Swedbank Ab Class A · OMXSTO:SWED_A
Swedbank Ab Class A — Q3 2009 Earnings Presentation
33 slides from Swedbank Ab Class A's earnings presentation, Oct 20, 2009
Slide 1: Interim report January – September 2009
Interim report January – September 2009 20 October 2009 Michael Wolf, CEO Erkki Raasuke, CFO Göran Bronner, CRO
Slide 2: Successful rights offering
Successful rights offering • SEK 15.1bn rights offering completed • Strong support from shareholders and other investors – subscription level of 187.9% • Ensures our position as a well capitalised bank • Improves our competitive strength • Funding position improved 2
Slide 3: Continued focus on short-term priorities
Continued focus on short-term priorities • First signs of growth rate of impaired loans Asset quality levelling off • Ektornet to protect long-term shareholder value • Risk adjusted pricing process continues Earnings capacity • Capacity adjustment according to plan • Improved market conditions Liqui
Slide 4: Evolving our strategy – to be presented at Q4
Next step Evolving our strategy – to be presented at Q4 • Recognising the new environment favouring traditional banking model • Building on our strengths – The preferred partner for the many households, companies and institutions in Sweden, Estonia, Latvia and Lithuania – Benefit from our heritage •
Slide 5: Mixed performance
Results by business area Mixed performance SEKm Profit before impairments and provisions 3 500 Swedish Banking 3 000 Q2 09 Q3 09 Continued solid performance, 2 500 limited impairment losses 2 000 1 500 Baltic Banking 1 000 Weak net interest income development, 500 lower growth rate in impaired loans
Slide 6: Continued headwind in Baltic and International Banking
Earnings capacity – Net interest income Continued headwind in Baltic and International Banking SEKm 6 000 5 243 152 4 5 017 5 000 -15 -190 -105 -72 4 000 3 000 2 000 1 000 Q2 Q3 0 Net interest Swedish Baltic International Swedbank Asset Other Net interest income Banking Banking Banking Markets Manag
Slide 7: NII short-term pressure, NII medium-term support
NII short-term pressure Change in NII - Baltic Banking • Stabilisation fee in Sweden • Low euro interest rates • Overdue loans in Baltic Banking and International Banking • Open currency position in Baltic Banking • Deleveraging in Baltic Banking and 9M 2008 Volume Euribor Open Overdue Other 9M 2009
Slide 8: High volatility
Net gains and losses High volatility • Valuation effects Swedbank Mortgage (partly offset by NII) • Long UAH position affects International Banking (partly offset in balance sheet) • Lower seasonal earnings in Markets (but stronger NII) SEKm Q3 09 Q2 09 Q3 08 Swedish Banking -233 73 -121 Baltic Bank
Slide 9: Capacity adjustments according to plan
Capacity adjustments according to plan Planned FTE actual reduction Q3 09 H2 09 H1 10 Swedish Banking -35 0 -450 Baltic Banking -474 -690 -250 International Banking -192 -660 -670 Other -13 NA NA Total -714 -1 350 -1 370 9
Slide 10: Tax charge of SEK 734m – higher than normalised
Tax charge of SEK 734m – higher than normalised SEKm Q3 09 Q2 09 Q1 09 YTD 2009 Ukrainian Banking 248 62 -408 -98 Baltic Banking -159 -542 -265 -966 Rest of Group 645 625 660 1 930 Swedbank Group 734 145 -13 866 10
Slide 11: Income statement
Third quarter results 2009 Income statement SEKm Q3 2009 Q2 2009 Change Net interest income 5 017 5 243 -226 Net commission income 2 208 1 970 238 Net gains/losses on financial items, fair value 87 710 -623 Other income 830 1 311 -481 Total income 8 142 9 234 -1 092 Staff costs 2 241 2 289 -48 Profi
Slide 12: Liquidity for more than 24 months
Liquidity & Funding Liquidity for more than 24 months • Satisfactory liquidity situation • Liquid assets of more than SEK 230bn of which about SEK 50bn in untapped covered bond pool Stress test of liquidity as of 30 September 2009* SEKbn 300 250 200 150 100 50 * Stress test main assumptions: 2009-09
Slide 13: Improved access to market funding
Liquidity & Funding Improved access to market funding • New funding issued in Q3 – SEK 51bn of long-term debt, of which SEK 1bn was guaranteed – SEK 53bn of short-term debt (non-guaranteed), including Outstanding wholesale funding Interbank lending and depo SEKbn, notional value Total long-term, • N
Slide 14: Impaired loans as expected
Asset quality Impaired loans as expected • Impaired loans increased by SEK 6.1bn – excl FX effects SEK 8.9bn – Sweden: continued very low levels – Estonia: clearly best quality in the Baltic countries – Latvia, Lithuania and Ukraine: continued weak development Quarterly change of impaired loans 4 82
Slide 15: Quarterly change of 60-day overdue loans in the Baltics – growth rate slowing
Asset quality Quarterly change of 60-day overdue loans in the Baltics – growth rate slowing EURm 400 350 300 250 200 150 100 50 0 Q3 Q4 Q1 Q2 Q3 Q3 Q4 Q1 Q2 Q3 Q3 Q4 Q1 Q2 Q3 08 08 09 09 09 08 08 09 09 09 08 08 09 09 09 Estonia Latvia Lithuania 15
Slide 16: Provisions – work-out units at full speed
Asset quality Provisions – work-out units at full speed • Impairment losses on loans were SEK 6.1bn in Q3 and SEK 19.6bn for the period Jan-Sep • Provision ratios – Sweden 99% – Baltics 51% 63% – Ukraine 92% – Russia 79% • Group collective provisions reallocated in Lithuania and Estonia, and partly
