Swedbank Ab Class A · OMXSTO:SWED_A
Swedbank Ab Class A — Q4 2005 Earnings Presentation
41 slides from Swedbank Ab Class A's earnings presentation, 2006
Slide 1: FöreningsSparbanken Q4 2005
FöreningsSparbanken Q4 2005 Jan Lidén, CEO
Slide 2: Highlights 2005
2 Highlights 2005 • The market share for total new savings from Swedish households rose to 19 percent (17) • For new household deposits, the Swedish market share rose to 31 procent (10) • Funds under management in Robur rose to SEK 355 bn (280) – a new all-time high • Group lending increased by 14 p
Slide 3: Result highlights
3 Result highlights SEK M Q1-4 2005 Q1-4 2004 +/-, % Operating profit 15,010 10,578 42 – excluding items affecting comparability 13,548 11,874 14 Total income 29,460 24,683 19 Net interest income 15,539 15,199 2 Net commissions 7,170 6,122 17 Net gains and losses on financial items at fair value 2,9
Slide 4: Highlights Q4
4 Highlights Q4 • Continued high profitability High revenue and business volume growth Market shares top priority in Sweden Hansabank’s growth accelerated Basel II calculations confirm considerably lower risk-weighted amount
Slide 5: Basel II and capital adequacy
5 Basel II and capital adequacy • The Group’s aggregated risk-weighted amount for credit risks, operational risks and market risks in FSB calculated in QIS5 study • Group risk-weighted amount estimated to fall by slightly less than 30 percent Minimum future capital requirement compared to current le
Slide 6: Results, Q4 2005
6 Results, Q4 2005 • Operating profit rose by 12 percent to SEK 3,279 M (2,922) • Net profit rose by 25 percent to SEK 2,570 M (2,063) • RoE increased to 19.7 percent (19.0) • Total income increased by 9 percent to SEK 6,997 M (6,397) • Costs increased by 10 percent to SEK 3,717 M (3,376) • Hansaban
Slide 7: Group P&L
7 Group P&L SEK M Q4, 2005 Q3, 2005 +/-, % Net interest income 3,712 3,860 –4 Net commissions 1,896 1,910 –1 Net gains and losses on financial items at fair value 1,006 789 28 Other income 383 1,839 – 79 Total income 6,997 8,398 – 17 Staff expenses – 1,731 – 1,700 2 Profit-based staff expenses – 378
Slide 8: EnterCard
8 EnterCard • Re-classified as a joint venture and consolidated according to equity method, leaving only associate income in Group P&L from Q3, 2005 and onwards • Negative impact on NII in Swedish Banking of SEK -98 M in Q4 and -91 M in Q3 • Negative impact on net commission income in Swedish Bankin
Slide 9: Items affecting comparability
9 Items affecting comparability 2005 SEK M Q4 Q3 Q2 Q1 Q1-4 Capital gain on sale of shares in EnterCard – 10 810 800 Capital gain on sale of shares in KIAB 1,421 1,421 Profit-based staff expenses – 378 – 349 – 444 – 183 – 1,354 of which allocation to Kopparmyntet – 148 – 173 – 261 – 87 – 669 Expense
Slide 10: Profit effect from IAS 39
10 Profit effect from IAS 39 2005 SEK M, compared to 2004 Q4 Q3 Q2 Q1 Q1-4 Net interest income Change in net interest income in Spintab repurchase differences 79 35 104 157 375 interest income compensation – 151 – 132 – 96 – 102 – 481 Total – 72 – 97 8 55 – 106 Net profit on financial items at fair
Slide 11: Application of "fair value option"
11 Application of ”fair value option” • Reduces accounting volatility that does not reflect underlying economic conditions • Applies to portfolios of fixed-rate loans and related liabilities where the aggregate interest rate exposure is hedged with derivatives • In total, SEK 368 bn of the Group’s l
Slide 12: Lending
12 Lending Annualized growth,% SEK bn Q4 2005 Jan 1, 2005 * * Q4 Q1-4 Group lending 796 701 16 14 Spintab’s household lending 340 305 13 11 Corporate lending incl. Hansabank 364 315 18 16 Hansabank total lending 88 53 59 68 *) after restatement to fair value according to IAS 39
Slide 13: Savings
13 Savings annualized growth, % SEK bn Q4, 2005 Q4, 2004 Q4 Q1-4 Funds under management 365 286 17 28 Household deposits 182 157 4 16 Market share, % Q1-4 ’05 Q1-4, ’04 Total new savings, Sweden 19 17 New household deposits, Sweden 31 10 Index-linked bonds 36 27
Slide 14: Change in net interest income
14 Change in net interest income SEK M Q4, 2005 Q3, 2005 Change Swedish banking operations 2,908 3,093 – 185 Baltic banking operations 749 738 11 Swedbank Markets 245 205 40 Asset management and insurance 8 5 3 Shared services and new operations – 25 – 104 79 Eliminations – 173 – 77 – 96 Total 3,712
Slide 15: Change in net interest income
