Slide 1: Swedbank's fourth quarter 2010 results
Swedbank’s fourth quarter 2010 results 8 February 2011 Michael Wolf, CEO Erkki Raasuke, CFO Göran Bronner, CRO
Slide 2: Favourable profit trend
Favourable p profit trend • Net profit of SEK 7.4bn for 2010 • Core Tier 1 ratio of 13.94 per cent • Proposed dividend: SEK 2 2.10 10 per A-share A-share, SEK 4.80 per preference share Net profit performance Q4 09 Q1 10 Q2 10 Q3 10 Q4 10 2
Slide 3: Priorities 2010 – Summing up the year
Priorities 2010 Summing g up p the year y • Customer satisfaction • Lower risk level • Earnings • Liquidity and capitalisation 3
Slide 4: Priorities 2010 – Customer satisfaction
Priorities 2010 – Customer satisfaction Making g progress p g but still more to do… • New service concepts in Retail yields result • Sector focus in LC&I • Baltic Banking implementing same customer approach as Retail in the branch network • Enhanced capital p markets offering g to meet increased dem
Slide 5: Priorities 2010 – Lower risk level
Priorities 2010 – Lower risk level Significantly g y reduced risk Credit impairments, SEKm • Continued reduced CEE lending 7 500 • Estonia joined the EMU 6 500 1 Jan 2011 5 500 • Decreased RWA 4 500 • Reduced need for senior funding g 3 500 2 500 1 500 500 -500 08 09 09 09 09 10 10 10 10 Q4 0 Q1 0 Q
Slide 6: Priorities 2010 – Earnings
Priorities 2010 – Earnings Pre-provision p earnings g starting g to improve p Net interest income, SEKm • Net profit increased by 7 000 SEK 18bn due to lower credit impairments 6 000 • NII troughed in Q2 Q2, positive trend 5 000 • Expenses adopted to lower 4 000 business volumes 3 000 2 000 1 000 0
Slide 7: Priorities 2010 – Liquidity and capitalisation
Priorities 2010 – Liquidity and capitalisation Strengthened g funding g position p SEKbn • Average maturity of capital 500 Covered bonds market k t ffunding di extended t d d Central bank and guaranteed funding to 27 months 400 • L Left f the h state guarantee programme in April 300 • State guarante
Slide 8: New capitalisation target and dividend policy
New capitalisation p target g and dividend policy p y • Core Tier 1 capital ratio of at least 13 per cent until 2013 • Long-term core Tier 1 capital ratio of at least 10 per cent • AGM to decide on buy-back programme to manage capitalisation • New dividend policy from 2011 – 50 per cent pay-out pay
Slide 9: Net interest income
Net interest income Growing g NII • Increasing interest rates in SEK • Deposit margins improving • Restated Baltic Banking late payment fees Retail LC&I Baltic Russia, Treasury, Banking Ukraine Other 4 702 4 527 13 159 249 91 4 023 253 -59 3 799 3 980 1 168 733 2 752 (SEKm) -285 285 Q4 09 Q1 10 Q2 1
Slide 10: Net commission income
Net commission income Strong g commission income • Strong syndicated lending fees • L Low b brokerage k ffees iin Q3 • Corporate finance picking up Retail LC&I Baltic Russia, Asset mgmt, Banking Ukraine Other 2 538 2 361 2 395 2 310 2 282 23 94 -3 1 428 113 20 383 575 1 132 (SEKm) Q4 09 Q1 10 Q2 10
Slide 11: Net gains/losses on financial items, fair value
Net gains/losses on financial items, fair value Lower g gains with higher g quality q y • Strong end of the year from LC&I • C Cancellation ll ti off deposit d it iin R Russia i • Treasury valuation effects turned to negative Baltic Russia, Treasury, LC&I Banking Ukraine Other Retail 809 29 180 647
Slide 12: Expenses
