Slide 1: Swedbank's third quarter 2011 results
Swedbank’s third quarter 2011 results Michael Wolf, Wolf CEO Göran Bronner, CFO Håkan Berg, CRO
Slide 2: Stable result but increased macro uncertainty
Stable result but increased macro uncertainty y • Net profit of SEK 3 475m • Core Tier 1 capital ratio of 15.1 per cent • Return on equity of 14 14.4 4 per cent in Q3 • Pause in buy-backs Profit for the period Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 2
Slide 3: Well prepared to meet increased uncertainty
Well p prepared p to meet increased uncertainty y • Increased macro uncertainty – lower growth • Income pressure likely – Interest rates – Lower activity • Intensified cost focus • Strong position capital and liquidity 3
Slide 4: Increased cost of doing banking
Potential long-term effects Increased cost of doing g banking g • Lower leverage – Governments, Governments banks, banks businesses and households • Reshaping of savings market • Long-term regulatory changes – Demarcation line tax payers/shareholders – Cost of senior funding – Ringg fencing g of cer
Slide 5: Retail: Solid performance
Retail Solid p performance SEKm Profit before impairments • Improved NII 2 800 2 400 2 000 • Stable asset quality 1 600 1 200 800 • Good cost control 400 0 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 • High interest rate sensitivity SEKm Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 • Transaction to relation (T2R) Net interest i
Slide 6: Large Corporates & Institutions: Turbulent market conditions
Large Corporates & Institutions Turbulent market conditions SEKm Q1 11* Q2 11 Q3 11 SEKm Profit before impairments 1 100 Net interest income 850 884 778 of which LC & FI** 450 485 557 of which Capital markets 370 378 184 700 Commission income 505 412 399 off which LC C & FI** ** 289 202 225 300 of w
Slide 7: Baltic Banking: Stable development
Baltic Banking Stable development p Profit before impairments SEKm 1 000 • Slowing deleveraging 800 • Continued recoveries 600 400 • Increased activity 200 0 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 • High interest rate sensitivity SEKm Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Net interest income 919 1 168 997 1 017 994
Slide 8: Group results: Solid core development
Group results Solid core development p SEKm 9M 10 9M 11 Q2 11 Q3 11 • Lower asset management and Net interest income 11 802 14 124 4 740 4 857 corporate finance fees Net commission income 6 987 6 837 2 244 2 292 Net gains and losses 2 043 1 025 511 259 Other income 2 254 3 011 860 782 • Negative fun
Slide 9: Funding development Q3
Liquidity and funding Funding g development p Q3 • SEK 60bn of long-term debt issued in Q3 • D Demand d ffor S Swedbank db k short-term h tt paper continued ti d • USD-funding need covered for more than 12 months Long-term debt issued in Q3 Outstanding short-term debt SEKm SEK SEKm 35 000 Q2 11 60 0
Slide 10: Term funding at a slower pace going forward
Liquidity and funding Term funding g at a slower pace p going g g forward • Over SEK 600bn term funding issued since Q3 2009 • Significantly lengthened maturities • All government guaranteed debt pre-funded SEKbn 100 Term funding issuance Average term funding issuance Pre-funded term maturities 75 A
Slide 11: Conservative liquidity levels
Liquidity Conservative liquidity q y levels • Short-term funding mainly a tool for cash management SEKbn 350 300 250 Next 12-month Other pledgeable and/or liquid assets term funding 200 maturities Additional liquidity q y reserve assets 150 Commercial Central bank deposits papers/ Certificate of dep
Slide 12: Conservative liquidity levels
Liquidity Conservative liquidity q y levels • Short-term funding mainly a tool for cash management • M More th than 15 months th pre-funded f d d SEKbn 350 300 250 Next 12-month Other pledgeable and/or liquid assets term funding 200 maturities Additional liquidity reserve assets 150 Commercial Centr
Slide 13: Uncertain regulatory demand – Swedbank well positioned
Capital management – Core Tier 1 ratio Uncertain regulatory g y demand – Swedbank well p positioned • Still large regulatory uncertainty regarding minimum CT1 ratio and 15.1% different buffers Excess capital (SEK 10.4bn) • Basel 3 13% Extra buffer – CT1 ratio impact 100bp due to prevailing circumsta
Slide 14: Improvement but increased macro uncertainty
Risk highlights Improvement p but increased macro uncertainty y • Improved asset quality – Decreased impaired loans – Continued recoveries – Positive rating migration – Improved loan-to-value developments in Estonia, Latvia and Lithuania • Increased macro economic uncertainty – World economy slowing
Slide 15: Net recoveries of SEK 441m in Q3
Asset quality Net recoveries of SEK 441m in Q3 Credit impairments, SEKm • Continued recoveries in CEE 120 – Positive development in the Baltic corporate portfolio – Mortgage provisions in Ukraine • Solid Swedish performance -324 -441 441 -483 -972 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Retail LC&I Baltic Ban
Slide 16: Continues actions to ensure proactive risk management
