Swedbank Ab Class A · OMXSTO:SWED_A
Swedbank Ab Class A — Q3 2007 Earnings Presentation
36 slides from Swedbank Ab Class A's earnings presentation, Oct 24, 2007
Slide 1: Interim report, Q3 2007
Interim report, Q3 2007 24 October, 2007 Jan Lidén CEO and President
Slide 2: Summary January – September 2007
Summary January – September 2007 • Shareholders’ net profit increased 12 percent to SEK 8,888m compared with previous year – Net interest income was up 19 percent – Net commission income was up 12 percent • Deposit, lending and payments growth was strong on all markets • Excellent access to funding
Slide 3: Financial markets’ turbulence impact
Financial markets’ turbulence impact Direct impact • Valuation effects: – Swedish Banking – fair value option in Swedbank Mortgage was affected negatively by about SEK 129m – Shared Services and Group Staffs – IAS valuation of interest rates swaps for inter-company lending affected the results negat
Slide 4: Strong position for profitability and growth
Strong position for profitability and growth Sweden Baltics Russia and Ukraine Swedbank is the leading bank in The Baltic economies are Swedbank has a small but Sweden. Profitability is high and experiencing strong economic growing presence in Russia and stable and the bank is growth that is expecte
Slide 5: Business volumes, savings
Business volumes, savings SEKbn Growth 2007 SEKbn Balance, Sept 2007 25 500 20 415 400 15 327 10 300 5 0 200 -5 92 100 -10 30 18 -15 0 Deposits, Deposits, AM funds, AM funds, Structured Deposits, Deposits, AM funds, AM funds, Structured Sweden Baltics Sweden Baltics products, Sweden Baltics Sweden B
Slide 6: Business volumes, lending
Business volumes, lending SEKbn Growth 2007 SEKbn Balance, Sept 2007 50 1 200 1 043 1 000 40 800 30 600 462 20 367 400 10 200 71 93 50 0 0 Lending, Private, Corporate, Private, Corporate, Other* Lending, Private, Corporate, Private, Corporate, Other* Group Sweden Sweden Baltics Baltics Group Sweden
Slide 7: Margins
Margins % Lending Deposits % 6.0 6.0 RIGIBOR 90 days averaged 5.0 5.0 8.5% in Q3 4.0 (9.1 in Q2) 4.0 3.0 3.0 Lag until higher 2.0 2.0 cost of funding, 1.0 1.0 mainly Euribor based, is passed 0.0 0.0 on to customers Q2- Q3- Q4- Q1- Q2- Q3- Q2- Q3- Q4- Q1- Q2- Q3- 06 06 06 07 07 07 06 06 06 07 07 07 E
Slide 8: Loan losses, Group
Loan losses, Group SEKm % • Increasing loan loss ratio, but still on 600 0.60 a very low level, 0.09 percent 500 0.50 400 0.40 • For TAS, provisions are calculated 300 0.30 as a share of the period’s lending 200 0.20 increase 100 0.10 0 0.00 • TAS provisioning model resulted in -100 -0.10 loan losse
Slide 9: Swedish Banking
Swedish Banking • Stable earnings and continued high SEKm % profitability 5,000 0.7 • Sustained good volume growth 4,500 0.6 – Lending grew 3 percent and deposits 5 percent 4,000 Q3 vs. Q2 3,500 0.5 • Increased market shares 3,000 0.4 – New retail mortgages sales improved to 2,500 33 percent (32 per
Slide 10: Baltic Banking Operations
Baltic Banking Operations SEKm % 2,400 0.5 • Earnings continued high 2,200 2,000 • Net interest income increased 8 percent 0.4 1,800 Q3/Q2 1,600 0.3 • C/I-ratio improved to 0.38 1,400 1,200 • Strong volume growth 1,000 0.2 – Expected lending growth slow down 800 600 continues 0.1 400 • Decrease in s
Slide 11: Credit quality, Baltic Banking
Credit quality, Baltic Banking NPL/loan portfolio (12-month old) 1,2% 0,9% 0,6% 0,3% 0,0% Q1 06 Q2 06 Q3 06 Q4 06 Q1 07 Q2 07 Q3 07 Est Lat Lit 0,8% Loan losses to average portfolio 0,6% 0,4% 0,2% 0,0% Q1 06 Q2 06 Q3 06 Q4 06 Q1 07 Q2 07 Q3 07 (11) Est Lat Lit Hansabank
Slide 12: Decreasing Baltic lending growth