Expenses Expenses p seasonally y higher g • Accelerated IT development • Y/Y expenses flat fl t • FR&R and Ektornet 2010 expenses SEK 714m 0.57 0.57 0.55 0.58 0.54 LC&I Baltic B lti Russia, Russia Asset mgmt, mgmt Retail Banking Ukraine Other 4 300 4 391 4 423 152 73 9 4 590 4 238 123 -5 582 211 697
Slide 13: Liquidity & Capital management: SEK 265bn term funding issued in 2010
Liquidity & Capital management SEK 265bn term funding issued in 2010 • Full year 2011 maturities of nominal Issued & matured full year 2010 (nominal SEKbn) SEK 180bn 60 – Of which SEK 80bn in guaranteed 40 funding 20 – Of which SEK 86bn in covered bonds 0 -20 • Average maturity of wholesale funding,
Slide 14: Income statement
Fourth quarter 2010 results Income statement SEKm Q4 10 Q3 10 QoQ % Q4 09 Income 7 958 7 647 4% 7 982 Expenses 4 590 4 238 8% 4 300 Profit before impairments 3 368 3 409 -1% 3 682 Impairment of intangible assets 23 Impairment of tangible assets 406 30 352 Credit impairments - 483 120 5 003 Operating
Slide 15: Asset quality – Continued improvements
Asset quality Continued improvements p • All indicators in the right direction – Impaired loans – 60 days overdue Declining in all countries – Restructured loans – Watch list • RWA d decreased dbby SEK 18 18.4bn 4b iin Q4 – Positive rating migration – Continued C ti ddde-leveraging l i iin B Baltic
Slide 16: Asset quality – Credit impairments of SEK -483m
Asset quality Credit impairments p of SEK -483m SEKm 6 000 • Net recoveries in Baltic Banking 5 003 and Russia & Ukraine 5 000 • Minor credit impairments in 4 000 Retail and LC&I 3 000 • Write-down of tangible assets, 2 210 mainly in Ukraine 2 000 963 1 000 120 0 -1 000 -483 Q4 09 Q1 10 Q2 10 Q3 10
Slide 17: Asset quality – Provisions
Asset quality Provisions – work-out p portfolios slowly y declining g SEKm 30 000 65 9% 65.9% 63 5% 63.5% Provision ratios, % Q4 10 64.8% 63.9% 25 000 4 104 Retail 99 4 684 5 135 3 606 62.7% LC&I 106 20 000 3 297 B lti B Baltic Banking ki 58 Russia 57 15 000 Ukraine 65 21 889 23 028 Group 63 10 000
Slide 18: Capital management – Core Tier 1 ratios European banks
10% 12% 14% 16% 0% 2% 4% 6% 8% UBS S Swedbankk 13.9 p SEB B 12.2 Dexia a SHB B 12.1 European N. B. Of Greece e p DnB NOR R Stan Chartt Capital management HSBC C peer RBS S Nordea 10.3 Barclayss Core Tier 1 ratios (Basel 2) European banks* Danske Bankk p Credit Suisse e EFG EuroBankk Bank of Ireland
Slide 19: Assets – significantly reduced risk level since Q4 08
Capital management Assets – significantly g y reduced risk level since Q4 08 (SEKbn) 1 400 • Estonia joined the EMU, 1 Jan 2011 1 200 • RWA reduced from SEK 697bn to -108 CEE lending SEK 541bn Estonia 1 000 • Reduced need for unsecured Other corporate lending, Sweden & funding of about SEK 150bn oth
Slide 20: Liabilities – significantly reduced risk level since Q4 08
Capital management Liabilities – significantly g y reduced risk level since Q4 08 (SEKbn) 1 400 • Increased use of stable and efficient funding sources 1 200 Central banks + Government guaranteed -182 Senior unsecured • Issued SEK 365bn since 1 000 -46 second rights issue Covered bonds 800 +140 • Ma
Slide 21: Capitalisation – solid to meet risk profile and uncertainties
Capital management – Core Tier 1 Capitalisation p – solid to meet risk p profile and uncertainties 13.9% Excess capital (SEK 4.9bn) • CT1-ratio to stay above 13.0% 13 per cent until 2013 Extra buffer due to prevailing – Perception circumstances (SEK 16.2bn) – Unclear regulatory framework 10.0% – Unc
Slide 22: Excess capital – no need to increase capital further
