Swedbank Ab Class A · OMXSTO:SWED_A
Swedbank Ab Class A — Q4 2008 Earnings Presentation
45 slides from Swedbank Ab Class A's earnings presentation, Feb 12, 2009
Slide 1: Interim report Q4 2008
Interim report Q4 2008 12 February 2009 Jan Lidén President and CEO
Slide 2: Content
Content • Fourth quarter 2008 – Group – Business areas • Comments on issues in focus – Credit quality – Liquidity and funding – Capitalization – Dividend • Summary and conclusions © Swedbank 2
Slide 3: Profit trend
Profit trend
Slide 4: Fourth quarter 2008 – Group
Fourth quarter 2008 – Group • Profit for the period increased by 34% to SEK 3 318m (2 468 Q3), Profit for the period, SEKm excl. impairment of goodwill • Net interest income increased by +6% to SEK 5 742m (5 424) • Net commission income decreased by 11% due to downturn in the stock market • Increase
Slide 5: Fourth quarter 2008 – Group, cont.
Fourth quarter 2008 – Group, cont. • Successful share issue of SEK Tier 1 capital ratio, % 12.4bn increases the tier 1 capital ratio to 10.7% • Stronger liquidity due to larger funding volumes (with and without state guarantee) • Prepared for tougher times ** Including total subscribed capital © Swe
Slide 6: Business areas
Business areas Swedish Banking International Banking • Continued lending growth, corporate lending • Increased operating profit decreased due to cooperation with Kommuninvest • 18 new branches in Ukraine and two more in • Net interest income increased by 6% Russia during the period – focus on attrac
Slide 7: Comments on issues in focus
Comments on issues in focus
Slide 8: Credit quality – impaired loans are increasing
Credit quality – impaired loans are increasing Distribution of lending Share of impaired loans % Other 4.0 Lithuania 7% 5% 3.5 Latvia 6% 3.0 Estonia 7% 2.5 Sw eden 75% Sw edbank 2.0 Mortgage 49% 1.5 1.0 0.5 0.0 Q1-06 Q2-06 Q3-06 Q4-06 Q1-07 Q2-07 Q3-07 Q4-07 Q1-08 Q2-08 Q3-08 Q4-08 Swedbank Mortgage
Slide 9: Credit quality – write-offs still low
Credit quality – write-offs still low Swedish Banking Swedbank Mortgage SEKm SEKm % % 500 1.0 500 1.0 400 0.8 400 0.8 300 0.6 300 0.6 200 0.4 200 0.4 100 0.2 100 0.2 0 0.0 0 0.0 -100 -0.2 -100 -0.2 -200 -0.4 -200 -0.4 -300 -0.6 -300 -0.6 -400 -0.8 -400 -0.8 -500 -1.0 -500 -1.0 Q1-06 Q2-06 Q3-06 Q4-0
Slide 10: Selected exposures – limited risk
Selected exposures – limited risk • The secured exposure to Lehman is unchanged – USD 1 350m – 69 loans with 55 properties as underlying collateral – The collateral value is well above the exposure amount – Updated analysis shows that there is no further need of provisions • Exposure to hedge funds
Slide 11: Low risk in interest-bearing securities (SEK 134bn)
Low risk in interest-bearing securities (SEK 134bn) Holding distributed per sector Geographic distribution of issuers Mortgage Others bonds, not 8% covered 7% Baltics 2% Other financial USA corporations Mortgage 5% 9% bonds, covered Norway Other 37% 5% corporations As of 31 December, around 19 11% U
Slide 12: Liquidity for more than 1 year
Liquidity for more than 1 year Stress test of liquidity as of 31 Dec 2008 Main assumption: No access to capital markets; no refinancing of lending to credit institutions, issued bonds or subordinated loans. 250 200 150 SEK bn 100 50 31/12/2008 05/02/2009 0 1W 2W 3W 1M 2M 3M 4M 5M 6M 9M 1Y © Swedbank
