Slide 1: Swedbank's year-end 2011 results
Swedbank’s year-end 2011 results Michael Wolf, CEO Göran Bronner, CFO Håkan Berg, CRO
Slide 2: Delivered according to last years prospects
Delivered according to last years prospects • Net profit of SEK 11.7bn for 2011 • Core Tier 1 capital ratio of 15.7 per cent • Return on equity of 12.2 per cent for 2011 • Proposed dividend of SEK 5.30 per share 2
Slide 3: All stakeholders affected by new environment
All stakeholders affected by new environment • Shareholders – Two share issues totalling SEK 27bn – Buy-back programme halted – Goodwill write-downs – Harder to reach ROE target • Staff – Number of employees down by about 6 000 since end of 2007 – Overhaul of remuneration systems will reduce variabl
Slide 4: Group results: Continued stable development
Group results Continued stable development SEKm FY FY Q3 11 Q4 11 • Goodwill write-down in Latvia 2010 2011 Net interest income 16 329 19 118 4 857 4 994 SEK 1913m Net commission income 9 525 8 963 2 292 2 126 • SEK 330m restructuring Net gains and losses 2 400 1 584 259 559 charge Other income 2 79
Slide 5: Significantly lower issuance volumes going forward
Liquidity and funding Significantly lower issuance volumes going forward • SEK 44bn of long-term debt issued in Q4 (incl. SEK 7bn of senior unsecured) • Over-collateralisation in covered-bond pool increased to 29% (25%) • Continued strong liquidity reserves SEKbn Term funding issuance 80 Average ter
Slide 6: Swedbank regulatory compliant – transition completed
Swedbank regulatory compliant – transition completed • Transformation of: – Maturity structure liabilities – Liquidity reserve – Capital buffer • Significantly reduced risk in balance sheet • Cost for regulatory compliance taken Ratio Swedbank Expected requirements CT1-ratio, Basel 3 14.7% 10% (20
Slide 7: Capital management
Capital management • Current capitalisation targets withdrawn • Dividend policy of 50% • Other capital repatriation on hold • Proposal to issue convertible debt instruments • Return target of 15% 7
Slide 8: Net recoveries of SEK 174m in Q4
Risk highlights Net recoveries of SEK 174m in Q4 Credit impairments, SEKm • Credit impairments in Sweden still low – Known problems – Limited inflow of watch list and problem loans -324 -174 • Collective provisions mortgage loans in Latvia and Ukraine -441 -483 -972 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Ret
Slide 9: Focus on risk-weighted assets
Risk highlights Focus on risk-weighted assets RWA development • Significant achievements 2011 SEKbn 550 – Full organisational involvement – Credit volumes 4.4 540 – Customer quality -22.3 – Market risks 530 • Focus areas 2012 520 – Review of small and mid-sized corporates Sweden -21.2 510 541.3 – Re
Slide 10: Many factors impacting outlook
Risk highlights Many factors impacting outlook • Challenging economic situation in Europe • Real estate Sweden: Risk picture is going down • Positive outlook in Baltic countries 10
Slide 11: Increased focus on operational efficiency
Priorities going forward Increased focus on operational efficiency • Improve customer satisfaction • Increase decision-making close to our customers • Improve quality and cost effectiveness 11
Slide 12: Q&A
Swedbank @ Q&A
Slide 13: Appendix
Appendix Swedbank @ 13
Slide 14: Mortgage loans gross margin (3-months)
Mortgage loans gross margin (3-months) Swedbanks price towards 6.0 customer (3 months) Swedbank's funding cost 5.0 Stibor 3 months Swedish Riksbanks reporate 4.0 Should cover: Liquidy costs Percent 3.0 Cost of adminis- tration Credit Impairments 2.0 Profit 1.0 0.0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Slide 15: Development of ROE and net interest margin
Development of ROE and net interest margin ROE % NIM % 30 1.6 25 1.4 20 1.2 15 1.0 10 0.8 5 0.6 0 2 004 2 005 2 006 2 007 2 008 2 009 2 010 2 011 0.4 -5 -10 0.2 -15 ROE (left hand scale) NIM (right hand scale) 0.0 15
Slide 16: Funding development Q4
Liquidity and funding Funding development Q4 • SEK 44bn of long-term debt issued in Q4 (mainly domestic covered bonds and senior unsecured private placements) • Demand for Swedbank short-term paper continued • USD funding need covered for more than 12 months SEKm Long-term debt issued in Q4 SEKm Out
Slide 17: Funding development FY 2011
