Swedbank Ab Class A · OMXSTO:SWED_A
Swedbank Ab Class A — FY2018 Earnings Presentation
27 slides from Swedbank Ab Class A's earnings presentation, January 2019
Slide 1: Swedbank year-end results 2018
Swedbank year-end results 2018 Birgitte Bonnesen (CEO), Anders Karlsson (CFO), Helo Meigas (CRO) © Swedbank Information class Public
Slide 2: Strong financial result in 2018 – delivered on strategic priorities
Strong financial result in 2018 – delivered on strategic priorities SELECTED 2018 DELIVERIES 16.1% Return Continued digitisation of the mortgage process on Equity and digital guiding Further personalisation of the physical and digital customer interaction - data lake and data 75% analytical tools Di
Slide 3: Initiatives in 2018 to further strengthen our sustainable customer offering
Initiatives in 2018 to further strengthen our sustainable customer offering SELECTION OF ACCOMPLISHMENTS IN Q4 LANDMARK ACHIEVEMENTS IN 2018 Banking industry Swedbank Robur winner – Sustainable launches unique Brand Index B2B SDG equity fund First Nordic bank to join Advanced our the initiative Scie
Slide 4: Continued solid mortgage loan volume growth in Q4
Continued solid mortgage loan volume growth in Q4 Total income, SEKbn 12 TOTAL Continued mortgage loan volume growth INCOME SEK 10.7bn 8 4 Lower net commission income 0 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Total expenses, SEKbn 6 TOTAL EXPENSES SEK 4.4bn 4 2 Expenses in line with guidance 0
Slide 5: Focus on the customer relationship and friction-free experience
Focus on the customer relationship and friction-free experience 2018 deliveries Proactivity and enabled further personalisation automation and in focus for 2019 potential for aggregation Service offering based on Change in content of customer needs personal service Accessible Instant Individual Mult
Slide 6: Strategic priorities in 2019 – further increase customer value and improve competitive position
Strategic priorities in 2019 – further increase customer value and improve competitive position 1 Offerings based on customer data 2 Excellent digital experience 3 Channel transformation 4 Digital payment and commerce offering 5 Digital lending process 6 Improved savings and pension offering 7 Corpo
Slide 7: Group result – FY 2018: Strong result
Group result – FY 2018 Strong result SEKm FY 2018 FY 2017 ▲YoY • ROE of 16.1% - target achieved Net interest income 25 228 24 595 633 Net commission income 630 • Strong income generation 12 836 12 206 Net gains and losses 2 112 1 934 178 reflecting leading position in our Other income 4 046 3 468
Slide 8: Stable net interest income
Group result Stable net interest income NII, SEKm • Continued mortgage loan volume 6 326 40 40 6 335 growth -5 -10 • Stable margins -10 -46 • Accounting change to prepaid interest income Q3 2018 Loan Margins Deposit FX Accounting Treasury & Q4 2018 volumes guarantee change to Other fee prepaid inter
Slide 9: Lower net commission income
Group result Lower net commission income NCI, SEKm • Seasonally lower cards income 3 336 • Higher expenses in payments 9 3 183 -77 -63 -22 • Lower asset management income due to weak market development Q3 2018 Cards & Asset Lending & Other Q4 2018 Payments management guarantees © Swedbank Informatio
Slide 10: Mixed result in challenging market conditions
Group result Mixed result in challenging market conditions NGL, SEKm • Negative impact on trading and derivatives valuation 635 559 488 • Positive impact from lower covered 430 356 bond buy-back volumes • Positive valuation impact from basis swap spreads Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Other
Slide 11: Strong capitalisation – no excess capital
Capital Strong capitalisation – no excess capital CET1 capital ratio, % • Risk weight floor for Swedish 24.3% mortgages moved to Pillar 1* 16.4% 16.3% 14.6% • CET1 capital was unchanged – Positive effect from net profit of SEK 1.0bn excl. dividend – Negative IAS19 pension valuation effect of SEK 0.8
Slide 12: Increased Risk Exposure Amount (REA)
Capital Increased Risk Exposure Amount (REA) REA, SEKbn 634.1 5.8 2.0 637.9 • Risk weight floor for Swedish -1.4 -1.6 -1.0 mortgages moved to Pillar 1 427.5 – Increased REA by SEK 208.6bn* • REA (pro forma) increased by SEK 3.8bn – PD model change in the Baltics and other (article 3) Q3 2018 Pro for
Slide 13: Comments on 2019
Comments on 2019 NET Upside from rate sensitivity to roll in INTEREST over Q1 with full effect from Q2 INCOME onwards TREASURY NII & NGL combined expected to be RESULT lower than in 2018 Underlying expenses below SEK 17bn EXPENSES for FY 2019 © Swedbank Information class Public 13
