Swedbank Ab Class A · OMXSTO:SWED_A
Swedbank Ab Class A — Q2 2022 Earnings Presentation
30 slides from Swedbank Ab Class A's earnings presentation, 2022
Slide 1: Swedbank Second quarter results 2022
— ~ Swedbank ~ ae al : _ Second eh reer results ” 4 1 J A Area “92022
Slide 2: GDP (annual % change)
GDP (annual % change) 2022 2023 2024 ● High inflation, turbulence and slower growth Estonia 1.5 2.0 3.0 Latvia 3.5 1.9 3.1 ● Home markets show resilience Lithuania 1.8 2.4 3.0 ● Central banks continue to raise rates Sweden 1.9 2.3 1.9 Swedbank baseline 2
Slide 3: Q2 2022 financial summary
SEKm Q2 22 Q1 22 ▲% Net interest income 7 113 6 762 5% Net commission income 3 551 3 581 -1% ● Net profit of SEK 4.7bn Net gains and losses 57 122 -53% ● NII increased significantly: Other income 891 990 -10% Total income 11 612 11 455 1% – Higher lending volumes Total expenses 5 248 5 087 3% – High
Slide 4: Strong credit quality and low impairments
Strong credit quality and low impairments Exposure to CRE in line with our strategy Strong liquidity and capital position Return on Equity increased to 12.0% Credit rating upgraded by Fitch to AA- 4
Slide 5: Market Share, % Position
Market Share, % Position 25 1 20 2 15 3 4 10 5 5 6 0 © Swedbank Information class Restricted access Confidential 5
Slide 6: Pilot of new savings platform in production
Pilot of new savings platform in production Increased app usage and rating Digitally on-boarded +30 000 private customer © Swedbank Information class Restricted access Confidential 6
Slide 7: Green asset register has a healthy growth rate
Green asset register has a healthy growth rate Sustainability training for 3 900 advisors S&P increased Swedbank sustainability rating © Swedbank Information class Restricted access Confidential 7
Slide 8: Strong business activity in Q2
Strong business activity in Q2 Swedbank finances energy independence Continued demand for insurance and fund savings © Swedbank Information class Restricted access "File:Vilnius Skyline.jpg" by Adbar is marked with CC BY-SA 3.0. To Confidential 8 view the terms, visit https://creativecommons.org/lic
Slide 9: Sweden, Estonia, Latvia, Lithuania
Sweden Estonia Latvia Lithuania
Slide 10: Loan growth of 8% YoY
Loan growth by business area, SEKbn Loan growth of 8% YoY, SEKbn 17 1 758 10 1 768 Private loans Corporate loans 12 4 1 725 1 164 604 +6% +13% +33bn 1 102 535 Q1 2022 Swedish Baltic LC&I Q2 excl. FX FX Q2 2022 Q2 2021 Q2 2022 Q2 2021 Q2 2022 banking banking 10
Slide 11: Deposit growth of 1% YoY
Deposit growth by business area, SEKbn Deposit growth of 1% YoY, SEKbn Private deposits Corporate deposits 694 24 1 292 658 1 284 1 278 14 -2 -28 +11% -9% -6bn 624 599 Q1 2022 Swedish Baltic LC&I Q1 Excl. FX FX Q2 2022 Q2 2021 Q2 2022 Q2 2021 Q2 2022 banking banking 11
Slide 12: Net interest income
● NII – Second highest quarter ever NII distribution, SEKm – Underlying NII, SEK +310m 233 41 7 113 – Higher average loan volumes 155 -78 6 762 – Higher deposit margins – Lower lending margins 310 – Increased funding cost Q1 2022 Volumes Margins Group Other Q2 2022 Treasury NII five quarters, SEKm +
Slide 13: Net commission income
● Stable Net Commission Income NCI distribution by income source, SEKm ● Improved cards income 139 49 3 581 3 551 – Covid-19 restriction free quarter -153 -65 – Increased travel expenditure – Higher volume per transaction ● Market development negatively impacted Asset Management income Q1 2022 Cards
Slide 14: Net gains and losses
NGL distribution by type, SEKm ● Positive contribution: 92 – Sales and trading in both Fixed income and FX 419 60 – Group Treasury covered bond buy-backs -237 ● Impacted negatively by: 57 – Treasury liquidity portfolio and LC&I bond -277 inventories due to higher credit spreads Client Funding Bond O
Slide 15: Other income
● Lower Other Income Distribution by quarter and type, SEKm 979 990 – Higher underlying Net insurance 927 910 891 (provisions release in Q1 of SEK 115m) 459 391 – Lower income in EnterCard 165 118 366 382 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Other Associates Net insurance Other Income five years,
Slide 16: Total expenses
