Swedbank Ab Class A · OMXSTO:SWED_A
Swedbank Ab Class A — Q3 2022 Earnings Presentation
26 slides from Swedbank Ab Class A's earnings presentation, 2022
Slide 1: Swedbank Q3 2022 presentation after results
ate tg » 5 o SC Be OSwedbank after results “&& 2027 Sa ~S 9
Slide 2: GDP, percent change
GDP, percent change ● Multiple challenges weigh on the outlook 2021 2022F 2023F 2024F ● IMF revises down the global growth forecast Estonia 8.0 0.5 0.0 2.5 ● We operate in four resilient home markets Latvia 3.9 2.8 0.0 2.9 Lithuania 6.0 2.0 0.0 2.1 Sweden 5.1 2.7 -1.1 1.0 World* 6.0 3.2 2.7 3.2 Sour
Slide 3: Net profit of SEK 5.7bn, RoE of 13.9%
SEKm Q3 22 Q2 22 ▲% Net interest income 8 360 7 113 18% Net commission income 3 643 3 551 3% Net gains and losses 945 57 >100% Other income 1 082 891 21% ● Net profit of SEK 5.7bn Total income 14 030 11 612 21% ● RoE of 13.9% Total expenses 5 329 5 248 2% Profit before impairments 8 701 6 364 37% ●
Slide 4: Strong credit quality, capital buffer, cyber security investments
Strong credit quality Capital buffer of around 420 bps Continued investments in cyber security 4
Slide 5: Market Share, % Position
Market Share, % Position 25 1 20 2 15 3 10 4 5 5 0 6 jan-21 feb-21 mar-21 apr-21 maj-21 jun-21 jul-21 aug-21 sep-21 okt-21 nov-21 dec-21 jan-22 feb-22 mar-22 apr-22 may-22 jun-22 jul-22 aug-22 © Swedbank Information class Restricted access Confidential 5
Slide 6: Improved digital solutions to corporates
Improved digital solutions to corporates App usage increased with 30 percent Digital on-boarding of 12 000 youths © Swedbank Information class Restricted access Confidential 6
Slide 7: Robur #1 in Morningstar Sustainability Rating
Robur #1 in Morningstar Sustainability Rating Social bonds in sustainable funding framework Co-operation on fraud prevention © Swedbank Information class Restricted access Confidential 7
Slide 8: Supporting corporates with liquidity
Supporting corporates with liquidity Financing energy solutions Swedbank the most loved brand © Swedbank Information class Restricted access Confidential 8
Slide 9: Loan growth by business area, SEKbn
Loan growth by business area, SEKbn Private loans 1 175 1 173 1 164 10 2 1 796 5 1 801 10 1 768 6 +9bn +28bn Q2 2022 Q3 excl. FX Q3 2022 Corporate loans 623 626 604 Q2 2022 Swedish Baltic LC&I Other Q3 excl. FX Q3 2022 banking banking FX +19bn Q2 2022 Q3 excl. FX Q3 2022 9
Slide 10: Deposit growth by business area, SEKbn
Deposit growth by business area, SEKbn Private deposits 699 694 696 +2bn 1 293 4 1 279 6 1 285 1 -6 -13 -14bn Q2 2022 Q3 excl. FX Q3 2022 Corporate deposits 599 Q2 2022 Swedish Baltic LC&I Other Q3 excl. FX Q3 2022 banking banking FX 586 583 -16bn Q2 2022 Q3 excl. FX Q3 2022 10
Slide 11: Best quarter ever: NII distribution
● Best quarter ever NII distribution, SEKm +18% – Underlying NII, SEK +1.2bn 1 878 31 8 360 – Higher loan volumes 152 -814 7 113 – Higher deposit margins 1 216 – Lower lending margins – Increased funding cost Q2 2022 Volumes Margins Group Other Q3 2022 Treasury NII five quarters, SEKm +1 572 8 360 7
Slide 12: NCI distribution by income source
● Improved cards income NCI distribution by income source, SEKm 112 7 3 643 – Seasonally higher cards income 3 551 16 -43 ● Seasonal lower corporate finance and securities income ● Stable Asset Management income – Resilient performance amidst negative market conditions Q2 2022 Cards & Corporate Asse
Slide 13: NGL distribution by type, SEKm
NGL distribution by type, SEKm ● Positive contribution 385 108 945 – Reversal of valuation effects from 8 previous quarters in Treasury -107 – FX sales and client trading 551 ● Impacted negatively by – Treasury liquidity portfolio due to widening credit spreads Funding Client Liquidity Bond Other To
Slide 14: Other income distribution by quarter and type