Decreasing Baltic lending growth 8,000 Hansabank, Estonia 60% 6,000 Hansabank, Latvia 100% 90% 7,000 5,000 50% 80% 6,000 4,000 70% 40% 5,000 60% 4,000 30% 3,000 50% 3,000 40% 20% 2,000 30% 2,000 1,000 20% 10% 1,000 10% 0 0% 0 0% 05/Jun 06/Jun 07/Jun 05/Jun 06/Jun 07/Jun 05/Mar 06/Mar 07/Mar 05/Mar 0
Slide 13: Baltic Banking, market shares
Baltic Banking, market shares Estonia Latvia Lithuania Aug, Dec, Aug, Dec, Aug, Dec, Balance, % 2007 2006 2007 2006 2007 2006 Deposits, households 62.5 62.3 28.5 29.5 39.0 38.6 Mortgage lending, households 49.0 49.2 27.8 29.8 28.5 29.5 Consumer/bank lending 55.8 59.0 24.4 18.7 34.9 33.9 Deposits, SM
Slide 14: Baltic macro development
Baltic macro development • Economy readjusting in Estonia with relatively swift slow-down from 11.4% GDP-growth in 2006 to forecasted 5.5% in 2008 • Fast growth continues in Latvia in 2007 with relatively steep slow down expected in 2008 • Relatively stable growth expected to continue in Lithuania,
Slide 15: Swedbank Markets
Swedbank Markets SEKm • Difficult trading markets 500 – Credit bonds at mark-to-market decreased SEK 450 60m 400 350 – Lower fixed income trading volumes 300 – Results in First Securities declined 250 – Profit for the quarter amounted to SEK 200 121m (236) 150 • Continued success for structured prod
Slide 16: International banking
International banking SEKm 100 • New business area as of Q3 2007 75 – Growing presence outside the home markets 50 • Continued good performance by TAS- Kommerzbank in Ukraine which was 25 consolidated as of Q3 0 • Profit for the quarter in Russian banking -25 increased to SEK 40m (28) -50 • Restrict
Slide 17: TAS-Kommerzbank
TAS-Kommerzbank • Expected strong long-term economic growth paired with low penetration of financial services product gives attractive business case • Strong domestic demand and increased household income, GDP is expected to grow around 7 percent annually • TAS follows its growth plan – Distribution
Slide 18: Group results
Group results Mikael Inglander CFO (18)
Slide 19: Income statement, Group
Income statement, Group Q3 Q2 Q3 SEKm 2007 2007 % 2006 % Net interest income 4,806 4,591 5 4,139 16 Net commission income 2,503 2,552 –2 2,109 19 Net gains/losses on financial items at fair value 196 579 – 66 513 – 62 Other income 526 504 4 403 31 Total income 8,031 8,226 –2 7,164 12 Staff costs – 2
Slide 20: Net interest income change by business area
4,200 4,400 4,600 4,800 5,000 Net interest income Q2- SEKm 4 591 07 Swedish 21 Banking Baltic Banking 110 Operations Baltic Banking - 10 Investment International 173 Banking Swedbank Markets - 150 Net interest income Q3-07 (Q2-07) Shared Services and 71 other Net interest income Q3- 4 806 07 (20)
Slide 21: Swedish Banking, change in net interest income
Swedish Banking, change in net interest income Q3 2007 Q3 2007 SEKm vs Q2 2007 vs Q3 2006 Net interest income Q2 2007 2 905 Net interest income Q3 2006 2 933 Changes: Higher lending volumes 55 213 Decreased lending margins – 87 – 270 Difference in number of days/quarter, lending 19 Higher deposit vo
Slide 22: Baltic Banking, change in net interest income
Baltic Banking, change in net interest income Q3 2007 Q3 2007 SEKm vs Q2 2007 vs Q3 2006 Net interest income Q2 2007 1,377 Net interest income Q3 2006 990 Changes: Higher lending volumes 67 295 Decreased lending margins – 28 – 27 Difference in number of days/quarter, lending 10 FX-effects, lending 2
Slide 23: Net commission income, Group
Net commission income, Group SEKm 1 200 1 100 Q1 2006 1 000 Q2 2006 900 Q3 2006 800 700 Q4 2006 600 Q1 2007 500 Q2 2007 400 Q3 2007 300 200 100 0 -100 management Insurance Payments Brokerage Lending Other Corporate finance Asset (23)
Slide 24: Net gains on financial items, fair value
