Swedbank Ab Class A · OMXSTO:SWED_A
Swedbank Ab Class A — Q3 2008 Earnings Presentation
40 slides from Swedbank Ab Class A's earnings presentation, Oct 23, 2008
Slide 1: Interim report Q3 2008
Interim report Q3 2008 23 October 2008 Jan Lidén President and CEO
Slide 2: Content
Content • Highlights in Q3 results • The macro-economic environment • Comments on issues in focus – Funding and liquidity – Credit quality – Business areas • Summary and conclusions © Swedbank 2
Slide 3: Stable NII - negative valuation effects as a result of the credit crisis
Stable NII - negative valuation effects as a result of the credit crisis • Net profit for the period Jan-Sep amounted to SEK 8 972m (8 888) • Net interest income increased by 15 percent to SEK 15 960m (13 898) • Net commission income decreased by 7 percent to SEK 6 819m (7 344) • Net gains an losses
Slide 4: The macro-economic environment
The macro-economic environment
Slide 5: Weaker economic outlook
Weaker economic outlook • Financial crisis • Global economy under stress – Quick deceleration of world economy – Advanced economies close to or moving into recession • Recovery not yet in sight - and likely to be gradual when it comes – Declining credit demand – Emerging economies are still expected
Slide 6: Effects on Swedbank's home markets
Effects on Swedbank’s home markets Sweden Baltics • Weaker global growth restrain • Reduced demand in the Baltic Sea exports region is restraining growth • Diminishing private consumption • Fewer new jobs and unemployment rate above 7% in 2009 • Lower current account deficit • Gradually decreased in
Slide 7: Focus on credit quality and efficiency
Focus on credit quality and efficiency Sweden Baltics Ukraine and Russia • Stricter lending criteria • Stricter lending criteria • More focus on quality than • Personal contact with all • Balanced goal for loan to growth customers with loans overdues deposit ratio • Implementation of Group credit •
Slide 8: Funding and liquidity
iE ez: | Funding and liquidity
Slide 9: Funding markets
Funding markets • After mid September funding markets have worsened significantly – no risk appetite – flight to treasury bills • Money markets and commercial paper markets have dried up • Low volumes in primary issuance of both covered bonds and senior unsecured bonds, the secondary markets are ill
Slide 10: Swedbank AB – Funding 2008 and 2009
Swedbank AB – Funding 2008 and 2009 • During 2008, Swedbank AB has issued senior unsecured bonds amounting to SEK 45 billion to external investors (excluding issues linked to index-linked bonds) • In Q4 2008 senior unsecured bonds amounting to SEK 18 billion will mature • In 2009 senior unsecured bo
Slide 11: Deposits from the public
Deposits from the public • Deposits declined during a period of speculations – Increased sales of other products, such as interest rate funds – Intensified focus on customer dialogue and improved customer offerings – During the last 12 months deposits in Swedish Banking have increased by 7% or SEK 2
Slide 12: Liquidity
Liquidity • Debt securities in issue are principally covered bonds with Aaa/aaa rating from Moody’s and S&P – Class of assets with demand • New covered bonds with long maturities have been issued • Attractive savings accounts • Adequate liquidity reserves which can be further enlarged (12)
Slide 13: Liquidity stress test
Liquidity stress test 2008 09 30 (SEKm) 180 000 160 000 140 000 120 000 100 000 80 000 60 000 40 000 20 000 0 ks ks k s s s s s s th ee th th th th th th ee ee on on on on on on on w w w m m m m m m m ne ee o 1 w O 2 3 4 5 6 9 hr T T Main assumptions: No access to capital markets; no refinancing of
Slide 14: The Swedish government's stability plan – summary
The Swedish government’s stability plan – summary • Good intention – has the possibility to decrease the overall perceived risk level of the Swedish bank system – Could decrease the overall interest rate level – Could reduce the interest burden for individuals and companies • Guaranty program to sup
