Swedbank Ab Class A · OMXSTO:SWED_A

Swedbank Ab Class A — Q3 2023 Earnings Presentation

27 slides from Swedbank Ab Class A's earnings presentation, 2023

  1. Slide 1: Financial results Q3 2023

  2. Slide 2: Global economy remains resilient

    Sweden Latvia ● Global economy remains resilient Estonia Lithuania ● Slow recovery 2.8 2.8 3.0 2.8 1.9 2.0 1.7 1.5 2.1 2.3 ● Inflation too high 0.3 -0.5 -0.3 -0.3 ● Rates high for longer -1.1 -2.0 2022 2023F 2024F 2025F Sweden Latvia Riksbank ECB (deposit rate) Estonia Lithuania FED (upper bound) 30

  3. Slide 3: Net profit SEK 9.1bn

    ▲ ● Net profit SEK 9.1bn Net interest income 12 901 12 768 1% Net commission income 3 862 3 811 1% ● Return on equity Net gains and losses 652 524 24% 19.3 per cent Other income 1 053 1 069 -2% ● Cost/Income ratio 0.30 Total income 18 468 18 173 2% Total expenses 5 562 5 717 -3% of which provision f

  4. Slide 4: Solid credit quality

    ● Solid credit quality ● Credit impairments SEK 347m ● Management overlay SEK 1.5bn ● CET1 capital buffer 370bps © Swedbank 4

  5. Slide 5: Focus on profitability and low risk

    ● Focus on profitability and low risk ● Corporate loan book – Stable in Sweden – Increased in Baltic Banking ● Green transition financing © Swedbank 5

  6. Slide 6: Mortgage markets and savings

    ● Swedish mortgage market – Maintaining leading position – Low market volumes ● Baltic mortgage market – Maintaining leading position – Strong demand for green mortgages ● Savings – Deposits decreased in all markets – Higher rates for our customers © Swedbank 6

  7. Slide 7: High demand for support and advice

    ● High demand for support and advice ● Cloud based communication platform ● New contact center in Umeå © Swedbank 7

  8. Slide 8: New business area for Swedish Premium and Private Banking customers

    ● New business area for Swedish Premium and Private Banking customers ● Corporate customers with a dedicated advisor transfers to Corporates & Institutions ● Focus on customer satisfaction in Swedish Banking © Swedbank 8

  9. Slide 9: © Swedbank

    © Swedbank 9

  10. Slide 10: Lending volumes development

    QoQ +0.3% QoQ -0.1% +12 1 181 1 180 1 183 1 803 11 1 815 1 808 3 0 -2 -6 Q2 2023 Q3 2023 Q3 excl. FX QoQ +1.1% 628 631 621 Q2 2023 Swedish C&I Baltic Group Q3 excl. FX FX Q3 2023 Banking Banking Functions Q2 2023 Q3 2023 Q3 excl. FX © Swedbank 10

  11. Slide 11: Deposit volumes development

    QoQ -1.5% QoQ -1.7% 716 -12 704 709 1 298 2 1 286 1 278 -10 -1 -3 -8 Q2 2023 Q3 2023 Q3 excl. FX QoQ -1.4% 582 574 577 Q2 2023 Swedish C&I Baltic Group Q3 excl. FX FX Q3 2023 Banking Banking Functions Q2 2023 Q3 2023 Q3 excl. FX © Swedbank 11

  12. Slide 12: Net interest income

    QoQ +1.0% ● NII increase – Baltic Banking deposit +133 margins and lending 12 768 39 195 140 12 901 volumes -86 -155 – C&I lending margins – Day count and FX ● Partially offset by Business-driven NII – Higher funding cost due to -7 deposit migrations and proactive wholesale funding ● Year-on-year, Y

  13. Slide 13: Net commission income

    QoQ +1.3% ● Stable cards and payments +51 ● Asset management higher due to global 68 17 3 862 3 811 stock market -9 -26 performance, FX and day count ● Securities & Corporate Finance seasonally lower Q2 2023 Cards & Asset Securities & Other Q3 2023 Payments Management Corporate Finance © Swedbank 13

