Slide 1: Swedbank Q3, 2005
1 Swedbank Q3, 2005 Jan Lidén, CEO
Slide 2: Q3 highlights: Outstanding operating results
2 Q3 highlights • Outstanding operating results Strong growth in income and business volumes Favourable market conditions boosted fees and commissions Hansabank reported new record quarter Tier 1 ratio improved to 6.5 percent Credit quality still excellent in all markets
Slide 3: Q3 highlights: one-off gain and new accounting rules
3 Q3 highlights • …helped by one-off gain… SEK 1.4 bn net profit from KIAB disposal • …and new accounting rules SEK 447 M positive effect from IAS 39 in Q3 (SEK 886 M accumulated in 2005)
Slide 4: Group results, Q3, 2005
4 Group results, Q3, 2005 • Total income increased by 43 percent to SEK 8,775 M (6,115) • Costs increased by 2 percent to SEK 3,452 M (3,399) • Net gain of SEK 1,421 M from disposal of debt collection subsidiary KIAB • Operating profit increased to SEK 5,225 M (2,583) • Net profit increased 34 perce
Slide 5: Group P&L
5 Group P&L SEK M Q3, 2005 Q3, 2004 chg, % Net interest income 3,951 3,979 –1 Net commissions 1,973 1,533 29 Net gains and losses on financial items at fair value 1,044 167 525 Other income 1,807 436 314 Total income 8,775 6,115 43 Staff costs – 1,724 – 1,682 2 Profit-based staff costs – 351 – 300 1
Slide 6: Items affecting comparability
6 Items affecting comparability 2005 SEK M Q3 Q2 Q1 Q1-3 Capital gain on sale of shares in EnterCard 810 810 Capital gain on sale of shares in KIAB 1,421 1,421 Profit-based staff costs – 351 – 444 – 183 – 978 of which allocation to Kopparmyntet – 173 – 261 – 87 – 521 Costs for personnel changes – 49
Slide 7: Profit effects of IAS 39
7 Profit effects of IAS 39 SEK M, 2005 VS 2004 Q3 Q2 Q1 Q1-3 Net interest income Change in net interest income in Spintab - repurchase differences 35 104 157 296 - interest income compensation – 132 – 96 – 102 – 330 Net profit on financial items at fair value Valuation of derivatives in Spintab at f
Slide 8: Lending
8 Lending annualized growth, % SEK bn Q3’05 (Q4’04) Q3 Q1-3 Total lending 762 (694) 9% 13 % Spintab household lending 325 (301) 12 % 11 % Corporate lending 345 (312) 5% 14 % Hansabank lending 77 (53) 45 % 60 %
Slide 9: Group lending
9 Group lending Group excl. Hansabank Hansabank Sep 30, Dec 31, Sep 30, Dec 31, SEK bn 2005 2004 2005 2004 Households 374.3 349.6 28.1 18.2 of which Spintab 325.2 300.7 Real estate management 148.2 136.2 9.4 5.9 Retail, hotels, restaurants 16.1 15.6 10.7 8.7 Construction 7.8 7.6 2.9 1.7 Manufacturin
Slide 10: Savings
10 Savings annualized growth, % SEK bn Q3’05 (Q4’04) Q3 Q1-3 Fund assets 350 (286) 26 % 30 % Household deposits 180 (157) 16 % 20 % Market shares, % Q1-3 ’05 2004 Total new savings, Sweden 19 17 New household deposits, Sweden 25 10
Slide 11: Group savings
11 Group savings Group excl Hansabank Hansabank 30/9 31/12 30/9 31/12 SEK bn 2005 2004 2005 2004 Deposits 260 232 59 45 of which household deposits 153 137 27 20 of which other deposits 107 95 32 25 Fund management 342 281 7 5 of which PPM 25 16 of which unit-linked insurance 52 41 Discretionary ass
Slide 12: Net interest income
12 Net interest income SEK M Q3, 2005 Q3, 2004 change Swedish retail operations 3,063 3,293 – 230 Swedbank Markets 195 241 – 46 International banking operations 732 577 155 Asset management and insurance 5 7 –2 Shared services and Group staffs 33 – 39 72 Eliminations – 77 – 100 * 23 Total 3,951 3,97
Slide 13: Net interest income