Slide 14: Continued investments according to plan
Expenses Continued investments according to plan FY 2018 Total expenses SEK 16.8bn FY 2019 Underlying expenses below SEK 17bn +0.4bn FX Current estimation of market-dependent headwinds +0.3bn Pension cost +0.30bn FX Additional market-dependent +0.15bn Pension cost headwinds -0.20bn Restructuring rel
Slide 15: Solid asset quality
Group Solid asset quality Credit impairments, SEKm Q4 18 Q3 18 ▲QoQ FY 2018 • Resilient asset quality in all Swedish Banking 319 71 248 727 business segments Baltic Banking -103 8 -111 -208 Large Corporates & Institutions 202 37 165 13 Swedbank Group 412 117 295 521 Ratios Q4 18 Q3 18 FY 2018 Credit
Slide 16: Appendix
Appendix © Swedbank Information class Public
Slide 17: Solid result amidst challenging market conditions
Group result Solid result amidst challenging market conditions SEKm Q4 18 Q3 18 ▲QoQ Q4 17 ▲YoY • Continued mortgage loan volume Net interest income 6 335 6 326 9 6 326 9 growth Net commission income -153 3 335 -152 3 183 3 336 • Weak net commission income due Net gains and losses 430 488 -58 356 74
Slide 18: Continued volume growth
Continued volume growth Loans Deposits +4bn +19bn** +8bn +3bn -7bn +11bn +8bn Swedish Baltic Banking Corporate excl. Private Corporate private loans* Baltic Banking Of which FX -1 Of which FX -1 Of which FX -1 * Private mortgage loans, private other including tenant-owner associations **excl. Group
Slide 19: Swedbank has a low-risk residential property portfolio
Swedish Swedbank has a low-risk residential property housing and mortgage portfolio market Real estate lending, net loans in Sweden, SEKbn1) • Swedbank has pursued a low risk 1 123 strategy by tightening loan origination • Private mortgages: SEK 798bn, average standards, and prioritising price and L
Slide 20: Residential property developers - low exposure
Swedish Residential property developers - low exposure housing and mortgage market • Total loan portfolio of SEK 16bn, mainly to larger, listed construction firms with which Swedbank has long-term relations • SEK 10bn of the loans are related to tenant-owner association projects • SEK 6bn of the loa
Slide 21: Swedbank – low-risk bank with strong capital
Swedbank – low-risk bank with strong capital This is Swedbank base Liquidity & capital, % • Low risk – a Board of Directors’ strategic priority – ensures access to funding NSFR LCR CET1 ratio,(RHS) markets and low funding cost 200 30 • Retail profile and four home markets a key feature 25 150 20 – A
Slide 22: Swedbank – strong and stable earnings
Swedbank – strong and stable earnings This is Swedbank capacity • Four home markets – Sweden, Estonia, Latvia and Lithuania – Strong and stable economies – Market-leading position in all home markets – Largest customer base in all home markets Profit before impairments, SEKbn 30 • Retail profile ens
Slide 23: Swedbank – market leader in cost efficiency
Swedbank – market leader in cost efficiency This is Swedbank Total expenses, SEKbn • Best-in-class cost efficiency – an executive management strategic priority 20 Acquisition, one-off • Executive management strongly focused on cost and change management 18 – Integrated in corporate culture 16 – Focu
Slide 24: Swedbank creates value
Swedbank creates value Strategy % SEK Return on Equity 30 16 >15% target * 14 25 20 12 16.1% (FY) 10 ** 15 8 Common Equity Tier 1 ratio ** 10 6 One of the highest among European banks 4 5 2 16.3% (pro forma Q4 2017 16.5%) 0 0 2013 2014 2015 2016 2017 2018 Dividend per share* Return on equity (LHS) C
Slide 25: Focus on sustainable business
Focus on sustainable business Q4 accomplishments Landmark achievements in 2018 Banking industry winner – Sustainable Brand Index B2B Swedbank Robur launches unique SDG equity fund Sustainable Swedbank was appointed by leading decision makers to "Industry Swedbank Robur’s new sustainability equity fu
Slide 26: Conservative funding position
Conservative funding position Liquidity and funding Issued, long-term debt Survival horizon • LCR 144% (EU 2015/61) SEKbn Covered bonds Senior unsecured debt Tier 2 SEKbn 250 800 Prefunded for more than 12 months • NSFR 111% (Basel committee) 200 600 • Plan to issue around SEK 140bn in 2019 150 400
Slide 27: 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 Jan 18 0% -6% -2% Feb 18 -1% -8% -4% Mar 18 -2% -9% -4% Apr 18 -2% -7% -4% May 18 -2% -7% -4% House price index, Sweden 350 2005=100 Jun 18 -2% -