Liquidity and funding Funding development FY 2011 • SEK 254bn of long-term debt issued and SEK 180bn of maturities at beginning of 2011 • Good demand for Swedbank short-term paper SEKm Issued long-term debt SEKm Outstanding short-term debt 160 000 50 000 140 000 40 000 120 000 100 000 30 000 2010 80
Slide 18: Long-term funding maturity profile
Liquidity and funding Long-term funding maturity profile • Maturities for 2012 amount to nominal SEK 86bn Long-term funding maturity profile SEKbn 200 Government guaranteed debt Senior unsecured 150 debt Covered bonds 100 50 0 2012 2013 2014 2015 2016 2017- 18
Slide 19: Remaining government guaranteed debt
Liquidity and funding Remaining government guaranteed debt • Exited the programme on 30 April 2010 • No issuance under the programme since summer 2009 • SEK 37bn of government guaranteed debt matures in April 2012 SEKbn Maturity profile as of Q4 2011 40 USD SEK 20 EUR CHF HKD JPY 0 2012 2013 2014 19
Slide 20: House price sensitivity of the cover pool
Swedbank’s cover pool House price sensitivity of the cover pool House price sensitivity of the cover pool Over- collateralisation 35% 30% 25% OC 20% 15% 10% 5% 0% -5% -10% -15% -20% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% House price drop 20
Slide 21: Liquidity reserve
Liquidity and funding Liquidity reserve SEKm According to the template defined by the Swedish Bankers' Association1 Cash and holdings in central banks 163 215 Deposits in other banks available overnight Securities issued or guaranteed by sovereigns, central banks or multilateral development banks 27
Slide 22: Impaired loans decreasing
Asset quality Impaired loans decreasing • Excluding FX effect down SEK 3.4bn in Q4 • Corporate portfolio quality improvements SEKm 45 000 42 719 38 631 40 132 40 328 2 391 40 000 -4 088 34 778 35 770 4 362 196 -3 853 31 747 35 000 Share of 6 113 -3 031 30 669 29 657 28 743 impaired -1 078 24 805 30
Slide 23: Loans past due 60 days – performance Q/Q
Asset quality Loans past due 60 days – performance Q/Q EURm 30 10 -10 -30 -50 -70 -90 -110 -130 -150 Q1 11 Q2 11 Q3 11 Q4 11 Q1 11 Q2 11 Q3 11 Q4 11 Q1 11 Q2 11 Q3 11 Q4 11 Q1 11 Q2 11 Q3 11 Q4 11 Q1 11 Q2 11 Q3 11 Q4 11 Q4 10 Q4 10 Q4 10 Q4 10 Q4 10 Estonia Latvia Lithuania Ukraine Russia 23
Slide 24: Provisions – well provided for
Asset quality Provisions – well provided for • Individual provisioning rates maintained • Additional portfolio provisions in Latvian and Ukrainian mortgages • Positive rating migrations SEKm 30 000 Provision ratios, % Q4 11 Retail 90 62.7% 25 000 LC&I 135 61.0% Baltic Banking 55 3 297 60.0% 59.8% 61
Slide 25: Repossessed assets
Asset quality Repossessed assets SEKm 7 000 6 000 5 000 4 000 3 000 2 000 1 000 0 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Real Estate Residential Real Estate Commercial Passenger & Commercial Transport Shares Other 25
Slide 26: Credit impairments by category
Asset quality Credit impairments by category SEKm 1 000 500 0 - 500 - 324 - 441 -1 000 - 174 - 972 - 483 -1 500 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Portfolio provisions Individual provisions Recoveries Write-offs net 26
Slide 27: Shipping and offshore
Credit portfolio – Large Corporates & Institutions Shipping and offshore • Lending exposure to the shipping and Shipping and offshore portfolio offshore sector is SEK 22.7bn plus Tanker 26% unutilised commitments of SEK 6.1bn – Portfolio duration 4-5y – Average fleet age 7y Offshore 58% – Other repr
Slide 28: Real estate prices – Sweden 2011
Swedish housing and mortgage market Real estate prices – Sweden 2011 Single-family homes1 Tenant owner rights2 Combined3 12M Δ 12M Δ 12M Δ Jan 0% 8% 2% Feb 2% 7% 3% Mar 2% 6% 3% Apr 1% 6% 3% May 0% 6% 2% Jun 0% 5% 2% Jul 0% 6% 2% Aug -2% 3% -1% Sep -3% 1% -2% Oct -4% -1% -3% Nov -5% -4% -5% Dec -7%
Slide 29: Real estate prices – Baltic countries
Real estate prices – Baltic countries Tallinn Riga 1 800 2 000 1 616 1 762 1 600 1 800 1 400 1 600 1 200 1 400 976 1 200 1 000 1 000 800 800 590 600 600 400 400 200 200 0 0 Jan-05 Jun-11 Dec-07 Jul-08 Nov-10 Aug-05 Sep-09 Jan-05 Jan-06 Jan-08 Jan-09 Jan-10 Jan-07 Jan-11 Sep-05 Sep-06 Sep-07 Sep-09 S
Slide 30: New private lending in Sweden
Swedish housing market New private lending in Sweden • Internal LTV limit of 75% having a clear impact on average LTV levels of new origination Weighted average LTV on new lending 78 76 74 72 70 68 66 64 62 2009 2010 2011 1 Tenant owner rights Single-family houses Total 1 Total of Tenant owner right