Swedbank Ab Class A · OMXSTO:SWED_A
Swedbank Ab Class A — Q3 2020 Earnings Presentation
29 slides from Swedbank Ab Class A's earnings presentation, October 2020
Slide 1: Swedbank's third quarter results 2020
Swedbank’s third quarter results 2020 Jens Henriksson (CEO), Anders Karlsson (CFO), Rolf Marquardt (CRO) © Swedbank Information class Public
Slide 2: Covid-19
Covid-19 Source: John Hopkins University/BBC, updated Oct. 14, 2020 © Swedbank Information class Public 2
Slide 3: "A long and difficult ascent"
“A long and difficult ascent” 2019 2020F 2021F IMF* June June Global 2.8 % -4.4 % (- 4.9%) 5.2 % (5.4%) Swedbank** Sweden 1.2 % - 5.0 % (- 4.9%) 3.2 % (1.9%) Estonia 4.4 % - 5.0 % (- 7.0%) 4.5 % (5.0%) Latvia 2.2 % - 5.0 % (- 7.5%) 4.2 % (4.3%) Lithuania 3.9 % - 1.7 % (- 6.5%) 4.9 % (4.5%) • IMF Wor
Slide 4: Support to our customers during the pandemic
Support to our customers during the pandemic © Swedbank Information class Public 4
Slide 5: Another strong quarter in uncertain times
Group result Another strong quarter in uncertain times SEKm Q3 20 Q2 20 ▲QoQ Net interest income -172 • Stable NII 6 714 6 886 Net commission income 3 246 2 925 321 • Stronger NCI due to increased card Net gains and losses 669 1 398 -729 activity and asset values Other income 975 867 108 • Stabilise
Slide 6: AML initiatives - areas and total numbers Q3 2020
AML initiatives - areas and total numbers Q3 2020 4 (3) FIU Reporting Risk Assessment 16 (11) 59 (39) Monitoring Internal Regulations 76 (43) 244(217) 12 (8) Risk Classification Training 2 (2) 75 (46) Customer Due Diligence White: Total number of milestones in Q3 2020 Grey: Total number of milestone
Slide 7: AML initiatives – work in progress
AML initiatives – work in progress Total Not yet Total Ongoing Ongoing Ongoing Completed started initiatives 145 42 7 31 19 244 © Swedbank Information class Public 7
Slide 8: Feedback from customers gives digital solutions
Feedback from customers gives digital solutions QR-login in Youth App Chat with us! Expense control Internet bank © Swedbank Information class Public 8
Slide 9: The road to Swedbank
The road to Swedbank 9
Slide 10: © Swedbank Information class Public
© Swedbank Information class Public
Slide 11: Stable net interest income
Group result Stable net interest income NII, SEKm 240 • Stable loan volume development 6 886 40 228 6 714 – Lower corporate volumes somewhat -23 -546 outweighed mortgage loan growth -111 • Higher deposit volumes • Higher mortgage loan margins • Lower deposit margins Q2 2020 Lending Deposit Lending D
Slide 12: Stronger net commission income
Group result Stronger net commission income NCI, SEKm • Higher income from cards due to 176 2 3 246 higher activity 143 • Asset management income positively 2 925 impacted by higher AuM – Strong net inflows in equity funds Q2 2020 Cards & Asset Other Q3 2020 Payments management Increase Decrease © S
Slide 13: Stabilised net gains & losses
Group result Stabilised net gains & losses NGL, SEKm • Positive valuation effects 1 398 1 218 – Derivatives – Bond inventories 669 457 • Shares in Asiakastieto was sold during the quarter offset by Visa share conversion Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 -322 • Good underlying client trading ac
Slide 14: Higher other income
Group result Higher other income Other Income, SEKm • Higher net income from insurance due to higher premium income and lower 975 919 915 867 claims 645 • Higher income from Entercard • Stable income from savings banks Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 © Swedbank Information class Q3 2020 Publ
Slide 15: Underlying expenses according to plan
Group result Underlying expenses according to plan Expenses, SEKm • AML investigation expenses 5 549 5 370 remains at low level 4 843 4 761 519 576 43 63 • Seasonally lower staff cost offset by higher headcount 5 030 • FY 2020 total expected expenses 4 794 4 800 4 698 below SEK 21bn Q419 Q120* Q220
Slide 16: Strong asset quality
Strong asset quality Credit impairments by business area, SEKm 2 151 373 146 1 235 Swedish Banking 432 Baltic Banking 1627 LC&I 56 Baltic crisis 425 740 43 1.93 521 Covid-19 pandemic -140 Credit impairment ratio, % YTD Q3 0.30 Q308 Q109 Q309 Q110 Q310 Q111 Q311 Q112 Q312 Q113 Q313 Q114 Q314 Q115 Q31
