Swedbank Ab Class A · OMXSTO:SWED_A
Swedbank Ab Class A — Q1 2008 Earnings Presentation
29 slides from Swedbank Ab Class A's earnings presentation, Apr 24, 2008
Slide 1: Interim report Q1 2008
Interim report Q1 2008 24 April 2008 Jan Lidén President and CEO
Slide 2: Core business is doing well – challenging financial markets
Core business is doing well – challenging financial markets • Solid business development with • Lower commission income due to corporates and private customers weaker equity markets and low • Development as expected in the corporate finance activity Baltic states • Net gains and losses on financial
Slide 3: Strong position for profitability and growth
Strong position for profitability and growth Sweden Baltics Ukraine and Russia Swedbank is the leading bank in The Baltic economies are Swedbank has a small but Sweden. Profitability is high and experiencing strong economic growing presence in Ukraine and stable and the bank is growth that is expect
Slide 4: Business volumes
Business volumes SEKbn Lending Savings SEKbn 1,200 500 1,103 1,131 1,000 401 400 385 334 340 800 300 600 484 475 397 200 390 400 102 102 100 200 100 104 77 78 61 68 31 34 19 17 0 0 Lending, Private, Corporate, Private, Corporate, Other Deposits, Deposits, AM funds, AM funds, Structured Group Sweden
Slide 5: Margins
Margins % Lending Deposits % 4.5 4.5 Lower interest rates in 4.0 4.0 Latvia and Lithuania 3.5 adversely affected 3.5 deposit margins. 3.0 3.0 2.5 2.5 2.0 2.0 1.5 1.5 Increased funding 1.0 1.0 costs have not yet been fully transferred 0.5 0.5 to customers. 0.0 0.0 Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q1 07
Slide 6: Credit quality, Group
Credit quality, Group SEKm % 6,000 0.50 0.45 5,000 0.40 4,000 0.35 0.30 3,000 0.25 0.20 2,000 0.15 1,000 0.10 0.05 0 0.00 06 Mar 07 Mar 05 Mar 04 Mar 08 Mar 05 Jun 06 Jun 07 Jun 04 Jun 06 Dec 05 Sep 05 Dec 06 Sep 03 Dec 04 Sep 04 Dec 07 Sep 03 Sep 07 Dec Impaired loans Impaired loan provisions (6) S
Slide 7: Credit quality, Baltic Banking
Credit quality, Baltic Banking Loan loss ratio, net* Q4 07 2007 Q1 08 Estonia 0.67% 0.21% 0.38% Latvia 0.78% 0.56% 0.54% Lithuania 0.13% 0.23% 0.25% Group level provision adjustment -0.28% -0.05% Baltic Banking 0.28% 0.35% 0.39% *Loan loss ratio, net = (changes in provisions + net write offs) / cred
Slide 8: Swedish Banking
Swedish Banking SEKm C/I-ratio • Continued solid volume growth 5,000 0.7 • Net interest income increased 4,500 0.6 by 2% compared with Q4 2007 4,000 3,500 0.5 • Lower equity related 3,000 commission income 0.4 2,500 • Continuous work to adjust the 2,000 0.3 branch structure – sale of 8 1,500 0.2 1,0
Slide 9: Baltic Banking Operations
Baltic Banking Operations SEKm C/I-ratio • Profitability remained robust 2,400 0.5 • Lending growth continued to 2,200 2,000 decrease 0.4 1,800 • Net interest margins declined due 1,600 1,400 0.3 to decreasing local interest rates 1,200 and higher funding costs 1,000 800 0.2 • Net loan losses as exp
Slide 10: Baltic macro development
Baltic macro development • Economic slowdown in Estonia continues: GDP growth will fall to about 3.5% in 2008, with a recovery to 5% growth in 2009. The bottom of the cycle is expected to be in summer 2008 • In Latvia growth will decline to about 4% in 2008 and to about 3.5% in 2009. The bottom of t
Slide 11: International Banking
International Banking SEKm • Continued solid performance in 100 Ukraine – Launch of the new brand initiated 75 – Expansion and restructuring of the branch network continues 50 – New corporate offering 25 • Cautious expansion in Russia – Raimo Valo new head of Russian operations 0 Q3 Q4 Q1 Q2 Q3 Q4 Q
Slide 12: Swedbank Markets
Swedbank Markets SEKm 500 • Fixed income and FX trading 450 continued to do well 400 • Equity trading was weaker due to 350 negative market sentiment 300 250 • Market leader position in 200 structured products was 150 improved, in a weaker market 100 50 • Weak quarter in Corporate 0 Finance for Firs
Slide 13: Accounting and valuation effects
Accounting and valuation effects Q1 Q4 Q3 Accounting and valuation effects, SEKm 2008 2007 2007 Swedbank Markets – 187 – 40 – 60 Group Treasury, intra-group lending – 253 20 – 90 Swedbank Mortgage – 22 66 – 129 Group Treasury, liquidity portfolio 69 –5 – 68 (13)
Slide 14: Swedbank funding structure
Swedbank funding structure Lending to the public: SEK 1,131bn Swedbank Group, excl. Swedbank 50% 50% Swedbank Mortgage SEK Mortgage 562bn SEK 569bn Distribution of net funding requirement Swedbank Treasury (excluding Mortgage) Swedbank Mortgage Funding Equity 12% 4% Swedbank Mortgage • Large deposit