Slide 17: Restructuring work – progressing well
Asset quality Restructuring work – progressing well • Work-out units operating at full speed – More than 70% of the weak portfolio in the Baltic countries has active business plans, 100% at year-end – Foreclosure process needs improvement • Ukraine – Main part of weak portfolio processed – Provision
Slide 18: Ektornet – to protect long-term shareholder value
Asset quality Ektornet – to protect long-term shareholder value • Subsidiary of Swedbank AB to manage repossessed assets • Independent organisation and processes • Mainly corporate real estate related assets • Fully operational at year-end • Business plan for each asset • Experienced CEO appointed •
Slide 19: Risk-weighted assets (RWA) – continued reduction
Capital management Risk-weighted assets (RWA) – continued reduction • RWA reduced by SEK 44bn during Q3 Lending volumes -22 Improved processes and collateral position -6 Market risk 2 FX -18 • Continued focus on capital efficiency – Focus on core customers 19
Slide 20: Resilient capital ratios despite high provisions
Capital management Resilient capital ratios despite high provisions Core Tier 1 capital ratio* % 12.3 12 Core Tier 1 capital ratio* YE 08 9.68% 10 Result loss: SEK8.7bn -1.24% RWA reduction +1.27% 8 Other +0.20% Core Tier 1 capital ratio* Q3 09 9.91% 6 9.7 9.4 9.8 9.9 Rights issue 2.39% 4 7.4 Pro fo
Slide 21: Appendix
Appendix Swedbank@ 21
Slide 22: Balance sheet
Balance sheet Swedbank Group SEKm Sep 09 Dec 08 % Loans to credit institutions 148 354 128 536 15% Loans to the public 1 244 800 1 287 424 -3% Interest-bearing securities 190 701 133 694 43% Shares and participating interests 81 152 60 182 35% - for which customers bear the investment risk 72 170 51
Slide 23: Exposure FAQ
Exposure FAQ • The so-called Lehman exposure was USD 1 415m as of 2009-09-30 – The exposure consists of real estate loans to 50 borrowers, with collateral in 53 properties – 12 borrowers are in default – The aggregated nominal value of loans is well above the amount of the exposure – Updated analysi
Slide 24: Exposure FAQ
Exposure FAQ • Private equity related exposure is SEK 14bn – Nordic related LBOs – 99% senior lending – Largest sector is health care, about 45% – No impairment losses during the third quarter • Lending exposure to shipping sector is SEK 18bn plus unutilised commitments of SEK 8bn Tanker Offshore 31
Slide 25: Long-term funding
Liquidity & Funding Long-term funding • In Q3 Swedbank issued SEK 51bn of covered bonds and senior unsecured bonds and had maturities of SEK 12bn • SEK 1bn issued in government guaranteed bonds • Average maturity of wholesale funding further extended to 20 months • Maturities of SEK 100bn over next
Slide 26: Funding under the Swedish guarantee programme
Liquidity & Funding Funding under the Swedish guarantee programme (total outstanding as of 30 September, notional SEK 277bn) Currency distribution • Total outstanding long-term guaranteed EUR 43% funding decreased by SEK 9 bn to SEK 179bn primarily due to FX changes USD 28% • During Q3, Swedbank iss
Slide 27: Swedbank Mortgage, Sep 2009, total loan portfolio
Swedbank Mortgage, 30 Sep 2009, total loan portfolio SEK 658bn, notional amount • 100% lending – Swedish properties • More than 90% residential lending • Average LTV* of 45% in Swedbank Mortgage (cover pool 43%) • 80% of the total lending book within a loan-to-value ratio below 50% SEKm Loan-to-valu
Slide 28: Swedish Banking lending to the public, excluding Swedbank Mortgage, SEK 288bn
Swedish Banking lending to the public, excluding Swedbank Mortgage, SEK 288bn SEKm 350 000 Real estate management Other real 300 000 Industrial estate mgmt properties 6% Residential 4% properties 250 000 Municipalities 26% Other corporate lending Commercial Forestry and agriculture properties 21% 20
Slide 29: Foreign exchange positions as of 30 September 2009
Earnings capacity Foreign exchange positions as of 30 September 2009 SEKm EEK LVL LTL UAH RUB Structural position -34 232 123 -9 184 4 504 -8 Net assets 17 147 6 194 4 995 -2 784 1 323 Equity hedge 0 - 5 320 -4 990 0 -96 Goodwill 12 793 0 0 0 13 Total position - 4 292 997 -9 179 1 720 1 232 29
Slide 30: Appendix – Baltic Banking
Appendix — Baltic Banking Swedbank@ 30
Slide 31: Baltic Banking gross lending by sectors
Baltic Banking gross lending by sectors* Portfolio, September 2009, EURm Portfolio growth, Q3 09, EURm Individuals Mortgage Other 46% -160 Real estate 3 141 17% 3 mgmt*** Retail & 1 354 7% -141 Wholesale Industry 1 403 8% -113 Transport 905 5% -17 Construction 397 2% -30 Other** 2 883 16% -125 0 2 0
Slide 32: Real estate prices continued to fall
Real estate prices continued to fall Distressed sales were driving the trend Market situation • Apartment prices down from peak level Riga 1800 1800 -56% in EE, -70% in LV, and -41% in LT 1500 1500 No of transactions 1200 1200 • In Q3 2009 there was a slowdown in the pace EUR/m2 900 900 of price adj
Slide 33: Mortgage portfolio LTV
LTV risk dimensions Mortgage portfolio LTV • Due to the price drop in all three Baltic countries, average LTVs have increased significantly • Latvia was hurt most, due to higher share of portfolio issued at peak prices and a steeper price drop EE LV LT Average LTV: 2009-09-30 81% 142% 87% Share of p