Swedbank Ab Class A · OMXSTO:SWED_A
Swedbank Ab Class A — Q2 2020 Earnings Presentation
30 slides from Swedbank Ab Class A's earnings presentation, July 2020
Slide 1: Swedbank's second quarter results 2020
Swedbank’s second quarter results 2020 © Swedbank Information class Public
Slide 2: World Covid Map
World Covid Map Source: John Hopkins University/BBC, updated July 3, 2020 © Swedbank Information class 2 Public
Slide 3: "A Crisis Like No Other"
“A Crisis Like No Other” 2019 2020F 2021F IMF* Global 2.9 % - 4.9 % 5.4 % Swedbank** Sweden 1.2 % - 4.9 % 1.9 % Estonia 4.4 % - 7.0 % 5.0 % Latvia 2.2 % - 7.5 % 5.8 % Lithuania 3.9 % - 6.5 % 5.0 % • IMF World Economic Outlook, April 2020 https://www.imf.org/en/Publications/WEO/Issues/2020/06/24/WEOU
Slide 4: Swedbank's response to Corona crisis
Swedbank´s response to Corona crisis Amortisation grace period Refocus customer - 56 000 private customers – Privacy and data protection - 10 000 SME – Financial advisory services Corona web pages - 958 000 visits ”Ask Swedbank” social media - 6 million views © Swedbank Information class 4 Public
Slide 5: Strong result in an uncertain time
Group result Strong result in an uncertain time SEKm Q2 20 Q1 20 ▲QoQ Net interest income 200 • Strong NII supported by loan and 6 886 6 686 deposit volumes Net commission income 2 925 3 223 -298 Net gains and losses 1 398 -322 1 720 • NCI impacted by lower card activity Other income 867 645 222 and
Slide 6: AML initiatives - areas and total numbers Q2 2020
AML initiatives - areas and total numbers Q2 2020 4 (3) FIU Reporting Risk Assessment 16 (11) 58 (39) Monitoring Internal Regulations 75 (43) 245(152) 14 (8) Risk Classification Training 2 (2) 76 (46) Customer Due Diligence White: Total number of milestones in Q2 2020 Grey: Total number of milestone
Slide 7: AML initiatives – work in progress
AML initiatives – work in progress Total Not yet Total Ongoing Ongoing Ongoing Completed started initiatives 117 58 8 21 41 245 Change from Q1 +30 +2 +1 +2 -7 +28 © Swedbank Information class 7 Public
Slide 8: Cultural strengths
Cultural strengths A values-led atmosphere with strong collegiality A respectful environment where people can be themselves Strong affiliation towards the bank and brand Flexibility of work and work-life balance Hope for the future and a willingness to change © Swedbank Information class Public Sour
Slide 9: Stable underlying loan volumes and strong deposit volume inflows
Stable underlying loan volumes and strong deposit volume inflows Loans Deposits Of which FX -14 -7bn +39bn** of which +10bn of which -11bn of which -6bn +12bn +27bn Swedish Baltic Banking Corporate excl. Private Corporate mortgage loans Baltic Banking Of which FX -10 Of which FX -4 Of which FX -13 *
Slide 10: Stronger net interest income
Group result Stronger net interest income NII, SEKm 10 172 • Higher average volumes 6 686 98 6 886 -73 -7 • Higher deposit margins • Lower mortgage loan margins • Higher resolution fund fee • Lower funding cost in Group Treasury Q1 2020 Volumes Margins Resolution FX Treasury & Q2 2020 fund fee Other
Slide 11: Lower net commission income due to Covid-19
Group result Lower net commission income due to Covid-19 NCI, SEKm • Lower income from cards due to 3 223 reduced activity and less foreign transactions -137 -77 2 925 • Asset management income negatively -84 impacted by lower average AuM – Strong net inflows in equity and mixed funds Q1 2020 Cards
Slide 12: Strong NGL following market rebound
Group result Strong NGL following market rebound NGL, SEKm • Positive valuation effects 1 398 1 218 – Derivatives 768 – Bond inventories 457 – Shares in Visa and Asiakastieto • Solid underlying client trading activity in Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 FX and fixed income -322 NGL, Q2 2020 1
Slide 13: Higher other income
Group result Higher other income Other Income, SEKm • Higher net income from insurance due to lower claims 919 915 839 867 • Higher income from savings banks 645 • Stable income from Entercard Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 © Swedbank Information class Q2 2020 Public 13
Slide 14: Underlying expenses according to plan
Group result Underlying expenses according to plan Expenses, SEKm • AML investigation expenses delayed 5 549 5 370 5 164 519 4 843 due to Covid-19 321 576 43 • FY 2020 total expenses estimate remains at around SEK 21.5bn 4 843 5 030 4 794 4 800 Q319 Q419 Q120* Q220 Other cost AML investigations * Ex
Slide 15: Strong asset quality
Strong asset quality Credit impairments by business area, SEKm 2 151 373 146 Swedish Banking 1 235 Baltic Banking 432 LC&I 1627 56 740 1.93 Q120 Q220 Credit impairment ratio, % 0.51 0.28 Q208 Q408 Q209 Q409 Q210 Q410 Q211 Q411 Q212 Q412 Q213 Q413 Q214 Q414 Q215 Q415 Q216 Q416 Q217 Q417 Q218 Q418 Q21
