Slide 1: FSB Q2, 2005
7A a | “A ee N Se by N FSB Q2, 2005 Jan Lidén, CEO
Slide 2: Quarter overview
2 • Stable, profitable development in Swedish operations • Continued strong growth in both volumes and profits in Hansabank • Strengthened performance in savings and deposits
Slide 3: Operating profit rose by 33 percent
3 • Operating profit rose by 33 percent to SEK 6,752 M (5,073) • Profit for the period rose by 33 percent to SEK 5,242 M (3,933) • The return on shareholders’ equity rose to 23.3 percent (19.1) • Shareholders’ earnings per share rose by 37 percent to SEK 10.22 (7.45) • Total income rose by 15 percen
Slide 4: Income statement Q1-2 2005
4 SEK M Q1-2, 2005 Q1-2, 2004 Change % Net interest income 7,967 7,181 11 Net commissions 3,364 3,035 11 Net gains and losses on financial items at fair value 1,120 1,227 –9 Other income 1,572 728 Total income 14,023 12,171 15 Staff costs – 3,406 – 3,326 2 Profit-based staff costs – 627 – 500 25 Oth
Slide 5: Quarterly income statement
5 Q2, Q1, Q4, Q3, Q2, SEK M 2005 2005 2004 2004 2004 Net interest income 4,028 3,939 4,039 3,979 3,722 Net commissions 1,834 1,530 1,554 1,533 1,531 Net profit on financial items at fair value 678 442 413 167 460 Other income 1,144 428 391 436 394 Total income 7,684 6,339 6,397 6,115 6,107 Staff cos
Slide 6: Items affecting comparability
6 2005 SEK M Q2 Q1 Acc. Q1-2 Capital gain on sale of shares in EnterCard 810 810 Profit-based staff costs – 444 – 183 – 627 of which allocation to Kopparmyntet – 261 – 87 – 348 Costs for personnel changes – 79 – 58 – 137 Profit effect IAS 39 444 –5 439 Total 731 – 246 485 2004 SEK M Q2 Q1 Acc. Q1-2
Slide 7: Profit effect IAS 39
7 2005 SEK M Q2 Q1 Acc Q1-2 Net interest income Increase in net interest income in Spintab repurchase differences 104 157 261 interest income compensation – 96 – 102 – 198 Net profit on financial items at fair value Valuation of derivatives in Spintab at fair value – 129 – 139 – 268 Repurchased Spin
Slide 8: Lending, Q1-2, 2005
8 Lending, Q1-2, 2005 • Group lending rose by 7 percent to SEK 745 bn (694) • Spintab’s household lending rose by 5 percent to SEK 316 bn (301) • Corporate lending rose by 9 percent to 341 SEK bn (312) • Hansabank’s lending rose by 28 percent to SEK 68 bn (53). Figures in parentheses refer to Decemb
Slide 9: Funds under management and deposits
9 • Funds under management increased by 15 percent to SEK 329 bn (286) – an all-time-high • Household deposits increased by 10 percent to SEK 173 bn (157) • Market share deposits in Sweden rose to 24 percent (10) • The market share in Sweden for new savings net rose to 19 percent (17) Figures in par
Slide 10: Net interest income
10 Net interest income Group, Q1-2 2005 compared to Q1-2 2004 SEK M Q1-2 2005 Q1-2 2004 Change Swedish retail operations 6,115 6,044 71 Swedbank Markets 411 485 – 74 International banking operations 1,254 1,060 194 Asset management and insurance 14 15 –1 Shared services and Group staffs 74 31 43 Eli
Slide 11: Swedish retail operations
11 Swedish retail operations Q1-2 2005 compared to Q1-2 2004, SEK M Increased lending volumes + 230 Increased deposit volumes + 47 Lower lending margins – 222 Lower overall interest rates – 114 Shareholders’ equity and other balance sheet items + 130 Total + 71
Slide 12: Hansabank
12 Hansabank Q1-2 2005 compared to Q1-2 2004, SEK M Increased lending volumes + 260 Decreased lending margins – 83 Accrual of revaluation of assets in lending portfolio – 118 Increased deposit volumes + 48 Decreased deposit margins – 69 Treasury, trading and other balancesheet items + 126 Total + 16
