Swedbank Ab Class A · OMXSTO:SWED_A
Swedbank Ab Class A — Q3 2018 Earnings Presentation
30 slides from Swedbank Ab Class A's earnings presentation, 2018
Slide 1: Swedbank's third quarter 2018 results
Swedbank’s third quarter 2018 results Birgitte Bonnesen (CEO), Anders Karlsson (CFO), Helo Meigas (CRO) © Swedbank Information class Public
Slide 2: Swedbank in the Baltics
Swedbank in the Baltics © Swedbank Information class Public
Slide 3: Swedbank's customers in the Baltics
Swedbank’s customers in the Baltics Market leader with a strong focus on domestic customers Loans Loans Deposits Deposits Payments TOTAL BALTICS ESTONIA (p) (c) (p) (c) Private customers 3.2m Private customers 0.9m 46% 37% 55% 43% 59% Corporate customers 283 000 Corporate customers 132 000 Loans Loa
Slide 4: The low number of Swedbank non-resident customers are mainly EU private individuals
The low number of Swedbank non-resident customers are mainly EU private individuals NON-RESIDENT SHARE OF TOTAL SWEDBANK NON-RESIDENT SHARE OF TOTAL SWEDBANK BALTIC BANKING CUSTOMERS ESTONIAN CUSTOMERS 3.0% 3.0% 2.5% Very low share 2.5% of corporates 2.0% outside EU 2.0% 1.5% 1.5% 1.0% 1.0% 0.5% 0.5
Slide 5: Swedbank's payments market share shows a business model built on a domestic customer base
Swedbank’s payments market share shows a business model built on a domestic customer base MARKET SHARES BASED ON TOTAL ASSETS AND VOLUME OF OUTGOING CROSS BORDER PAYMENTS, ESTONIA, % DANSKE BANK VERSOBANK SEB 50% 50% 50% 40% 40% 40% 30% 30% 30% 20% 20% 20% 10% 10% 10% 0% 0% 0% 2008 2009 2010 2011 20
Slide 6: Swedbank's cross border payments have grown in line with economy
Swedbank’s cross border payments have grown in line with economy OUTGOING CROSS BORDER PAYMENTS, ESTONIA EURbn Market dynamics influenced by non-resident business models Market, EURbn Swedbank, EURbn Source: Bank of Estonia © Swedbank Information class 6 Public
Slide 7: We have continuously worked with anti-money laundering
We have continuously worked with anti- money laundering Systematic approach to assure detection of suspicious transactions Swedbank acts and business activities forcefully on all Systematic approach to KYC and on-boarding process signals Swedbank’s policy is to serve customers with clear local bus
Slide 8: Swedbank third quarter financial results
Swedbank third quarter financial results © Swedbank Information class Public
Slide 9: Group financial highlights, Q3 2018
Group financial highlights, Q3 2018 Total income, SEKbn 12 Continued loan volume growth TOTAL INCOME SEK 11.2bn 8 4 Strong net commission income from 0 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 cards and asset management Total expenses, SEKbn 6 Underlying expenses in line TOTAL 4 EXPENSES SEK 4.
Slide 10: Higher net interest income
Group result Higher net interest income NII, SEKm • Continued loan volume growth 36 5 6 275 84 43 6 327 • Stable margins -9 -107 • Lower resolution fund fee • One more day in the quarter • Less favorable USD funding market Q2 2018 Loan Margins Resolution Day count FX Treasury & Q3 2018 volumes fund
Slide 11: Strong net commission income
Group result Strong net commission income NCI, SEKm • Seasonally higher cards income 45 54 3 3 336 • Asset management income 3 236 -2 supported by positive asset value development and mutual fund inflows Q2 2018 Cards & Asset Lending & Other Q3 2018 Payments management guarantees © Swedbank Informat
Slide 12: Stable underlying revenue generation
Group result Stable underlying revenue generation NGL, SEKm • Stable client trading activity • Positive valuation effect on 559 635 derivatives 525 488 356 • Negative impact from higher covered bond buy-back volumes • Negative impact from widening Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 credit and b
Slide 13: Underlying expenses in line with FY2018 guidance
Group result Underlying expenses in line with FY2018 guidance Total Expenses FY2018 guidance, SEK Main currencies breakdown in cost base Original expense guidance of below SEK 17bn 2% USD -200m 3% NOK Restructuring charge 19% FX EUR release sensitivity comes mainly from EUR 76% SEK +300m FX Market-d
Slide 14: Strong core revenues
Group result Strong core revenues SEKm Q3 18 Q2 18 ▲QoQ • Continued mortgage and corporate Net interest income 6 326 6 273 53 loan volume growth Net commission income 100 3 336 3 236 • Strong net commission income Net gains and losses 488 635 -147 supported by solid macroeconomic Other income 1 026
Slide 15: Strong capitalisation – no excess capital
Capital Strong capitalisation – no excess capital CET1 capital ratio, % • CET1 capital increased by SEK 23.9% 24.6% 24.8% 24.3% 1.4bn 23.6% 21.5% – Positive effect from net profit of SEK 1.0bn excl. dividend – Positive IAS19 pension valuation effect of SEK 0.2bn • REA decreased by SEK 7bn Q3 2017 Q4