● Higher income from Net insurance, Distribution by quarter and type, SEKm EnterCard and Savings banks +191m 1 082 990 927 910 891 423 361 326 459 391 261 239 253 165 118 327 331 366 382 398 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Other Associates Net insurance Other Income, SEKm 1 200 1 000 800 600
Slide 15: Total expenses by quarter, SEKm
● Slightly higher expenses in Q3 Total expenses by quarter, SEKm – Increased energy cost 5 842 92 5 248 5 329 – IT development and maintenance 5 042 5 087 92 152 96 55 ● Expect ~1% above SEK 20.5bn cost cap 5 750 5 156 5 177 4 946 5 032 for 2022 underlying expenses excluding FX ● AML investigation c
Slide 16: Other impairments: software and goodwill in Norway
● Impairment of internally developed software, SEK 263m ● Impairment of goodwill in Norway, SEK181m © Swedbank Information class Restricted access Confidential 16
Slide 17: Credit impairments Q3, SEKm
● Updated macro scenarios Credit impairments Q3, SEKm ● New definition of default 171 -20 -2 ● Rating migrations – impacted by 602 207 -87 macro ● Expert portfolio adjustments 333 – Reassessment of specific sectors ● Year-to-date Q3 – Macro scenarios update of SEK 835m Macro New definition Rating an
Slide 18: Loan distribution and LTV of corporate lending
● Focus on strong cash flows Loan distribution per type and country, SEK 289bn ● Debt Service Tolerance Residential 8% 4% 2% Sweden properties 11% 1% – Includes stress of financial cost of 6-8% Commercial 30% 4% Estonia 15% properties ● Well collateralised Industrial and Latvia Lithuania Warehouse ●
Slide 19: Strong capitalisation: CET1 capital distribution
Target CET1 capital distribution, SEKbn 135.9 5.7 0.8 139.6 range of ● Strong capitalisation 100-300bps - 2.8 ● CET1 capital ratio buffer of around 420bps above requirements – Implementation of Swedish CCyB rate and SREP (Pillar 2) ● REA increased by SEK 9bn to SEK 753bn Q2 2022 Profit Anticipated O
Slide 20: Summary: strong result in turbulent times
• Swedbank delivers a strong result in turbulent times • Net profit SEK 5.7bn • Return on equity 13.9% • Cost income ratio of 0.38 • Investor day 6th Dec with plan on how to reach 15% RoE 20
Slide 21: Appendix
© Swedbank Information class Restricted access Confidential
Slide 22: Financial targets: ROE, cost efficiency, CET1, dividend policy
ROE target of 15% Market leading cost efficiency 17.3 18.9 17.6 18.6 0.54 0.43 0.44 11.5 0.39 0.38 15.1 16.1 14.7 13.2 8.9 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 Earnings per share, SEK Return on equity, % Cost to income ratio CET1 capital ratio buffer target of 100-300bps above requireme
Slide 23: Private mortgages: low historical loss ratio
Private mortgage annual loss ratio, % 0.30% ● Strong repayment ability due to 0.25% prudent origination and regulations 0.20% Accumulated losses of SEK 1.7bn since – Focus on affordability 0.15% 1982 0.10% – Interest rate stress - the higher of: 0.05% ● 6 percent interest rate or 0.00% ● 5 year fixe
Slide 24: Capital highlights
Capital Buffer of ~ 420bps 14.3% 18.5% 1.7% 2.4% 18.6% 23.1% 13.0% Highlights • REA increased by SEK 9bn to SEK 5.5 Pillar 2 Guidance 753bn 1 Leverage ratio req. & P2G 5.2 2.5 (3.45%) • CET1 capital ratio buffer of around Capital Conservation Buffer 0.8 420bps above requirements and P2G - 1 Automati
Slide 25: Liquidity and funding
Liquidity and funding Strong funding profile Liquidity reserve ● LCR 154% (EU 2015/61) SEKbn Outstanding volumes SEKbn 625 1 400 Q2 2022 Q3 2022 Level 1 assets ● NSFR 117% (CRD2) 1 200 176 1 000 ● Issued SEK 102bn of long-term 800 of which cash and balances funding in YTD Q3 2022 600 449 with centra
Slide 26: Swedish housing and mortgage market
Swedish housing and mortgage market Houses1 Flats2 Combined3 House price index, Sweden 12M Δ 12M Δ 12M Δ 2005=100 (Monthly data as per May 2022) Oct 21 13% 8% 11% 360 Nov 21 13% 8% 11% 330 Total Dec 21 11% 9% 11% 300 Tenant-owner rights (apartments) Jan 22 12% 9% 10% 270 Single-family houses Feb 22