Slide 13: Net commissions by quarter
13 Q2, Q1, Q4, Q3, Q2, SEK M 2005 2005 2004 2004 2004 Payment processing 677 587 615 587 575 Lending commissions 83 89 97 113 132 Brokerage 133 111 106 74 91 Asset management 748 702 702 677 671 Insurance commissions 102 96 94 95 97 Other commissions 91 – 55 – 60 – 13 – 35 Total commissions, net 1,8
Slide 14: Net commission income
14 Net commission income Q1-2, 2005 compared to Q1-2, 2004, SEK M Payment processing + 169 First Securities + 168 Asset management + 116 Brokerage + 17 Lending commissions – 53 Other commissions – 88 Total + 329
Slide 15: Financial instruments at fair value
15 SEK M Q1-2, 2005 Q1-2, 2004 Change Financial instruments classified as trading and derivatives – 122 790 – 912 Other financial instruments at fair value 870 67 803 Changes in exchange rates 372 370 2 Total 1,120 1,227 – 107
Slide 16: Costs
16 Costs SEK M Q2, 2005 Q1, 2005 Q4, 2004 Q3, 2004 Q2, 2004 Swedish operations Underlying costs 2,686 2,676 2,669 2,582 2,697 Costs for personnel changes 79 58 30 155 89 Profit based staff costs 380 125 151 242 173 International banking operations Total costs 597 474 526 420 431 Total 3,742 3,333 3,
Slide 17: Swedish operations
17 Swedish operations 9,800 9,680 9,573 9,600 9,531 9,439 9,400 9,276 9,191 9,200 9,134 9,087 9,000 8,932 8,898 * 8,800 8,600 8,400 Q4 00 Q4 01 Q4 02 Q4 03 Q1 04 Q2 04 Q3 04 Q4 04 Q1 05 Q2 05 * Excluding First Securities
Slide 18: C/I ratio
18 C/I ratio adjusted to IFRS from Q1, 2004 0.80 0.69 0.49 incl capital gain 0.63 0.63 0.62 0.61 EnterCard 0.59 0.59 0.58 0.57 0.60 0.56 0.55 0.56 0.56 0.53 0.53 0.54 target 0.40 0.20 Q3- Q4- Q1- Q2- Q3- Q4- Q1- Q2- Q3- Q4- Q1- Q2- Q3- Q4- Q1- Q2- 01 01 02 02 02 02 03 03 03 03 04 04 04 04 05 05
Slide 19: Doubtful claims and loan losses
19 • Doubtful claims gross decreased by 12 percent to SEK 2,508 M (2,858)* • The provision ratio rose to 159 percent (137)* • Loan losses fell by 25 percent to SEK 196 M (262) • The loan loss level dropped to 0.05 percent (0.08) * Excluding discontinued operations Figures in parentheses refer to Q1-
Slide 20: Loan losses
20 SEK M Q1-2, 2005 Q1-2, 2004 Established 178 233 Provisions 325 411 Recoveries – 307 – 382 Total 196 262 of which collective provisions for claims asessed individually 116 157
Slide 21: Swedish Retail operations
21 Swedish Retail operations • Strong development of business volumes – lending increased 8 percent – deposits increased 7 percent • Costs unchanged excluding profit based compensation and costs for personnel changes • Number of full-time employees decreased by 275 to 6,447 (6,722) Figures in parent
Slide 22: Swedish Retail operations results
22 SEK M Q2, 2005 Q1, 2005 Q4, 2004 Q3, 2004 Q2, 2004 Net interest income 2,996 3,119 3,166 3,293 3,021 Other income 2,180 1,232 1,116 1,108 1,107 Share of profit/loss of associated companies 32 46 97 28 Total income 5,208 4,397 4,282 4,498 4,156 Staff costs – 1,188 – 1,043 – 1,056 – 1,231 – 1,051 O
Slide 23: EnterCard
23 • Establishment of new venture goes according to plan, focus on staffing and HQ • Ambition to grow EnterCard into the leading credit- card issuer in the Nordic region • Investigating possible entry options in Denmark and Finland
Slide 24: Sale of written-off claims
24 • Net gain of SEK 1.4 bn in Q3 • Five-year agreement with buyer to sell written-off claims within execution title at reasonable market price • Sale will, all else equal, reduce loan loss write- backs somewhat in future
