erkki Raasuke 0

11 Awards from 20 Company with the most convincing and coherent business strategy in the Baltic region Hansabank Group the best financial institution in the Baltic countries Hansabank the best bank in Estonia Hansabanka company with the best reputation in Latvia Hansabankas one of the most innovative companies in Lithuania Best employer in Estonia Accounting Flagship in Estonia Most competitive enterprise in Estonia International magazine Global Finance announced that Hansabank is the best bank in Estonia The Banker names Hansabank best bank in Estonia Euromoney Recognize Strategies of Hansabank to be the Most Successful in the Baltic Countries Addition to that Swedbank Group was also mentioned as a "Bank of the Year Sweden" by the British magazine The Banker.

12 I Introduction of the Hansabank Group II Market shares and results III Baltic markets 2

13 Baltic market shares September 20 Loans Deposits Others 42% Hansa 33% Others 46% Hansa 32% SEB 25% SEB 22% 3

14 Market shares September 20 Estonia Latvia Lithuania September 20 Market share Change Yoy Market share Change yoy Market share Change yoy Retail deposits 62% 0% 28% -% 39% +% Corporate deposits 45% -4% 2% -% 22% +% Lending (excl.fin.inst.) 44% -2% 27% -% 27% +% Pension II (by No of clients) 55% +% 38% +% 43%* 0% 4 * Lithuanian Pension II market share as of May

15 Market position September 20 Estonia Latvia Lithuania Retail deposits 2 Corporate deposits 2 2 Retail loans 2 Corporate loans 2 Pension II Cards 5

16 Operations in Russia Geographic focus: universal bank in North-West of Russia (Moscow, St. Petersburg and Kaliningrad region) First bank branch opened in Moscow in September 2005, St. Petersburg branch in March 20 and Kaliningrad branch in Spring 20. Services: Asset-based finance, trade finance and corporate banking. Basic retail products introduced: cards, deposits, mortgage loans, car loans, consumer loans. Future focus on developing into a full-scale universal bank Customer focus: The business model is based on a large customer base. Main focus is on medium-sized companies and private individuals with above the average purchasing power, however, all customer groups are served. Total Russian lending portfolio: EUR 858 million as of 30 September 20 Corporate loans EUR 694m ABF EUR46m Mortgages EUR 9m Number of employees, 325 6

17 Highlights 20 Net income EUR 28m, +m QoQ Total revenues EUR 259m, EUR +7m vs, annual growth 39% Net interest income EUR +0m vs on the back of strong volume growth and base rate increase Trading income down EUR -3m from strong Total expenses EUR 0m, EUR +m vs, annual growth 34% Annual personnel expense growth, number of employees +5% Loans EUR +.23bn QoQ Annual growth rate slowed further from 49% to 42% YoY Deposits EUR +56m QoQ Lending margins increased (+bp QoQ), while deposit margins where stable Net loan losses were up by EUR 6.5m from includes one large exposure related provision in Estonia Hansabank Group results include OAO Swedbank. In Swedbank interim reporting these results are shown under Strategic and International Banking business unit and not Baltic Banking 7

18 Key financials 20 in millions of EUR % YoY YTD % YoY Norm. YTD % YoY 9mos 20 9mos 20 Loans 8,793 3,95 42% Deposits 0, 8,4 20% Revenues % 47% Expenses % 25% 34% EBT % 66% 56% Net Income % 65% 54% EVA % 66% 50% Return on equity 30.0% 29.2% 30.9% 24.6% Cost-income 2 39.% 40.5% 39.7% 46.6% Net interest margin 2.96% 2.92% 2.98% 2.88% Employees (FTE) 9,437 8,23 5% Group ROE based actual equity 8 * Norm YTD is adjusted by the impact of Russian VAT provision of EUR 3.m in 20, 2.3 in 20 and 0.6 in normalized cost-income was 40.2% and ROE 29.4%

19 Quarterly trends Net income* Q4 *, and results include VAT provisions in Russia, EUR 3.m, EUR 2.3m and EUR 0.6m, respectively 70% 60% 50% 47% 53% Cost-income 45% 39% 35% 30% 25% 20% 24% ROE on actual equity 29% 30% 30% 2% 33% 30% 30% Q4 5% Q4 9

20 Performance against mid-term financial targets 9 mos 20 Group Target EBT growth *66% >20% ROE on actual equity 3% >20% Cost-income <42% Net credit losses 0.0% <0.35% 9 mos 20 Est Lat Lit Rus EBT growth 47% 6% 88% *n.m ROE on allocated equity 33% 32% 2% Cost-income 36% 38% 44% 54% Net credit losses 0.4% 0.24% 0.% n.a 20 * Group and Russian EBT growth rate is affected by the impact of VAT provision of EUR 6.0m in first 9m 20. Normalized EBT growth is 56% and 8% respectively.

