Debt investor presentation first quarter 2010 April 2010 Jonas - - PowerPoint PPT Presentation

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Debt investor presentation first quarter 2010 April 2010 Jonas Erikson, Head of Group Treasury Peter Stenborn, Head of Debt Investor Relations Improved risk profile Long-term competitiveness traditional banking model Tangible results

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SLIDE 1

Debt investor presentation first quarter 2010 April 2010

Jonas Erikson, Head of Group Treasury Peter Stenborn, Head of Debt Investor Relations

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SLIDE 2

Improved risk profile

  • Long-term competitiveness – traditional banking model
  • Tangible results from actions taken and improved macro

– Full access to debt capital markets – Exiting state guarantee programme

  • CEE lending now 15% of total lending or 191% of equity

– Trend will continue

2

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SLIDE 3

50 100 150 200 250 300 350 400 09-03-01 09-05-01 09-07-01 09-09-01 09-11-01 10-01-01 10-03-01 Swedbank SEB Nordea Handelsbanken

Improved risk profile

3

CDS spread development

Source: Reuters, 5y CDS spreads in EUR

Restructuring units established Rights issue Reduced CEE exposure Improved funding structure

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SLIDE 4

4

Strategic priorities 2010

Customer focus

  • Achieve operational excellence, enhance earnings

and improve customer satisfaction

  • Secure long-term competitive funding terms
  • Close sub par profitability gaps
  • Continuous cost focus
  • Be prepared for new regulations and long-term

funding structure

Risk reduction Earnings capacity Liquidity & Capital management

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SLIDE 5
  • 3 000
  • 2 000
  • 1 000

1 000 2 000 Retail Large Corporates & Institutions Baltic Banking Russia & Ukraine Asset Management Ektornet SEKm

Profit before impairments

Q4 09 Q1 10 5

Retail

Lower NII, good credit quality, new customer-

  • riented organisational structure

Large Corporates & Institutions

Stronger quarter, increased deposits

Baltic Banking

Stabilising, decreasing overdues

Russia & Ukraine

Credit quality in Ukrainian Banking stabilising, re-sizing Russian Banking operations

Asset Management

Stable earnings

Ektornet

Ektornet managed repossessed properties valued at SEK 784m

Result by business area

  • 3 000
  • 2 000
  • 1 000

1 000 2 000 Retail Large Corporates & Institutions Baltic Banking Russia & Ukraine Asset Management Ektornet SEKm

Operating result

Q4 09 Q1 10

Q1 update

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SLIDE 6

50 100 150 200 250 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 SEKbn

CEE lending

Decreased risk and pre-provision earnings

6

Net interest income

  • 4 000
  • 3 000
  • 2 000
  • 1 000

1 000 2 000 3 000 4 000 5 000 6 000 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 SEKm

Result development

Profit before impairments Net profit

  • 8 000
  • 7 000
  • 6 000
  • 5 000
  • 4 000
  • 3 000
  • 2 000
  • 1 000

Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 SEKm

Credit impairments

100 200 300 400 500 600 700 800 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 SEKbn

Funding

Covered bonds Government guaranteed Central bank repos

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SLIDE 7

Continued headwinds and temporary effects

7

Net interest income

Q4 2009 4 702 Funding maturity mismatch

  • 208

Trading strategy

  • 145

Wholesale funding cost

  • 121

Baltic Banking, Russia & Ukraine

  • 118

NII and equity hedges

  • 37

Other

  • 50

Q1 2010 4 023

4 702 4 023 163 147 44 73 252 500 1 000 1 500 2 000 2 500 3 000 3 500 4 000 4 500 5 000 NII Q4 09 Retail LCI Baltic Banking Russia & Ukraine Group Treasury and Other NII Q1 10 SEKm

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SLIDE 8

SEKm Q1 10 Q4 09* Q1 09 Retail 32 45 43 Large Corporates & Institutions 441 55 1 332 Baltic Banking 72 88 183 Russia & Ukraine 27 149 10 Group Treasury and Other 75

  • 114

143 Swedbank Group 647 223 1 711

Stronger net gains

  • Trading strategy pressed NII and boosted net gains and losses
  • Stable currency rates in Ukraine
  • Lower P&L impact from wholesale funding valuation

8

Net gains/losses on financial items, fair value

* Excluding capital gain of SEK 39m (sale

  • f Aktia shares SEK 24m and of Tallinn

Stock Exchange shares SEK 15m)

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SLIDE 9

9

First quarter 2010 results

Income statement

SEKm Q1 2010 Q4 2009 Change Net interest income 4 023 4 702

  • 679

Net commission income 2 282 2 361

  • 79

Net gains/losses on financial items, fair value 647 223 424 Other income 715 751 19 Non recurring items