15 Change in net interest income Swedish banking operations Q4, 2005 vs. Q3, 2005, SEK M Increased lending volumes + 21 Increased deposit volumes + 4 Increased deposit margins + 3 Decreased lending margins – 129 KIAB – 45 Shareholders’ equity and other balance sheet items – 39 Total – 185
Slide 16: Change in net interest income
16 Change in net interest income Baltic banking operations Q4 2005 vs. Q3 2005, SEK M Increased lending volume + 66 Increased lending margin + 2 Increased deposit volume + 7 Increased deposit margin + 5 ”Maturity missmatch” and other – 10 Change according to Hansabank’s reported figures + 70
Slide 17: Change in net interest income
17 Change in net interest income SEK M Q1-4, 2005 Q1-4, 2004 +/- Swedish banking operations 12,266 12,503 – 312 Baltic banking operations 2,752 2,313 439 Swedbank Markets 873 996 – 123 Asset management and insurance 27 29 –2 Shared services and new operations – 228 4 – 131 Eliminations – 151 – 620 4
Slide 18: Net commission income
18 Net commission income SEK M Q4, 2005 Q3, 2005 Q2, 2005 Q1, 2005 Q4, 2004 Payment processing 607 643 677 587 615 Lending commissions 128 154 83 89 97 Brokerage 264 190 133 111 106 Asset management 880 820 748 702 702 Insurance commissions 88 108 102 96 94 Other commissions – 71 –5 91 – 55 – 60 Tot
Slide 19: Change in net commission income
19 Change in net commission income Q1-4, 2005 vs. Q1-4, 2004, SEK M Payment processing + 217 First Securities + 434 Asset management + 437 Brokerage + 95 Lending commissions – 19 Other commissions – 154 Total 1,048
Slide 20: Net profit on financial items
20 Net profit on financial items Q4, Q3, Q2, Q1, Q4, SEK M 2005 2005 2005 2005 2004 Financial instruments classified as trading and derivatives 1,160 737 – 357 258 316 Other financial instruments – 232 – 87 874 – 15 9 Change in exchange rates 78 139 268 104 88 Total 1,006 789 785 377 413 of which at
Slide 21: Costs
21 Costs SEK M Q4 2005 Q3 2005 Q2 2005 Q1 2005 Q4 2004 Group excl. Baltic banking operations - Underlying costs – 2,631 – 2,499 – 2,704 – 2,678 – 2,681 - Costs for personnel changes – 79 – 49 – 79 – 58 – 30 - Profit based staff costs – 290 – 267 – 380 – 125 – 151 Baltic banking operations - Underlyi
Slide 22: Number of full-time positions
22 Number of full-time positions Baltic banking operations 8 000 7 226 6 847 7 000 6 541 6 497 6 255 5 931 5 943 5 935 6 049 6 069 5 901 6 000 5 000 4 000 3 000 2 000 1 000 0 2001 2002 2003 Q1 04 Q2 04 Q3 04 Q4 04 Q1 05 Q2 05 Q3 05 Q4 05
Slide 23: C/I ratio
23 C/I ratio adjusted according to IFRS from Q1, 2004 0,80 0,69 0,63 0,63 0,62 0,61 0,59 0,59 0,58 0,57 0,60 0,56 0,55 0,56 0,56 0,53 0,53 0,53 0,49 target 0,39 0,40 0,20 0,00 Q3- Q4- Q1- Q2- Q3- Q4- Q1- Q2- Q3- Q4- Q1- Q2- Q3- Q4- Q1- Q2- Q3- Q4- 01 01 02 02 02 02 03 03 03 03 04 04 04 04 05 05 05 0
Slide 24: Credit quality
24 Credit quality Q1-4, 2005 • Doubtful claims gross decreased by 14 percent to SEK 2,219 M (2,579) • The provision ratio rose to 171 percent (151) • Loan losses fell by 41 percent to SEK 294 M (494) • The loan loss level dropped to 0.04 percent (0.07)
Slide 25: Swedish banking
25 Swedish banking Q4, 2005 • Healthy growth in business volumes – lending increased by 9 % – deposits increased by 8 % (full year) • Increased product sales in branch network • Erosion of regional differences in margins • Unchanged costs • Swedbank named “Bank of the Year”
Slide 26: New staff incentive program
26 New staff incentive program • Swedish retail banking operations • Targets for branches, local banks and regions • Maximum bonus one month’s pay per employee • ”Kopparmyntet” profit sharing program reduced, maximum payout 1/3 lower • Unchanged cost ceiling for employee incentive programs in Swedis
Slide 27: Swedbank Markets
27 Swedbank Markets Q4, 2005 • Strong quarter for stock trading • Another strong quarter for First Securities • Net commission income increased by 13 percent to SEK 283 M in Q4 (250 in Q3) • Net profit on financial items increased to SEK 262 M in Q4 (143 in Q3)
Slide 28: Asset management and insurance
28 Asset management and insurance Q4, 2005 • Assets under management (AuM), increased 27 percent to SEK 355 bn (280) – a new all-time high • 79 percent of Robur’s equity funds beat their comparative indices • Robur’s funds’ average Morningstar rating increased to 3.33 (3.28)
Slide 29: Key figures
29 Key figures Q1-4, 2005 Q1-4, 2004 Return on equity, % 24.6 21.8 excluding capital gains 20.4 19.1 Earnings per share, SEK 23.14 17.50 Equity per share, SEK 104.07 86.16 C/I ratio before loan losses 0.48 0.55 C/I ratio before loan losses excl capital gains 0.52 0.55 Loan loss ratio, net, % 0.04 0.