Slide 13: Prepared for tougher times
Prepared for tougher times • Tier 1 capital ratio, 10.7 % • Solid liquidity • Closer evaluations of exposures deemed at higher risk • Continued focus on systematic work in the Baltics: – Reinforcement of resources – Processes – Legal structures – Scenario planning © Swedbank 13
Slide 14: Group results
Group results Mikael Inglander CFO © Swedbank 14
Slide 15: Income statement, Group
Income statement, Group Q4 Q3 Q4 SEKm 2008 2008 % 2007 % Net interest income 5 742 5 424 6 5 259 9 Net commission income 2 011 2 265 – 11 2 536 – 21 Net gains/losses on financial items at fair value 1 244 – 109 386 Other income 1 349 658 693 95 Total income 10 346 8 238 26 8 874 17 Staff costs 2 340
Slide 16: Income statement, Group
Income statement, Group Jan-Dec Jan-Dec SEKm 2008 2007 % Net interest income 21 702 19 157 13 Net commission income 8 830 9 880 – 11 Net gains/losses on financial items at fair value 2 351 1 691 39 Other income 3 580 2 196 63 Total income 36 463 32 924 11 Staff costs 9 142 8 134 12 Profit-based staf
Slide 17: 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 11 840 1 6 448 14 2 171 89 1 555 32 76 – 8 Net commission income 4 078 – 9 1 925 4 354 16 960 – 28 1 513 – 19 Other income 2 349 59 1 04
Slide 18: Net interest income, Swedish Banking
Net interest income, Swedish Banking Q4 2008 Q4 2008 SEKm vs Q3 2008 vs Q4 2007 Net interest income Q3 2008 2 857 Net interest income Q4 2007 2 927 Changes: Higher lending volumes 15 166 Higher lending margins 247 197 Higher deposit volumes 36 Decreased deposit volumes – 40 Decreased deposit margins
Slide 19: Baltic Banking Operations, change in net interest income
Baltic Banking Operations, change in net interest income Q4 2008 Q4 2008 SEKm vs Q3 2008 vs Q4 2007 Net interest income Q3 2008 1 667 Net interest income Q4 2007 1 588 Changes: Higher lending volumes 104 Decreased lending margins -24 -124 Exchange rate effect, lending 67 89 Decreased deposit volumes
Slide 20: Net commission income, Group
Net commission income, Group Q4 Q3 Q4 SEKm 2008 2008 % 2007 % Payments 889 899 –1 800 11 Lending 129 194 – 34 162 – 20 Brokerage 141 166 – 15 290 – 51 Asset management 727 864 – 16 995 – 27 Insurance 59 69 – 14 80 – 26 Corporate finance 58 22 209 – 72 Other 8 51 – 84 0 Total net commissions 2 011 2
Slide 21: Net gains and losses on financial items at fair value
Net gains and losses on financial items at fair value SEKm Q4 2008 Q3 2008 Q2 2008 Q1 2008 Q4 2007 Q3 2007 Swedish Banking 828 -126 179 16 116 1 Swedbank Mortgage open interest rate exposure 763 -172 29 -22 66 -129 MasterCard 101 89 Baltic Banking 12 107 205 78 163 213 International Banking 229 -6 1
Slide 22: Expenses
Expenses Q4 Q3 Q4 SEKm 2008 2008 % 2007 % Swedish Banking 2 390 2 197 9 2 279 5 Baltic Banking Operations 977 926 6 1 062 –8 International Banking* 557 315 77 302 84 Swedbank Markets 500 398 26 530 –6 Asset Management & Insurance 182 200 –9 230 – 21 Other 296 277 7 123 Total expenses 4 902 4 313 14
Slide 23: Key figures, Group
Key figures, Group Jan-Dec Jan-Dec 2008 2007 Return on equity, % * 17.1 18.9 Earnings per share, SEK * 21.95 21.78 Equity per share, SEK 111.54 131.96 C/I ratio * 0.50 0.51 Loan loss ratio, % 0.28 0.07 Share of impaired loans, % 0.52 0.13 Provision ratio for impaired loans, % 60 120 Core tier 1 capi
Slide 24: Summary
