Swedbank Ab Class A · OMXSTO:SWED_A
Swedbank Ab Class A — Q4 2010 Earnings Presentation
24 slides from Swedbank Ab Class A's earnings presentation, Feb 8, 2011
Slide 1: Swedbank's fourth quarter 2010 results
Swedbank’s fourth quarter 2010 results 8 February 2011 Michael Wolf, CEO Erkki Raasuke, CFO Göran Bronner, CRO
Slide 2: Favourable profit trend
Favourable profit trend • Net profit of SEK 7.4bn for 2010 • Core Tier 1 ratio of 13.94 per cent • Proposed dividend: SEK 2.10 per A-share, SEK 4.80 per preference share Net profit performance Q4 09 Q1 10 Q2 10 Q3 10 Q4 10 2
Slide 3: Summing up the year
Priorities 2010 Summing up the year • Customer satisfaction • Lower risk level • Earnings • Liquidity and capitalisation 3
Slide 4: Making progress but still more to do…
Priorities 2010 – Customer satisfaction Making progress but still more to do… • New service concepts in Retail yields result • Sector focus in LC&I • Baltic Banking implementing same customer approach as Retail in the branch network • Enhanced capital markets offering to meet increased demands 4
Slide 5: Significantly reduced risk
Priorities 2010 – Lower risk level Significantly reduced risk Credit impairments, SEKm • Continued reduced CEE lending 7 500 • Estonia joined the EMU 6 500 1 Jan 2011 5 500 • Decreased RWA 4 500 • Reduced need for senior funding 3 500 2 500 1 500 500 -500 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3
Slide 6: Pre-provision earnings starting to improve
Priorities 2010 – Earnings Pre-provision earnings starting to improve Net interest income, SEKm • Net profit increased by 7 000 SEK 18bn due to lower credit impairments 6 000 • NII troughed in Q2, positive trend 5 000 • Expenses adopted to lower 4 000 business volumes 3 000 2 000 1 000 0 * In Q4 NII
Slide 7: Strengthened funding position
Priorities 2010 – Liquidity and capitalisation Strengthened funding position SEKbn • Average maturity of capital 500 Covered bonds market funding extended Central bank and guaranteed funding to 27 months 400 • Left the state guarantee programme in April 300 • State guaranteed funding and central ban
Slide 8: New capitalisation target and dividend policy
New capitalisation target and dividend policy • Core Tier 1 capital ratio of at least 13 per cent until 2013 • Long-term core Tier 1 capital ratio of at least 10 per cent • AGM to decide on buy-back programme to manage capitalisation • New dividend policy from 2011 – 50 per cent pay-out ratio 8
Slide 9: Net interest income
Net interest income Growing NII • Increasing interest rates in SEK • Deposit margins improving • Restated Baltic Banking late payment fees Retail LC&I Baltic Russia, Treasury, Banking Ukraine Other 4 702 4 527 13 159 249 91 4 023 253 -59 3 799 3 980 1 168 733 2 752 (SEKm) -285 Q4 09 Q1 10 Q2 10 Q3 1
Slide 10: Net commission income
Net commission income Strong commission income • Strong syndicated lending fees • Low brokerage fees in Q3 • Corporate finance picking up Retail LC&I Baltic Russia, Asset mgmt, Banking Ukraine Other 2 538 2 361 2 395 2 310 2 282 23 94 -3 1 428 113 20 383 575 1 132 (SEKm) Q4 09 Q1 10 Q2 10 Q3 10 Q4 1
Slide 11: Net gains/losses on financial items, fair value
Net gains/losses on financial items, fair value Lower gains with higher quality • Strong end of the year from LC&I • Cancellation of deposit in Russia • Treasury valuation effects turned to negative Baltic Russia, Treasury, LC&I Banking Ukraine Other Retail 809 29 180 647 574 38 -71 315 77 223 439 (
Slide 12: Expenses
Expenses Expenses seasonally higher • Accelerated IT development • Y/Y expenses flat • FR&R and Ektornet 2010 expenses SEK 714m 0.57 0.57 0.55 0.58 0.54 LC&I Baltic Russia, Asset mgmt, Retail Banking Ukraine Other 4 300 4 391 4 423 152 73 9 4 590 4 238 123 -5 582 211 697 877 (SEKm) 2 223 Q4 09 Q1 10
