Swedbank Ab Class A · OMXSTO:SWED_A
Swedbank Ab Class A — Q1 2023 Earnings Presentation
24 slides from Swedbank Ab Class A's earnings presentation, 2023
Slide 1: A sustainable bank is a profitable bank
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Slide 2: Macro outlook: higher policy rates, weaker economy, falling inflation
Sweden Latvia ● Rapid transition to higher policy rates Estonia Lithuania 8.0 ● Weaker economic outlook 5.1 4.16.0 2.6 2.8 2.3 2.11.8 1.9 0.6 0.3 ● Falling inflation from high levels -0.3 -1.3 -1.3 -0.8 2021 2022 2023F 2024F Sweden Latvia Riksbank ECB (refi rate) Estonia Lithuania FED (upper bound)
Slide 3: Q1 2023 income statement and key ratios
▲ ● Return on equity Net interest income 11 936 10 918 9% 17.0 per cent Net commission income 3 660 3 422 7% ● Cost/Income ratio 0.37 Net gains and losses 916 763 20% Other income 875 843 4% ● IT-related fine imposed Total income 17 387 15 947 9% by the Swedish FSA and Total expenses 6 410 5 602 14%
Slide 4: Capital buffer, dividend and credit impairments
● CET1 capital buffer 390bps above requirement ● Paid dividend of SEK 9.75 per share to shareholders ● Macro economic outlook drives credit impairments ● Management overlay amounts to SEK 2bn © Swedbank 4
Slide 5: Corporate lending and deposits
● Corporate loan book – Stable in Swedish Banking – Reduced in LC&I according to 15/25 – Stable in Baltic Banking ● Focus on existing customers ● Corporate deposits increased slightly © Swedbank 5
Slide 6: Savings and mortgage markets
● Savings – Reduced private deposits – Competitive rates on savings accounts – Requalified for occupational pension scheme, ITP in Sweden ● Swedish mortgage market – Low annual market growth – Increased amortisations ● Baltic mortgage market – Stable house prices © Swedbank 6
Slide 7: Financial Health Index launched in all home markets
● Financial Health Index launched in all home markets ● Swedbank want to empower 1 million individuals to strengthen their financial health by 2030 © Swedbank 7
Slide 8: Sustainability: climate position and energy efficiency
● Climate position in line with Paris agreement ● Potential to finance energy efficiency in buildings ● Our expertise leverage co-operations – Education of sustainability specialists at TalTech in Estonia – Business council with sustainability focus in Latvia – Sustainable innovation with Rockit in
Slide 9: Lending and deposit volumes
YoY +1.9% QoQ +0.4% QoQ -0.7% 704 699 695 1 298 23 1 298 6 1 303 -0 -17 -6 Q4 2022 Q1 excl. FX Q1 2023 QoQ +1.7% 602 604 594 Q4 2022 Swedish Baltic LC&I Group Q1 excl. FX FX Q1 2023 Banking Banking Functions Q4 2022 Q1 excl. FX Q1 2023 © Swedbank 9
Slide 10: Deposit and lending volume development
YoY +3.9% QoQ -0.4% QoQ -0.3% 1 177 1 174 1 172 1 799 1 1 789 3 1 791 0 -7 -4 Q4 2022 Q1 excl. FX Q1 2023 QoQ -0.6% 621 616 617 Q4 2022 Swedish Baltic LC&I Group Q1 excl. FX FX Q1 2023 Banking Banking Functions Q4 2022 Q1 excl. FX Q1 2023 © Swedbank 10
Slide 11: Net interest income development
QoQ +9.3% ● NIM expansion 1 062 169 11 936 -157 10 918 -55 Business-driven NII Q4 2022 Volumes Margins Treasury & Other FX & Other Q1 2023 © Swedbank 11
Slide 12: Net commission income
QoQ +7.0% ● Cards higher – Mastercard discounts on card issuing 80 3 660 – Negative adjustments in 67 15 3 422 76 Q4 of SEK 80m (net) – Underlying seasonally lower ● Asset management higher due to stock market performance ● Securities and Corporate finance up Q4 2022 Cards & Asset Corporate Other Q1