Slide 15: Swedbank lending structure
Swedbank lending structure Lending to the public, SEK 1,218bn Russia Ukraine Nordic 1% 2% Lithuania 3% Swedbank 5% Swedbank Group, excl. Latvia Mortgage 5% Swedbank SEK 580bn Mortgage Estonia -Entirely Swedish 6% Swedbank SEK 638bn Mortgage mortgage lending 48% Sweden 30% • Large deposits Distributi
Slide 16: Credit quality
Be { i Be Credit quality
Slide 17: Credit quality, Swedish banking
Credit quality, Swedish banking % SEKm Share of impaired loans 5,000 1.60 4,000 1.20 3,000 Q4-07 Q2-08 Q3-08 0.80 2,000 0.40 Private 0.02% 0.03% 0.04% 1,000 0 0.00 Corporate 0.11% 0.09% 0.14% Q4-07 Q1-08 Q2-08 Q3-08 Q3-07 Q2-06 Q3-06 Q4-07 Q1-07 Q2-07 Total 0.06% 0.06% 0.08% Impaired loans Share of
Slide 18: Credit quality, Swedbank Mortgage
Credit quality, Swedbank Mortgage SEKm % 5,000 1.60 4,000 1.20 Share of impaired loans 3,000 0.80 Q4-07 Q2-08 Q3-08 2,000 0.40 Private 0.01% 0.01% 0.01% 1,000 Corporate 0.01% 0.03% 0.03% 0 0.00 Total 0.01% 0.02% 0.02% Q3-07 Q4-07 Q1-08 Q2-08 Q3-08 Q4-06 Q2-07 Q1-06 Q2-06 Q3-06 Q1-07 Impaired loans S
Slide 19: Credit quality, Baltic Banking Operations
Credit quality, Baltic Banking Operations SEKm % 5,000 1.60 4,000 1.20 Share of impaired loans 3,000 2,000 0.80 Q4-07 Q2-08 Q3-08 1,000 0.40 Private 0.41% 0.72% 0.96% 0 0.00 Corporate 0.50% 1.01% 1.78% Q2-08 Q1-08 Q3-08 Q4-07 Q4-06 Q2-07 Q3-06 Q1-07 Q3-07 Total 0.47% 0. 91% 1.45% Impaired loans Shar
Slide 20: Baltic banking overdues vs market
Baltic banking overdues vs market Estonia - overdue over 30 days / current Estonia - overdue over 60 days / current 4% portfolio 4% portfolio 3% 3% 2% 2% 1% 1% 0% 0% apr-08 aug-08 mar-08 mar-07 mar-06 jun-08 jul-08 maj-08 jun-06 sep-06 dec-06 jun-07 sep-07 dec-07 dec-05 dec-05 dec-06 dec-07 apr-08 a
Slide 21: Collateral exposure towards Lehman Brothers
Collateral exposure towards Lehman Brothers The assets Conclusions as of Q3 2008 • 69 commercial mortgage loans • On-site due diligence and dialogue • Aggregate loan value well above with relevant parties exposure to Lehman USD 1 350m – The due diligence has confirmed • All loans are performing the
Slide 22: Exposures
Exposures • No direct US Sub-Prime exposure – Minimal indirect exposure through investments of EUR 19m in bonds issued by US mortgage institutions who, in their turn, have exposures towards US sub-prime • Total exposure towards structured credits is minimal – Total commitments towards conduits or SI
Slide 23: Business area summary
Business area summary Swedish Banking International Banking • Stable NII despite effects from troublesome • Recovered VAT of SEK 83m in Russia funding markets • Three retail branches opened in Moscow and • Strong product sales during September Kaliningrad • Credit growth is moderating • Strong NII d
Slide 24: Business areas
Business areas Swedish Baltic Int'l. Swedbank Asset Banking Banking Banking Markets Mgmt 9M 2008 vs 2007, SEKm 2008 % 2008 % 2008 % 2008 % 2008 % Net interest income 8,810 0 4,773 17 1,415 77 1,125 66 77 24 Net commission income 3,120 – 6 1,428 4 257 15 797 – 15 1,217 – 16 Other income 1,238 20 861
Slide 25: Group results
Group results Mikael Inglander CFO (25)
Slide 26: Income statement
Income statement Jan-Sep Jan-Sep SEKm 2008 2007 % Net interest income 15,960 13,898 15 Net commission income 6,819 7,344 –7 Net gains/losses on financial items at fair value 1,107 1,305 – 15 Other income 2,231 1,503 48 Total income 26,117 24,050 9 Staff costs 6,802 6,023 13 Profit-based staff costs
Slide 27: Income statement
Income statement Q3 Q2 Q3 SEKm 2008 2008 % 2007 % Net interest income 5,424 5,295 2 4,806 13 Net commission income 2,265 2,374 –5 2,503 – 10 Net gains/losses on financial items at fair value – 109 1,141 196 Other income 658 623 6 526 25 Total income 8,238 9,433 – 13 8,031 3 Staff costs 2,223 2,268 –