Slide 13: SEK 265bn term funding issued in 2010
Liquidity & Capital management SEK 265bn term funding issued in 2010 • Full year 2011 maturities of nominal Issued & matured full year 2010 (nominal SEKbn) SEK 180bn 60 – Of which SEK 80bn in guaranteed 40 funding 20 – Of which SEK 86bn in covered bonds 0 -20 • Average maturity of wholesale funding,
Slide 14: Income statement
Fourth quarter 2010 results Income statement SEKm Q4 10 Q3 10 QoQ % Q4 09 Income 7 958 7 647 4% 7 982 Expenses 4 590 4 238 8% 4 300 Profit before impairments 3 368 3 409 -1% 3 682 Impairment of intangible assets 23 Impairment of tangible assets 406 30 352 Credit impairments - 483 120 5 003 Operating
Slide 15: Asset quality: Continued improvements
Asset quality Continued improvements • All indicators in the right direction – Impaired loans – 60 days overdue Declining in all countries – Restructured loans – Watch list • RWA decreased by SEK 18.4bn in Q4 – Positive rating migration – Continued de-leveraging in Baltic countries • Recoveries in C
Slide 16: Credit impairments of SEK -483m
Asset quality Credit impairments of SEK -483m SEKm 6 000 • Net recoveries in Baltic Banking 5 003 and Russia & Ukraine 5 000 • Minor credit impairments in 4 000 Retail and LC&I 3 000 • Write-down of tangible assets, 2 210 mainly in Ukraine 2 000 963 1 000 120 0 -1 000 -483 Q4 09 Q1 10 Q2 10 Q3 10 Q4
Slide 17: European peer comparison core Tier 1 ratios
10% 12% 14% 16% 0% 2% 4% 6% 8% UBS Swedbank 13.9 SEB 12.2 Dexia SHB 12.1 N. B. Of Greece DnB NOR Stan Chart Capital management HSBC RBS Nordea 10.3 Barclays Core Tier 1 ratios (Basel 2) European banks* Danske Bank Credit Suisse EFG EuroBank Bank of Ireland BNP B. Popular Espana BNP Lloyds Soc Gen Sa
Slide 18: Assets – significantly reduced risk level since Q4 08
Capital management Assets – significantly reduced risk level since Q4 08 (SEKbn) 1 400 • Estonia joined the EMU, 1 Jan 2011 1 200 • RWA reduced from SEK 697bn to -108 CEE lending SEK 541bn Estonia 1 000 • Reduced need for unsecured Other corporate lending, Sweden & funding of about SEK 150bn other N
Slide 19: Liabilities – significantly reduced risk level since Q4 08
Capital management Liabilities – significantly reduced risk level since Q4 08 (SEKbn) 1 400 • Increased use of stable and efficient funding sources 1 200 Central banks + Government guaranteed -182 Senior unsecured • Issued SEK 365bn since 1 000 -46 second rights issue Covered bonds 800 +140 • Maturi
Slide 20: Capitalisation – solid to meet risk profile and uncertainties
Capital management – Core Tier 1 Capitalisation – solid to meet risk profile and uncertainties Excess capital • CT1-ratio to stay above 13.0% 13 per cent until 2013 Extra buffer due to prevailing – Perception circumstances – Unclear regulatory framework 10.0% – Uncertain macro economic Risk appetite
Slide 21: Excess capital – no need to increase capital further
Capital management Excess capital – no need to increase capital further • Large capital buffer in relation to current risk level • Increasing profit generation • RWA growth expected to be moderate • Continued focus on capital efficiency 21
Slide 22: Proposal: buy-back programme
Capital management Proposal • AGM to decide on buy-back programme to manage capitalisation – Up to 10 per cent of outstanding shares (incl. acquisition of own shares through the securities operations) – Gradual buy-backs during the permit period – Full flexibility to chose between A and preference s
Slide 23: Priorities 2011
Priorities 2011 • Customer focus • Growth in selective segments • Quality and effectiveness • Robust and low-risk balance sheet 23
Slide 24: Welcome to Swedbank's Capital markets day
Welcome to Swedbank’s Capital markets day 23 February 2011 Registration at www.swedbank.com/ir