Slide 1: Swedbank's second quarter 2011 results
Swedbank’s second quarter 2011 results Michael Wolf, Wolf CEO Erkki Raasuke, CFO Göran Bronner, CRO
Slide 2: Continued underlying trends
Continued underlying y g trends • Net profit of SEK 3 452m • Core Tier 1 capital ratio of 14.8 per cent after buy-backs • Return on equity of 14 14.4 4 per cent in Q2 Profit performance Profit before impairments Lehman contribution Profit for the period Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 2
Slide 3: Business area highlights
Business area highlights g g SEKm Retail Retail 2 500 2 000 1 500 - Improved result driven by higher NII 1 000 500 - Cost/income ratio 0.49 0 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Large Corporates & Institutions SEKm 2 000 Large Corporate & Institutions 1 500 - Good development in corporate 1 000 lending 50
Slide 4: Delivering on our 2011 priorities
Delivering g on our 2011 priorities p • Quality and efficiency • Robust and low-risk balance sheet • Customer focus • Growth in selected segments 4
Slide 5: Positive NII trend
Net interest income Positive NII trend • Higher Stibor and Euribor rates, increased margins • Trading result recorded mostly in NII • Maturing government guaranteed funding LC&I Baltic Russia, Treasury, Retail Banking 4 740 Ukraine Other 4 527 101 34 20 118 128 4 527 -60 1 017 3 799 3 980 884 3 026
Slide 6: Underlying commissions stable
Net commission income Underlying y g commissions stable • Increased payment commissions • Ch Changed d accruals l in i LC&I decreased d d llending di and d guarantees t b by SEK 136 136m SEKm 1 200 1 000 800 600 400 200 0 Payment Asset Life insurance Brokerage and Corporate finance Lending and Depos
Slide 7: Valuation effects turnaround in Q2
Net gains/losses on financial items, fair value Valuation effects turnaround in Q2 • Positive valuation effects in Group Treasury – Basis swaps – Fair valued lending & funding – Benchmark effect • L Low NGL ffrom ttrading di 822 574 511 Treasury & 357 Other Russia & 255 Ukraine Baltic Banking (SEKm)
Slide 8: On target with flat costs
Expenses On target g with flat costs • Lower number of employees • B k accounting Bank ti principles i i l iin Ekt Ektornett iincrease expenses 0.57 0.58 0.55 0.52 0.52 4 423 4 590 4 238 4 384 4 345 Total expenses Cost-income ratio (SEKm) Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 8
Slide 9: Volume development
Second quarter 2011 results Volume development p • YTD stable lending and deposit volumes • L di iin LC&I tturning Lending i tto growth th • Continued de-leveraging in Baltic Banking Lending Deposits SEKbn Q2 Q/Q Δ YTD Δ Q2 Q/Q Δ YTD Δ Retail private 584 4 6 347 9 0 Retail corporate 297 0 2 LC&I 126
Slide 10: Term funding issuance according to plan
Liquidity & Funding Term funding issuance according to plan • Majority of issuance in the domestic Issuance H1 2011 & maturities FY 2011 (nominal SEKbn) covered bond market 60 • Average maturity of wholesale funding, 40 including short-term funding, 34 months 20 (42 months for covered bonds) 0 -20 •
Slide 11: Income statement
Second quarter 2011 results Income statement SEKm Q2 11 Q1 11 Δ Q2 10 Net interest income 4 740 4 527 213 3 799 Net commission income 2 244 2 301 -57 2 395 Net gains/losses 511 255 154 822 Other 860 1 369 -509 509 756 Total income 8 355 8 452 -97 7 772 Total expenses 4 345 4 384 -39 4 423 Profit bef
Slide 12: Asset quality improvement – increased macro risk
Risk highlights Asset q quality y improvement p – increased macro risk • Asset quality – Decreasing impaired loans – Continued recoveries – Positive rating migration • Macro economic uncertainty – European debt crisis – World economy slowing • Swedbank’s S db k’ resilience ili strong t – Capitalisat
Slide 13: Net recoveries of SEK 324m in Q2
Asset quality Net recoveries of SEK 324m in Q2 Credit impairments, SEKm • Stable CEE development 963 – One One-offs offs Estonia – Adjustment in Latvia • Solid Swedish performance 120 324 -324 -483 -972 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Retail LC&I Baltic Banking Russia & Ukraine Other 13
Slide 14: Well positioned
Funding risk Well p positioned • Board of Directors risk tolerance limit – Liquidity survival horizon – Liquidity portfolio – Over Over-collateralisation collateralisation requirement • Liquidity reserve increased to SEK 203bn • Covered bond availability increasing • USD ffunding di d dependence d l
Slide 15: Strong capitalisation