Slide 30: Hansabank Q4, 2005
30 JAHansabank Q4, 2005 J®Hansabank —
Slide 31: Full-year highlights
31 Full-year highlights • Rapid market growth • Decrease in client margins, overall margins supported by increase in base-rate and change in product mix • Expansion of Russian operations • Investments in distribution and increase in personnel • Increasing weight of Latvian and Lithuanian business un
Slide 32: Full-year highlights
32 Full-year highlights EUR M 2005 2004 +/- Loans 9,371 5,924 58% Deposits 7,241 4,972 46% Net profit 241.8 192.5 26% Revenues 524.6 420.8 25% Expenses* 241.7 200.8 20%* Return on equity 25.0% 25.6% Net interest margin 2.97% 3.33% Cost-income 46.0% 45.8% * 2004 expenses also include goodwill amortis
Slide 33: Q4 highlights
33 Q4 highlights • Accelerating growth in all business units due to low interest rates and strong credit demand. • Estonian result decreased by 3.6 million euro operating risk provision and Lithuanian result by higher credit cost (6.6 million euros in Q4 05 vs 2.9 million euros in Q4 04) • Lending y
Slide 34: Q4 highlights
34 Q4 highlights EUR M Q4 05 Q4 04 +/- Loans 9,371 5,924 58% Deposits 7,241 4,972 46% Net profit 60.3 51.2 18% Revenues 143.5 112.0 28% Expenses 73.7 58.3 26% Return on equity 22.6% 25.3% Net interest margin 2.80% 3.22% Cost-income 51.3% 50.3%
Slide 35: Market shares
35 Market shares Estonia Latvia Lithuania Market Market Market December 2005 Change Change Change share share share Retail deposits 63% -1% 29% +4% 39% - Corporate deposits 48% +1% 15% +3% 20% -1% Retail loans 52% -1% 24% +3% 30% +1% Corporate loans 45% +1% 25% +2% 20% - Pension II 55% +2% 33% +4% 4
Slide 36: Regional distribution
Regional distribution 36 EUR in millions Q4 05 Est Lat Lit Rus Deposits 7,241 43% 24% 32% 1% Loans 9,371 43% 26% 26% 5% Total revenues 143.5 44% 27% 23% 6% Operating expenses 73.7 42% 26% 26% 6% Operating profit 69.8 46% 28% 20% 6% Net credit losses -5.9 -29% 9% 105% 15% Net profit 60.3 57% 27% 12%
Slide 37: Revenues
37 Revenues YoY QoQ +28% +5% 140 Q4 05 Q4 04 +/- 130 Net interest income 83.6 64.5 30% EUR in millions 120 Net fee income 45.1 32.8 38% 110 Trading income 11.3 11.4 -1% 100 90 Other income 0.5 1.2 6% 80 Total revenues 143.5 112.0 28% Q4 04 Q1 05 Q2 05 Q3 05 Q4 05 • Net interest income growth driven
Slide 38: Expenses
38 Expenses YoY QoQ Q4 05 Q4 04 +/- 80 26% 27% Personnel 34.6 27.1 28% 70 EUR in millions Administrative 13.1 11.5 14% 60 Data network 5.9 5.0 18% 50 Depreciation 5.9 5.0 18% 40 Other 15.9 10.6 50% 30 Q4 04 Q1 05 Q2 05 Q3 05 Q4 05 Total expenses 73.7 58.3 26% • No of employees increased by 363 in Q4
Slide 39: Lending growth
39 Lending growth Business units Growth by loan type, Q4 05 4 500 450 122% 140% 4 000 400 120% 3 500 350 EUR in millions EUR in millions 100% 300 3 000 79% 2 500 80% 250 57% 200 2 000 60% 44% 1 500 150 40% 1 000 100 500 20% 50 0 0% 0 Est Lat Lit Rus Est Lat Lit Rus Dec 2004 Other Dec 2005 ABF Growth
Slide 40: Net interest margin
40 Net interest margin Group By business units 5,0% 4,5% 4,5% 4,0% 4,0% 3,85% 3,5% 3,45% 3,48% 3,5% 3,13% 3,0% 2,80% 3,0% 2,5% 2,5% 2,41% 2,50% 2,39% 2,0% 2,0% Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 03 04 04 04 04 05 05 05 05 03 04 04 04 04 05 05 05 05 Estonia Latvia Lithuania
Slide 41: Building a Leading Nordic-Baltic bank
41 - Building a Leading Nordic-Baltic bank
FöreningsSparbanken (Swedbank) — Q4 2005 Earnings Presentation on 6ix