Swedbank Ab Class A · OMXSTO:SWED_A
Swedbank Ab Class A — Q3 2010 Earnings Presentation
29 slides from Swedbank Ab Class A's earnings presentation, Oct 21, 2010
Slide 1: Swedbank's third quarter 2010 results
Swedbank’s S db k’ third thi d quarter t 2010 results lt 21 October 2010 Michael Wolf, CEO Erkki Raasuke, CFO Gö Göran B Bronner, CRO
Slide 2: Continued financial improvement
Continued financial improvement p • Net profit of SEK 2.6bn in Q3 • Baltic Banking net profit in Q3 of SEK 531m • Improved NII and stable net commission income Net et p profit o t performance pe o a ce Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 2
Slide 3: Result by business area
Result by business area Business highlights g g SEKm Profit before impairments 2 000 Retail Q2 10 Q3 10 • Increased NII and seasonally lower costs 1 000 • Increased market share in new mortgage lending 0 • New in-principle framework agreement with savings banks -1 000 Retail Large Baltic Russia & As
Slide 4: Improved NII
Net interest income Improved p NII • Retail showed increased volumes and improved margins • LC&I lower activity levels • Treasury deficit reduced by funding mismatch effects 5 017 Retail Treasury, 4 702 LC&I Baltic Russia, Banking Ukraine Other 3 980 4 023 102 24 123 146 3 799 45 -113 918 711 2 432
Slide 5: Stable commission income
Net commission income Stable commission income • Strong card and payment volumes • L Lower b brokerage k and d corporate t fi finance ffees (SEKm) Retail LC&I Baltic Russia, Asset Mgmt, 2 395 Banking Ukraine Other 2 361 2 310 2 208 2 282 -57 -21 -2 4 -9 387 19 386 387 1 131 Q3 09 Q4 09 Q1 10 Q2 10 Q
Slide 6: Net gains/losses on financial items, fair value
Net gains/losses on financial items, fair value Supported pp by y valuation effects • Low trading activities • FX losses l iin Uk Ukraine i • Funding related valuation effects in Group Treasury still high (SEKm) 809 Retail LC&I Baltic Banking Russia,, -5 Ukraine Treasury, 647 -49 Other -41 574 -48 9
Slide 7: Expenses seasonally lower
Expenses Expenses p seasonally y lower SEKm Q3 10 Q2 10 % Staff costs 2 261 2 282 -1 Variable staff costs 19 141 -87 Other expenses 1 958 2 000 -2 Total expenses 4 238 4 423 -4 C/I ratio 0.56 0.57 0.57 0.55 0.54 Retail LC&I Baltic Russia, Staff and 4 526 4 391 4 423 Banking Ukraine other 4 300 4 238
Slide 8: Solid wholesale funding activity continues
Liquidity & Funding Solid wholesale funding activity continues • YTD term funding of SEK 190bn, of which Outstanding wholesale funding SEK 40bn during the third quarter (nominal SEKbn) • Remaining maturities of SEK 42bn in Q4, Long-term, 459 out of SEK 137bn in total maturities for the non- 456 guar
Slide 9: Income statement
Third quarter 2010 results Income statement SEKm Q3 10 Q2 10 QoQ % YTD 10 YTD 09 YoY% Income 7 647 7 772 -2 2 23 086 26 800 -14 14 Expenses 4 238 4 423 -4 13 052 13 548 -4 Profit before impairments 3 409 3 349 2 10 034 13 252 -24 Total impairments 173 1 091 3 524 21 040 Operating profit 3 236 2 258
Slide 10: Asset quality continues to improve
Asset quality Continues to improve p • Asset quality indicators in the right direction – Impaired loans – 60 days overdue All declining – Restructured loans – Watch list • Well W ll provided id d ffor within ithi existing i ti problem bl areas • Positive rating g migration g in Sweden,, stable in th
Slide 11: Asset quality: Volumes
Asset quality Volumes • CEE lending decreased partly due to SEK 7.5bn FX effect • Continued relative shift from corporate to private in Sweden SEKbn 1 000 948 955 961 Private 900 C Corporate t 800 700 521 573 566 600 500 400 300 251 200 427 389 388 97 163 150 90 100 77 71 154 43 86 79 47 0 Q4 08 Q2
Slide 12: Credit impairments significantly reduced
Asset quality Credit impairments p significantly g y reduced • Sweden small reversals SEKm 7 000 • B lti countries Baltic ti 6 121 6 000 – Credit impairments in Latvia 5 003 5 000 • R Recoveries i iin R Russia i and d Uk Ukraine i 4 000 3 000 2 210 2 000 963 1 000 120 0 -1 000 Q3 09 Q4 09 Q1 10 Q2 1
Slide 13: Provisions
Asset quality Provisions • Provision ratio levels maintained SEKm 30 000 64 8% 64.8% 65 9% 65.9% 63 5% 63.5% Provision ratios Q3 10 63.9% 25 000 4 104 Retail 87% 62.9% 4 684 5 135 3 606 LC&I 92% 20 000 6 922 B lti B Baltic Banking ki 61% Russia 58% 15 000 Ukraine 66% 21 889 23 028 10 000 20 882 21 0
Slide 14: Simplified core balance sheet
Simplified p core balance sheet • High quality mortgage portfolio – low LTV • Limited impact p under severe economic conditions • Strategy – preserve quality and AAA rating 1 400 SEKbn 1 200 1 000 800 600 400 Swedish mortgage lending 200 0 Assets 14
