Swedbank Ab Class A · OMXSTO:SWED_A
Swedbank Ab Class A — Q4 2009 Earnings Presentation
35 slides from Swedbank Ab Class A's earnings presentation, Feb 9, 2010
Slide 1: Year-end report 2009
Year-end report 2009 9 February 2010 Michael Wolf, CEO Erkki Raasuke, CFO Göran Bronner, CRO
Slide 2: Progress made in 2009
Progress made in 2009 • Reduced CEE exposure • Restructuring units established (FR&R and Ektornet) • Capital strengthening through rights issue and managed risk weighted assets • Improved funding structure • Enhanced organisational and governance structure 2
Slide 3: Results by business area: Q4 update
Results by business area Q4 update Swedish Banking SEKm Profit before impairments 3 000 Continued solid performance, strong growth Q3 09 in deposits, low credit impairments 2 000 Q4 09 1 000 Baltic Banking 0 Lower total income due to contracting -1 000 economy, lower growth rate in impaired -2 000 l
Slide 4: Continued headwinds in net interest income
Net interest income Continued headwinds in net interest income SEKm 6 000 5 017 10 5 000 4 702 -57 -134 -58 -4 -71 4 000 3 000 2 000 1 000 Q3 Q4 0 Net interest Swedish Baltic Intl Banking Swedbank Asset Other Net interest income Banking Banking Markets Management income 4
Slide 5: Slow quarter in trading
Net gains and losses Slow quarter in trading • FX gains in Ukraine SEK 82m • Slow trading in Swedbank Markets • Inefficiencies of hedge accounting and repurchase of own debt in Group Treasury SEKm Q4 09* Q3 09 Q4 08 Swedish Banking 96 -233 834 Baltic Banking 88 196 -3 International Banking 143 -197
Slide 6: Capacity and expenses development
Costs Capacity and expenses development • FTE reduction ahead of plan • SEK 389m reserves of variable FTE plan actual remuneration reversed in Q4 reduction H2 09 H2 09 • Variable remuneration expenses Swedish Banking 0 -102 down from 2008 by SEK 920m Baltic Banking -690 -860 • Risk management and re
Slide 7: Income statement
Fourth quarter results 2009 Income statement SEKm Q4 2009 Q3 2009 Change Net interest income 4 702 5 017 -315 Net commission income 2 273 2 208 65 Net gains/losses on financial items, fair value 223 87 136 Other income 784 830 -46 Total income 7 982 8 142 -160 Staff costs 2 319 2 241 78 Profit-based
Slide 8: High liquidity maintained
Liquidity & Funding High liquidity maintained • Survival period further increased thanks to long-term funding issuance • Need for short-term funding continuously reduced as loan-to- deposit ratios improve Stress test of liquidity as of 31 December 2009 SEKbn • Liquidity managed from a long- 300 term
Slide 9: Loans and deposits development
Liquidity & Funding Loans and deposits development Swedish Banking (SEKbn) • Good growth of deposits 970 365 Loans (left) Deposits (right) • Loan/deposit ratios improved in all 960 355 business areas 950 345 940 335 • Quality of funding improved 930 325 920 315 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Ba
Slide 10: Improved funding situation
Liquidity & Funding Improved funding situation • SEK 66bn of long-term debt issued Outstanding wholesale funding Q2-Q4 during Q4 (and another SEK 30bn SEKbn, notional value during January 2010) Total long- 391 term, non- 338 • Central bank repos down to guaranteed 318 SEK 116bn Total 166 guaranteed
Slide 11: Well capitalised
Capital management Well capitalised Core Tier 1 capital ratio* % 12 Core Tier 1 capital ratio* YE 08 9.68% 10 Result loss: SEK10.5bn -1.51% RWA reduction +1.50% 8 Rights issue +2.10% Other +0.24% 6 12.0 9.9 Core Tier 1 capital ratio* YE 09 12.01% 9.7 9.4 9.8 4 2 0 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 * Acc
Slide 12: Continued risk reduction