13 Net interest income SEK M Q1-3, 2005 Q1-3, 2004 change Swedish retail operations 9,178 9,337 – 159 Swedbank Markets 606 726 – 120 International banking operations 1,986 1,637 349 Asset management and insurance 19 22 –3 Shared services and Group staffs 107 –8 115 Eliminations 22 – 554 * 576 Total
Slide 14: Change in net interest income
14 Change in net interest income Swedish retail operations, Q1-3, 2005 vs Q1-3, 2004, SEK M Increased lending volumes + 384 Increased deposit volumes + 35 Decreased lending margins – 358 Decreased deposit margins through: Decreased overall interest rates – 222 Other changes – 78 Shareholders’ equity
Slide 15: Change in net interest income
15 Change in net interest income Hansabank, Q1-3 2005 vs. Q1-3 2004, SEK M Increased lending volumes + 504 Decreased lending margins – 488 Accrual of revaluation of assets in lending portfolio – 158 Increased deposit volumes + 135 Decreased deposit margins – 242 Treasury, trading and other balance s
Slide 16: Net commission income
16 Net commission income Q3, Q2, Q1, Q4, Q3, SEK M 2005 2005 2005 2004 2004 Payment processing 711 677 587 615 587 Lending commissions 159 83 89 97 113 Brokerage 190 133 111 106 74 Asset management 820 748 702 702 677 Insurance commissions 108 102 96 94 95 Other commissions – 15 91 – 55 – 60 – 13 To
Slide 17: Change in net commission income
17 Change in net commission income Q1-3, 2005 vs Q1-3, 2004, SEK M Payment processing + 293 First Securities + 283 Asset management + 259 Brokerage + 48 Lending commissions – 7 Other commissions – 107 Total 769
Slide 18: Net profit on financial items at fair value
18 Net profit on financial items at fair value Q3, Q2, Q1, Q4, Q3, SEK M 2005 2005 2005 2004 2004 Financial instruments classified as trading and derivatives 755 – 377 255 316 197 Other financial instruments 150 787 83 9 3 Change in exchange rates 139 268 104 88 – 33 Total 1,044 678 442 413 167
Slide 19: Costs
19 Costs Q3, Q2, Q1, Q4, Q3, SEK M 2005 2005 2005 2004 2004 Swedish operations Underlying costs 2,576 2,686 2,676 2,669 2,595 Costs for staff reductions 49 79 58 30 142 Profit based staff costs 269 380 125 151 242 International operations Total costs 558 597 474 526 420 Total 3,452 3,742 3,333 3,376
Slide 20: Full-time positions
20 Full-time positions 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 8 900 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 Q3/05
Slide 21: C/I ratio
21 C/I ratio adjusted according to IFRS from Q1, 2004 0.80 0.39 incl. capital 0.69 gain 0.63 0.63 0.62 KIAB 0.61 0.59 0.59 0.58 0.57 0.60 0.56 0.55 0.56 0.56 0.53 0.53 0.49 0.47 target 0.40 0.20 0 Q3- Q4- Q1- Q2- Q3- Q4- Q1- Q2- Q3- Q4- Q1- Q2- Q3- Q4- Q1- Q2- Q3- 01 01 02 02 02 02 03 03 03 03 04 04
Slide 22: Credit quality
22 Credit quality • Doubtful claims gross decreased by 2 percent to SEK 2,738 M (2,788)* • The provision ratio rose to 149 percent (140)* • Loan losses fell by 26 percent to SEK 294 M (395) • The loan loss level dropped to 0.05 percent (0.07) * Net of discontinued operations Comparisons refer to Q1-
Slide 23: Capital adequacy and tier 1
23 Capital adequacy and tier 1 • Tier 1 ratio increased to 6.5 in Q3 Quarterly profit + 55 bps of which net gain from sale of KIAB +24 bps Conversion of staff options + 8 bps New hybrid capital + 9 bps
Slide 24: Swedish Retail operations
24 Swedish Retail operations • Net interest income increased 2 percent in Q3 • Costs 9 percent lower in Q3 • Swedbank named Corporate Bank of the Year for the 3rd consequtive year by Affärsvärlden magazine • Strong development of business volumes – lending increased 5 percent annualized – deposits i
