swedbank's first quarter results for 2013 from the analyst conference

7/28/2019 Swedbank's First Quarter Results for 2013 from the Analyst Conference

1/30

Swedbanks first quarter 2013 results

,

Gran Bronner, CFO

Hkan Berg, CRO


2/30

Customer requirements drive new ways of banking

Retail banking

Focus on functionality and ease of use

million Monthly logins Swedbank and Savings Banks

25

15

5

10

0

J an 2010 J an 2011 J an 2012 J an 2013

Mobile bank Internet bank

2


3/30

Fast increase of digital usage

Swedbank and Savings Banks

Internet Bank, private and corporate (since March 1997) Number of users: >3.5 million

Mobile Bank, private (since Dec 2009)

Number of users: >1.3 million

Mobile Bank Youth (since March 2013) Number of users: 6 700

Mobile Bank Corporate (since March 2013) Number of users: >8 000

Number of users: >200 000

Swish (since Dec 2012) Number of users: ~100 000

3


4/30

Stable results

Retail

Stable NIISEKm Q1 12 Q4 12 Q1 13 Q/Q Y/YNet interest income 3 371 3 353 3 332 -21 -39

Solid asset quality

Net commissions 1 538 1 554 1 589 35 51

Total income 5 346 5 255 5 377 122 31

o a expenses - -Profit before

impairments2 917 2 781 2 971 190 54

Credit impairments 21 91 55 -36 34

ROE, % 28.4 28.0 27.9

ra o . . .

4


5/30

Good return

Large Corporates & Institutions

Stable NIISEKm Q1 12 Q4 12 Q1 13 Q/Q Y/YNet interest income 728 795 783 -12 55

Low activity in Corporate

Finance

Net commissions 485 536 419 -117 -66

Total income 2 071 1 857 1 814 -43 -257Ex enses excl variable

Structural challenges inEquities

staffcosts- -

Variable staff costs 105 75 88 13 -17

Profit before

impairments1 305 1 114 1 080 -34 -225

Solid credit qualityCredit impairments 17 162 74 -88 57

ROE % 18.9 18.3 16.7

C/I ratio 0.37 0.40 0.40

5


6/30

Focus on costs

Baltic Banking

Stable NII in local currencySEKm Q1 12 Q4 12 Q1 13 Q/Q Y/YNet interest income 910 760 742 -18 -168

Increased customer activity

Net commissions 386 366 388 22 2

Total income 1 468 1 289 1 281 -8 -187

Increased efficiency in focus

o a expenses - -

Profit before

impairments839 656 695 39 -144

Credit impairments -134 -329 -70 -259 -64

ROE, % 14.6 13.3 12.6

ra o . . .

6


7/30

Robust earnings

Group results

Stable NII

SEKm Q1 12 Q4 12 Q1 13 Q/Q Y/Y

Net interest income 4 895 5 346 5 353 7 458

Funding costs

Lower deposit margins

Net commission income 2 398 2 502 2 388 -114 -10

Net gains and losses 979 830 557 -273 -422

Total income 9 072 9 437 9 082 -355 10

Net gains and lossesone-off gain in Q4 12

Total expenses 4 327 4 142 4 043 -99 -284

Profit before impairments 4 745 5 295 5 039 -256 294

Impairment of tangible assets 40 141 85 -56 45

Lower costsCredit impairments -96 -76 60 136 -156Tax 1 108 786 976 190 -132

Profit from continued ops. 3 693 4 427 3 918 -509 225

Continued good asset qualityProfit from discontinued ops. -279 -174 -390 -216 -111Profit for the period 3 410 4 252 3 525 -727 115

discontinued operations

Return on equity, % 14.1 16.9 13.8

ROE continuing operations, % 15.3 17.5 15.3

Cost/income ratio 0.48 0.44 0.45

7


8/30

Continued strengthening capital position

Capital situation

13-15% CET116.7 17.3

16.4

Common Tier 1 capital ratio

Basel 2* Basel 3

CRD/CRR IV less impact

IRB Advanced

* As of 2012 incl. IAS 19.