Slide 16: Major part of loan portfolio insignificantly impacted by Covid-19
Major part of Swedbank’s loan portfolio insignificantly impacted by Covid-19 Total loans categorised by Covid-19 sensitivity, SEK 1 625bn • Strong repayment capability – cash flow 1 600 ▪ Considerably impacted sectors, SEK 115bn – Manufacturing 7% based lending − Retail 1 400 − − Transportation Ship
Slide 17: Low oil-related exposures
Considerably impacted sectors Low oil-related exposures - half of portfolio in run-off Loans carrying amount and credit impairment provisions Gross loans by stages • Credit impairment provisions of SEK 4bn Total stage 3 loans of SEK 8bn, coverage ratio of 50% SEKbn Shipping, SEK 12bn Offshore, SEK 9
Slide 18: Credit impairments provisions in H1 2020
Credit impairments provisions in H1 2020 969 197 3 381 210 557 1 235 698 2 151 -698 889 - 84 2 151 648 © Swedbank Information class Public 18
Slide 19: Macro economic adjustments in Q2
Macro economic adjustments in Q2 Credit impairment provisions due • Weaker macro economic outlook to macroeconomic adjustments – Prolonged recovery period – Lower GDP and higher unemployment expected YTD SEK 1 205m Sweden - Real GDP growth scenarios* Sweden – Unemployment scenarios* 3% 12% 2% 557 10
Slide 20: Solid capital position
Capital Solid capital position CET1 capital ratio, % 16.3% 17.0% 16.1% 16.4% • CET1 capital increased by SEK 2.0bn 13.0% – Positive effect from net profit of SEK 2.8bn excl. dividend – Negative IAS19 pension valuation Q3 2019 Q4 2019 Q1 2020 Q2 2020 CET1 capital effect of SEK 1.0bn ratio CET1 capita
Slide 21: Stable Risk Exposure Amount (REA)
Capital Stable Risk Exposure Amount (REA) REA, SEKbn • REA increased by SEK 1.3bn 2.5 6.7 692.4 – Lending volumes increased REA 691.1 -1.1 -0.7 -6.1 – Covid-19 rating migrations increased REA – Stronger SEK decreased REA – Market movements decreased REA for market risk and derivatives Q1 2020 Credit
Slide 22: Strong financial position to manage uncertainty
Strong financial position to manage uncertainty Balance sheet Earnings capacity (profit before impairments, SEKbn) • Liquidity coverage ratio, 164% 30 20 • Net stable funding ratio, 125% 10 • Liquidity reserve, SEK 607bn 0 2011 2012 2013 2014 2015 2016 2017 2018 2019H1 2020* – Of which SEK 377bn (62
Slide 23: Forward looking comments
Forward looking comments INCOME ASSET QUALITY ▪ Individual provisions ▪ Lending volumes and margins ▪ Uncertainty remains ▪ Cards and asset management EXPENSES CAPITAL ▪ FY 2020 cost guidance remains ▪ Dividend outlook © Swedbank Information class Q2 2020 Public 23
Slide 24: Appendix
Appendix © Swedbank Information class Public
Slide 25: IFRS9 scenarios – Q2 2020
IFRS9 scenarios – Q2 2020 Asset quality Positive scenario (16.7%) Base scenario (66.6%) Negative scenario (16.7%) GDP Unemployment Houseprices GDP Unemployment Houseprices GDP Unemployment Houseprices Annual growth Annual average End-year Annual growth Annual average End-year Annual growth Annual av
Slide 26: Consumer spending observer – Spending is back to last year's level
Consumer spending observer – Spending is back to last year’s level Notes on data The data shows transaction turnover based on card transactions acquired by Swedbank Pay in Sweden, both in stores and online. It includes about 5.7 million transactions per day (2019 average), corresponding to an estima
Slide 27: Daily transaction turnover in 2020 in different sectors
Daily transaction turnover in 2020 in different sectors Annual growth © Swedbank Information class 27 Public
Slide 28: Sustainability in our DNA – Q2 accomplishments
Sustainability in our DNA – Q2 accomplishments Enabling customers to make smart and sustainable choices Swedbank recent commitments and recognitions Swedbank acted as a sole structuring advisor to K2A Swedbank Latvia achieved its highest score and maintained for the third for the development of the
Slide 29: Strong liquidity position
Strong liquidity position Liquidity and funding Survival horizon Stable liquidity key ratios SEKbn more than 12 months Net Stable Funding Ratio and Liquidity coverage ratio, % 800 130 190 • Solid liquidity buffer – prefunded for NSFR, CRD2 (LHS) LCR (RHS) 700 125 180 more than 12 months (survival 60
Slide 30: Real-estate price performance – Sweden
Swedish Real-estate price performance – Sweden, housing and mortgage 12 month market Single-family homes1 Tenant-owner rights2 Combined3 12M Δ 12M Δ 12M Δ Jul 19 3% 2% 2% Aug 19 2% 1% 2% Sep 19 3% 2% 3% Oct 19 4% 3% 3% House price index, Sweden 2005=100 Nov 19 5% 4% 5% 350 Dec 19 4% 5% 4% Total 300