Capital management Strong g capitalisation p • As of 30 June the excess capital amounted to SEK 9bn 14.8% Excess capital (SEK 9.2bn) • 2.86 per cent of total shares Extra buffer 13.0% repurchased h d iin Q2 due to prevailing circumstances (SEK 15.3bn) • Stress tests 10.0% Risk appetite – ICAAP 2011
Slide 16: Appendix
Appendix Swedbank@ 16
Slide 17: ICAAP 2011 – adverse scenario
ICAAP 2011 – adverse scenario Scenario: “Eastern slowdown – Western standstill” Triggers Outcome S d Sweden • Chinese housing market collapses • Negative GDP for three consecutive years, 2012- • The export led recovery in the US halts as 2014 (a drop of 7% relative 2011) Asian demand dries up • Unem
Slide 18: Scenario model results
ICAAP 2011 – adverse scenario Scenario model results Total Income statement (SEKm) 2010F 2011F 2012F 2013F 2014F 2015F 2016F 2011-2016 Profit before impairments p 12 485 13 233 13 766 7 666 7 287 7 150 7 610 56 712 Credit impairments 3 005 5 972 19 318 15 359 10 231 6 734 4 290 61 904 Profit for the
Slide 19: Macroeconomic assumptions
ICAAP 2011 – base scenario and adverse scenario Macroeconomic assumptions p Sweden Baltic countries GDP growth GDP growth 120 140 130 110 120 100 110 100 90 90 80 80 2010 2011 2012 2013 2014 2015 2016 2010 2011 2012 2013 2014 2015 2016 Unemployment Unemployment 20% 20% 15% 15% 10% 5% 10% 0% 5% 2010
Slide 20: Impaired loans decreasing
Impaired p loans decreasing g • Excl. FX effect down SEK 1.6bn in Q2 • Underlying decreases in all business areas in Q2 SEKm 45 000 42 719 40 132 40 328 40 000 -4 088 4 362 196 2 391 35 770 -3 853 Impaired loans as % 38 631 35 000 of gross lending 6 113 34 778 -3 031 29 657 -1 078 30 000 Ukraine 66%
Slide 21: Loans past due 60 days – performance
-50 0 100 150 200 250 -150 -100 50 EURm Q2 10 Q Q3 10 Q Q4 10 Q Loans p Q1 11 Q Estonia Q2 11 Q Q2 10 Q Q3 10 Q Q4 10 Q Q1 11 Q Latvia Q2 11 Q past due 60 days y –p Q2 10 Q Q3 10 Q Q4 10 Q Q1 11 Q Lithuania Q2 11 Q Q2 10 Q Q3 10 Q Q4 10 Q performance Q/Q Ukraine Q1 11 Q Q2 11 Q Q2 10 Q Q3 10 Q Q4 10
Slide 22: Provisions – well provided for
Asset quality Provisions – well p provided for • Individual provisioning rates maintained • Work-out portfolios slowly declining • Positive rating migrations SEKm 30 000 63.5% Provision ratios, % Q2 11 63.9% 25 000 4 104 Retail 92 62.7% 3 606 LC&I 125 61.0% 20 000 3 297 60.0% Baltic Banking 55 2 769
Slide 23: Repossessed assets
Asset quality Repossessed p assets SEKm 6 000 5 000 4 000 3 000 2 000 1 000 0 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Real Estate Residential Real Estate Commercial Passenger & Commercial Transport Shares Other 23
Slide 24: Credit impairments by category
Credit impairments p by y category g y SEKm 2 000 963 1 500 1 000 120 500 0 - 500 - 324 -1 000 - 483 - 972 -1 500 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Portfolio provisions Individual provisions Recoveries Write-offs net 24
Slide 25: Real estate prices
Real estate prices p Tallinn Riga 1 800 2 000 1 616 1 762 1 600 1 800 1 400 1 600 1 200 1 400 915 1 200 1 000 1 000 800 601 800 600 600 400 400 200 200 0 0 May-05 May-06 May-07 May-08 May-09 May-10 May-11 Mar-06 May-07 Feb-09 Apr-10 Jan-05 Sep-05 Jan-06 Sep-06 Jan-07 Sep-07 Jan-08 Sep-08 Jan-09 Sep-
Slide 26: Long-term funding
Liquidity & Funding Long-term g funding g • Continued focus on covered bonds with Q2 issuance of SEK 43bn • SEK 6bn in senior unsecured issuance during Q2 • Term funding issuance in the first half of 2011 totalled SEK 153bn, with maturities of SEK 79bn during the same period • Maturities for the rem
Slide 27: Remaining government guaranteed debt
Liquidity & Funding Remaining g government g guaranteed g debt • Exited the programme on 30 April 2010 • No issuance under the p programme g since summer 2009 • SEK 33bn of government guaranteed debt matured during the first six months of 2011 • Maturities of SEK 46bn for the remainder of 2011 Matur
Slide 28: Limited unsecured funding need
Liquidity & Funding Limited unsecured funding g need Lending to the public, less deposits, covered bond pool and retail bonds SEKbn 200 150 100 50 0 -50 -100 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2008 2009 2009 2009 2009 2010 2010 2010 2010 2011 2011 28
Slide 29: Liquidity reserve
Liquidity q y reserve* SEK SEKm Cash and holdings in central banks and deposits in other banks available overnight 90 723 Securities issued or guaranteed by sovereigns sovereigns, central banks or multilateral development banks 57 327 Securities issued or guaranteed by municipalities or Public secto