Swedbank Ab Class A · OMXSTO:SWED_A
Swedbank Ab Class A — Q4 2023 Earnings Presentation
29 slides from Swedbank Ab Class A's earnings presentation, January 2024
Slide 1: Year-end result 2023
Slide 2: Macro outlook: lower inflation, stagnating economies
Sweden Latvia ● Lower inflation Estonia Lithuania ● Stagnating economies 3.0 3.4 2.4 1.4 1.2 2.0 2.3 2.5 2.0 ● Positive outlook for H2 2024 0.7 -0.5 -0.7 -0.4 -0.3 -0.4 -2.5 2022 2023F 2024F 2025F Sweden Latvia Riksbank ECB (deposit rate) Estonia Lithuania FED (upper bound) 25% 6% 20% 15% 4% 10% 2%
Slide 3: Full year 2023: net profit SEK 34.1bn
▲ ● Net profit SEK 34.1bn Net interest income 50 933 33 146 54% Net commission income 15 088 14 114 7% ● Cost/Income ratio 0.33 Net gains and losses 2 938 1 940 51% ● Return on equity Other income 4 098 2 828 45% 18.3 per cent Total income 73 057 52 028 40% Total expenses 24 100 20 817 16% of which
Slide 4: Solid credit quality
● Solid credit quality ● Credit impairments SEK 363m ● CET1 capital buffer 390bps © Swedbank 4
Slide 5: Mortgage market and savings
● Swedish mortgage market – Low market activity – Maintaining leading position ● Baltic mortgage market – Continued growth – Maintaining leading position ● Savings – Private deposits stable – Competitive savings rates in all markets © Swedbank 5
Slide 6: Focus on profitability and low risk
● Focus on profitability and low risk ● Corporate loan book – Reduced in Sweden – Increased in Baltic Banking © Swedbank 6
Slide 7: Shorter queues and improved mortgage application process
● Shorter queues with improved availability – New communication platform in all home markets – New contact center launched in Umeå ● Improved mortgage application process © Swedbank 7
Slide 8: 2027 ambition to support the transition
● 2027 ambition to support the transition – Grow sustainable lending by at least 3 times – At least 40 per cent of all arranged bonds should be ESG ● Estonia and Latvia: 370 EURm green loans © Swedbank 8
Slide 9: Tailored digital guidance
● Tailored digital guidance introduced in Latvia and Lithuania ● New advisory platform will be introduced in Sweden during 2024 © Swedbank 9
Slide 10: Fourth quarter 2023
© Swedbank
Slide 11: Q4 2023: net profit SEK 8.3bn
▲ ● Net profit SEK 8.3bn Net interest income 13 329 12 901 3% Net commission income 3 754 3 862 -3% ● Return on equity Net gains and losses 845 652 29% 16.9 per cent Other income 1 101 1 053 5% ● Cost/Income ratio 0.34 Total income 19 029 18 468 3% Total expenses 6 411 5 562 15% ● EPS after dilution
Slide 12: Lending volumes and development by segment
QoQ -1.4% QoQ -0.4% -13 1 180 1 176 1 181 1 808 1 796 4 0 1 782 -3 -14 -13 Q3 2023 Q4 2023 Q4 excl. FX QoQ -3.4% 628 614 606 Q3 2023 Swedish C&I Baltic Group Q4 excl. FX FX Q4 2023 Banking Banking Functions Q3 2023 Q4 2023 Q4 excl. FX © Swedbank 12
Slide 13: Deposit volumes and development by segment
QoQ -3.8% QoQ -0.9% 708 710 -31 702 1 278 -5 21 1 247 1 230 -3 -44 -16 Q3 2023 Q4 2023 Q4 excl. FX QoQ -7.3% 570 529 537 Q3 2023 Swedish C&I Baltic Group Q4 excl. FX FX Q4 2023 Banking Banking Functions Q3 2023 Q4 2023 Q4 excl. FX © Swedbank 13
Slide 14: Net interest income increase
QoQ +3.3% ● NII increase – Gradual repricing of lending +428 129 13 329 – Lower deposit guarantee 615 12 901 fee and methodology change in C&I origination -8 -48 -260 fees Business-driven NII +299 Q3 2023 Lending Deposit Margins Treasury & FX & Other Q4 2023 volumes volumes Other © Swedbank 14
Slide 15: Net commission income
QoQ -2.8% ● Seasonally lower cards ● Asset management -108 impacted by slightly lower average stock 3 862 47 3 754 market performance -99 -31 -25 ● Securities & Corporate Finance increased due to market maker fees Q3 2023 Cards & Asset Securities & Other Q4 2023 Payments Management Corporate Finance
Slide 16: Net gains and losses
