Swedbank Ab Class A · OMXSTO:SWED_A
Swedbank Ab Class A — Q4 2019 Earnings Presentation
29 slides from Swedbank Ab Class A's earnings presentation, January 2020
Slide 1: Swedbank year-end results 2019
Swedbank year-end results 2019 Jens Henriksson (CEO), Anders Karlsson (CFO) © Swedbank Information class Public
Slide 2: A new bank
A new bank Changes in Board and executive management Head of Head of Chair of the Vice Chair of Baltic CEO Swedish Board the Board Banking Banking (acting) Head of Chief Chief Risk Communications Head of CEO Board Compliance Officer & Sustainability office (unit secretary (acting) dissolved) Officer
Slide 3: A new organisation - Group Executive Committee
A new organisation - Group Executive Committee • Simpler and clearer decision-making structure • Customer-focused for even better and quicker development of banking services • Further strengthen governance and internal control • Initiated reviews – compliance, AML and corporate culture • Facilitate
Slide 4: AML timeline
AML timeline August/September 31 December 31 December Creation of the 132 AML 67/132 AML 152/152 AML initiatives list initiatives completed initiatives to be completed SVT News UG SVT News UG Jan Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan 2007 2019 2020 2021 2022 2023 26 Mar
Slide 5: AML initiatives
AML initiatives Areas and total number of initiatives in Q4(Q3) 3 (1) FIU Reporting Risk Assessment 11 (10) 39 (35) Monitoring Internal Regulations 43 (32) 152(132) 8 (8) Risk Classification Training 2 (3) 46 (43) Customer Due Diligence © Swedbank Information class Public
Slide 6: AML initiatives – work in progress
AML initiatives – work in progress Total Not yet Total Ongoing Ongoing Ongoing Completed started initiatives 67 51 6 11 17 152 Change +47 +1 -24 +8 -12 +20 from Q3 © Swedbank Information class 6 Public
Slide 7: Stable results in challenging environment
Stable results in challenging environment FY 2019 • Net profit SEK 19.7bn • ROE 14.7% • CET1 capital ratio buffer of around 190bps • Dividend proposal SEK 8.80 per share © Swedbank Information class 7 Public
Slide 8: Looking ahead
Looking ahead • Investigation cost – possible fine • Increased competition • Increased compliance cost • Increased investments • Financial targets - Cost discipline - ROE target of 15% © Swedbank Information class 8 Public
Slide 9: Higher expenses weighed on net profit
Group result – FY 2019 Higher expenses weighed on net profit SEKm FY 2019 FY 2018 ▲YoY • ROE of 14.7% Net interest income 25 989 25 228 761 • Strong income generation Net commission income 12 984 12 836 148 Net gains and losses 3 629 2 112 1 517 • Higher expenses Other income 3 358 4 046 -688 ‒ AML
Slide 10: Lower net interest income
Group result Lower net interest income NII, SEKm 118 11 • Smaller contribution from loan volume 6 553 16 -13 6 408 growth -276 • Higher deposit margins • Lower mortgage loan margins • Group Treasury impacted by internal pricing effects Q3 2019 Loan Margins Deposit FX Treasury & Q4 2019 volumes guara
Slide 11: Strong net commission income
Group result Strong net commission income NCI, SEKm • Seasonally lower income in cards 82 3 415 3 297 86 -14 • Asset management income supported -36 by positive market development and net inflows • Higher corporate finance activity • Annual covered bond market maker Q3 2019 Cards & Asset Corporate O
Slide 12: Favourable market movements and stable other income
Group result Favourable market movements and stable other income NGL, SEKm • Positive valuation effects in derivatives 1 186 1218 • Higher net positive effect from Visa and 768 Asiakastieto 457 • Solid FX and credit trading activity 430 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Other Income, SEKm • St
Slide 13: Solid asset quality
Group Solid asset quality Credit impairments, SEKm Q4 19 Q3 19 ▲QoQ FY 2019 • Strong asset quality in core Swedish Banking 10 27 -17 154 segments Baltic Banking -3 10 -13 3 Large Corporates & Institutions 982 117 865 1 312 • Oil-related segments Swedbank Group 988 154 834 1 469 ‒ Increased provision
Slide 14: Solid capital position
