Slide 1: Swedbank's year-end 2012 results
Swedbank’s year-end 2012 results Michael Wolf, CEO Göran Bronner, CFO Håkan Berg, CRO
Slide 2: Retail: Stable development
Retail Stable development SEKm Q2 Q3 Q4 Q/Q • Deposit margins pressure Net interest income 3 404 3 447 3 407 -40 Net commissions 1 248 1 269 1 320 +51 • Repricing lending Total income 5 138 5 209 5 107 -102 Total expenses 2 345 2 357 2 432 +75 • Increased sales of funds Profit before impairments 2 7
Slide 3: Large Corporates & Institutions: Improved profitability
Large Corporates & Institutions Improved profitability SEKm Q2 Q3 Q4 Q/Q • Continued growth in Large Net interest income 825 852 824 -28 - of which LC/FI* 666 689 729 +40 Corporates NII Net commissions 346 379 443 +64 Net gains and • High activity debt capital 316 341 412 +71 losses markets and corp
Slide 4: Baltic Banking: Slow banking environment
Baltic Banking Slow banking environment SEKm Q2 Q3 Q4 Q/Q • Lower Euribor affected NII Net interest income 870 755 761 +6 Net commissions 378 360 351 -9 • Small lending growth in EUR Total income 1 430 1 273 1 275 +2 Total expenses 588 553 631 +78 • One-off in Lithuania SEK -35m Profit before impair
Slide 5: Group results: Strong quarter
Group results Strong quarter SEKm Q3 Q4 2011 2012 • One-offs affecting quarter 5 263 5 465 19 014 21 188 Net interest income - Net gains in Treasury Net commission income 2 381 2 504 9 597 9 636 - Tax gain of SEK 505m Net gains and losses 568 752 1 584 2 534 9 051 9 491 34 045 36 620 • Stable NII Q/
Slide 6: Focus on customer and efficiency
Focus 2013 Focus on customer and efficiency Russia & Ektornet Other Ukraine Customer IT service investments Expenses Expenses 2012 2013 6
Slide 7: Capital – continued accumulation
Capital situation Capital – continued accumulation % Common Equity Tier 1 ratio 20 17.4 • Management’s view is that 13- 18 16 15.7 14.3 15.4 15% CET1-ratio is required 14 12 • Capital efficiency focus remains 10 8 • IRB-A application filed 6 4 • New dividend policy: 75% of the 2 profit for the year
Slide 8: Stable asset quality
Risk highlights Stable asset quality Credit impairments (SEKm) Q3 Q4 2012 • Continued high credit quality in Retail 69 102 295 Sweden LC&I -35 152 185 • Net recoveries Baltic Banking Baltic Banking -18 -329 -685 Estonia 2 -242 -343 • Exit costs Ukraine continue Latvia 8 86 -124 Lithuania -28 -173 -2
Slide 9: High ambition to make it easy for our customers
Digital channels High ambition to make it easy for our customers Customer contacts by channel 2012 Mobile Bank Sweden: log-ins per month 25 000 000 2% 5% +150% Y/Y (7%) 20 000 000 26% (9%) 15 000 000 68% (83%) 10 000 000 5 000 000 0 Internetbank Mobilebank Telephonebank Branches Jan 2010 Jan 2011 Ja
Slide 10: Q&A
Q&A
Slide 11: Appendix
Appendix Swedbank@ 11
Slide 12: Large Corporates & Institutions: Improved profitability
Large Corporates & Institutions Improved profitability SEKm Q4 11* Q1 12 Q2 12 Q3 12 Q4 12 Net interest income 845 887 825 852 824 of which LC & FI** 563 652 666 689 729 of which Markets 282 235 159 163 95 Commission income 269 434 346 379 443 of which LC & FI* * 261 278 278 311 290 of which Markets
Slide 13: Strong execution on costs 2012
Cost performance Strong execution on costs 2012 • Staff costs -847m and consultancy costs -241m year on year Cost trend (SEKm) FY 2011 FY 2012 YTD Total expenses 18 399 16 949 -1 450 Variable staff costs -395 -738 Compensation to savings banks -530 -622 Restructuring cost -430 -2 FX effects -87 Unde
Slide 14: Reduced RWA – continued focus
Risk weighted assets Reduced RWA – continued focus RWA development SEKbn • RWA down SEK 11bn in quarter 480 - Positive P/D changes • Application for IRB-A filed Q4 475.5 475 - 1.2 470 - 8.2 + 1.9 - 4.1 465 464.3 + 0.4 460 2012 Q3 Volume Rating Credit risk Other Market risk 2012 Q4 (EAD) migration FX
Slide 15: Core balance sheet structure
