Swedbank Ab Class A · OMXSTO:SWED_A
Swedbank Ab Class A — Q3 2013 Earnings Presentation
29 slides from Swedbank Ab Class A's earnings presentation, 2013
Slide 1: Swedbank's third quarter 2013 results
Swedbank’s third quarter 2013 results Michael Wolf, CEO Göran Bronner, CFO Anders Karlsson, CRO © Swedbank
Slide 2: Retail: Stable results
Retail Stable results SEKm Q3 12 Q2 13 Q3 13 ▲ Q/Q ▲ Y/Y • Stable NII Net interest income 3 405 3 367 3 473 106 68 – Loan growth Net commissions 1 532 1 536 1 550 14 18 – Stable back book margins Total income 5 413 5 312 5 491 179 78 – Improved funding cost Total expenses 2 477 2 398 2 389 -9 -88 –
Slide 3: Large Corporates & Institutions: Robust customer activity
Large Corporates & Institutions Robust customer activity SEKm Q3 12 Q2 13 Q3 13 ▲ Q/Q ▲ Y/Y • Stable NII Net interest income 768 851 864 13 96 Net commissions 416 523 467 -56 51 • Slightly weaker trading Total income 1 655 1 926 1755 -171 100 income Expenses excl. variable 662 730 660 -70 -2 staff c
Slide 4: Baltic Banking: Increasing customer activity
Baltic Banking Increasing customer activity SEKm Q3 12 Q2 13 Q3 13 ▲ Q/Q ▲ Y/Y • Improved NII Net interest income 753 763 807 44 54 Net commissions 376 445 446 1 70 • Recoveries Total income 1 287 1 378 1453 75 166 Total expenses 556 593 604 11 48 Profit before 731 785 849 118 64 impairments Impairm
Slide 5: Group results: Stable earnings
Group results Stable earnings SEKm Q3 12 Q2 13 Q3 13 ▲Q/Q ▲Y/Y • Improved NII Net interest income 5 085 5 409 5 641 232 556 – Mortgage loan growth Net commission income 2 375 2 525 2 520 -5 145 – Treasury Net gains and losses 687 296 170 -126 -517 – Margins in Baltic Banking and LC&I Total income 8
Slide 6: Capital: Reduced RWA
Capital Reduced RWA Swedbank’s Risk-Weighted Assets development • Mix change SEKbn • Rating migration 500 Basel 3 487.1 480 Basel 3 460 459.5 Basel 3 • FX 446.0 - 4.7 - 3.7 • Market risk 440 - 0.6 0.0 Basel 2 - 1.4 - 1.4 464.3 - 1.9 Basel 2 420 455.2 Basel 2 441.6 400 380 360 6
Slide 7: Asset quality: Continued strong asset quality
Asset quality Continued strong asset quality Credit impairments, SEKm Q3 12 Q2 13 Q3 13 • Continued solid asset quality Retail 72 37 106 in Sweden Large Corporates & Institutions -38 94 7 Baltic Banking -18 -43 -147 • Net recoveries in the Estonia 2 -36 -38 Baltic countries Latvia 8 18 -70 Lithuania
Slide 8: Swedbank's third quarter 2013 results: Q&A
Swedbank’s third quarter 2013 results Q&A
Slide 9: Appendix
Appendix Swedbank @
Slide 10: Swedish customer satisfaction index (SKI)
Swedish customer satisfaction index (SKI) Average rating 80 78 76 74 72 70 Industry average 68 66 Swedbank 64 62 60 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Source: SKI/EPSI 10
Slide 11: Swedish housing market: Regulatory initiatives targeting the mortgage market
Swedish housing market Regulatory initiatives targeting the mortgage market Swedbank´s equity doubled • LTV cap of 85% • Amortisation Total equity, SEKbn 120 100 80 • Risk-weight floor of 15% on 60 mortgage loans 40 20 • Capital and liquidity 0 requirements 2005 Q3 2013 – High minimum regulatory req
Slide 12: Swedish housing market: Shortage of housing
Swedish housing market Shortage of housing Housing completions Population and housing growth 80 000 Apartment buildings Single-family dwellings 1 200 Acc increase in population 70 000 Number of homes / persons, thousands Acc increase in housing completions 60 000 1 000 Number of apartments 50 000 80
Slide 13: Loans past due 60 days – performance Q/Q
Loans past due 60 days – performance Q/Q EURm Estonia Latvia Lithuania 50 0 -50 -100 -150 -200 -250 Q3-12 Q4-12 Q1-13 Q2-13 Q3-13 Q4-12 Q1-13 Q2-13 Q3-13 Q3-12 Q4-12 Q1-13 Q2-13 Q3-13 Q3-12 13
Slide 14: Provisions – well provided for
Provisions – well provided for SEKm 20 000 Provision ratio, % Q3-13 Retail 63 LC&I 43 15 000 65% 64% 62% Baltic Banking 52 57% 54% Group 53 53% 2 040 1 774 10 000 10 951 9 934 1 545 7 077 5 000 1 420 1 398 1 325 4 429 4 047 3 570 0 Q2-12 Q3-12 Q4-12 Q1-13 * Q2-13 * Q3-13* Individual provisions Portf
Slide 15: Credit portfolio - Retail: Corporate portfolio drives capital efficiency
Credit portfolio - Retail Corporate portfolio drives capital efficiency Total portfolio SEK 222bn Segments excl. Swedbank Volume Secured Mortgage and Swedbank Finance (SEKbn) (%) Agriculture 6.1 81 Manufacturing 8.5 74 Public sector and utilities 4.5 92 105 94 Construction 4.4 82 Retail 8.9 88 Trans
Slide 16: Credit portfolio: Agriculture
