Swedbank Ab Class A · OMXSTO:SWED_A
Swedbank Ab Class A — Q1 2011 Earnings Presentation
24 slides from Swedbank Ab Class A's earnings presentation, 2011
Slide 1: Swedbank's first quarter 2011 results
Swedbank’s first quarter 2011 results Michael Wolf, CEO Erkki Raasuke, CFO Göran Bronner, CRO
Slide 2: Strong start to the year
Strong start to the year • Net profit of SEK 3.9bn for Q1 • Core Tier 1 capital ratio of 14.9 per cent • Return on equity of 16.1 per cent in Q1 Net profit performance Lehman contribution Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 2
Slide 3: Follow-up on priorities 2011
Follow-up on priorities 2011 • Customer focus • Growth in selected segments • Quality and effectiveness • Robust and low-risk balance sheet 3
Slide 4: Net interest income
Net interest income NII supported by higher interest rates • One-offs and higher stability fee shadowing underlying NII growth • Improving deposit margins in Retail • Government guarantee cost kept within Treasury LC&I Baltic Russia, Treasury, Retail Banking Ukraine Other 4 527 173 117 29 4 527 188
Slide 5: Net gains/losses on financial items, fair value
Net gains/losses on financial items, fair value NGL affected by funding effects • Strong trading result in LC&I, but higher portion of income reported as NII • Russia & Ukraine returning to normalised levels • Basis swap gains of 2010 partly reversed, benefits euro funding cost 809 Baltic Russia, Tr
Slide 6: Expenses
Expenses Stable year-on-year expenses • Enhancing internal capabilities – Key recruitments in Q1 – Lower consultancy costs • Improving cost/income ratio driven by one-off income 0.57 0.57 0.55 0.58 0.52 Retail LC&I Baltic Russia, Treasury, Banking Ukraine Other 4 391 4 423 4 590 4 384 4 238 -30 -18
Slide 7: Income statement
First quarter 2011 results Income statement SEKm Q1 11 Q4 10 Δ Q1 10 Net interest income 4 527 4 527 0 4 023 Net commission income 2 301 2 538 -237 2 282 Net gains/losses 255 315 -60 647 Other 1 369 578 791 715 Total income 8 452 7 958 494 7 667 Total expenses 4 384 4 590 -206 4 391 Profit before im
Slide 8: Key ratios
First quarter 2011 results Key ratios Volumes, SEKbn Q1 11 Q4 10 Δ Q1 10 Lending to the public 1 141 1 146 -5 1 168 Deposits from the public 502 517 -15 496 Covered bonds 477 410 66 389 Key ratios Q1 11 Q4 10 Q1 10 Return on equity, % 16.1 11.7 2.4 Cost-income ratio 0.52 0.58 0.57 Core funding ratio
Slide 9: SEK 91bn term funding issued in Q1 2011
Liquidity & Funding SEK 91bn term funding issued in Q1 2011 • First US covered bond issue (144A), Issuance Q1 & maturities full year 2011 (nominal SEKbn) dual tranche of USD 1bn each 60 • Two EUR benchmark covered bonds 40 20 • Maturities of nominal SEK 121bn for the remainder of 2011 0 -20 • Averag
Slide 10: Risk highlights
Risk highlights Continued improvements • Asset quality – Decreasing impaired loans – FR&R/Ektornet according to plan • Substantial recoveries – all countries • Lehman income • RWA decreased by SEK 22.3bn in Q1 – SEK 11.0bn lower credit risk – SEK 8.7bn lower market risk • Strong funding position 10
Slide 11: Net recoveries of SEK 972m in Q1
Asset quality Net recoveries of SEK 972m in Q1 Credit impairments SEKm 2 500 • Net recoveries in all CEE 2 210 countries 2 000 • Sweden – also recoveries 1 500 963 • Collateral revaluations, 1 000 repayments and rating migration 500 120 0 -500 -483 -1 000 -972 -1 500 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Re
Slide 12: One-off income in US commercial real estate lending
Asset quality One-off income in US commercial real estate lending • One-off pre-tax income of SEK 716m in Q1 after agreement with Lehman • Remaining gross exposure was USD 1.1bn as of 31 March 2011, consisting of 35 assets • No. of repossessed assets are expected to increase (2 as of today) • Over-c