Slide 25: Sale of Tre Kronor non-life insurance
25 • FSB to sell Tre Kronor’s non-life insurances on a commission basis in Sweden • Initial offering includes home and auto insurances • The aim is to reach a market share of 3 percent within 5 years • Tre Kronor, owned by Trygg-Hansa (51%) and SpareBank 1 Gruppen (49%), manages the insurance operat
Slide 26: Asset Management and Insurance
26 Asset Management and Insurance • AuM reach record level of SEK 329 bn (286) • 67 percent of Robur equity funds outperformed their indexes • Morningstar’s average rating on Robur funds improved further to 3.30 (3.28) Figures in parentheses refer to December 31, 2004
Slide 27: Asset Management and Insurance results
27 SEK M Q2, 2005 Q1, 2005 Q4, 2004 Q3, 2004 Q2, 2004 Net interest income 6 8 7 7 5 Other income 346 333 372 357 351 Total income 352 341 379 364 356 Staff costs – 77 – 66 – 50 – 70 – 65 Other expenses – 81 – 84 – 86 – 78 – 81 Total expenses – 158 – 150 – 136 – 148 – 146 Operating profit 194 191 243
Slide 28: Swedbank Markets
28 Swedbank Markets • Operating profit in-line with previous year • Holding in First Securities increased to 51 percent and consolidated as of June 15th – very successful quarter boosts income • Continued high return on equity
Slide 29: Swedbank Markets results
29 SEK M Q2, 2005 Q1, 2005 Q4, 2004 Q3, 2004 Q2, 2004 Net interest income 211 200 270 241 236 Other income 514 273 316 150 282 Share of profit/loss of associated companies 7 15 19 2 9 Total income 732 488 605 393 527 Staff costs – 241 – 152 – 153 – 148 – 145 Other expenses – 148 – 126 – 112 – 124 –
Slide 30: First Securities consolidation
30 • Consolidated as a subsidiary as of June 15, 2005 – share of income from associated companies from Jan 1st until June 14, amounted to SEK 22 M (18) – share of operating profit June 15-30: SEK 80 M (0) 2005 of which Q1-2 Q1-2 SEK M June 15-30 2005 2004 Net interest income 2 5 0 Net commissions 16
Slide 31: Hansabank's operating profit rose by 27 percent
31 • Hansabank’s operating profit rose by 27 percent to SEK 1,105 M (869) – another record quarter • Integration work according to plan • Increase of the share capital of Russian subsidiary Kvest bank by EUR 79 M • Erkki Raasuke new CEO of Hansabank Figures in parentheses refer to Q1-2 2004
Slide 32: Hansabank Q2, 2005
a | ~ ASK Ge e N Se by & Rane SN 4 _ eo “ a, a n Sa a Nn ) > ~ ~ Hansabank Q2, 2005 Erkki Raasuke, CEO
Slide 33: Hansabank Q2 2005 key figures
33 EUR in millions Q2 05 Q2 04 +/- Loans 7,237 5,078 43% Deposits 6,113 4,580 33% Pre-tax profit 62.2 50.3 24% Net profit 59.0 42.6 38% Revenues 129.5 104.8 24% Expenses 58.4 48.3 21% Return on equity 25.0% 23.8% 120bp Net interest margin 3.04% 3.39% -35bp Cost-income 45.0% 44.2% -80bp
Slide 34: Accelerating growth in all business units
34 • Accelerating growth in all business units due to low interest rates and strong credit demand • Strong deposit growth in all business units due to strong credit growth and increase in short-term deposits (Swedbank buy-out) • NIM fairly stable in Latvia and Lithuania, biggest decrease in Estonia
Slide 35: Net profit development
35 200 182.8 160 48,8 130.9 119.8 EUR in millions 120 108.2 31,6 48,6 31,4 22,5 80 35,7 59,0 27,3 36,6 42,7 29,0 40 32,2 26,8 54,3 34,6 42,8 26,2 24,9 0 2001 2002 2003 2004 I hy 05
Slide 36: Regional distribution