Liquidity and funding Core balance sheet* structure Assets Liabilities SEKbn SEKbn 1 400 1 400 Suppl. cap CET1 1 200 1 200 Government guaranteed debt Estonia Senior CEE lending 1 000 Other corporate 1 000 lending, Sweden & other Nordic coun. Deposits 800 800 Other private, Sweden 600 600 Swedish 400
Slide 16: Lower funding needs
Liquidity and funding Lower funding needs • LCR139% (Swedish FSA definition FFFS 2012:6) • NSFR 91% • Expanded investor base Term funding issuance – completed and planned SEKbn Covered bonds Senior unsecured 120 100 80 60 40 20 0 16
Slide 17: Conservative funding plan
Liquidity and funding Conservative funding plan • Issued SEK 142bn of term-funding FY 2012, maturities of SEK 86bn • Term funding plan in 2013 of SEK 120bn, maturities of SEK 86bn SEKm Long-term debt issued SEKm Outstanding short-term debt 30 000 70 000 60 000 25 000 50 000 20 000 Q1 12 40 000 Q1 12
Slide 18: Long-term funding maturity profile
Liquidity and funding Long-term funding maturity profile • FY 2013 maturities amount to nominal SEK 86bn Long-term funding maturity profile SEKbn 200 Government guaranteed debt Senior unsecured 150 debt Covered bonds 100 50 0 2013 2014 2015 2016 2017 2018- Source: Swedbank Dec 31, 2012 18
Slide 19: Over-collateralisation
Liquidity and funding Senior unsecured debt strategy • Limited need given Swedbank’s balance sheet structure • Secure OC • Fund liquidity reserves Senior unsecured debt maturity profile House price sensitivity of the cover pool Senior unsecured debt 40% SEKbn 60 35% 30% OC, Q412 25% Over-collaterali
Slide 20: Liquidity reserve
Liquidity and funding Liquidity reserve According to the template defined by the Swedish Bankers' Association SEKm Cash and holdings in central banks 130 984 Deposits in other banks available overnight 1 500 Securities issued or guaranteed by sovereigns, central banks or multilateral development ban
Slide 21: Prolonged survival horizon
Liquidity and funding Prolonged survival horizon* SEKbn 300 250 200 150 100 50 0 0 20 40 60 80 100 120 140 160 180 200 220 240 260 280 300 320 340 365 360 Days forward * For definition see Swedbank factbook Source: Swedbank Dec 31, 2012 21
Slide 22: Conservative liquidity levels
Liquidity and funding Conservative liquidity levels • Short-term funding mainly a tool for cash management • More than 12 months pre-funded SEKbn 400 400 350 350 Additional pledgeable 300 300 and/or liquid assets Next 12-month term 250 250 1 funding maturities Liquidity reserve, 200 securities 200 C
Slide 23: Limited need for USD-funding
Liquidity and funding Limited need for USD-funding • USD-funding need covered for more than 12 months • Issued USD 1.5bn of covered bonds (144a) YTD 2012 SEKbn 180 Interest-bearing 160 securities 140 Lending to the public 120 Loans to credit institutions 100 Cash and balances with 80 central banks 6
Slide 24: Remaining government guaranteed debt
Liquidity and funding Remaining government guaranteed debt • Exited the programme on 30 April 2010 • No issuance under the programme since summer 2009 • Remaining outstanding debt of SEK 30bn maturing during 2013 and 2014 of which SEK 10bn matured in January 2013 Nom, SEKbn Maturity profile as per Q
Slide 25: Asset encumbrance
Liquidity and funding Asset encumbrance Distribution by type of liability and asset Central banks Debt and instruments Securities Government supranational issued by issued by debt debt Covered credit corporate and Mortgage SEKm instruments instruments bonds institutions other issuers ABS loans Cash
Slide 26: Swedish mortgage market
Swedish housing and mortgage market Swedish mortgage market • No securitization (on balance sheet), no sub-prime market, no 3rd party origination, no buy-to-let market • 70% home ownership1 • Rental market is regulated • Transparent credit information (credit information agency, www.uc.se) – Publicl
Slide 27: Real estate prices – Sweden 12 months development
Swedish housing and mortgage market Real estate prices – Sweden 12 months development Single-family homes1 Tenant-owner rights2 Combined3 12M Δ 12M Δ 12M Δ Jan/12 -4% -2% -4% Feb/12 -4% -1% -3% Mar/12 -4% 1% -3% Apr/12 -2% 2% -1% May/12 -2% 3% -1% Jun/12 -1% 4% 0% Jul/12 0% 4% 1% Aug/12 2% 4% 3% Sep