Credit portfolio Agriculture Private: • Segment definitions Residential – Corporate agriculture: Businesses that derive 20% their main income from agricultural activities – Private investments: Private individuals who own the agricultural properties for living or investment purposes Agriculture 45%
Slide 17: Credit portfolio – Large Corporates & Institutions: Shipping and offshore
Credit portfolio – Large Corporates & Institutions Shipping and offshore SEKbn Shipping and offshore -2.4% 30 -7.2% 25 26 24 23 25 • Lending exposure to Shipping & Offshore sector SEK 4 24.5bn. Decrease over the quarter mainly due to FX 20 5 – Portfolio duration 4-5y – Average fleet age 7y 10 15 – S
Slide 18: Core balance sheet structure
Liquidity and funding Core balance sheet* structure Assets Liabilities SEKbn SEKbn 1 400 1 400 Suppl. cap CET1 Government guaranteed debt 1 200 1 200 Estonia Senior CEE lending 1 000 Other corporate 1 000 lending, Sweden & Deposits other Nordic countries 800 800 Other private, Sweden 600 600 Swedish
Slide 19: Senior unsecured debt strategy
Liquidity and funding Senior unsecured debt strategy • Limited need given Swedbank’s balance sheet structure • Secure OC • Fund liquidity reserves Senior unsecured debt maturity profile House price sensitivity of the cover pool 50% SEKbn Senior unsecured debt 60 40% OC, Q313 Over-collateralisation 3
Slide 20: Lower funding needs
Liquidity and funding Lower funding needs • LCR 147% (Swedish FSA definition FFFS 2012:6) • NSFR 91% • Issued SEK 89bn of term-funding YTD of which SEK 20bn in Q3 Term funding issuance – completed and planned Covered bonds Senior unsecured SEKbn 120 100 80 60 40 20 0 Source: Swedbank, 30 Sep 2013, n
Slide 21: Long-term funding maturity profile
Liquidity and funding Long-term funding maturity profile • Term funding plan for the next 12 months of SEK 120bn to meet maturities of SEK 98bn Long-term funding maturity profile SEKbn 200 Government guaranteed debt Senior unsecured 150 debt Covered bonds 100 50 0 2013 2014 2015 2016 2017 2018 2019-
Slide 22: Liquidity reserve
Liquidity and funding Liquidity reserve According to the template defined by the Swedish Bankers' Association SEKm Cash and holdings in central banks 132 001 Deposits in other banks available overnight 443 Securities issued or guaranteed by sovereigns, central banks or multilateral development banks
Slide 23: Prefunded in excess of 12 months
Liquidity and funding Prefunded in excess of 12 months SEKbn 250 200 150 100 50 0 0 20 40 60 80 100 120 140 160 180 200 220 240 260 280 300 320 340 360 Days forward SEKbn 400 400 350 350 Additional pledgeable 300 300 and/or liquid assets 250 250 Liquidity reserve,1 Next 12-month term 200 securities
Slide 24: Limited need for USD funding
Liquidity and funding Limited need for USD funding • USD funding need covered for more than 12 months • Issued USD 1bn of covered bonds (144a) and USD 1bn of senior (144a) YTD 2013 SEKbn 250 Assets held for sale 200 Interest-bearing securities Lending to the public 150 Loans to credit institutions C
Slide 25: Asset encumbrance
Liquidity and funding Asset encumbrance Encum bered assets - distribution by type of liability (row ) and asset (colum n) Central banks Debt of w hich and instruments Securities received Government supranational issued by issued by collateral debt debt Covered credit corporate and Mortgage (off- SEK
Slide 26: Swedish mortgage market
Swedish housing and mortgage market Swedish mortgage market • No securitisation (on balance sheet), no sub-prime market, no 3rd party origination, insignificant buy-to-let market • 70% home ownership1 • Rental market is regulated • Transparent credit information (credit information agency, www.uc.se
Slide 27: Real estate price performance – Sweden 12 months
Swedish housing and mortgage market Real estate price performance – Sweden 12 months Single-family homes1 Tenant-owner rights2 Combined3 12M Δ 12M Δ 12M Δ Oct-12 1% 6% 3% Nov-12 3% 7% 4% Dec-12 4% 7% 6% Jan-13 3% 7% 5% Feb-13 4% 7% 5% Mar-13 3% 7% 5% Apr-13 2% 8% 4% May-13 4% 8% 5% Jun-13 4% 10% 6%
Slide 28: Real estate prices: Baltic countries
Real estate prices Baltic countries EURm EURm Riga Tallinn 1800 1 800 1600 1 600 1400 1 400 1200 1 200 1000 1 000 800 800 600 600 400 400 200 200 0 0 Jul-05 Jul-06 Jul-07 Jul-08 Jul-09 Jul-10 Jul-11 Jul-12 Jul-13 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jul-05 Jul-06 Jul-07 Jul
Slide 29: Mortgage loans, gross margin (3 months)
Mortgage loans, gross margin (3 months) % 6 5 4 Net margin 3 The gross margin covers: 2 Cost of liquidity ~0.2% Administrative costs ~0.3% Credit impairments ~ 0.03% 1 Tax (22 % on profit before tax) 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Gross margin Swedbank's funding cost Stibor