Slide 25: Asset Management and Insurance
25 Asset Management and Insurance • Robur AuM reached SEK 342 bn (280), up 22 percent in 2005 • 79 percent of Robur equity funds outperformed their relative indices • Morningstar’s average rating on Robur funds improved further to 3.40 (3.28) All comparisons refer to December 31, 2004
Slide 26: Swedbank Markets
26 Swedbank Markets • High equity trading activity • Strong quarter for First Securities • Commissions up 66 percent to SEK 240 M (145) in Q3
Slide 27: Hansabank Q3, 2005
27 J™Hansabank Hansabank Q3, 2005 J®Hansabank —
Slide 28: Quarterly highlights
28 Quarterly highlights EUR M Q3 05 Q3 04 +/- Loans 8,205 5,462 50% Deposits 6,318 4,770 32% Pre-tax profit 72.4 52.1 39% Net profit 68.2 48.7 40% Revenues 137.1 107.9 27% Expenses 58.0 48.3 20% Return on equity 27.1% 25.5% Net interest margin 2.88% 3.30% Cost-income ratio 42.3% 42.9%
Slide 29: Quarterly Highlights
29 Quarterly Highlights • Group net profit EUR 68 million: Estonia EUR 37 million, Latvia EUR 17 million, Lithuania EUR 12 million, Russia EUR 2 million • Accelerating growth in all business units due to low interest rates and strong credit demand • Loan growth has become more evenly distributed bet
Slide 30: Financial targets
30 Financial targets Target Q3 2005 Q3 2004 Increase of pre-tax profit ≥15% 39% 40% excl IFRS changes* 25% Return on equity ≥20% 27% 25% Cost/income ratio <45% 42% 43% Risk cost <0.5% 0.1% 0.2% * no goodwill amortisation in either period and equal provisioning (net provisions/total loans) ** net ris
Slide 31: Quarterly profit trend
31 Quarterly profit trend 200 182.8 181.5 160 48,8 68,2 130.9 Q4 EUR in millions 119.8 120 108.2 31,6 48,6 Q3 31,4 22,5 80 35,7 59,0 Q2 27,3 36,6 42,7 Q1 29,0 40 32,2 26,8 54,3 34,6 42,8 26,2 24,9 0 2001 2002 2003 2004 Q1-3 05
Slide 32: Regional distribution
32 Regional distribution EUR, millions Q3 05 Est Lat Lit Rus Deposits 6,319 45% 23% 32% 1% Loans 8,205 44% 25% 26% 5% Total revenues 137.1 46% 26% 24% 4% Operating expenses 58.0 39% 26% 30% 5% Operating profit 79.1 50% 25% 19% 6% Net credit losses -6.8 43% 6% 22% 29% Net profit 68.2 55% 24% 18% 3% R
Slide 33: Net profit
33 Net profit Business units 40 94% 100% 90% 35 • High growth in Lithuania is a 80% result of strong volume growth 30 70% and changes to IFRS (no EUR in millions 25 goodwill amortisation in 2005) 60% 20 50% • Zero growth in the Russian 37% unit, primarily due to higher 40% 15 administrative expenses
Slide 34: Revenues
34 Revenues yoy qoq +27% +6% Q3 05 Q3 04 +/- 140 130 Net interest 76.0 62.0 23% EUR in millions 120 income 110 Net fee income 42.2 30.0 41% 100 Trading income 15.2 9.6 58% 90 Other income 3.7 6.3 -41% 80 Q3 04 Q4 04 Q1 05 Q2 05 Q3 05 Total revenues 137.1 107.9 27% • Net interest income growth driven
Slide 35: Net interest margin
35 Net interest margin Group Business units 5,0% 5,0% 4,5% 4,5% 4,0% 3,88% 4,0% 3,75% 3,55% 3,5% 3,5% 3,06% 2,88% 3,0% 3,0% 2,74% 2,77% 2,5% 2,5% 2,57% 2,0% 2,0% Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 03 03 03 04 04 04 04 05 05 05 03 03 04 04 04 04 05 05 05 Estonia Latvia Lithuania
Slide 36: Expenses
36 Expenses yoy qoq Q3 05 Q3 04 +/- 20% -1% 60 Personnel 30.9 24.4 27% 55 Administrative 11.4 9.4 21% EUR in millions 50 Data network 4.9 3.9 26% 45 40 Depreciation 4.1 4.4 -7% 35 Other 6.7 6.2 8% 30 Total expenses 58.0 48.3 20% Q3 04 Q4 04 Q1 05 Q2 05 Q3 05 • No of employees increased by 156 in Q3.