Asset quality Continued risk reduction • CEE lending as % of equity down from 290% to 209% Development – lending to the public SEKbn 1 200 Private 948 959 Corporate 1 000 800 520 555 600 400 251 188 200 428 404 97 84 154 104 0 Sweden 2008 Sweden 2009 Baltic countries & Baltic countries & Eastern Eur
Slide 13: Quarterly change of 60-day past due loans – stabilisation continues
Asset quality Quarterly change of 60-day past due loans – stabilisation continues EURm 400 350 300 250 200 150 100 50 0 -50 Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 08 09 09 09 09 08 09 09 09 09 08 09 09 09 09 08 09 09 09 09 08 09 09 09 09 Estonia Latvia Lithuania U
Slide 14: Development of impaired loans
Asset quality Development of impaired loans • Impaired loans increased by SEK 4.4bn (SEK 6.5bn excl definition change) • The rate of increase in impaired loans is decreasing • As expected weak performance in Latvia, Lithuania and Ukraine SEKm 45 000 Share of impaired 40 132 loans, gross 40 000 947 3
Slide 15: Credit impairments in Q4
Asset quality Credit impairments in Q4 • Credit impairment SEK 5 003m SEKm + Sweden and Estonia continued 8 000 good development 6 845 7 000 6 672 + Ukraine: reduced provisioning 6 121 6 000 ratio as portfolio knowledge increases 5 000 5 003 4 000 – Russia high losses due to thorough review of portf
Slide 16: Provisioning
Asset quality Provisioning • All portfolios thoroughly reviewed in 2009 • Portfolio provisions - individual • Provision ratio for Group increased during Q4 from 63% to 65% SEKm 30 000 64.8% Provision ratios: 64.1% 25 000 62.9% 63.3% 5 135 Swedish Banking 96% 20 000 Baltic Banking Op 57% 6 922 15 000
Slide 17: Repossessed assets
Asset quality Repossessed assets • Increased to SEK 1.7bn, of which SEK 0.5bn is managed by Ektornet SEKm 2 000 1 800 1 600 1 400 1 200 1 000 800 600 400 200 0 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Real Estate Residential Real Estate Commercial Passenger Transport Commercial Transport Shares Other
Slide 18: Ektornet – recouping value over time
Asset quality Ektornet – recouping value over time • Independent business area as of the fourth quarter • Management team in place – real estate experience background • External market appraisal • Seized collateral at year-end of SEK 517m, mainly real estate – Nordic region, SEK 173m – Estonia, SEK
Slide 19: Main risks 2010
Asset quality Main risks 2010 • Global macro situation – Deleveraging – Sovereign risks with high fiscal debt levels • Sweden – Interest rate stimulus withdrawn – Late impairment losses in certain segments • Latvia – Political uncertainty: Election in September • Ukraine – Political uncertainty • Po
Slide 20: Strategic priorities 2010
Strategic priorities 2010 Customer satisfaction • Increased customer segment focus • Local empowerment • Reducing parts of exposure in CEE countries Risk reduction • Protecting value through FR&R and Ektornet • New business initiatives in Sweden Earnings capacity • Strong focus on cost and efficienc
Slide 21: Customer-centric organisational model
Customer-centric organisational model CEO Large Baltic Russia Asset Retail Corporates & Ektornet Banking & Ukraine Management Institutions 21
Slide 22: Outlook
Outlook Given that the global macro economy continues to develop positively without substantial divergence, particularly in Latvia and Ukraine, a profit for the full-year 2010 is feasible. 22
Slide 23: Appendix
Appendix Swedbank@ 23
Slide 24: Income statement
Results 2009 Income statement SEKm FY 2009 FY 2008 Change Net interest income 20 765 21 702 -937 Net commission income 7 825 8 830 -1 005 Net gains/losses on financial items, fair value 2 731 2 351 380 Other income 3 461 3 580 -119 Total income 34 782 36 463 -1 681 Staff costs 9 184 9 142 42 Profit-