Summary • Strong result • Transparent, diversified balance sheet • Improved capitalization and liquidity • Focus on systematic work to manage the Group through more difficult times © Swedbank 24
Slide 25: Appendix
Appendix © Swedbank 25
Slide 26: Shipping exposure
Shipping exposure • Exposure to shipping companies amounted to SEK 20.4bn as of 31 December – Duration of the portfolio is 4 years – Average age of vessels is six years – Limited exposure to dry cargo (9%) and car transports (2.7%) – Customers generally have long freight contracts Tanker Offshore 33
Slide 27: Maturity profile – long-term funding
Maturity profile – long-term funding Swedbank (excl. Swedbank Mortgage) Maturity profile Swedbank Mortgage, Maturity profile 120 120 100 SEK bn, nom. amount SEK bn, nom. amount 100 80 80 60 60 40 40 20 20 0 0 2009 2010 2011 2012 2013 2014- 2009 2010 2011 2012 2013 2014- © Swedbank 27
Slide 28: Long-term funding 2008-2009
Long-term funding 2008-2009 Swedbank Group - Long-term funding SEK bn Swedbank Swedbank Mortgage Debt to mature 2008 55 155 Issued 2008 110 97 -of which guaranteed 61 0 Debt to mature 2009 49 104 Issued 2009* 41 5 -of which guaranteed 40 0 * As of 9 Feb 2009 © Swedbank 28
Slide 29: Mortgage lending, Sweden
Mortgage lending, Sweden Lending SEK 595bn Public sector 3% Forest & Agriculture Tenant ow ners 6% associations Share of LTV 14% portfolio Multi-family homes 70,0% 2% 60,0% Condiminiums 15% 50,0% Commercial real 40,0% estate Single family homes 0% 60% 30,0% Funding Funding 20,0% Equity 6% 10,0% CP L
Slide 30: Other lending to the public, Sweden
Other lending to the public, Sweden (excl. Swedbank Mortgage), SEK 309bn SEKbn 350 000 300 000 Real estate management Public sector 250 000 Other corporate lending Renting, other Forestry and agriculture estate 200 000 Transportation 9% Renting, other Renting of single- Industry industry family home
Slide 31: Baltic Banking
Swedbank @ Baltic Banking © Swedbank 31
Slide 32: Asset quality
Asset quality Net loan losses Net loan losses 500% 105 2008 2007 Q4 08 400% 90 Estonia 0.77% 0.33% 1.32% 300% 75 Latvia 1.61% 0.51% 3.70% EURm 60 200% 45 Lithuania 0.58% 0.17% 0.77% 100% 30 0% 15 Baltic Banking 0.98% 0.35% 1.91% -100% 0 Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Net loan losses
Slide 33: Asset quality by country
Asset quality by country Net loan loss dynamics Net loan losses 5,0% Estonia EURm 60 4,0% 40 28 3,0% 20 11 14 7 2,0% 0 Q1 08 Q2 08 Q3 08 Q4 08 1,0% 0,0% Latvia EURm 60 Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 60 Est Lat Lit Baltic Banking 40 16 20 8 11 • Global recession has had a large negat
Slide 34: Credit quality of the loan book
Credit quality of the loan book Large corporate risk profile 30% 25% Low risk 20% Non- EURm 15% performing • Well diversified portfolio dominated by retail exposures 10% • Macro developments have triggered downgrades in all 5% segments: 0% – Real estate sector drives downgrades in large 1 1- 2 2- 3
Slide 35: Overdue development
Overdue development Rising overdues over 90 days have the most impact on rising NLL levels Corporate, EE Corporate, LV Corporate, LT 5% 5% 5% 4% 4% 4% 3% 3% 3% 2% 2% 2% 1% 1% 1% 0% 0% 0% dec-07 mar-08 jun-08 sep-08 dec-08 dec-07 mar-08 jun-08 sep-08 dec-08 dec-07 mar-08 jun-08 sep-08 dec-08 31-60 da
Slide 36: Overdue loans – Swedbank Estonia and Swedbank Latvia vs market