Waiting for regulatory clarity

2007 2008 2009 2010 2011 2012 Q1 13

Changes in B3 CET1 ratio Q4-Q1

15.45%

0.14% 0.14%0.24%

0.55%

-0.13

16.38%

Q4 2012 Profit Q1 IAS 19 RWA SME& Other Q1 2013

8

change Q1 CVA(Basel 3)

Basel3changes

Increase Decrease


9/30

Strong credit quality

Continued high credit qualityCredit impairments, SEKm Q1 12 Q4 12 Q1 13Retail 21 91 55

Slower net recoveries in

Large Corporates & Institutions 17 162 74

Baltic Banking -134 -329 -70

a c an ng

Exiting Russia and Ukraine

s ona - - -

Latvia -21 86 4

Lithuania -35 -173 -20

Swedbank Group -96 -76 60

31.735

SEKbn Impaired loans

20

25

30

10.3

0

5

10

9

Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Q3 12 Q4 12 Q1 13*

* Russia and Ukraine reported as discontinued operations.


10/30

Swedbanks first quarter 2013 results


11/30

Appendix


12/30

Loans past due 60 days performance Q/Q

EURm

Estonia Latvia Lithuania

-50

0

-150

-100

-250

-200

Q11

Q21

Q31

Q41

Q11

Q11

Q21

Q31

Q41

Q11

Q11

Q21

Q31

Q41

Q11

12


13/30

Provisions well provided for

SEKm

Provision ratios, % Q1 13

Retail 70

LC&I 7620 000

25 000

Baltic Banking 52

Group 57

2 478

65.0% 63.7% 65.2%61.9%

57.0%15 000

11 915

10 951 9 934

7 077

1 774

1 545

1420

10 000

4 429

0

Q1 12 Q2 12 Q3 12 Q4 12 Q1 13*

* Russia and Ukraine reported as discontinued operations.

Individual provisions Portfolio provisions Provision ratio

13


14/30

Corporate portfolio drives capital efficiency

Credit portfolio - Retail

Total portfolio SEK 222bn Segments excl. SwedbankMortgage and Swedbank Finance

Volume

(SEKbn)

Secured

(%)

grcu ure .

Manufacturing 9.7 74

Public sector and utilities 5.1 92

94104

Construction 4.7 82

Retail 9.0 88

Transportation 1.9 85

24

Shipping 0.1 95

Hotels and restaurants 3.1 91

Information & communication 0.9 46

Swedbank Mortgage AB

Swedbank Finans AB

Other

Finance and insurance 2.0 66

Property management 49.4 97

Professional service 6.7 65

Other 6.0 72

Total 104.4 87

14


15/30

Shipping and Offshore

Credit portfolio Large Corporates & Institutions

Shipping and Offshore

4

24 26 25 24 23

30 Exposure to Shipping & Offshoresector was SEK 23.5bn plus

-3.0% -3.0%

15

5

10

20

unutilised commitments of SEK 7.7bn Portfolio duration 4-5y

Avera e fleet a e 7

0Q1-12 Q2-12 Q3-12 Q4-12 Q1-13

Offshore Tanker Other

Strong employment profiles

J PY

Shipping and Offshore portfolio by currency

Q1-130.7

0.9

1.6

Dry bulk

Container

RORO

Shipping and Offshore Portfolio by subsegment

bn

USD

NOK

Q4-12

1.9

0.2

2.3

0.7

1.4

Floatin roduction

Chemical

Product

Crude oil

Gas (LNG/LPG)Q1-13

Q4-12

SEK

EUR

6.8

1.6

3.5

1.2

Drilling & exploration

Oil service

Supply

Accommodation

15

0 5 10 15 20

.

0 2 4 6 8SEKbn


16/30

Agriculture

Credit portfolio

Segmentation definitions Corporate Agriculture: Businesses

that derive their main income fromagricultural activities

Private Investments: Private individuals whoown agricultural properties for residential or

Private:Residential

20%

investment purposes

Agriculture45%

Lending to the agricultural sectorSEK 63.3bn

Private:Forestry

Agriculture 45%

Forestry 13%

Private Investments (42%)Forestry

13%

Residential: 20%

Forestry: 22%

16


17/30

Core balance sheet* structure

Liquidity and funding

14001400

Assets LiabilitiesSEKbn SEKbn

12001200

CEE lendinEstonia

Senior

CET1

Suppl. cap

Governmentguaranteed debt

800

1000

800

1000

Othercorporatelending, Sweden &otherNordics Deposits

600600

er prva e, we en

200

400400

Swedishmortgage loans

Coveredbonds

0

Q1 20130

Q1 2013

17

Source: Swedbank, 31 March, 2013

* Simplifiedbalance sheet


18/30

Senior unsecured debt strategy


Limited need given Swedbanks balance sheet structure

Fund liquidity reserves

40%Senior unsecured debt

Senior unsecured debt maturity profile

SEKbn

House price sensitivity of the cover pool

20%

30%OC, Q113

60

ion

0%

10%

40

er-

collateralisa

-10%

20 O

-0% -5% -10%-15%-20%-25%-30%-35%-40%-45%-50%2013 2014 2015 2016 2017 2018 2019-

18

Source: Swedbank, 31 March, 2013, nominalamounts House pricedrop


19/30

Lower funding needs


LCR 139% (Swedish FSA definition FFFS 2012:6)