Slide 17: IFRS 9 – high uncertainty remains
IFRS 9 – high uncertainty remains • Improved macro scenario • High uncertainty from pandemic recovery • Individual assessment – mainly oil-related 114 432 3 811 3 386 804 82 -234 425 -773 3 386 Credit Macroeconomic Expert portfolio Expert portfolio Individual Rating Other (LGD, Credit impairments H1
Slide 18: Major part of Swedbank's loan portfolio insignificantly impacted by Covid-19
Major part of Swedbank’s loan portfolio insignificantly impacted by Covid-19 Loans carrying amount, SEKbn ▪ Considerably impacted sectors Distribution by Distribution by sub- − Manufacturing sector sensitivity sector sensitivity* − Retail − 7% 2% − Transportation Shipping and Offshore (oil) 109 29 1
Slide 19: Shipping and Offshore by sub-sectors - half of portfolio in run-off
Shipping and Offshore by sub-sectors - half of portfolio in run-off Gross loans, SEK 20bn of which SEK 12bn in offshore Sub-sectors, gross loans by stages Credit impairment provisions, SEK 5bn Total stage 3 loans, SEK 7bn 6 6 Shipping Offshore Shipping Offshore 5 5 4 4 3 3 2 2 1 1 0 0 Stage 1 Stage
Slide 20: Solid capital position
Capital Solid capital position CET1 capital ratio, % 17.0% 16.1% 16.4% 16.8% • CET1 capital increased by SEK 3.0bn 13.0% – Positive effect from net profit of SEK 2.1bn excl. dividend – Positive IAS19 pension valuation Q4 2019 Q1 2020 Q2 2020 Q3 2020 CET1 capital effect of SEK 0.7bn ratio CET1 capita
Slide 21: Stable Risk Exposure Amount (REA)
Capital Stable Risk Exposure Amount (REA) REA, SEKbn • REA decreased by SEK 0.9bn – Lending volumes decreased credit risk 692.4 0.1 1.3 691.5 – Market movements increased REA for market risk and derivatives -1.1 -1.2 – LGD model update replaced LGD Article 3 add-on Q2 2020 Credit risk excl. Credit r
Slide 22: Appendix
Appendix © Swedbank Information class Public
Slide 23: Stable underlying loan volumes and strong deposit volume inflows
Stable underlying loan volumes and strong deposit volume inflows Loans, SEKbn Deposits, SEKbn -2 +26 * 1 625 8 2 1 622 10 16 1 075 1 049 -12 Q2 2020 Swedish Baltic banking Corporate excl. Q3 2020 Q2 2020* Private Corporate* Q3 2020* mortgage loans Baltic banking Of which FX +1 Of which FX +2 *excl.
Slide 24: Strong financial position to manage uncertainty
Strong financial position to manage uncertainty Balance sheet Earnings capacity (profit before impairments, SEKbn) • Liquidity coverage ratio, 153% 30 20 • Net stable funding ratio, 124% 10 0 • Liquidity reserve, SEK 563bn 2011 2012 2013 2014 2015 2016 2017 2018 2019 YTD Q3 2020* – Of which SEK 388b
Slide 25: Property management – focus on well-known property management companies with solid finances
Property management – focus on well-known Property management companies with solid finances Sweden, SEK 206bn (82% of total) Swedbank Group, SEK 249bn 35% 30% • Commercial property management, SEK 101bn 41% 17% – Mostly office properties with low vacancies in growing larger cities 7% 6% – Approximat
Slide 26: IFRS9 scenarios – Q3 2020 (August)
IFRS9 scenarios – Q3 2020 (August) Asset quality Positive scenario (16.7%) Base scenario (66.6%) Negative scenario (16.7%) GDP Unemployment Houseprices GDP Unemployment Houseprices GDP Unemployment Houseprices Annual growth Annual average End-year Annual growth Annual average End-year Annual growth
Slide 27: Sustainability in our DNA – Q3 accomplishments
Sustainability in our DNA – Q3 accomplishments Enabling customers to make smart and sustainable choices Swedbank recent commitments and recognitions ❖ Swedbank Robur presented its first ‘Paris Aligned’ Swedbank Latvia achieved its highest score and maintained for the third funds (Access Edge) based
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, % 800 • Solid liquidity buffer – prefunded 700 130 NSFR, CRD2 (LHS) LCR (RHS) 190 180 for more than 12 months 600 125 500 170
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 Oct 19 4% 3% 3% Nov 19 5% 4% 5% Dec 19 4% 5% 4% Jan 20 6% 6% 6% House price index, Sweden 2005=100 Feb 20 7% 7% 7% 350 Mar 20 6% 6% 6% Total 300