Slide 25: Balance sheet
Balance sheet Swedbank Group SEKm Dec 09 Dec 08 % Loans to credit institutions 92 131 128 536 -28% Loans to the public 1 290 667 1 287 424 0% Interest-bearing securities 170 615 133 694 28% Fund shares for which customers bear the investment risk 78 194 51 638 51% Shares and participating interests
Slide 26: Long-term funding
Liquidity & Funding Long-term funding • In Q4 Swedbank issued SEK 66bn of covered bonds and senior unsecured bonds compared to maturities of SEK 14bn • No Government guaranteed Swedbank, long-term maturity profile bonds issued since (including Swedbank Mortgage) SEKbn, nom announcement of rights iss
Slide 27: Funding under the Swedish guarantee programme
Liquidity & Funding Funding under the Swedish guarantee programme (total outstanding as per 31 December, notional SEK 241bn) Currency distribution • Total outstanding guaranteed funding EUR 43% with maturity >12 months decreased USD 29% by SEK 9bn to ca SEK 166bn SEK 22% CHF 4% • No issuance under t
Slide 28: Cover pool and new issuance of cover bonds
Cover pool and new issuance of cover bonds Cover pool data • Since Q3, two euro covered Total pool size SEK 608bn bonds have been issued Average loan size SEK 398 818 – Euro Mid Term Note CB 7Y, Number of loans outstanding 1 524 546 EUR 1.25bn, Sep/Oct 2009 Residential Mortgages (90.3%), Public (2.9
Slide 29: Swedbank Mortgage, total loan portfolio SEK 672bn
Swedbank Mortgage, 31 Dec 2009, total loan portfolio SEK 672bn • 100% lending – Swedish properties • 90% residential lending • Average LTV* of 45% (loan level) 60% (property level). Cover pool 44% / 58% • 79% of the total lending book within a loan-to-value* ratio below 50% SEKm Loan-to-value* (LTV)
Slide 30: Swedish Banking lending to the public, excluding Swedbank Mortgage
Swedish Banking lending to the public, excluding Swedbank Mortgage, SEK 276bn SEKm Real estate management (SEK 91bn) 300 000 Other 10% 250 000 Residential Industry 27% Municipalities 10% 200 000 Other corporate lending Forestry and agriculture Transportation Housing Manufacturing cooperative 150 000
Slide 31: Foreign exchange positions as of 31 December 2009
Earnings capacity Foreign exchange positions as of 31 December 2009 SEKm EEK LVL LTL UAH RUB Structural position -36 577 64 -14 234 410 -5 Net assets 20 301 7 642 5 651 1 080 1 042 Equity hedge 0 - 7 607 -5 645 0 0 Goodwill 11 541 0 0 0 13 Total position - 4 735 99 -14 228 1 490 1 050 31
Slide 32: Appendix – Baltic Banking
Appendix — Baltic Banking Swedbank@ 32
Slide 33: Baltic Banking gross lending by sectors
Baltic Banking gross lending by sectors* Portfolio, December 2009, EURm Portfolio growth, Q4 09, EURm Individuals Mortgage Other 46% -230 Real estate 3,162 18% 21 mgmt*** Retail & 1,244 7% -110 Wholesale Industry 1,361 8% -43 Transport 853 5% -52 Construction 358 2% -40 Other** 2,645 14% -238 0 2,00
Slide 34: Real estate prices stabilised in the second half of 2009
Real estate prices stabilised in the second half of 2009 Vilnius 1800 Tallinn 1800 1 800 1 731 1800 1 611 1500 1500 1 500 1500 No of transactions No of transactions 1 014 EUR/m2 1200 1200 1 200 1200 EUR/m2 900 758 900 900 900 600 600 600 600 300 300 300 300 0 0 0 0 Q4'06 Q2'07 Q4'07 Q2'08 Q4'08 Q2'0
Slide 35: Mortgage portfolio LTV
LTV risk dimensions Mortgage portfolio LTV • Due to the price drop in all three Baltic countries, average LTVs have increased significantly • Latvia was hurt most, due to higher share of portfolio issued at peak prices and a steeper price drop EE LV LT Average LTV*: 2009-12-31 90% 166% 92% Share of