Slide 16: Decreased Risk Exposure Amount (REA)
Capital Decreased Risk Exposure Amount (REA) REA, SEKbn • REA decreased by SEK 7bn 434.5 – Positive collateral valuation 0.2 0.1 427.5 effect -7.3 – Positive FX effect Q2 2018 Credit risk Market risk CVA risk Q3 2018 © Swedbank Information class Q3 2018 Public 16
Slide 17: Solid asset quality
Group Solid asset quality Credit impairments, SEKm Q3 18 Q2 18 ▲QoQ • Resilient asset quality in all Swedish Banking 71 84 Baltic Banking 8 -87 business segments Large Corporates & Institutions 37 -126 Swedbank Group 117 -135 Ratios Q3 18 Q2 18 Credit impairment ratio, % 0.03 -0.03 Share of Stage 3
Slide 18: Appendix
Appendix © Swedbank Information class Public
Slide 19: Strong core revenues
Group results Strong core revenues SEKm Q3 18 Q2 18 ▲QoQ Q3 17 ▲YoY Net interest income 6 326 6 273 53 6 208 118 Net commission income 3 336 3 236 100 2 962 374 Net gains and losses 488 635 -147 525 -37 Other income 1 026 1 653 -627 723 303 Total income 11 176 11 797 -621 10 418 758 Total expenses 3
Slide 20: Continued volume growth
Continued volume growth Loans Deposits +11bn +2bn* +8bn +0bn +4bn +8bn -6bn Swedish Baltic Banking Corporate excl. Private Corporate mortgage loans Baltic Banking Of which FX -2 Of which FX -1 Of which FX -2 © Swedbank Information class Q3 2018 *excl. Group functions and other (Group Treasury) 20 Pu
Slide 21: Swedbank has a low-risk residential property portfolio
Swedish Swedbank has a low-risk residential property housing and mortgage portfolio market Real estate lending, net loans in Sweden, SEKbn 1 111 • Swedbank has pursued a low risk • Private mortgages: SEK 788bn, average strategy by tightening origination LTV 56% standards, and prioritising price and
Slide 22: Residential property developers - low exposure
Swedish Residential property developers - low exposure housing and mortgage market • Total loan portfolio of SEK 18bn, mainly to the larger listed construction firms, with which Swedbank has long-term relations • SEK 12bn of the loans are related to tenant-owner rights projects • SEK 6bn of the loan
Slide 23: Swedbank – low-risk bank with strong capital
Swedbank – low-risk bank with strong capital This is Swedbank base • Low risk – a Board of Directors’ strategic priority – ensures access to funding Liquidity & capital, % markets and low funding cost NSFR LCR* CET1 ratio, CRDIV (RHS) 200 30 • Retail profile and four home markets a key feature 150 –
Slide 24: Swedbank – strong and stable earnings
Swedbank – strong and stable earnings This is Swedbank capacity • Four home markets – Sweden, Estonia, Latvia and Lithuania – Strong and stable economies – Market-leading position in all home markets – Largest customer base in all home markets • Retail profile ensures stable earnings with low volati
Slide 25: Swedbank – market leader in cost efficiency
Swedbank – market leader in cost efficiency This is Swedbank • Best-in-class cost efficiency – an executive management strategic priority Total expenses, SEKbn 20 Acquisition, one-off • Executive management strongly focused on cost and change management 18 – Integrated in corporate culture 16 – Focu
Slide 26: Focus on sustainable business
Focus on sustainable business Improved sustainability scores Swedbank Robur launches unique SDG equity fund Swedbank Robur’s new sustainability equity fund, Global Impact, invests in companies Dow Jones that through their products, services and activities, contribute to reaching the UN’s SDGs. The f
Slide 27: Swedbank creates value
Swedbank creates value Strategy % SEK Return on Equity 30 14 >15% target 25 12 20 10 17.0% (YTD) 8 15 Common Equity Tier 1 ratio 6 10 One of the highest among European banks 4 5 2 24.3% 0 0 2013 2014 2015 2016 2017 YTD 2018 Dividend per share Return on equity (LHS) CET1 capital ratio (LHS) 75% payou
Slide 28: Conservative funding position
Conservative funding position Liquidity and funding • LCR 148% (EU 2015/61) • NSFR 110% (Basel committee) • Issued around SEK 104bn YTD Q3 2018 (in addition, around SEK 8bn in Tier 2) • Initial plan to issue around SEK 145bn in 2018 has been revised down due to deposit inflow Term funding issuance –
Slide 29: Long-term funding maturity profile
Long-term funding maturity profile Liquidity and funding Long-term funding maturity profile, by funding source Long-term funding maturity profile, by currency SEKbn SEKbn Senior unsecured debt Covered bonds 200 200 150 150 Other GBP 100 100 USD EUR 50 SEK 50 0 0 2018 2019 2020 2021 2022 2023 2024- 2
Slide 30: Real-estate price performance – Sweden
Swedish Real-estate price performance – Sweden, housing and mortgage 12 month market Single-family homes1 Tenant-owner rights2 Combined3 12M Δ 12M Δ 12M Δ Oct 17 4% 1% 3% Nov 17 1% -3% 0% Dec 17 0% -6% -2% Jan 18 0% -6% -2% Feb 18 -1% -8% -4% House price index, Sweden 2005=100 Mar 18 -2% -9% -4% 350