Slide 28: Real estate prices – Baltic countries
Baltic real estate prices Real estate prices – Baltic countries Tallinn Riga 1800 1 800 1600 1 600 1400 1 400 1200 1 200 1000 1 000 800 800 600 600 400 400 200 200 0 0 Jan-05 Jan-06 Jan-08 Jan-09 Jan-11 Jan-07 Jan-10 Jan-12 Jul-05 Jul-07 Jul-08 Jul-10 Jul-11 Jul-06 Jul-09 Jul-12 Jan-06 Jan-07 Jan-08
Slide 29: Loans past due 60 days – performance Q/Q
-250 -200 -150 -100 50 -50 0 EURm Q4 11 Q1 12 Q2 12 Asset quality Q3 12 Estonia Q4 12 Q4 11 Q1 12 Latvia Q2 12 Q3 12 Q4 12 Q4 11 Q1 12 Q2 12 Lithuania Q3 12 Q4 12 Q4 11 Q1 12 Q2 12 Ukraine Loans past due 60 days – performance Q/Q Q3 12 Q4 12 Q4 11 Q1 12 Q2 12 Russia Q3 12 Q4 12 29
Slide 30: Provisions – well provided for
Asset quality Provisions – well provided for SEKm 25 000 20 000 65.0% 63.7% 65.2% 61.5% 61.9% 15 000 Provision ratios, % Q4 12 2 435 2 478 12 821 2 040 Retail 75 11 915 1 774 10 000 10 951 LC&I 166 9 934 1 545 Baltic Banking 52 7 077 Russia 64 5 000 Ukraine 78 Group 62 0 Q4 11 Q1 12 Q2 12 Q3 12 Q4 1
Slide 31: Corporate Retail portfolio will drive capital efficiency
Credit portfolio – Retail Corporate Retail portfolio will drive capital efficiency Total portfolio SEK 231bn Segments excl. Swedbank Volume Secured Mortgage and Swedbank Finance (SEKbn) (%) Agriculture 6.0 82 Manufacturing 11.3 70 Swedbank Mortgage Public sector and utilities 4.7 86 AB 94 Constructi
Slide 32: Shipping and Offshore
Credit portfolio – Large Corporates & Institutions Shipping and Offshore Shipping and offshore SEKbn 0.4% -3.6% 30 • 26 Lending exposure to shipping and offshore sector of 24 24 25 24 SEK 24.2bn plus unutilised commitments of SEK 4 20 7.9bn 6 – Portfolio duration 4-5y 10 – Average fleet age 7y 14 –
Slide 33: Credit portfolio – Agriculture Sweden
Credit portfolio – Agriculture Sweden • Segmentation Definitions – Corporate Agriculture: Business that derive their Private: main income from Agricultural activities Residential – Private Investments: Private individuals who own 20% the agricultural properties for living or investment purposes Agri
Slide 34: 2012 ICAAP Scenario – Deep recession without recovery
ICAAP 2012 ICAAP Scenario – Deep recession without recovery Triggers Outcome • Europe enters into deep • Sharp GDP drop with no recession recovery (10-15% from 2011 level) • Limited possibilities for fiscal stimulus • Severe drop in house prices • European bank runs (25-37% from 2011 level) • Credit
Slide 35: High capitalisation even in extremely stressed scenario
ICAAP High capitalisation even in extremely stressed scenario • Revenue decrease 31 percent • Credit impairments SEK 64bn over 5 year • Scenario effects on Core Tier 1 ratio -165bp • Well above 12% Core Tier 1 ratio at low point even in extremely stressed scenario in new regulatory environment 35
Slide 36: 2012 ICAAP scenario – Deep recession without recovery
ICAAP 2012 ICAAP scenario – Deep recession without recovery 105 GDP - Index 105 Real Estate prices - index 100 95 95 85 90 75 85 65 80 55 2011 2012 2013 2014 2015 2016 2011 2012 2013 2014 2015 2016 Sweden Estonia Latvia Lithuania Sweden Estonia Latvia Lithuania 3.0% Interest rates – 3m 14 FX scenari
Slide 37: 2012 ICAAP – Main scenario results
ICAAP 2012 ICAAP – Main scenario results SEK bn Net Interest Income • NII decreases by 39% throughout the 30 20.7 scenario 20 10 12.6 0 2011 2012 2013 2014 2015 2016 • Credit Impairments total SEK 64bn Credit impairments over the scenario period SEK bn 30 23.4 20 10 0 2011 2012 2013 2014 2015 2016 -
Slide 38: 2012 ICAAP – Income statement
ICAAP 2012 ICAAP – Income statement Total Income statement (SEKbn) 2011 2012 2013 2014 2015 2016 2012 - 2016 Total net interest income 20.7 19.5 16.7 14.2 13.0 12.6 75.9 Total income 34.7 31.8 34.0 25.4 24.3 24.1 139.6 Total expenses 20.9 17.6 18.7 18.0 18.0 17.8 90.1 Profit before credit losses 13.