Expanded investor base

Term funding issuance completed and planned

100

120

n

40

60

0

20

19

Source: Swedbank, 31 March, 2013, nominal amounts


20/30

Conservative funding plan


Issued SEK 40bn of term-funding in Q1

, -maturities of SEK 86bn

6000070000

Issued long-term debt Outstanding short-term debtSEKm SEKm

40000

50000

50000

60000

20000

30000 Q4 12

Q1 13

30000

40000 FY 2012

Q1 13

0

10000

0

10000

CB

(144A)

unsecured

20

Source: Swedbank, 31 March, 2013, nominalamounts


21/30

Long-term funding maturity profile


FY 2013 maturities amount to nominal SEK 86bn, of whichSEK 46bn for the remainder of 2013

Long-term funding maturity profile

150

200

Government

guaranteed debt

Senior unsecureddebt

100

0

50

2013 2014 2015 2016 2017 2018 2019-

2121

Source: Swedbank Mar 31, 2013


22/30

Limited need for USD-funding


USD-funding need covered for more than 12 months

Issued USD 1bn of covered bonds (144a) and USD 1bn of senior (144a) YTD 2013

300Interest-bearing securities

SEKbn

250Lending to the public

150

200Loans to credit institutions

Cash and balances with

100

Deposits and borrowingsfrom the public

0

50 Amounts owed to creditinstitutions

Debt securities in issue

Assets Liabilities

22

Source: Swedbank Fact book, Mar 31, 2013


23/30

Liquidity reserve


According to the template defined by the Swedish Bankers' Association

SEKm

Cash and holdings in central banks 210 251

Deposits in other banks available overnight 1 290

Securities issued or guaranteed by sovereigns, central banks or multilateral development banks 27 751

Securities issued or guaranteed by municipalities or Public sector entities 378

- Issued by other institutions 58 284

- Own issued

Securities issued by non-financial corporates

Securities issued by financial corporates (excl. covered bonds) 2 532

Other

Total1

300 486

ona qu asse s, roup,

1 95% of the securities in the liquidity reserve per Q1 2013 are rated AAA2 84% of the additional liquid assets fulfill the Liquidity Reserve definition by the Swedish Bankers Association except forthe fact that they are held outside the Treasury department.

23

3 82% of the additional assets are rated AAA

Source: Swedbank Factbook, 31 March, 2013


24/30

Prolonged survival horizon


SEKbn

250

300

SEKbn

150

200

50

100

Days forward

00 20 40 60 80 100 120 140 160 180 200 220 240 260 280 300 320 340 360365

Days forward

24

Source: Swedbank 31 March, 2013


25/30

Conservative liquidity levels


Short-term funding mainly a tool for cash management

-

SEKbn

300

350

Next 12-month term300

350Additional pledgeableand/or liquid assets

150

200

unding maturities

CP / CDs and netinterbank funding,

150

200Liquidity reserve,securities

Liquidity reserve,

1

1

0

50

100

0

50

100,

SEKm

25

Source: Swedbank 31 March, 2013

1 As defined by the Swedish Bankers Association


26/30

Asset encumbrance


Encumbered assets - distribution by type of liability (row) and asset (column)