21 2 Quarterly trend by business units Cost-income 34% 38% 36% 36% 4% 39% 39% 30% 50% 60% 70% Q4 ROE 4% 39% 4% 42% 37% 43% 42% 0% 20% 30% 50% Q4 37% 36% 4% 39% 47% 44% 45% 30% 50% 60% 70% Q4 43% 44% 47% 48% 5% 60% 52% 30% 50% 60% 70% Q4 Estonia Latvia Lithuania 33% 37% 28% 37% 32% 37% 33% 0% 20% 30% 50% Q4 34% 30% 3% 28% 26% 25% 28% 0% 20% 30% 50% Q4

22 Business line growth during 20 EURm, 20 vs 20 Est Lat Lit Rus Total HBG Loans (qoq abs. growth) ,233 Corporate Lending Mortgages Consumer Finance Asset Based Finance Other Deposits Revenues (qoq abs. growth) Net interest income Net fee income Expenses Net credit losses EBT Employees 2 (FTE, QoQ) Does not sum to total HBG due to group eliminations 2 BU number of employees includes IT and group level employees.

23 Income Statement and main ratios by BUs EURm 20 Est Lat Lit Rus Total revenue Growth YoY 39% 34% 48% 47% 9% Operating expenses Growth YoY 34% 27% 44% 30% 43% Operating profit Growth YoY 42% 37% 5% 62% -0% Net Income Growth YoY 37% 26% 43% 72% 33% EVA Growth YoY 25% 7% 27% 6% 20% Employees 2 (FTE) 9,437 3,227 2,50 3, Growth YoY 5% 2% 4% 5% 63% 23 YoY growth is affected by the impact of Russian VAT provision of EUR 0.6m in 20. Normalized YoY growth of expenses is 35%, operating profit 42%, net income 36% and EVA 24%. The respective growth rates for Russian business unit are 60%, -20%, % and -8% 2 BU number of employees includes IT and Group level employees

24 Revenues 300 yoy +39% qoq +3% Net interest income /- +45% Net fee income % EURm Trading income Other income % +65% 50 Total revenues % 0 Q4 Net interest income 45% yoy growth was driven by strong lending growth, relatively stable client lending margins and rising base rates. Other income includes one time fee received from the sale of subsidiary Hansa Insurance Brokerage in Lithuania and real estate in Estonia. 24

25 Stable lending margins, fluctuating deposit margins thanks to change in base rates 5.0% Loans 5.0% Deposits 4.5% 4.5% 4.0% 4.0% 3.5% 3.0% 2.5% 2.0%.5%.0% 0.5% 2.76% 2.37%.94% 2.64% 2.20%.73% 3.5% 3.0% 2.5% 2.0%.5%.0% 0.5% 3.67% 2.09% 2.76%.08%.65%.08% 0.0% Q4 0.0% Q4 Estonia Latvia Lithuania Estonia Latvia Lithuania 25 Deposit margin = (FTP-interest expense)/average deposits Loan margin = (interest income-ftp)/average loans

26 Expenses 25 yoy +34% (+35%) qoq +% Personnel / Administrative % EURm Q4 Data network Depreciation Other Total expenses % +2% +24% (+32%) +34% (+35%) 20 other expenses also include EUR 0.6m VAT dispute related operational risk provision in the Russian unit. Excluding this, annual expense growth was 35% 26

27 Personnel expenses EURm Salaries & Taxes Bonus Training /- +3% +62% +79% In, the total employee number decreased by 25. The decline can be attributed to the leave of summer trainees who provided assistance during the vacation period. Total FTE 9,437 8,23 +5% Employee growth during 20 Total growth, qoq Est* -5 Lat* -8 Lit* 83 Rus* 20 Group % FTE growth YoY incl. trainees Local business units Other local operations % 5% IT units Group units 3 0 8% *BU number of employees does not include IT and Group level employees 27 0% D-05 M- J- S- D- M- J- S- Estonia Latvia Lithuania Group

28 Revenue & expense development Revenue growth has exceeded cost growth in all three Baltic countries. In 20, the difference between growth rates has decreased due to higher funding costs and decreasing volume growth 00% 80% 60% 20% 0% Estonia Q4 46% 46% 34% 36% 33% 27% revenue growth expense growth 00% Latvia 00% Lithuania 80% 60% 47% 65% 48% 80% 60% 5% 54% 47% 20% 37% 27% 43% 20% 3% 32% 30% 0% Q4 0% Q4 revenue growth expense growth revenue growth expense growth 28 * Growth trends have been adjusted for significant one-time effects

