Swedbank Ab Class A · OMXSTO:SWED_A
Swedbank Ab Class A — Q1 2010 Earnings Presentation
29 slides from Swedbank Ab Class A's earnings presentation, Apr 27, 2010
Slide 1: Swedbank's first quarter 2010 results
Swedbank’s first quarter 2010 results 27 April 2010 Michael Wolf, CEO Erkki Raasuke, CFO Göran Bronner, CRO
Slide 2: Improved risk profile
Improved risk profile • Long-term competitiveness – traditional banking model • Tangible results from actions taken and improved macro – Full access to debt capital markets – Exiting state guarantee programme • CEE lending now 15% of total lending or 191% of equity – Trend will continue 2
Slide 3: CDS spread development
CDS spread development Improved risk profile Restructuring units Reduced CEE Improved funding Rights issue established exposure structure 400 350 300 Swedbank SEB 250 Nordea Handelsbanken 200 150 100 50 Source: Reuters, 5y CDS spreads in EUR 0 09-03-01 09-05-01 09-07-01 09-09-01 09-11-01 10-01-01 10
Slide 4: Strategic priorities 2010
Strategic priorities 2010 • Achieve operational excellence, enhance earnings Customer focus and improve customer satisfaction • Secure long-term competitive funding terms Risk reduction • Close sub par profitability gaps Earnings capacity • Continuous cost focus Liquidity & • Be prepared for new reg
Slide 5: Result by business area
Result by business area Q1 update SEKm Profit before impairments 2 000 Retail Q4 09 Lower NII, good credit quality, new customer- 1 000 Q1 10 oriented organisational structure 0 Large Corporates & Institutions -1 000 Stronger quarter, increased deposits -2 000 Baltic Banking -3 000 Stabilising, decr
Slide 6: Decreased risk and pre-provision earnings
Net interest income Decreased risk and pre-provision earnings SEKbn CEE lending SEKbn Funding 250 800 700 200 600 Covered bonds 150 500 400 100 Government guaranteed 300 200 50 Central bank repos 100 0 0 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 SEKm Credit impairments SEKm Result
Slide 7: Continued headwinds and temporary effects
Net interest income Continued headwinds and temporary effects SEKm NII Q4 09 Retail LCI Baltic Russia & Group NII Q1 10 5 000 Banking Ukraine Treasury 4 702 and Other 4 500 163 147 44 4 023 73 4 000 252 3 500 Q4 2009 4 702 3 000 Funding maturity mismatch -208 Trading strategy -145 2 500 Wholesale fu
Slide 8: Stronger net gains
Net gains/losses on financial items, fair value Stronger net gains • Trading strategy pressed NII and boosted net gains and losses • Stable currency rates in Ukraine • Lower P&L impact from wholesale funding valuation SEKm Q1 10 Q4 09* Q1 09 Retail 32 45 43 Large Corporates & Institutions 441 55 1 3
Slide 9: Income statement
First quarter 2010 results Income statement SEKm Q1 2010 Q4 2009 Change Net interest income 4 023 4 702 -679 Net commission income 2 282 2 361 -79 Net gains/losses on financial items, fair value 647 223 424 Other income 715 751 19 Non recurring items -55 -55 Total income 7 667 7 982 -315 Staff costs
Slide 10: Improved funding situation
Liquidity & Capital management Improved funding situation • Swedbank exits guarantee Outstanding wholesale funding SEKbn, notional value programme as per 30 April 2010 Total long- 459 term, non- • SEK 100bn of long-term debt 397 guaranteed issued during Q1 Total long- 174 term, 180 • SEK 110bn in re
Slide 11: High liquidity maintained
Liquidity & Capital management High liquidity maintained • Funding ahead of needs to further reduce liquidity risk and prepare for regulatory changes • Changing funding structure to replace guaranteed funding, prolong average maturity and build up Stress test of liquidity Liquidity stressastest per
Slide 12: Well capitalised
Capital management Well capitalised Core Tier 1 capital ratio* % Core Tier 1 capital ratio* YE 09 12.01% 14 Result +0.09% 12 12.3 RWA reduction +0.16% 12.0 Other +0.05% 10 9.4 9.8 9.9 Core Tier 1 capital ratio* Q1 10 12.31% 8 6 4 2 0 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 *according to f ull Basel 2 12
Slide 13: Q1 development
Asset quality Q1 development • Significantly improved macro – Stabilised/increasing property prices in CEE • Swedbank risk profile continued to improve – Limited new problems – Increasingly confident in known problems – Anecdotal evidence positive • Swedbank resilience has greatly improved 13
Slide 14: Volumes – continued risk reduction in CEE lending
Asset quality Volumes – continued risk reduction in CEE lending • Sweden – weak corporate credit demand • CEE lending now 191% of equity SEKbn 1 200 Private 959 952 Corporate 1 000 948 800 521 555 559 600 290% 209% 191% of equity 400 251 200 427 404 97 188 172 393 88 81 154 100 91 0 Q4 08 Q4 09 Q1 1
Slide 15: Quarterly change of 60-day past due loans