Slide 28: Net interest income Swedish Banking
Net interest income Swedish Banking Q3 2008 Q3 2008 SEKm vs Q2 2008 vs Q3 2007 Net interest income Q2 2008 2,971 Net interest income Q3 2007 2,926 Changes: Higher lending volumes 35 204 Higher lending margins 15 Decreased lending margins – 139 Difference in number of days/quarter, lending 19 Higher
Slide 29: Baltic Banking, change in net interest income
Baltic Banking, change in net interest income Q3 2008 Q3 2008 SEKm vs Q2 2008 vs Q3 2007 Net interest income Q2 2008 1,531 Net interest income Q3 2007 1,487 Changes: Higher lending volumes 26 171 Decreased lending margins -19 -96 Difference in number of days/quarter, lending 11 0 Exchange rate effec
Slide 30: Net commission income
Net commission income Q3 Q2 Q3 SEKm 2008 2008 % 2007 % Payments 899 839 7 814 10 Lending 194 199 –3 183 6 Brokerage 166 188 – 12 243 – 32 Asset management 864 933 –7 1,133 – 24 Insurance 69 71 –3 94 – 27 Corporate finance 22 177 – 88 49 – 55 Other 51 – 33 – 13 Total net commissions 2,265 2,374 –5 2,
Slide 31: Net gains and losses on financial items at fair value
Net gains and losses on financial items at fair value Q3 Q2 Q1 Q4 Q3 Q2 SEKm 2008 2008 2008 2007 2007 2002 Swedish Banking -126 179 16 116 1 86 Swedbank Mortgage open interest rate exposure -172 29 -22 66 -129 44 MasterCard 101 89 Baltic Banking 107 205 78 163 213 235 International Banking -6 114 22
Slide 32: Expenses
Expenses Q3 Q2 Q3 SEKm 2008 2008 % 2007 % Swedish Banking 2,197 2,239 – 2 2,208 –0 Baltic Banking 926 795 16 864 7 International Banking 315 391 – 19 318 –1 Swedbank Markets 398 543 – 27 377 6 Asset Management & Insurance 200 206 – 3 236 – 15 Other 277 256 8 129 Total expenses 4,313 4,430 – 3 4,132
Slide 33: Key figures
Key figures Q3, 2008 Q2, 2008 Q3, 2007 Return on equity, % 13.8 20.6 18.1 Earnings per share, SEK 4.79 6.99 5.57 Equity per share, SEK 141.68 135.81 124.89 C/I ratio before loan losses 0.52 0.47 0.51 Loan loss ratio, net, % 0.27 0.14 0.09 Share of impaired loans, % 0.32 0.20 0.14 Provision ratio for
Slide 34: Summary
Summary • Weaker economic outlook in • Provisions of SEK 169 million Sweden and the Baltic States regarding the exposure towards • Net profit during the period in line Lehman Brothers without with the profit during the same collateral. No provision need for period 2007 the exposure with collateral •
Slide 35: Appendix
Swedbank @ Appendix (35)
Slide 36: Swedbank AB long-term funding maturity profile, September 2008
Swedbank AB long-term funding maturity profile, 30 September 2008 120 100 80 SEKbn 60 40 20 0 2008 2009 2010 2011 2012 2013 2014- (36)
Slide 37: Swedbank Mortgage long-term maturity profile, September 2008
Swedbank Mortgage long-term maturity profile, 30 September 2008 140 120 100 80 SEKbn 60 40 20 0 2008 2009 2010 2011 2012 2013 2014- (37)
Slide 38: Mortgage lending, Sweden
Mortgage lending, Sweden SEK 580bn Lending Share of Forest & Agriculture, portfolio Tenant owners 6.3% Commercial 60% LTV associations, 10.8% real estate, 0.2% 50% Multi-family homes, 4.0% 40% Condominiums; Single family 14.2% 30% homes, Public sector, 62.4% 2.1% 20% 10% Funding 0% LTV Equity, 0-30%
Slide 39: Other lending to the public, Sweden
Other lending to the public, Sweden (excl. Mortgage) SEK 345bn 350 000 49 822 Individuals 300 000 Real estate management Other real 250 000 Real estate estate Tenant 125 386 management owners management: 8% associations; 20% 200 000 Retail & Wholesale Renting, other 16 607 estate; 150 000 18 551 Ind
Slide 40: Lending to the public, Baltics
Lending to the public, Baltics 200 SEKbn 200,000 180,000 Individuals 160,000 85,980 Real estate management 140,000 Other; Land plots; Office; 120,000 4% 11% 17% 100,000 Real-estate mgmt Production & 29,935 Warehouse; 8% 80,000 Retail & Wholesale 17,884 Retail; 5,731 Construction 28% 60,000 17,996 In