● Higher expenses in Q2 Total expenses by quarter, SEKm 5 842 – Seasonally higher and impact of annual 92 5 248 salary review in the Baltics 4 989 5 042 5 087 92 90 96 55 – Higher number of FTE’s 5 750 4 899 4 946 5 032 5 156 ● Underlying expenses at SEK 5 156m – AML investigation costs at SEK 92m Q
Slide 17: Credit quality is strong
Credit quality is strong a | a | -
Slide 18: Commercial real estate loan distribution
● Focus on strong cash flows Loan distribution per type and country, SEK 285bn ● Debt Service Tolerance Residential 8% 4% 2% Sweden properties 10% 1% – Includes stress of financial cost of 6-8% Commercial 30% 4% Estonia 16% ● Well collateralised properties Industrial and Latvia Lithuania ● Stable an
Slide 19: Private mortgages and low historical loss ratio
Private mortgage annual loss ratio, % 0.30% ● Strong repayment ability due to 0.25% prudent origination and regulations 0.20% Accumulated losses 0.15% of SEK 1.7bn since – Focus on affordability 1982 0.10% – 6% interest rate stress level 0.05% ● Low historical loss ratio 0.00% ● Total average LTV of
Slide 20: Credit impairments by business area
Distribution by business area, SEKm ● Credit impairments in Swedish banking 147 ● Recoveries in LC&I and Baltic banking 40 10 -2 -115 Swedish Balic LC&I Group Group banking banking functions Distribution by quarter, SEKm 158 40 18 -27 -67 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 20
Slide 21: IFRS9 distribution Q2
● Macro economic outlook adjusted IFRS9 distribution Q2, SEKm for lower growth expectations and 150 higher interest rates ● Rating and stage migrations -101 252 – Negative impact from increased geopolitical risks -105 ● Expert adjustments released and reallocated, still hold reserves of almost SEK 1
Slide 22: Strong capitalisation
Target CET1 capital distribution, SEKbn 4.7 1.0 135.9 range of 132.6 ● Strong capitalisation 100-300bps - 2.4 ● CET1 capital ratio buffer of around 460bps above requirements ● REA increased by SEK 19bn to SEK 744bn ● Upcoming regulatory changes – Countercyclical buffer +1% in Q3 2022 and Q1 2022 Pro
Slide 23: Summary of the quarter
● Strong quarter with a profit of SEK 4.7bn ● QoQ lending volumes grew by SEK 33bn ● Well positioned for additional rate hikes ● Delivers a RoE of 12% ● Strong credit quality and capital position 23
Slide 24: © Swedbank Information class Confidential
© Swedbank Information class Restricted access Confidential
Slide 25: Financial targets
ROE target of 15% Market leading cost efficiency 17.3 18.9 17.6 18.6 0.54 0.43 0.44 11.5 0.39 0.38 15.1 16.1 14.7 13.2 8.9 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 Earnings per share, SEK Return on equity, % Cost to income ratio CET1 capital ratio buffer target of 100-300bps above requireme
Slide 26: The Strategic Direction
The Strategic Direction is directional and guiding for our identity, aspirations, and overarching target position Our vision We empower the many —_ people and businesses Our purpose to create a better future Our customer romise A financially sound F Ours and sustainable society »/ Together we make y
Slide 27: Sustainability commitments
• By 2050, Swedbank has committed to carbon neutrality and interim target setting • By 2040, The aggregate fund capital managed by Swedbank Robur will be placed in carbon neutral investments • By 2030, Reduce Swedbank’s direct greenhouse gas emission by 60% (base year 2019) • By 2025, Reduce energy
Slide 28: Liquidity and funding
Liquidity and funding SEKbn Strong funding profile Liquidity reserve ● LCR 140% (EU 2015/61) 1 400 Outstanding volumes Q1 2022 Q2 2022 SEKbn 605 Level 1 assets ● NSFR 119% (CRD2) 1 200 1 000 172 ● Issued SEK 80bn of long-term 800 of which cash and balances funding in H1 2022 600 400 437 with central
Slide 29: Capital
Capital Buffer of ~ 460bps 13.7% 18.3% 1.7% 2.4% 17.8% 21.8% 13.0% Highlights Pillar 2 Guidance • REA increased by SEK 19bn to SEK 5.5 744bn Leverage ratio req. & P2G 1.5 (3.45%) • CET1 capital ratio buffer of around 6.1 2.5 Capital Conservation Buffer 460bps above requirements and P2G - 1 1.5 Autom
Slide 30: Swedish housing and mortgage market
Swedish housing and mortgage market Houses1 Flats2 Combined3 House price index, Sweden 12M Δ 12M Δ 12M Δ 2005=100 (Monthly data as per May 2022) Jun 21 20% 11% 17% 350 Jul 21 17% 9% 14% Total Aug 21 16% 9% 13% 300 Tenant-owner rights (apartments) Sep 21 15% 8% 12% Single-family houses 250 Oct 21 13%