● Strong FX and Fixed income with high client activity 109 ● Positive revaluation 322 effects in Treasury and 845 the liquidity portfolio -238 671 -19 Client trading Bond inventories Funding Liquidity Other Total NGL (Treasury) portfolio © Swedbank 16
Slide 17: Other income
QoQ +4.5% ● Net insurance increased driven by revaluations mainly in Baltic Banking -48 ● Negative result from 210 Entercard due to higher 1 101 1 053 impairments and higher -147 -15 funding costs ● Stable income from savings banks Q3 2023 Net insurance Associates Other Q4 2023 © Swedbank 17
Slide 18: Expenses and 2024 cost outlook
YoY +11.5%1) QoQ +15.3% ● Full year underlying expenses of SEK 23.2bn Underlying expenses Administrative fine and provision C/I ratio – Strict cost discipline 0.40 0.33 0.37 ● 2024 cost outlook 0.35 0.34 24 100 0.31 0.30 – 2023 level excluding fines 887 6 410 6 411 20 817 5 717 – Temporary investmen
Slide 19: Credit impairments
● Updated macro forecasts ● Stage migrations 584 ● Higher year-end net repayments and amortisations 414 ● Credit impairment ratio 8bps 363 -147 ● Remaining Post model 174 adjustments of SEK 1.3bn -523 -140 Macro Rating & stage Net Post model Individual Other Total credit scenarios migrations repayme
Slide 20: Managing balance sheets
● Managing balance sheets − Divestments of properties 10% 7.4% 7.8% 8.0% − Restructurings 8% 7.2% 6.9% 6.9% 7.0% 7.2% − Capital injections 6% − Bond buy-backs 4% Q3 21 Q4 21 Q1 22 Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 − Cancelled dividends − CAPEX reductions Interest Coverage Ratio (ICR)2) 2.6x (2.9x) − Int
Slide 21: CET1 capital ratio of 19.0 per cent
● CET1 capital ratio of 19.0 per cent ● Higher countercyclical buffer 390bps buffer in Estonia and Lithuania 0.5% 0.4% 19.0% ● Operational risk – annual 18.7% re-calculation -0.4% -0.3% 15.1% ● 100-300bps capital buffer target range remains Q3 2023 Profit after Change in Operational Other Q4 2023 CE
Slide 22: Risk exposure amount
● Article 3 add-on decreased due to roll-out of the large corporates PD model (IRB overhaul) ● Operational risk – annual 16.8 16.1 847.1 837.9 re-calculation - 5.7 - 0.3 - 17.7 Q3 2023 IRB Article 3 Operational Other credit Other Q4 2023 roll-out 1) risk risks risks © Swedbank 1) Credit risk re-rati
Slide 23: Summary: net profit, return on equity, dividend proposal
● Net profit of SEK 34.1bn ● Return on equity 18.3 per cent ● Cost to income ratio 0.33 ● Solid credit quality ● Dividend proposal SEK 15.15 per share © Swedbank 23
Slide 24: Appendix
Appendix
Slide 25: Mortgage portfolio: loan-to-value and past due loans
20 20 16 16 96% of portfolio below 70% LTV 12 12 8 8 ● Average loan-to-value of 4 4 58 per cent 0 0 1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 55 58 61 64 67 70 73 76 79 82 85 88 91 94 97 100 LTV per cent 0.50% 1200 0.40% 1000 ● Increasing past due loan >60 days, per cent, LHS 0.30% >60 days
Slide 26: Corporate lending portfolio
● Focus on strong cash flows and collateral ● Continuous dialogue with customers 11% 80 SEK 101 294bn 80% ● Average LTV 9% 18 − Property management, 38 52 per cent • Non-residential, 52 per cent Sweden Residential Baltics Commercial • Residential, 54 per cent Norway & Finland Industrial & Warehouse
Slide 27: Deposits and loan-to-deposit ratio
Transaction accounts On-demand savings Term savings +34% 704 Private Corporate1 1 298 702 1 259 1 230 1 131 42 594 108 528 920 954 16 43 40 345 320 48 535 440 317 274 2018 2019 2020 2021 2022 2023 Q4 2022 Q4 2023 Q4 2022 Q4 2023 Private SME 200 LTD-ratio Corporate 180 88% 88% 93% Total 145% 82% 160
Slide 28: Liquidity and funding
172% Liquidity Coverage Ratio 5 12 2 49 38 124% Net Stable Funding Ratio 278 272 178 191 >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
Slide 29: Swedbank
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