Capital management Excess capital p – no need to increase capital p further • Large capital buffer in relation to current risk level • Increasing I i profit fit generation ti • RWA growth expected to be moderate • Continued focus on capital efficiency 22
Slide 23: Capital management – Proposal
Capital management Proposal p • AGM to decide on buy-back programme to manage capitalisation – Up U tto 10 per centt off outstanding t t di shares h (incl. (i l acquisition i iti off own shares through the securities operations) – Gradual buy-backs buy backs during the permit period – Full flexibili
Slide 24: Priorities 2011
Priorities 2011 • Customer focus • Growth in selective segments • Quality and effectiveness • Robust and low-risk balance sheet 24
Slide 25: Welcome to Swedbank's Capital markets day
Welcome to Swedbank’s Capital p markets day y 23 February 2011 Registration at www.swedbank.com/ir
Slide 26: Appendix
Appendix Swedbank@ 26
Slide 27: Loan to deposit ratio improved
Loan to deposit p ratio improved p SEKbn 2010 2009 Δ Retail - loans 873 854 19 Retail - deposits 347 318 29 LC&I - loans 130 150 -20 LC&I - deposits 74 69 5 BB - loans 130 170 -40 BB - deposits 93 103 -10 R&U - loans 13 18 -5 R&U - deposits 3 7 -4 Group - loans 1 146 1 192 -46 Group - deposits 517 4
Slide 28: Business area performance
Business area performance p Profit before impairments p Q4 10 Q3 09 Δ 8Q development p Retail 2 126 1 881 245 Large corporates & 895 664 231 Institutions Baltic Banking 935 937 -2 Asset management 188 179 9 Russia & Ukraine -116 116 -55 55 -61 61 Other -660 -197 -463 Group 3 368 3 409 -41 Q1 09 Q4 1
Slide 29: Impaired loans decreasing
Impaired p loans decreasing g • Excl. FX effect down SEK 3bn in Q4 • Underlying decreases in all business areas in Q4 SEKm 45 000 42 719 40 132 40 328 40 000 -4 088 35 770 4 362 196 2 391 Impaired loans as % 38 631 -3 3 853 35 000 of gross lending 6 113 34 778 7 957 29 657 Ukraine 62% 30 000 1 939 R
Slide 30: Loans past due 60 days – performance Q/Q
-50 0 100 150 200 00 250 -150 -100 50 EURm Q4 09 Q Q1 10 Q Loans p Q2 10 Q Estonia Q3 10 Q Q4 10 Q Q4 09 Q Q1 10 Q Q2 10 Q Latvia Q3 10 Q past due 60 days Q4 10 Q y –p Q4 09 Q Q1 10 Q Q2 10 Q Q3 10 Q Lithuania Q4 10 Q Q4 09 Q Q1 10 Q Q2 10 Q performance Q/Q Q3 10 Q Ukraine Q4 10 Q Q4 09 Q Q1 10 Q Q2
Slide 31: Repossessed assets
Asset qualtiy Repossessed p assets SEKm 4 000 3 500 3 000 2 500 2 000 1 500 1 000 500 0 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10 Real Estate Residential Real Estate Commercial Passenger & Commercial Transport Shares Other 31
Slide 32: Real estate prices
Real estate p prices Tallinn Riga* 1 800 1 800 2 000 2 000 1616 1 500 1 500 No of transactions 1 500 1 500 1 200 1 200 EUR/m2 of transactions 813 EUR/m2 900 900 1 000 1 000 617 600 669 600 500 500 N No.o 300 300 0 0 0 0 Q4 06 Q2 07 Q4 07 Q2 08 Q4 08 Q2 09 Q4 09 Q2 10 Q4 10 Q4 02 Q4 03 Q4 04 Q4 05 Q4
Slide 33: Liquidity & funding – Long-term funding
Liquidity & funding Long-term g funding g • Continued focus on covered bonds with full-year issuance of SEK 238bn • SEK 23bn in senior unsecured issuance • 4 EUR-denominated covered bond benchmark deals, each in the size of EUR 1bn • 1 EUR-denominated senior unsecured benchmark deal of EUR 1bn • Tot
Slide 34: Remaining government guaranteed debt
Liquidity & funding Remaining g government g guaranteed g debt • Exited the programme on April 30, 2010 • No issuance under the programme since summer 2009 • SEK 75bn of government guaranteed debt matured during 2010 • Maturities of nominal SEK 80bn in 2011 Maturityy p profile,, SEKbn 0 USD SEK EUR