Slide 13: Corporate risk weights – focus on capital efficiency
Capital management Corporate risk weights – focus on capital efficiency Corporate risk weights, 90 % development Q1 09 - Q4 10 • Several different work streams 80 • Expected gradual effect in small steps 70 60 • History not enough to predict future 50 – Stress tests key steering tool 40 – Transparen
Slide 14: Buy-back programme
Capital management Buy-back programme 14.9% Excess capital (SEK 9.9bn) • As of 31 March the excess 13.0% capital amounts to SEK 9.9bn Extra buffer due to prevailing circumstances • Gradually during four quarters (SEK 15.6bn) 10.0% • Both A-shares and preference Risk appetite (ICAAP buffer, shares SE
Slide 15: Appendix
Appendix Swedbank @ 15
Slide 16: Impaired loans decreasing
Impaired loans decreasing • Excl. FX effect down SEK 2.5bn in Q1 • Underlying decreases in all business areas in Q1 SEKm 45 000 42 719 40 132 40 328 40 000 -4 088 4 362 196 2 391 35 770 -3 853 Impaired loans as % 35 000 38 631 of gross lending 6 113 34 778 -3 031 29 657 30 000 31 747 6 695 Ukraine 6
Slide 17: Loans past due 60 days – performance Q/Q
-50 0 100 150 200 250 -150 -100 50 EURm Q1 10 Q2 10 Q3 10 Estonia Q4 10 Q1 11 Q1 10 Q2 10 Q3 10 Latvia Q4 10 Q1 11 Q1 10 Q2 10 Q3 10 Q4 10 Lithuania Q1 11 Q1 10 Q2 10 Q3 10 Loans past due 60 days – performance Q/Q Ukraine Q4 10 Q1 11 Q1 10 Q2 10 Q3 10 Russia Q4 10 Q1 11 17
Slide 18: Provisions – work-out portfolios slowly declining
Asset quality Provisions – work-out portfolios slowly declining SEKm 30 000 65.9% 63.5% Provision ratios, % Q1 11 63.9% 25 000 4 684 4 104 Retail 97 3 606 62.7% LC&I 116 3 297 61.0% 20 000 Baltic Banking 56 2 769 Russia 58 15 000 Ukraine 64 21 889 23 028 16 598 21 068 18 494 Group 61 10 000 5 000 5
Slide 19: Repossessed assets
Asset quality Repossessed assets SEKm 4 500 4 000 3 500 3 000 2 500 2 000 1 500 1 000 500 0 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Real Estate Residential Real Estate Commercial Passenger & Commercial Transport Shares Other 19
Slide 20: Real estate prices
1 000 1 200 1 400 1 600 1 800 200 400 600 800 0 1 000 1 200 1 400 1 600 1 800 2 000 200 400 600 800 0 Jan-05 Jan-05 May-05 May-05 Sep-05 Sep-05 Jan-06 Jan-06 May-06 May-06 Sep-06 Sep-06 Jan-07 Jan-07 May-07 May-07 Source: Swedbank, Estonian Land Board Sep-07 Sep-07 Nr.of deals Nr.of deals Jan-08 Tal
Slide 21: Long-term funding
Liquidity & funding Long-term funding • Continued focus on covered bonds with Q1 issuance of SEK 85bn • SEK 4bn in senior unsecured issuance • 2 USD-denominated covered bond benchmark deals - of EUR 1bn each • 2 EUR-denominated covered bond benchmark deals of EUR 1bn and EUR 1.5bn • Total term fundi
Slide 22: Remaining government guaranteed debt
Liquidity & funding Remaining government guaranteed debt • Exited the programme on 30 April 2010 • No issuance under the programme since summer 2009 • SEK 25bn of government guaranteed debt matured during Q1 2011 • Maturities of SEK 53bn for the remainder of 2011 Maturity profile as per Q1 2011, SEK
Slide 23: Limited unsecured funding need
Liquidity and funding Limited unsecured funding need Lending to the public, less deposits, covered bond pool and retail bonds SEKbn 200 150 100 50 0 -50 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2008 2009 2009 2009 2009 2010 2010 2010 2010 2011 23
Slide 24: Liquidity reserve
Liquidity reserve* SEKm Cash and holdings in central banks and deposits in other banks available o/n 63 437 Securities issued or guaranteed by sovereigns, central banks or multilateral development banks 29 214 Securities issued or guaranteed by municipalities or PSEs 0 Covered bonds 53 366 - Issued