Slide 39: 2012 ICAAP – Credit impairments
ICAAP 2012 ICAAP – Credit impairments EAD 2011 Acc. loss ratio Credit impairments (%) (SEKbn) 2012 2013 2014 2015 2016 2012 - 2016 Total 1,384.4 0.6 1.8 1.5 0.9 0.5 4.6 of which LC & I 309.8 0.5 2.3 2.0 0.8 0.6 5.4 Retail 950.8 0.3 1.2 1.0 0.7 0.3 3.2 Estonia 52.5 1.2 2.5 2.2 1.8 1.7 6.6 Latvia 30.6
Slide 40: 2012 ICAAP Main adverse scenario results: Capital assessment
ICAAP 2012 ICAAP Main adverse scenario results Capital assessment RWA & Capital (SEKbn) 2011 2012 2013 2014 2015 2016 RWA 492.3 489.5 504.1 433.9 395.2 365.0 RWA inc 15% mortgage riskweight * 565.3 552.2 557.1 482.4 442.6 414.4 RWA inc regulatory effects ** 588.1 575.0 557.1 482.4 442.6 414.4 Core T
Slide 41: The Riksbank's Financial Stability Report 2012:2
The Riksbank's Financial Stability Report 2012:2 • Swedbank has the overall strongest capitalisation among Swedish peers • Swedbank has the strongest liquidity metrics among Swedish peers, • Swedbank is the most reciliant bank in a stressed scenario, only Swedbank makes a profit every year of the st
Slide 42: Core Tier 1 capital ratios according to Basel III
Core Tier 1 capital ratios according to Basel III Percent 18 16 14 12 10 8 6 4 2 0 Handels- Nordea SEB Swedbank banken March 2012 June 2012 September 2012 Chart 1:13 Sources: Bank reports and the Riksbank
Slide 43: Adjusted Leverage ratio
Adjusted Leverage ratio December 2011, per cent UBS Intesa Sanpaolo HSBC RBS St. Chartered Erste Group Bank BBVA Barclays BNP Paribas UniCredit Credit Agricole Société Générale Lloyds Raiffeisen Swedbank SEB DNB Credit Suisse Commerzbank Danske Bank Nordea Deutsche Bank Handelsbanken 0 2 4 6 8 10 12
Slide 44: Level of loan losses in the main scenario, percent
Level of loan losses in the main scenario, percent 0.30 0.25 0.20 0.15 0.10 0.05 0.00 Handels- Nordea SEB Swedbank Totalt banken 2013 2014 2015 Chart 5:3 Source: The Riksbank
Slide 45: CET capital ratio according to Basel III, initially and in stress test
CET 1 capital ratio according to Basel III, initially and in the Riksbank’s stress test Percent 18 16 14 12 10 8 6 4 2 0 12 13 14 15 12 13 14 15 12 13 14 15 12 13 14 15 Q3 Q3 Q3 Q3 Handelsbanken Nordea SEB Swedbank Chart 5:9 Sources: Bank reports and the Riksbank
Slide 46: P&L in the Riksbank stress test
P&L in the Riksbank stress test
Slide 47: The Riksbank's short-term liquidity measure
The Riksbank’s short-term liquidity measure Survival period, number of days 120 100 80 60 40 20 0 Handels- Nordea SEB Swedbank banken September 2011 December 2011 March 2012 June 2012 September 2012 Chart 5:12 Sources: Liquidatum and the Riksbank
Slide 48: The Riksbank's structural liquidity measure
The Riksbank’s structural liquidity measure Stable funding in relation to illiquid assets, per cent 120 100 80 60 40 20 0 Handels- Nordea SEB Swedbank banken September 2011 December 2011 March 2012 June 2012 September 2012 Chart 5:14 Sources: Liquidatum and the Riksbank
Slide 49: The Riksbank's short-term and structural liquidity measure
The Riksbank's short-term and structural liquidity measure (European Banks) June 2012 180 160 Short-term liquidity measure (days) 140 120 100 Handelsbanken 80 SEB Swedbank Nordea 60 40 20 0 70 80 90 100 110 120 Structural liquidity measure (per cent) Chart 5:17 Sources: Liquidatum and the Riksbank
Slide 50: Transparency, liquidity risk
Transparency, liquidity risk 50
Slide 51: Mortgage loans, gross margin (3 months)
Mortgage loans, gross margin (3 months) % 6 5 4 Net margin The gross margin should cover: 3 Cost of liquidity ~0.2% Administrative costs ~0.3% Credit impairments ~ 0.03% Tax (22 % on profit before tax) 2 1 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Gross margin Swedbank's funding cost Stibo