Slide 37: Cost/income ratio
37 Cost/income ratio Group Business units 60% 100% 42,9% 42,3% 50% 80% 58% 40% 54% 60% 30% 40% 43% 39% 36% 40% 20% 10% 20% 0% 0% Q3 04 Q4 04 Q1 05 Q2 05 Q3 05 Est Est Lat Lat Lit Lit Q304 Q305 Q304 Q305 Q304 Q305
Slide 38: Return on equity
38 Return on equity Group Business units 30% 60% 25,7% 27,1% 25% 50% 47% 46% 48% 41% 20% 40% 15% 30% 28% 21% 10% 20% 5% 10% 0% 0% Q3 04 Q4 04 Q1 05 Q2 05 Q3 05 Est Est Lat Lat Lit Lit Q304 Q305 Q304 Q305 Q304 Q305 For business units ROE is calculated based on allocated equity - the Group is allocati
Slide 39: Lending and deposits
39 Lending and deposits Deposits, EUR M 30.09.05 31.12.04 YTD change Yoy% Group 6,318 4,972 +1,346 32% Estonia 2,755 2,171 +584 30% Latvia 1,476 1,125 +351 39% Lithuania 2,027 1,633 +394 35% Russia 61 44 +17 -25% Lending, EUR M 30.09.05 31.12.04 YTD change Yoy% Group 8,205 5,924 +2,281 50% Estonia 3
Slide 40: Lending growth
40 Lending growth Business units Growth by loan type, Q3 05 4000 109% 120% 400 3500 350 100% 3000 300 EUR in millions EUR in millions 80% 250 2500 59% 54% 2000 60% 200 40% 150 1500 40% 1000 100 20% 50 500 0 0% 0 Est Lat Lit Rus Est Lat Lit Rus Sept 2004 Other Sept 2005 ABF Growth yoy Business Mortga
Slide 41: Total lending
41 Total lending • Retail: € 3.03 bn – Annual 66% Other Construction 10% – Quarterly 15% 4% Private Transport individuals • Corporate: € 5.18 bn 7% 37% – Annual 42% – Quarterly 12% Real-estate development • Lending/GDP (June 05) 19% – Est 67% Manufacturing Retail and – Lat 62% 11% wholesale – Lit 37
Slide 42: Household lending
42 Household lending • Growth by countries Consumer – Est € 1,572 mil; +47% 20% – Lat € 778 mil; +93% Student – Lit € 676 mil; +93% 5% • Mortgages/GDP (June 05) – Est 22% (+6% yoy) Mortgage 75% – Lat 16% (+6% yoy) – Lit 8% (+2% yoy)
Slide 43: Asset quality
43 Asset quality EUR in millions Q3 05 Q2 05 Q1 05 Q4 04 Overdues* 94 64 66 45 Non-performing loans (NPL)** 35 31 19 17 NPL/loans 0.4% 0.4% 0.3% 0.3% NPL coverage ratio 1.7 2.0 2.7 4.2 Risk cost*** -0.1% -0.1% 0.0% -0.1% * overdue more than 30 days ** overdue more than 60 days *** (write-offs – reco
Slide 44: Q3 summary
44 Q3 summary • Swedish market position consolidated Lending, savings and cards drove earnings growth Corporate Bank of the Year for 3rd consequtive year • Confirmed positive trends in Hansabank Accelerated loan growth, investments in growth markets • Strengthened capital base Tier 1 ratio improved
Slide 45: Creating a leading Nordic-Baltic bank
45 Creating a leading Nordic-Baltic bank