Slide 15: Swedish mortgage lending funded by covered bonds
Swedish mortgage g g lending g funded by y covered bonds • High quality mortgage portfolio • Limited impact p under severe economic conditions • Strategy – preserve quality and AAA rating • Government guaranteed funding expected to be replaced largely by covered bonds 1 400 SEKbn 1 200 1 000 800 600
Slide 16: Other Swedish and Nordic lending
Other Swedish and Nordic lending g • Stress test real estate related – very high resilience • Strategy gy – Improve p risk adjusted j return, increased diversification 1 400 SEKbn 1 200 1 000 Other Swedish and 800 Nordic corporate lending Other Sw. Sw private 600 Government guaranteed 400 Swedish mo
Slide 17: Other Swedish and Nordic lending funded with deposits
Other Swedish and Nordic lending g funded with deposits p • Stress test real estate related – very high resilience • Strategy gy – Improve p risk adjusted j return, increased diversification • Funded with large deposit base 1 400 SEKbn 1 200 1 000 Other Swedish and 800 Nordic corporate lending Swedi
Slide 18: CEE lending
CEE lending g • CEE lending decreased substantially since end 2008 • ICAAP stress test show significant g resilience • Estonia to adopt the euro – becomes different risk category • Strategy – selective reductions, LTD restriction 1 400 SEKbn 1 200 CEE 1 000 Other Swedish and 800 Nordic corporate len
Slide 19: Limited need of senior unsecured funding
Limited need of senior unsecured funding g • Large and stable deposit base • High g quality q y Swedish mortgage g g pportfolio 1 400 SEKbn 1 200 Subordinated debt Equity CEE Senior unsecured 1 000 CEE d deposits it Other Swedish and 800 Nordic corporate lending Swedish and Nordic deposits Other Sw
Slide 20: Slide 20
Slide 21: Appendix
Appendix Swedbank@ 21
Slide 22: Impaired loans decreased by SEK 4bn
Asset quality Impaired p loans decreased by y SEK 4bn • Without FX effect down SEK 1.5bn • Underlying decreases mainly relate to the Baltic countries SEKm Impaired loans as % of gross lending 45 000 42 719 38 631 40 132 40 328 40 000 -4 088 196 2 391 35 770 4 362 8 531 Ukraine 67% 35 000 6 113 29 65
Slide 23: Loans past due 60 days - performance Q/Q
50 -50 0 100 00 150 200 250 -150 -100 50 EURm Q3 0 09 Q4 0 09 Q1 10 Loans p Estonia Q2 10 Q3 10 09 Q3 0 Q4 0 09 Q1 10 Latvia Q2 10 Q3 10 past due 60 days y –p 09 Q3 0 Q4 0 09 Q1 10 Lithuania Q2 10 Q3 10 09 Q3 0 Q4 0 09 Q1 10 Russia performance Q/Q Q2 10 Q3 10 09 Q3 0 Q4 0 09 Q1 10 Ukraine Q2 10 Q3 1
Slide 24: Repossessed assets
Asset quality Repossessed p assets SEKm 2 500 2 000 1 500 1 000 500 0 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 10 Real Estate Residential Real Estate Commercial Passenger & Commercial Transport Shares Other 24
Slide 25: Real estate prices
Real estate p prices Tallinn Riga* 1 800 1 800 1 762 1 800 1 800 1 611 1 500 1 500 1 500 1 500 ns No of transactionss No of transaction 1 200 1 200 1 200 1 200 EUR/m2 EUR/m2 900 822 900 900 900 616 600 600 600 600 300 300 300 300 0 0 0 0 Q4'06 Q2'07 Q4'07 Q2'08 Q4'08 Q2'09 Q4'09 Q2'10 Q4'06 Q2'07 Q4
Slide 26: Long-term funding
Liquidity & Funding Long-term g funding g • SEK 42bn (nominal value) of remaining term funding maturities in Q4 • Continued focus on covered bonds with YTD issuance of SEK 164bn • YTD issued SEK 26bn in senior unsecured and structured funding • Average maturity of wholesale funding of 28 months, cov
Slide 27: Remaining funding under the Swedish guarantee programme
Liquidity & Funding Remaining g funding g under the Swedish g guarantee programme p g • Swedbank exited the guarantee Currency distribution programme on 30 April 2010 EUR 41% • No issuance under the programme as of USD 27% August g 2009 SEK 25% • Outstanding guaranteed funding CHF 5% decreased durin
Slide 28: Cover pool and covered bond funding sources
Liquidity & Funding Cover p pool and covered bond funding g sources As per Q3 2010 Total pool size SEK 626bn • AAA/Aaa Rating from S&P and Geographic distribution Sweden 100% Moody’s Average seasoning 56 months Average LTV 1, 2 • Unlimited domestic covered bond – WA LTV on property level 58% program
Slide 29: Swedbank Mortgage total loan portfolio of SEK 687bn
Swedbank Mortgage total loan portfolio of SEK 687bn • 100% off llending di iin S Sweden d • 90% in residential lending • Average LTV of 46% (loan level) 61% (property level*) level*). Cover pool 43% and 58% respectively. SEKbn Loan-to-value* Lending distributed by collateral 110 100 90 Cooperative C