29 Lending growth by countries EURm QoQ abs. growth YoY % growth (rhs) % 80% 60% % 0 Q4 Q4 Q4 0% Estonia Latvia Lithuania Lending growth rate has gradually diminished in Estonia and Latvia. Lithuanian growth gradually slowed throughout 20 and has stabilized at 50% level. 29

30 Group lending by sectors Portfolio, September 20 Portfolio growth, Individuals 7,85 42% % Real-estate mgmt 3,22 7% 264 2% Retail & Wholesale,748 9% 98 8% Industry,764 9% 45 Transport,27 6% 44 Construction 546 3% -40 Other 2,635 4% % 0 2,000 4,000 6,000 8, xx% - share of portfolio and portfolio growth

31 Good asset quality and low provisioning cost 0.8% 0.6% 0.4% 0.2% 0.0% Net provisions* to average portfolio Q4 Est Lat Lit HBG group Net provisions Estonia Latvia Lithuania Group 0.43% 0.36% 0.3% 0.35% last 2m *Net provisions = write-offs + provisions - recoveries 0.25% % 0.29%.2% 0.9% 0.6% 0.3% 0.0% 3 NPL/loan portfolio (2-month old) Q4 Est Lat Lit

32 I Introduction of the Hansabank Group II Market shares and results III Baltic markets 32

33 Fast growing region December, 20 Baltic population 7 million Total GDP 53 EUR bn Total loans 37 EUR bn % GDP real growth % Loan growth % 60% 50% 6% 4% 30% 20% 2% 0% 0% % Baltics euro zone EU27 Estonia Latvia Lithuania 33

34 Exceptional economic growth Rapid growth has been reflected in: Rising incomes (20 data): real average monthly net wages up by.2% in Estonia, 5.5% in Latvia and 5.2% in Lithuania; Falling unemployment (from 2002 to 2005): to 5.6% (0.3%) in Estonia, 6.9% (2.2%) in Latvia and 5.6% (3.5%) in Lithuania; Current and capital account deficit (deficit as % of GDP in 20): 2.3% in Estonia, 9.9% in Latvia and 9.7% in Lithuania; Relatively high inflation (20 Harmonized CPI growth): 4.4% in Estonia, 6.5% in Latvia and 3.8% in Lithuania Rapid growth is currently financed from capital inflows from mother banks and FDI As a result: The most likely date for adoption of the euro in the Baltic States is ; A rapid and substantial drop in inflation would require (particularly in Latvia) a drastic reduction of internal demand, which would cause a recession; Thus, gradual economic policies will be used to ensure economic stability 34

35 Drivers of economic growth The fastest growth in 20 was observed in the following sectors: Estonia: financial intermediation 22.6%; construction 3.3%; manufacturing 2.8% Latvia: real estate and business services 7.6%, wholesale and retail trade 7,4%, financial intermediation 5.5% Lithuania: construction 9.8%; transport, storage and communication 0.7%, rental, real estate and business services, and manufacturing 9.3% The key driver is domestic demand Consumption boom: lending growth, rising wages and falling unemployment, consumer confidence at historic highs Rapid investment growth: EU structural funds, rapidly growing production costs and growing production shortages (wages, raw materials, services) External demand 35

36 Challenges balancing growth Labour market: Labour shortages are becoming more pronounced due to unfavorable demographic trends, rapid economic growth and labour emigration Toughening competition for labour may prompt wage rises in excess of gains in productivity, which is not sustainable in the long run (already seen in construction) Productivity-led growth must be enhanced Household demand: High optimism and growing incomes (incl. growing leverage) Rapid growth of real estate market and prices Price growth, unsustainable developments Rapidly growing prices of goods and services Growing imports, current account deficit and external debt Growth becomes more and more unbalanced undermining long-term growth and increasing the risk of a sharp correction in economic developments (hard-landing scenarios exist for Latvia and Estonia; but soft-landing expectations prevail) 36

37 Hansabank Group Liivalaia 8, Tallinn 5040, Estonia Tel: Fax: Hansabank Group website: Estonia Hansapank Liivalaia 8, Tallinn 5040, Estonia Tel: Fax: S.W.I.F.T.: HABA EE2X Lithuania Hansabankas Savanoriu av. 9, Vilnius LT-03502, Lithuania Tel: Fax: Latvia Hansabanka Balasta a, Riga LV-048, Latvia Tel: Fax: S.W.I.F.T: HABA LV 22 info@hansabanka.lv Russia Hansabank and Hansa Leasing Sadovaya-Spasskaja str, 24, 8 Moscow, Russia Tel: +7 (095) Fax: +7 (095)