  14. Slide 14: Net gains and losses

    ● Strong Fixed income and FX trading with high client activity 34 129 ● Positive revaluation 652 effects in Treasury 46 -90 533 Client trading Bond inventories Funding Liquidity Other Total NGL (Treasury) portfolio © Swedbank 14

  15. Slide 15: Other income

    QoQ -1.5% ● Higher income from savings banks and Other Associates lower from Entercard Net insurance ● Net insurance decrease 1 069 1 053 driven by revaluations 843 875 and higher claims 775 435 463 415 422 398 250 265 171 194 261 384 325 235 282 117 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 © Swedban

  16. Slide 16: Expenses seasonally lower

    QoQ -2.7% ● Expenses seasonally lower Underlying expenses Administrative fine and provision C/I ratio – According to plan 0.38 0.37 – Inflation headwind likely 0.35 0.31 0.30 to continue into 2024 6 410 5 602 890 5 717 5 562 5 185 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 © Swedbank 16

  17. Slide 17: © Swedbank

    © Swedbank 17

  18. Slide 18: Credit impairments

    ● Updated macro forecasts ● Stage migrations – From rating migrations 831 ● Post model adjustments – Partial release to meet -158 rating & stage migrations -265 347 201 -263 Macro scenarios Rating & stage Post model Individual Other Total credit migrations adjustments assessments impairments © Swedb

  19. Slide 19: Managing balance sheets

    ● Managing balance sheets 10% − Divestments of properties 8% 7.2% 7.2% 7.2% 7.4% 7.8% − Restructurings 6.9% 6.9% 7.0% 6% − Capital injections − Bond buy-backs 4% Q2 21 Q3 21 Q4 21 Q1 22 Q3 22 Q4 22 Q1 23 Q2 23 − Cancelled dividends − CAPEX reductions Interest Coverage Ratio (ICR)2) 2.9x (3.3x) − Int

  20. Slide 20: CET1 capital ratio of 18.7 per cent

    ● CET1 capital ratio of 18.7 per cent ● 100-300bps capital buffer 370bps buffer target range remains 18.6% 0.6% 0.6% 18.7% ● CRE risk weight floor moved -0.7% from Pillar 2 to REA -0.3% 15.0% ● SREP 2023 decision − Temporary Pillar 2 requirement add-on for IRB models of 100bps − Reduction of Article

  21. Slide 21: Part of the green transition

    ● Part of the green transition ● Institute for Financial Health © Swedbank 21

  22. Slide 22: Summary of Q3 2023

    ● Net profit of SEK 9.1bn ● Return on equity 19.3 per cent ● Cost to income ratio 0.30 ● Solid credit quality © Swedbank 22

  23. Slide 23: Appendix

    Appendix

  24. Slide 24: Rates high for longer

    ● Rates high for longer ● Continue with proven +89% pricing strategy 12 768 12 901 11 936 10 918 8 359 7 111 6 759 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 © Swedbank 24

  25. Slide 25: Commercial real estate lending

    ● Focus on strong cash flows and collateral ● Continuous dialogue with 84 customers 10% SEK 102 301bn 81% ● Average LTV 9% 18 − Property management, 39 53 per cent • Non-residential, 52 per cent Sweden Residential Baltics Commercial • Residential, 54 per cent Norway & Finland Industrial & Warehouse

  26. Slide 26: Deposits and LTD-ratio

    Transaction accounts On-demand savings Term savings +39% Private Corporate 1 259 1 298 1 278 1 131 704 704 42 95 920 954 579 537 29 43 35 345 44 320 536 493 317 288 2018 2019 2020 2021 2022 Q3 2023 Q4 2022 Q3 2023 Q4 2022 Q3 2023 Private SME 200 LTD-ratio Corporate 180 88% 88% 92% Total 142% 82% 160

  27. Slide 27: Liquidity and funding

    159% Liquidity Coverage Ratio 50 6 37 11 2 121% 282 Net Stable Funding Ratio 254 350 307 >2Y Survival horizon Cash and balances with central banks SEK EUR USD OTHER Sovereigns, central banks or multilateral development banks1 Municipalities or public service entities Extremely high quality covered b

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