100 200 300 400 500 600 Net gains Q2-07 SEKm 579 Fair value option Swedbank -173 Mortgage MasterCard shares 89 FX effects -60 TAS acquisition Credit bond -60 portfolio Group treasury and other -179 Net gains Q3-07 196 Net gains on financial items, fair value Q3 (Q2) portfolio (24) effects in swap Ma
Slide 25: Expenses
Expenses Q3 Q2 Q3 SEKm 2007 2007 % 2006 % Swedish Banking – 2,208 – 2,330 – 5 – 2,055 7 Baltic Banking – 864 – 851 2 – 644 34 Swedbank Markets – 416 – 499 – 17 – 423 –2 International Banking – 279 – 113 – 84 Of which Ukrainian Banking – 134 Other business areas – 365 – 331 10 – 284 29 Total expenses
Slide 26: Loan losses Q3-07 (Q2-07)
0 50 100 150 200 250 SEKm Loan losses, 102 Q2-07 Swedish -10 Banking Baltic 79 Banking International 62 Banking Loan losses Q3-07 (Q2-07) -3 Other Loan losses, 230 Q3-07 (26)
Slide 27: Business areas
Business areas Swedish Baltic Swedbank Asset Internat. Banking Banking Markets Mgmt Banking Q3 Q3 Q3 Q3 Q3 Q3 07 vs Q3 06, SEKm 2007 % 2007 % 2007 % 2007 % 2007 % Net interest income 2,926 – 0 1,487 50 145 – 45 19 90 335 Net commission income 1,130 14 475 27 273 – 14 543 31 58 Other income 292 21 32
Slide 28: Key figures
Key figures Jan - Sep, Jan - Sep, 2007 2006 Return on equity, % 19.0 19.2 Earnings per share, SEK 17.25 15.46 Equity per share, SEK 124.89 111.86 C/I ratio before loan losses 0.51 0.52 Loan loss ratio, net, % 0.06 – 0.02 Share of impaired loans, % 0.14 0.09 Provision ratio for impaired loans, % 138
Slide 29: Tier 1 ratio, Group
Tier 1 ratio, Group % % 9 9 • Tier 1 ratio was 6.2 percent 8 8 • Acquisition of TAS-Kommerzbank 7 7 decreased the tier 1 ratio by 73 bps. 6 6 • Issue of hybrid capital during Q3 improved 5 5 the ratio by 23 bps 4 4 • Gradual introduction of Basel II regulations 3 3 gives a reduction of 5 percent of
Slide 30: Summary January – September 2007
Summary January – September 2007 • Shareholders’ net profit increased 12 percent to SEK 8,888m compared with previous year – Net interest income was up 19 percent – Net commission income was up 12 percent • Deposit, lending and payments growth was strong on all markets • Excellent access to funding
Slide 31: Capital Markets Day March 2008
Capital Markets Day 5 March 2008 Tentative location: Kiev (31)
Slide 32: Appendix
Swedbank @ Appendix ~~ (32)
Slide 33: Lending by sectors – Baltic Banking
Lending by sectors – Baltic Banking Portfolio, September 2007 Portfolio growth, Q3 07 Individuals 7 851 42% 542 44% Real-estate 264 21% 3 122 17% mgmt Retail & 98 1 748 9% 8% Wholesale Industry 1 764 9% 45 Transport 1 127 6% 44 Construction 546 3% -40 Other 2 635 14% 279 23% 0 2 000 4 000 6 000 8 00
Slide 34: Swedbank Mortgage, secure base for external financing
Swedbank Mortgage, secure base for external financing Percent • Swedbank is a net lender to the 70 interbank market 60 • The parent company issues securities of its own partly to fill a minor 50 financing need and partly to ensure a substantial liquidity reserve 40 • Swedbank’s lending to the public
Slide 35: Funding and liquidity FAQ
Funding and liquidity FAQ • Excellent access to funding maintained during recent months – Strategy is to develop and maintain a well diversified and broad investor base in all core markets. Long term target of funds raised outside Sweden should be around 50 percent. • Well diversified funding base w
Slide 36: Exposure FAQ
Exposure FAQ • No direct US Sub-Prime exposure – Minimal indirect exposure through investments of USD 95m in bonds issued by US mortgage institutions who, in their turn, have exposure towards US sub-prime • Total exposure towards structured credits is minimal – No commitments towards conduits or SIV