Capital Solid capital position CET1 capital ratio, % • CET1 capital increased by SEK 2.9bn 15.9% 16.1% 16.3% 17.0% 15.1% – Positive effect from net profit of SEK 2.1bn excl. dividend – Positive IAS19 pension valuation effect of SEK 0.9bn • REA decreased by SEK 7.3bn Q1 2019 Q2 2019 Q3 2019 Q4 2019 C
Slide 15: Decreased Risk Exposure Amount (REA)
Capital Decreased Risk Exposure Amount (REA) REA, SEKbn • REA decreased by SEK 7.3bn – Higher PD in the portfolio increased 656.5 2.6 credit risk REA and decreased article 3 649.2 -0.1 -6.7 -3.1 adjustment – Decreased exposures in the corporate portfolio further decreased the article 3 adjustment –
Slide 16: Comments on 2020
Comments on 2020 INCOME CREDIT OUTLOOK ▪ Loan volumes ▪ Margins ▪ Strong asset quality ▪ NII sensitivity ▪ Lower resolution fund fee EXPENSES CAPITAL ▪ Investigations ▪ Strong capital generation ▪ Investments ▪ 50% pay-out ratio ▪ Compliance ▪ Total expenses in 2020 around the same ▪ Uncertainty reg
Slide 17: Stable expenses in 2020
Stable expenses in 2020 FY 2020 total expenses estimate of around SEK 20bn • Total expenses in 2020 are 20.00 20.00 expected to be around the same AML 0.80 level as in 2019 AML investigation 1.10 investigation • The AML-related development Pension 0.25 cost, is expected to increase by One-off costs
Slide 18: Appendix
Appendix © Swedbank Information class Public
Slide 19: Higher expenses weigh on net profit
Group result Higher expenses weigh on net profit SEKm Q4 19 Q3 19 ▲QoQ Q4 18 ▲YoY • Smaller contribution from loan Net interest income 6 408 6 553 -145 6 335 73 volume growth Net commission income 3 415 3 297 118 3 183 232 • Strong net commission income Net gains and losses 1 218 457 793 430 788 • F
Slide 20: Reduction of loan volumes – growth in deposits
Reduction of loan volumes – growth in deposits Loans Deposits -7bn +18bn** 1bn -2bn -6bn +4bn +17bn Swedish Baltic Banking Corporate excl. Private Corporate private loans* Baltic Banking Of which FX -5 Of which FX -3 Of which FX -6 * Private mortgage loans, private other and tenant-owner association
Slide 21: Swedbank creates value
Swedbank creates value Strategy % SEK Return on Equity 30 16 >15% target 14 25 20 12 14.7% (FY) 10 ** * 15 8 Common Equity Tier 1 ratio 6 One of the highest among European banks 10 4 5 2 17.0% 0 0 2015 2016 2017 2018 2019 Return on Equity (LHS) CET1 capital ratio (LHS) Dividend per share* 50% pay ou
Slide 22: 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 – Ar
Slide 23: Swedbank – strong and stable earnings capacity
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 Disposal, one-off •
Slide 24: 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 19 • Executive management strongly focused on cost and change management 18 – Integrated in corporate culture 17 – Focus on straight-thro
Slide 25: Group-wide strategic transformation initiatives securing future competitiveness
Group-wide strategic transformation initiatives securing future competitiveness 1 Customer relationships and trust based on data 2 Daily banking 3 Channel transformation 4 Digital commerce offering 5 Digital lending process 6 Financial health & advice 7 Corporate self-service & cash management © Swe
Slide 26: Sustainability in our DNA – Q4 accomplishments
Sustainability in our DNA – Q4 accomplishments Enabling customers to make smart and sustainable choices Swedbank recent commitments and recognitions Swedbank once again received a #1 rating among major banks in Fair Finance Guide’s review of banks’ guidelines and openness related to their sustainabi
Slide 27: Two hundred years of sustainability
Two hundred years of sustainability Key achievements 2019 65% 51 3 800 14bn SEK 100% …decrease of Swedbank's …Swedbank’s green bond …Swedbank’s Youth Financial …Swedbank’s Green Asset Pool …Assets under management direct carbon footprint 2019 transactions in 2019 Literacy sessions in 2019 – 15% fina
Slide 28: 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, % 700 125 NSFR, CRD2 (LHS) LCR (RHS) 190 • Solid liquidity buffer – prefunded for 600 180 120 170 more than 12 months (surviva
Slide 29: 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 19 0% 0% 0% Feb 19 1% 1% 1% Mar 19 1% 1% 1% Apr 19 2% 0% 1% May 19 2% 1% 2% House price index, Sweden 2005=100 Jun 19 2% 2% 2% 350 Total 300