SEKm

Government

debt

instruments

Central banks

and

supranational

debt

instruments

Covered

bonds

Debt

instruments

issued by

credit

institutions

Securities

issued by

corporate and

other issuers ABS

Mortgage

loans Cash Total

Central bank funding 0

Intraday settlement 1 028 10 772 11 800

Repurchase agreements 1) 18 448 12 765 31 213

Derivative 2) 74 1 949 13 125 15 148Covered bonds 3) 514 795 514 795

Other 4) 0 736 284 1 020

Total 19 550 0 25 486 736 0 0 514 795 13 409 573 976

Financial assets pledged for insurance policy holders 109 813

Unencumbered asse ts - additional assets available for secured funding

SEKm

Governmentdebt

instruments

and

supranationaldebt

instruments

Covered

bonds

instruments

issued bycredit

institutions

Securities

issued bycorporate and

other issuers ABS

Mortgage

loans Cash Total

Securities 5, 6) 30 948 11 213 73 812 12 671 8 238 984 137 866

Cover pool over

collateralisation 7) 192 782 192 782

Cover pool eligible assets 8) 12 031 12 031

Total 30 948 11 213 73 812 12 671 8 238 984 204 813 0 342 679

Total assets 1 917 227

1) Repoed securities on balance sheet.

2) Collateral posted under CSA agreements, gross (3-year, SEKm,

High: 21 572, Low : 10 945, Average: 13 975).

3) Of w hich accrued interest of assets in the cover pool, SEK 2 389m

as of Q1 2013

4) Collateral pledged in securities lending activities and with

6) All type of securities, including securities non pledgeable at central

banks, of which 80% are rated AAA, 2% are rated below A-

and 8% are not rated.

7) Of which accrued interest of assets in the cover pool

overcollateralisation, SEK 831mas of Q1 2013

8 T e of loans Residential 84.3% Forestr &A riculture 15.4%

26

Source: Swedbank Fact book Q1 2013

exchanges

5) Reversed repos are included.

Commercial 0.3%.


27/30

Swedish mortgage market

Swedish housing and mortgage market

No securitisation (on balance sheet), no sub-prime market, no 3rd party origination, insignificantbuy-to-let market

70% home ownership1

Rental market is regulated Transparent credit information (credit information agency, www.uc.se)

Publicly available information regarding income, debt, payment track record etc

rate Very limited debt forgiveness possibilities (full recourse)

Strong social security and generous unemployment benefit system

27

1Source: Boverket, 2011


28/30

Real estate prices Sweden 12 months development

Swedish housing and mortgage market

Single-family homes1 Tenant-owner rights2 Combined3

12M 12M 12M

Apr/12 -2% 2% -1%

May/12 -2% 3% -1%

-

J ul/12 0% 4% 1%

Aug/12 2% 4% 3%

Sep/12 2% 5% 3%

Oct/12 1% 6% 3%

Nov/12 3% 7% 4%

Dec/12 4% 7% 6%

Feb/13 4% 7% 5%

Mar/13 3% 7% 5%

28

Source: Valuegard www.valuegard.se (Based on data from Mklarstatistik), 1 HOXHOUSESWE, 2 HOXFLATSWE, 3 HOXSWE

R l i


29/30

Baltic countries

Real estate prices

1400

1 600

1 800Riga

1400

1600

1800Tallinn

600

800

1 000

1 200

600

800

1000

1200

0

200

400

an-0

5

Jul-05

an-0

6

Jul-06

an-0

7

Jul-07

an-0

8

Jul-08

an-0

9

Jul-09

an-1

0

Jul-10

an-1

1

Jul-11

an-1

2

Jul-12

an-1

30

200

400

an

-05

ul-05

an

-06

ul-06

an

-07

ul-07

an

-08

ul-08

an

-09

ul-09

an

-10

ul-10

an

-11

ul-11

an

-12

ul-12

an

-13

1 600

1 800

Vilnius

J J J J J J J J J

Nr.of deals EUR/m2

Source: Land book database

JJ

JJ

JJ

JJ

JJ

JJ

JJ

JJ

J

Nr.of deals EUR/m2

Source: Swedbank, Estonian Land Board

800

1 000

1 200

1 400

0

200

400

n-0

5

ul-05

n-0

6

ul-06

n-0

7

ul-07

n-0

8

ul-08

n-0

9

ul-09

n-1

0

ul-10

n-1

1

ul-11

n-1

2

ul-12

n-1

3

J J J J J J J J J J J J J J J J J

Nr.of deals EUR/m2

29

Source: Swedbank, State Enterprise Centre of Registers


30/30

Mortgage loans, gross margin (3 months)

6

%

5

4

Net margin

2

3

The gross margin covers:Cost of liquidity ~0.2%Administrative costs ~0.3%

1

re mpa rmen s ~ .Tax (22 % on profit before tax)

0

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Gross margin Swedbank's funding cost Stibor 3 months Swedish Riksbank's repo rate

30

swedbank's first quarter results for 2013 from the analyst conference

Documents