Swedbank Ab Class A · OMXSTO:SWED_A
Swedbank Ab Class A — Q2 2023 Earnings Presentation
23 slides from Swedbank Ab Class A's earnings presentation, 2023
Slide 1: Financial results Q2 2023
we hs ~ A . | ' ‘T ncial Fesults: , a f Q2 2023 < 7 bs r . é % € 7 ° a ; 4 ; oS = | ? * % f . > * -—?
Slide 2: Macro: inflation remains high, restrictive policy, resilient economies
Sweden Latvia ● Inflation remains high Estonia Lithuania ● Restrictive monetary and fiscal policy 2.6 2.8 1.9 2.5 2.1 1.8 2.9 3.0 2.4 2.3 ● Resilient economies 1.1 0.3 ● High for longer -1.3 -0.9 -1.3 -2.0 2022 2023F 2024F 2025F Sweden Latvia Riksbank ECB (deposit rate) Estonia Lithuania FED (upper
Slide 3: Q2 2023 income statement: net profit SEK 9.1bn
▲ ● Net profit SEK 9.1bn Net interest income 12 768 11 936 7% Net commission income 3 811 3 660 4% ● Cost/Income ratio 0.31 Net gains and losses 524 916 -43% ● Return on equity Other income 1 069 875 22% 20.4 per cent Total income 18 173 17 387 5% Total expenses 5 717 6 410 -11% of which administrat
Slide 4: Solid credit quality
● Solid credit quality ● Credit impairments SEK 188m ● Management overlay SEK 1.7bn ● CET1 capital buffer 350bps © Swedbank 4
Slide 5: New C&I organisation in place
● New C&I organisation in place ● Corporate loan book stable ● Corporate deposits decreased © Swedbank 5
Slide 6: Savings and mortgage markets
● Savings – Deposits increased in all markets – Interest rates on all Swedish accounts ● Swedish mortgage market – Lower market growth – Elevated amortisations – Volume growth in June ● Baltic mortgage market – Strong demand for sustainable loans – Stable house prices © Swedbank 6
Slide 7: Cloud-based communication platform rollout
● Our cloud-based communication platform rolled out in Estonia, Latvia and Lithuania – Sweden next ● Focus on improving availability in the Swedish Contact Center © Swedbank 7
Slide 8: Climate position and sustainability support for customers
● Climate position in line with Paris agreement ● We help our customers become more sustainable – Three large solar parks financed in Estonia ● Financial health requires financial literacy © Swedbank 8
Slide 9: Lending development
QoQ +0.7% QoQ +0.6% -3 1 175 1 181 1 174 15 1 803 1 791 7 3 1 788 0 -13 Q1 2023 Q2 excl. FX Q2 2023 -6 0 QoQ +0.6% 617 613 621 Q1 2023 Swedish C&I Baltic Group Q2 excl. FX FX Q2 2023 Banking Banking Functions Q1 2023 Q2 excl. FX Q2 2023 = Underlying development, i.e. excluding transfer of SEK 7bn fr
Slide 10: Deposit development
QoQ -0.4% QoQ +2.4% 716 -24 699 706 1 303 19 1 298 1 1 279 -5 -15 -5 Q1 2023 Q2 excl. FX Q2 2023 +4 -24 QoQ -3.6% 604 573 582 Q1 2023 Swedish C&I Baltic Group Q2 excl. FX FX Q2 2023 Banking Banking Functions Q1 2023 Q2 excl. FX Q2 2023 = Underlying development, i.e. excluding transfer of SEK 9bn fro
Slide 11: Net interest income: NIM expansion
QoQ +7.0% ● NIM expansion – Mainly from Baltic Banking +832 836 225 12 768 11 936 2 -13 -218 Business-driven NII Q1 2023 Lending Deposit Margins Treasury & FX & Other Q2 2023 volumes volumes Other © Swedbank 11
Slide 12: Net commission income
QoQ +4.4% ● Cards seasonally higher ● Asset management +151 higher due to stock 94 3 811 market performance 130 3 660 -38 -34 ● Corporate Finance & Securities lower due to a strong Q1 Q1 2023 Cards & Asset Corporate Other Q2 2023 Payments Management Finance & Securities © Swedbank 12
Slide 13: Net gains and losses
● Strong Fixed income and FX trading with high client activity 558 65 524 ● Negative revaluation -18 24 effects in Treasury -105 Client trading Bond inventories Funding Liquidity Other Total NGL (Treasury) portfolio © Swedbank 13
Slide 14: Other income
QoQ +22% ● Net insurance increase driven by higher Other Associates +194 revenues and lower Net insurance claims 1 069 ● Higher income from 843 875 EnterCard and other 775 435 associates 415 422 514 398 250 171 382 194 261 384 235 282 118 117 14 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 © Swedbank 14
Slide 15: Expenses seasonally higher
QoQ -11% ● Expenses seasonally higher Underlying expenses Administrative fine and provision C/I ratio – In line with expectations 0.45 – Inflation headwind likely 0.38 0.35 0.37 to continue into 2024 0.31 6 410 ● Temporary bank fee in 5 717 5 602 890 Lithuania, SEK 325m 5 092 5 185 5 520 Q2 2022 Q3
Slide 16: Credit impairments
● Updated macro forecasts – Slightly positive ● Stage migrations – From rating migrations 29 648 ● Expert portfolio adjustments – Released to meet rating & stage migrations -315 188 -153 -22 Macro Rating & stage Individual Expert portfolio Other Total credit scenarios © Swedbank migrations assessmen
Slide 17: Commercial real estate exposure
● Focus on strong cash flows and collateral ● Continuous dialogue with customers 11% 84 of which retail, SEK SEK 7bn 299bn 80% 99 ● Average LTV 9% of which hotels, 17 SEK 6bn − Property management, 40 53 per cent • Non-residential, 53 per cent Sweden Residential Baltics Commercial • Residential, 54
Slide 18: Managing balance sheets
● Managing balance sheets 10% − Divestments of properties − Restructurings 8% 7.7% 7.2% 7.2% 7.4% − Capital injections 6% 7.2% 6.9% 6.9% 6.9% 7.0% − Bond buy-backs 4% Q1 21 Q2 21 Q3 21 Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 − Cancelled dividends − CAPEX reductions Interest Coverage Ratio (ICR)2) 3.3x −
Slide 19: CET1 capital ratio of 18.6 per cent
● CET1 capital ratio of 18.6 per cent ● 100-300bps capital buffer 350bps buffer target range remains 18.3% 0.0% 0.6% 18.6% -0.3% ● Countercyclical buffer 15.2% increase of 1 per cent for Sweden (0.7 per cent impact) Q1 2023 Change in Profit after Other Q2 2023 CET1 capital Article 3 anticipated requ
Slide 20: Summary: net profit SEK 9.1bn
● Net profit of SEK 9.1bn ● Cost to income ratio 0.31 ● Solid credit quality ● Return on equity 20.4 per cent © Swedbank 20
Slide 21: Appendix
Appendix
Slide 22: Loan-to-deposit ratio and savings accounts
LTD-ratio 716 +41% 139% 583 Savings 1298 1298 410 1259 accounts 1131 920 954 306 On-demand Private Corporate 83% 89% 88% 92% 2018 2019 2020 2021 2022 H1 2023 62% 63% 61% 54% 4% 3% 3% 4% Sweden Estonia Latvia Lithuania Private SME Corporate © Swedbank 22
Slide 23: Liquidity Coverage Ratio and Net Stable Funding Ratio
167% Liquidity Coverage Ratio 6 36 13 2 44 123% Net Stable Funding Ratio 316 352 267 307 >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