Asset quality Quarterly change of 60-day past due loans • Stabilisation continues EURm 400 350 300 250 200 150 100 50 0 -50 Q1 09 Q1 09 Q1 09 Q1 09 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 09 Q3 09 Q4 09 Q1 10 Q2 09 Q3 09 Q4 09 Q1 10 Q2 09 Q3 09 Q4 09 Q1 10 Q2 09 Q3 09 Q4 09 Q1 10 Estonia Latvia Lithuania R
Slide 16: Impaired loans – almost no new problems
Asset quality Impaired loans – almost no new problems • Without FX effect up SEK 1.5bn SEKm 45 000 45 000 Impaired loans as 40 132 40 328 % of gross lending Ukraine 40 000 40 000 35 770 4 362 196 8 432 Russia Ukraine 57% 35 000 35 000 Lithuania 6 113 29 657 2 381 Lativa Russia 20% 30 000 30 000 7 89
Slide 17: Credit impairments in Q1
Asset quality Credit impairments in Q1 • Significant improvement SEKm 8 000 • Sweden still very low levels 7 000 6 845 6 672 • Small recoveries in Russia and 6 121 6 000 Ukraine 5 003 5 000 • Baltic countries – Few new problems 4 000 – Property prices stabilise/increase 3 000 2 210 2 000 1 000 0 Q1
Slide 18: Provisions
Asset quality Provisions • Stability in portfolio provisions – limited rating migration SEKm 30 000 64.8% 65.9% Provision ratios: 25 000 62.7% Retail 101% 4 684 63.1% 5 135 Large Corporates 106% 63.9% 20 000 Baltic Banking 60% 6 839 Russia 63% 15 000 8 856 Ukraine 74% 10 000 20 882 21 889 Group 66%
Slide 19: Ektornet – recouping value over time
Asset quality Ektornet – recouping value over time • Repossessed properties valued at SEK 784m • Intake forecast by 2012 SEK 5-10bn – Forecast for 2010 is SEK 4bn – Three quarters of this is expected in the Baltic countries • Large portion of real estate assets are currently non-cash flow generating
Slide 20: Conclusion
Conclusion • Significant improvement of asset and liability risk profiles • Economy gaining momentum • Still many areas of concern – Exit strategy central banks – Fiscal consolidations • Swedbank’s resilience has vastly improved CEE lending SEKbn 290% of equity 300 Private Corporate 251 209% 250 191
Slide 21: Appendix
Appendix Swedbank @ 21
Slide 22: Balance sheet
Balance sheet Swedbank Group SEKm Mar 10 Dec 09 % Loans to credit institutions 152 780 92 131 66% Loans to the public 1 214 007 1 290 667 -6% Interest-bearing securities 275 266 170 615 61% Fund shares for which customers bear the investment risk 85 023 78 194 9% Shares and participating interests 1
Slide 23: Long-term funding
Liquidity & Funding Long-term funding • SEK 110bn in remaining term funding maturities to roll or replace in 2010 • Continued focus on covered bonds (YTD SEK 79bn issued) • YTD issued SEK 21bn in senior Swedbank, long-term maturity profile unsecured funding (including Swedbank Mortgage) SEKbn, nom •
Slide 24: Funding under the Swedish guarantee programme
Liquidity & Funding Funding under the Swedish guarantee programme (total outstanding as per 31 March, notional SEK 202bn) • Swedbank exits guarantee Currency distribution programme as per 30 April 2010 EUR 41% • Outstanding long-term guaranteed USD 30% funding decreased by SEK 6bn to SEK 23% around
Slide 25: Cover pool and new issuance of covered bonds Q1 2010
Cover pool and new issuance of covered bonds Q1 2010 • Two euro covered bonds have been Total pool size SEK 613bn issued during Q1 Average loan size SEK 400 821 Number of loans outstanding 1 524 546 – Euro MTN CB 3Y, EUR 1bn, issued Jan 2010 Types of loans – Euro MTN CB 7Y, – Residential mortgages 9
Slide 26: Swedbank Mortgage, total loan portfolio
Swedbank Mortgage, 31 Mar 2010, total loan portfolio SEK 676bn • 100% lending – Swedish properties • 90% residential lending • Average LTV of 45% (loan level) 60% (property level). Cover pool 44% / 58% • 79% of the total lending book within a loan-to-value ratio below 50% SEKbn Loan-to-value, proper
Slide 27: Foreign exchange positions as of 31 March 2010
Earnings capacity Foreign exchange positions as of 31 March 2010 SEKm EEK LVL LTL UAH RUB Structural position -37 392 60 -16 002 585 262 Net assets 18 134 6 618 4 884 1 066 1 003 Equity hedge 0 - 6 620 -4 891 0 -30 Goodwill 10 879 0 0 0 0 Total position - 8 379 58 -16 009 1 651 987 27
Slide 28: Repossessed assets – as expected
Asset quality Repossessed assets – as expected SEKm 2 500 2 000 1 500 1 000 500 0 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Real Estate Residential Real Estate Commercial Passenger & Commercial Transport Shares Other 28
Slide 29: Real estate prices stabilised
Real estate prices stabilised Market situation Riga 1762 • Slight fluctuations in average price up 1800 1500 1800 1500 No of transactions or down influenced by the small 1200 1200 EUR/m2 transaction volumes 900 597 900 600 600 300 300 0 0 Q4'06 Q2'07 Q4'07 Q2'08 Q4'08 Q2'09 Q4'09 No of deals Average