Continues actions to ensure p proactive risk management g • Review of potentially exposed sectors in Retail and LC&I – Proactive P ti workk – Ensure customers’ buffers • Complementary stress tests shows strong resilience – Prudent mortgage lending in Sweden • Ukrainian and Latvian mortgage books mos
Slide 17: Focus on risk-weighted assets
Focus on risk-weighted g assets RWA development • Future focus areas SEKbn 515 – Review of small and mid-sized corporates Sweden 4.8 – Advanced IRB 510 509 3 509.3 -8.0 80 • Potential regulatory development – Mortgages 505 -4.8 500 -2.1 -2.2 497.1 495 2011 Volume Def inition Rating Other credit Mark
Slide 18: Swedbank's resilience strong
Swedbank’s resilience strong g • Solid credit portfolio • Strong capitalisation • Resilient funding position – No short-term funding dependence – Limited dependence on senior funding – Well matched USD funding – High g qquality y covered bond p pool 18
Slide 19: House price sensitivity of the cover pool
Swedbank’s cover pool House p price sensitivity y of the cover p pool Over collateralisation • Resilient LTV-structure with 30% an approximate 2-to-1 2 to 1 25% OC relationship between house 20% price drops and cover pool 15% size 10% 5% 0% -5% -10% -15% -20% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50
Slide 20: Appendix
Appendix Swedbank@ 20
Slide 21: Impaired loans decreasing
Asset quality Impaired p loans decreasing g • Excluding FX effect down SEK 2.5bn in Q3 • Minor increase in Retail in Q3 SEK SEKm 45 000 42 719 38 631 40 132 40 328 2 391 -4 088 34 778 40 000 35 770 4 362 196 3 853 -3 31 747 35 000 Share of 6 113 -3 031 30 669 29 657 28 743 impaired -1 078 30 000 -1
Slide 22: Loans past due 60 days – performance Q/Q
-90 -70 -50 -30 -10 -110 -150 -130 10 30 EURm Q3 10 Q Q4 10 Q Q1 11 Q Loans p Asset quality Estonia Q2 11 Q Q3 11 Q Q3 10 Q Q4 10 Q Q1 11 Q Latvia Q2 11 Q Q3 11 Q past due 60 days Q3 10 Q Q4 10 Q y –p Q1 11 Q Lithuania Q2 11 Q Q3 11 Q Q3 10 Q Q4 10 Q Q1 11 Q Ukraine Q2 11 Q performance Q/Q Q3 11 Q Q
Slide 23: Provisions – well provided for
Asset quality Provisions – well p provided for • Individual provisioning rates maintained • Work-out Work out portfolios slowly declining • Positive rating migrations SEKm 30 000 Provision ratios, % Q3 11 63.9% Retail 87 25 000 3 606 62.7% LC&I 103 61.0% 60.0% Baltic Banking 54 20 000 21 068 3 297 5
Slide 24: Repossessed assets
Asset quality Repossessed p assets SEKm 7 000 6 000 5 000 4 000 3 000 2 000 1 000 0 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Real Estate Residential Real Estate Commercial Passenger & Commercial Transport Shares Other 24
Slide 25: Credit impairments by category
Asset quality Credit impairments p by y category g y SEKm 2 000 1 500 1 000 120 500 0 - 500 - 324 - 441 -1 000 - 483 - 972 -1 500 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Portfolio provisions Individual provisions Recoveries Write-offs net 25
Slide 26: Real estate prices – Sweden 2011
Real estate p prices – Sweden 2011 Single-family homes Tenant owner rights Purchase price / 12M Δ Price (SEK) per Sqm* 12M Δ assessed tax value value* Jan/11 1,58 1% 21 909 8% Feb/11 1,59 1% 22 074 7% Mar/11 1,59 0% 22 004 7% Apr/11 1,6 0% 21 884 5% May/11 16 1,6 -1% 1% 21 584 4% Jun/11 1,6 -1% 21 2
Slide 27: Real estate prices – Sweden
20 40 60 80 0 100 120 140 0 100 120 140 20 40 60 80 2007-01 2007-01 2007-03 2007-03 2007-05 2007-05 2007-07 2007-07 2007-09 2007-09 Total volume 2007-11 2007-11 Total volume 2008-01 2008-01 2008-03 2008-03 2008-05 2008-05 2008-07 2008-07 2008-09 2008-09 2008-11 2008-11 2009-01 2009-01 Real estate p
Slide 28: Real estate prices – Baltic countries
Real estate p prices – Baltic countries Tallinn Riga 1 800 2 000 1 616 1 762 1 600 1 800 1 400 1 600 1 200 1 400 939 1 200 1 000 1 000 800 800 598 600 600 400 400 200 200 0 0 May-05 May-06 May-07 May-08 May-09 May-10 May-11 Mar-06 May-07 Feb-09 Apr-10 Jan-05 Sep-05 Jan-06 Sep-06 Jan-07 Sep-07 Jan-08
Slide 29: Liquidity reserve
Liquidity and funding Liquidity q y reserve* SEK SEKm AAA-rating** Cash and holdings in central banks 190 843 Deposits p in other banks available overnight g 759 Securities issued or guaranteed by sovereigns, central banks or multilateral development banks 32 854 Securities issued or guaranteed by m
Slide 30: Long-term funding
Liquidity and funding Long-term g funding g • Continued focus on covered bonds with Q3 issuance of SEK 60bn • Term funding of SEK 210bn issued first 9M 2011, with maturities of SEK 97bn during the same period • Maturities for the remainder of 2011 amount to nominal SEK 69bn • Nominal figures term fu
Slide 31: Remaining government guaranteed debt
Liquidity and funding Remaining g government g guaranteed g debt • Exited the programme on 30 April 2010 • No issuance under the p programme g since summer 2009 • SEK 39bn of government guaranteed debt matured during the first nine months of 2011 • Maturities of SEK 41bn for the remainder of 2011 Ma
Slide 32: Limited unsecured funding need
Liquidity and funding Limited unsecured funding g need Lending to the public, less deposits, covered bond pool and retail bonds SEKbn 200 150 100 50 0 -50 -100 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2008 2009 2009 2009 2009 2010 2010 2010 2010 2011 2011 2011 32