36 Regional distribution EUR in millions Q2 05 Est Lat Lit Rus Deposits 6,113 45% 23% 31% 1% Loans 7,237 46% 24% 26% 4% Total revenues 129.5 46% 25% 25% 4% Operating expenses 58.4 40% 26% 30% 4% Operating profit 71.1 51% 23% 20% 6% Net credit losses -9.0 10% 24% 63% 3% Net profit 59.0 60% 21% 14% 5%
Slide 37: Business unit profit growth
37 Business units 40 70% 59% 35 60% • Estonian growth helped by EUR 5 million dividend tax 30 50% expense in Q2 04 and EUR in millions 25 37% changes to IFRS. 35% 40% Excluding those effects (no 20 tax, goodwill amortisation 30% and equal provisioning 15 20% ratios), annual growth was 20% 10 17% 5 1
Slide 38: Revenues
38 Revenues yoy qoq +24% +13% 130 Q2 05 Q2 04 +/- 120 Net interest income 73.0 59.2 23% EUR in millions 110 Net fee income 40.4 31.5 28% 100 Trading income 13.2 8.5 55% 90 Other income 2.9 5.6 -48% 80 Total revenues 129.5 104.8 24% Q2 04 Q3 04 Q4 04 Q1 05 Q2 05 • Net interest income growth driven by
Slide 39: Net interest margin
39 Net interest margin Group Business units 5,0% 5,0% 4,5% 4,37% 4,5% 4,0% 4,0% 3,86% 3,66% 3,50% 3,5% 3,5% 3,04% 3,0% 2,88% 3,0% 2,75% 2,5% 2,5% 2,71% 2,0% 2,0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 03 03 03 03 04 04 04 04 05 05 03 03 03 04 04 04 04 05 05 Estonia Latvia Lithuania
Slide 40: Expenses
40 Expenses yoy qoq Q2 05 Q2 04 +/- 21% 13% 60 Personnel 29.0 23.5 23% 55 Administrative 11.3 8.9 27% EUR in millions 50 Data network 4.9 3.9 26% 45 40 Depreciation 4.2 4.6 -9% 35 Other 9.0 7.4 22% 30 Total expenses 58.4 48.3 21% Q2 04 Q3 04 Q4 04 Q1 05 Q2 05 • No of employees increased by 356 in Q2
Slide 41: Cost-income ratio
41 Group Business units 60% 100% 50% 44,2% 45,0% 80% 64% 40% 55% 60% 46% 48% 30% 38% 39% 40% 20% 10% 20% 0% 0% Q2 04 Q3 04 Q4 04 Q1 05 Q2 05 Est Est Lat Lat Lit Lit Q204 Q205 Q204 Q205 Q204 Q205
Slide 42: Return on equity
42 Group Business units 30% 60% 23,8% 25,0% 50% 25% 50% 41% 39% 20% 40% 35% 15% 30% 22% 18% 10% 20% 5% 10% 0% 0% Q2 04 Q3 04 Q4 04 Q1 05 Q2 05 Est Est Lat Lat Lit Lit Q204 Q205 Q204 Q205 Q204 Q205
Slide 43: Loans & Deposits
43 Loans & Deposits Deposits (EUR in millions) YTD change Yoy% 30.06.05 31.12.04 Group 6,113 4,972 1,141 33% Estonia 2,723 2,171 551 33% Latvia 1,381 1,125 256 35% Lithuania 1,927 1,633 294 35% Russia 83 44 39 -1% Lending (EUR in millions) 30.06.05 31.12.04 YTD change Yoy% Group 7 237 5,924 1,313 43
Slide 44: Lending growth
44 Lending growth Business units Growth by loan type, Q2 05 3500 70% 400 59% 3000 60% 350 48% 49% 300 EUR in millions EUR in millions 2500 50% 250 2000 35% 40% 200 1500 30% 150 1000 20% 100 500 10% 50 0 0% 0 Est Lat Lit Rus Est Lat Lit Rus June 2004 Other June 2005 ABF Growth yoy Business Mortgage
Slide 45: Total lending
45 Total lending • Retail: € 2.62 billion – Annual 61% Other – Quarterly 18% Construction 10% 4% Private Transport individuals • Corporate: € 4.62 8% 35% billion – Annual 34% – Quarterly 10% Real-estate development 18% Lending/GDP Manufacturing Retail and – Est 67% 12% wholesale – Lat 62% 13% – Lit
Slide 46: Retail lending
46 Retail lending • Growth by countries – Est € 1,411 mil; +45% – Lat € 648 mil; +85% Other – Lit € 561 mil; +84% 19% Student • Mortgages/GDP 6% – Est 22% (+6% yoy) – Lat 16% (+6% yoy) – Lit 8% (+2% yoy) Mortgage 75%
Slide 47: Asset quality
47 Asset quality EUR in millions Q2 05 Q1 05 Q4 04 Q3 04 Overdues* 64 66 45 46 Non-performing loans (NPL)** 31 19 17 22 NPL/loans 0.4% 0.3% 0.3% 0.4% NPL coverage ratio 2.0 2.7 4.2 3.2 Risk cost*** -0.1% 0.0% -0.1% 0.3% * Overdue more than 30 days ** Overdue more than 60 days ***(write-offs – recove
Slide 48: A leading Nordic-Baltic bank
48 - a leading Nordic-Baltic bank