Slide 15: Focus on funding
Focus on funding Funding costs have increased • Higher price of risk • Increased liquidity reserve • Short-term adverse effect on margins Covered bonds as of 21 April 2008 • AAA rating (S&P and Moody’s) ⇨ funding at lower cost • Facilitates access to a broader investor base – more stable liquidity •
Slide 16: Group results
Group results Mikael Inglander CFO (16)
Slide 17: Income statement, Group
Income statement, Group Q1 Q4 Q1 SEKm 2008 2007 % 2007 % Net interest income 5,241 5,259 –0 4,501 16 Net commission income 2,180 2,536 – 14 2,289 –5 Net gains/losses on financial items at fair value 75 386 – 81 530 – 86 Other income 950 693 37 473 101 Total income 8,446 8,874 –5 7,793 8 Staff costs
Slide 18: Net interest income Q1 08 (Q4 07)
4,600 4,800 5,000 5,200 5,400 Net interest SEKm income 5,259 Q4 07 Swedish 55 Banking Baltic Banking -13 Operations 1 Baltic Banking Investment International 22 Banking Swedbank Markets -215 Net interest income Q1 08 (Q4 07) Shared Services and 132 other Net interest income 5,241 Q1 08 (18)
Slide 19: Swedish Banking, change in net interest income
Swedish Banking, change in net interest income Q1 2008 Q1 2008 SEKm vs Q4 2007 vs Q1 2007 Net interest income Q4 2007 2,927 Net interest income Q1 2007 2,943 Changes: Higher lending volumes 55 234 Decreased lending margins – 116 – 403 Difference in number of days/quarter, lending – 18 18 Higher depo
Slide 20: Baltic Banking, change in net interest income
Baltic Banking, change in net interest income Q1 2008 Q1 2008 SEKm vs Q4 2007 vs Q1 2007 Net interest income Q4 2007 1,588 Net interest income Q1 2007 1,215 Changes: Higher lending volumes 47 245 Higher lending margins 3 8 Difference in number of days/quarter, lending -11 11 FX-effects, lending 14 2
Slide 21: Net commission income, Group
0 200 400 600 800 1,000 SEKm Asset management Payments Brokerage Q1 2008 Lending Insurance Q4 2007 Net commission income, Group Corporate finance Other (21)
Slide 22: Loan losses Q1 08 (Q4 07)
Loan losses Q1 08 (Q4 07) mkr 350 mkr mkr 17 000 17 000 300 15 000 15 000 250 13 000 13 000 200 11 000 11 000 9 000 9 000 150 7 000 7 000 100 5 000 5 000 3 000 3 000 50 1 000 1 000 0 -1 000 -1 000 2000 2001 2002 2003 2004 2005 2006 2007 -50 Group, total Swedish ResultatBanking Baltic Banking före kr
Slide 23: Expenses
Expenses Q1 Q4 Q1 SEKm 2008 2007 % 2007 % Swedish Banking 2,255 2,279 – 1 2,183 3 Baltic Banking 899 1,062 – 15 769 17 International Banking 309 272 14 107 of which Ukrainian Banking 150 163 –8 Swedbank Markets 456 560 – 19 517 – 12 Asset Management & Insurance 253 230 10 183 38 Other 268 123 178 51
Slide 24: Business areas
Business areas Swedish Baltic Int'l. Swedbank Asset Banking Banking Banking Markets Mgmt 2008 vs 2007, SEKm 2008 % 2008 % 2008 % 2008 % 2008 % Net interest income 2,982 1 1,575 30 369 289 – 28 25 32 Net commission income 1,025 – 5 458 8 54 26 227 – 38 416 4 Other income 690 93 209 – 24 26 254 2 24 –
Slide 25: Key figures
Key figures Jan-Mar Jan-Mar 2008 2007 Return on equity, % 16.8 18.9 Earnings per share, SEK 5.63 5.65 Equity per share, SEK 136.43 122.84 C/I ratio before loan losses 0.53 0.51 Loan loss ratio, net, % 0.10 0.02 Share of impaired loans, % 0.16 0.07 Dividend, SEK 9.00* 8.25 Tier 1 capital ratio, new r
Slide 26: Core business is doing well – challenging financial markets
Core business is doing well – challenging financial markets • Solid business development with • Lower commission income due to corporates and private customers weaker equity markets and low • Development as expected in the corporate finance activity Baltic states • Net gains and losses on financial
Slide 27: Appendix
Swedbank @ Appendix ~~ (27)
Slide 28: Exposures
Exposures • No direct US subprime exposure – Minimal indirect exposure through investments of EUR 48m in bonds issued by US mortgage institutions. The bonds have about 5% exposure to US subprime • Total exposure to structured credits is minimal – No commitments as regards conduits or SIVs of any kin
Slide 29: Baltic Banking lending by sectors
Baltic Banking lending by sectors Portfolio, March 2008 Portfolio growth, Q1 08 Individuals 8,370 42% 268 41% Real-estate 2,933 15% -79 -12% mgmt Retail & 1,800 9% 64 10% Wholesale Industry 1,780 9% 88 13% Transport 1,076 5% -35 -5% Construction 593 3% 47 7% xx% - share of portfolio and portfolio gr