Overdue loans – Swedbank Estonia and Swedbank Latvia vs market Estonia - overdues over 30 days / current Estonia - overdues over 60 days / current 4% portfolio portfolio 4% 3% 3% 2% 2% 1% 1% 0% 0% dec-05 jun-06 dec-06 jun-07 dec-07 apr-08 jun-08 dec-08 mar-06 sep-06 mar-07 sep-07 mar-08 maj-08 sep-0
Slide 37: Baltic lending by sectors
Baltic lending by sectors Portfolio (EURm), December 2008 Portfolio growth (EURm), Q4 08 Individuals Mortgage Other 44% -68 Real-estate 15% 3 092 -10 mgmt Retail & 1 721 9% -127 Wholesale EURm Industry 1 678 8% -102 Transport 1 018 5% -18 Construction536 3% -62 Other* 3 241 16% -71 0 2 000 4 000 6 0
Slide 38: Estonian lending by sectors
Estonian lending by sectors Portfolio (EURm), December 2008 Portfolio growth (EURm), Q4 08 Individuals 3 854 48% -49 Real-estate 1 161 15% 0 mgmt Retail & 633 8% -77 Wholesale Industry 454 6% -52 Transport 282 4% -7 Construction 174 2% -28 Other 1 450 18% -25 0 1 000 2 000 3 000 4 000 -100 -50 0 50
Slide 39: Latvian lending by sectors
Latvian lending by sectors Portfolio (EURm), December 2008 Portfolio growth (EURm), Q4 08 Individuals 2 805 43% -20 Real-estate 1 078 17% 4 mgmt Retail & 511 8% -13 Wholesale Industry 622 10% -43 Transport 298 5% 3 Construction 252 4% -6 Other 915 14% -58 0 1 000 2 000 3 000 4 000 -100 -50 0 50 100
Slide 40: Lithuanian lending by sectors
Lithuanian lending by sectors Portfolio (EURm), December 2008 Portfolio growth (EURm), Q4 08 Individuals 2 282 40% 0 Real-estate 853 15% -14 mgmt Retail & 10% 578 -37 Wholesale Industry 603 10% -7 Transport 438 8% -15 Construction 110 2% -28 Other 877 15% -2 0 1 000 2 000 3 000 4 000 -50 0 50 100 15
Slide 41: Mortgage portfolio
Mortgage portfolio • Due to the effects of crisis all vintages are 5% EE Mortgage overdues > 30 days converging to the same level of overdues. Overdues / Balance, % 4% Complicated to separate the effects of 3% origination quality from the downturn impact 2% 1% EE LV LT* 0% LTV, total portfolio 67% 7
Slide 42: Corporate client portfolio
Corporate client portfolio mEUR Large corporate risk profile • From 2005 to 2008, new lending changed 30% 25% 2007 – New lending in 2006 and 2007 mainly went to 20% companies rated 4 or 5 (scale of 7) 2008 15% – In 2008, the downturn caused downgrades, 10% rating 5 real estate portfolio most affecte
Slide 43: Real estate portfolio
Real estate portfolio Apartment transaction volume development • Real estate and in particular residential 1800 development is the most sensitive 1500 sector in Baltic Banking portfolio No of transactions 1200 900 • Around 58% from total Real Estate portfolio are cash flow generating 600 properties
Slide 44: Baltic lending by sectors – real estate
Baltic lending by sectors – real estate Estonia 3% 15% 24% Portfolio, December 2008 5% 8% 6% 8% Latvia 2% 29% 11% 15% 43% 15% 23% 3% 12% 22% 18% Lithuania Construction Other 5% 6% 13% Individuals Transport Production Retail & Wholesale 38% Real-estate mgmt 5% Office Production&Warehouse Residential
Slide 45: Collateral breakdown
Collateral breakdown Baltic Collateral (EURm) • Baltic Banking loan portfolio is adequately secured. Dec Dec • Private mortgage portfolio is fully covered with 2008 % 2007 % family houses and apartments (as a rule owner State 370 2% 273 1% occupied). Private real-estate 7,321 36% 6,660 33% • Commerc