Slide 13: Net gains and losses
● Strong Fixed income and FX trading with high client activity ● Positive revaluation 268 3 36 916 effects in Treasury -41 650 Client trading Funding Liquidity Bond inventories Other Total NGL (Treasury) portfolio © Swedbank 13
Slide 14: Other income
● Net insurance1) increase driven by positive Other Associates revaluation effect Net insurance1) ● Lower income from 875 843 EnterCard and other 775 associates 695 415 422 – Higher income from the 514 398 Savings Banks 366 171 382 194 165 261 235 282 164 118 117 14 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q
Slide 15: Expenses and cost/income ratio
● Lower underlying expenses Underlying expenses Administrative fine and provision C/I ratio – Salary revision in Sweden 0.44 0.45 0.38 0.37 – Baltic Winter Allowance 0.35 ended in March 6 410 5 602 890 ● Supporting KPI of C/I 5 185 4 938 5 092 through the cycle of 0.40 5 602 5 520 4 938 5 092 5 185
Slide 16: Credit impairments
● Updated macro forecasts – Impacting rating & stage migrations 198 777 ● Stage migrations 10 -57 – Both from macro update 278 and rating migrations ● Expert portfolio 348 adjustments – Mainly strengthened buffer for property management Macro Rating & stage Individual Expert portfolio Other Total cr
Slide 17: Property management loan portfolio
● Focus on strong cash 8% 3% 6% 4% flows and collateral Residential Sweden 1% Commercial 16% 30% Estonia 5% ● Continuous dialogue with Latvia SEK Industrial & SEK 294bn customers Warehouse 294bn Lithuania Other Norway ● Average LTV4) Finland 46% 81% − Property Management 53% − Non-residential, 52% −
Slide 18: Loan-to-value and credit losses
20 20 16 16 96% of portfolio below 70% LTV 12 12 ● Average loan-to-value of 57 8 8 per cent 4 4 0 0 1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 55 58 61 64 67 70 73 76 79 82 85 88 91 94 97 100 LTV per cent 0.50% 1000 ● Increasing over due loan 0.40% 800 0.30% >60 days, per cent, LHS >60 days,
Slide 19: CET1 capital ratio and buffer
● CET1 capital ratio of 18.3 per cent ● 100-300bps capital buffer 390bps buffer target range remains 17.8% 0.5% 0.1% 18.3% ● Additional 1 per cent -0.0% 14.4% countercyclical buffer for Sweden1) in June 2023 (SFSA) Q4 2022 Change in Profit after Other Q1 2023 CET1 capital 1) Expected impact of ~0.7
Slide 20: Summary
● Return on equity 17.0 per cent ● Cost to income ratio 0.37 ● Strong liquidity and capital position ● Good credit quality ● Initiatives to support our vision of a financially sound and sustainable society © Swedbank 20
Slide 21: Slide 21
Slide 22: Appendix
Appendix
Slide 23: Deposits and loan-to-deposit ratio
699 LTD-ratio 604 +42% 137% 54% 394 46% 1259 1298 1303 1131 920 954 305 Private Corporate On-demand Savings account 83% 87% 88% 92% 2018 2019 2020 2021 2022 Q1 2023 54% 61% 61% 58% 3% 5% 7% 9% Sweden Estonia Latvia Lithuania Private SME Corporate © Swedbank 23
Slide 24: Liquidity coverage ratio and liquidity portfolio
165% Liquidity Coverage Ratio 42 7 7 15 3 47 120% Net Stable Funding Ratio 317 357 277 299 >2Y Survival horizon Cash and balances with central banks SEK EUR USD OTHER Sovereigns, central banks or multilateral development banks 1 Municipalities or public service entities Extremely high quality covere