  • 55
  • 55

Total income 7 667 7 982

  • 315

Staff costs 2 296 2 319

  • 23

Variable staff costs 79 23 56 Other expenses 2 016 2 370

  • 354

Non recurring items

  • 412

412 Total expenses 4 391 4 300 91 Profit before impairments 3 276 3 682

  • 406

Impairment of intangible assets 14 Impairment of tangible assets 36 352

  • 316

Credit impairments 2 210 5 003

  • 2 793

Operating profit 1 016

  • 1 673

2 689 Tax expense 469 115 354 Result for the period 547

  • 1 788

2 335 Profit for the period attributable to: Shareholders of Swedbank AB 536

  • 1 804

2 340

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SLIDE 10

Improved funding situation

  • Swedbank exits guarantee

programme as per 30 April 2010

  • SEK 100bn of long-term debt

issued during Q1

  • SEK 110bn in remaining term

funding maturities to roll or replace in 2010

  • Average maturity of wholesale

funding further extended to 24 months (37 months for covered bonds)

10

Liquidity & Capital management

Outstanding wholesale funding

* Issued with more than 12 months maturity, government fee of 83bp ** Including interbank deposits *** Issued with less than 12 months maturity, government fee of 50bp SEKbn, notional value 61 97 116 180 397 28 87 108 174 459

Total short- term, guaranteed*** Total short- term, non- guaranteed** Central bank repos Total long- term, guaranteed* Total long- term, non- guaranteed

Q1 2010 Q4 2009

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SLIDE 11

2010 Funding plan

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Liquidity & Capital Management

  • 50
  • 40
  • 30
  • 20
  • 10

10 20 30 40

GG CP's GG Bonds Domestic CB Euro CB Senior Unsecured Bonds Structured bonds

Issued & redeemed Aug 09 – Mar 10, SEKbn

Plans for remainder of 2010

– 2 further covered benchmark deals in Euro market this year – 1-2 further senior unsecured issues – Further covered bond issuance on tap (domestic), registered covered bonds and private placements – Short-term funding outstandings to increase

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SLIDE 12

High liquidity maintained

  • Funding ahead of needs to further

reduce liquidity risk and prepare for regulatory changes

  • Changing funding structure to

replace guaranteed funding, prolong average maturity and build up liquidity portfolios

12

Liquidity & Capital management

50 100 150 200 250 300 D1 1W 2W 3W 1M 2M 3M 4M 5M 6M 9M 12M SEKbn

Stress test of liquidity as per 31 March 2010

2009-12-31 2010-03-31

Liquidity stress test – 31 March 2010

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SLIDE 13

Well capitalised

13

Capital management

Core Tier 1 capital ratio* YE 09 12.01% Result +0.09% RWA reduction +0.16% Other +0.05% Core Tier 1 capital ratio* Q1 10 12.31%

9.4 9.8 9.9 12.0 12.3 2 4 6 8 10 12 14 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 % *according to full Basel 2

Core Tier 1 capital ratio*

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SLIDE 14

Q1 development

  • Significantly improved macro

– Stabilised/increasing property prices in CEE

  • Swedbank risk profile continued to improve

– Limited new problems – Increasingly confident in known problems – Anecdotal evidence positive

  • Swedbank resilience has greatly improved

14

Asset quality

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SLIDE 15

427 404 393 154 100 91 521 555 559 97 88 81

948 959 952 251 188 172

200 400 600 800 1 000 1 200

Q4 08 Q4 09 Q1 10 Q4 08 Q4 09 Q1 10

Sweden

SEKbn

CEE

Private Corporate

Volumes – continued risk reduction in CEE lending

  • Sweden – weak corporate credit demand
  • CEE lending now 191% of equity

15

Asset quality

Note: CEE lending as % of equity calculated as net lending to the public divided by balance sheet equity

290%

  • f equity

209% 191%

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SLIDE 16
  • 50

50 100 150 200 250 300 350 400 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 EURm

Quarterly change of 60-day past due loans

  • Stabilisation continues

16

Asset quality

Estonia Latvia Lithuania Russia Ukraine

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SLIDE 17

Impaired loans – almost no new problems

  • Without FX effect up SEK 1.5bn

17

Asset quality

Impaired loans as % of gross lending

Ukraine 57% Russia 20% Lithuania 17% Latvia 25% Estonia 7.6% LCI 0.3% Retail 0.2%

9 343 9 736 6 113

4 362

196 10 578 19 921 29 657 35 770 40 132 40 328 5 000

10 000

15 000

20 000 25 000

30 000

35 000 40 000

45 000 FY 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 SEKm

1 625 1 150

5 473 13 370 7 896 2 381 8 432 Q1 10

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SLIDE 18
  • Significant improvement
  • Sweden still very low levels
  • Small recoveries in Russia and

Ukraine

  • Baltic countries

– Few new problems – Property prices stabilise/increase

18

Asset quality

Credit impairments in Q1

6 845 6 672 6 121 5 003 2 210

  • 1 000

1 000 2 000 3 000 4 000 5 000 6 000 7 000 8 000 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 SEKm

Retail LCI Baltic Banking Russia & Ukraine Other

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SLIDE 19

Provisions

  • Stability in portfolio provisions – limited rating migration

19

Provision ratios: Retail 101% Large Corporates 106% Baltic Banking 60% Russia 63% Ukraine 74% Group 66%

Asset quality

5 932 9 864 15 582 20 882 21 889 6 796 8 856 6 839 5 135 4 684 385 1 027 958 3 531 4 339 63.9% 63.1% 62.7% 64.8% 65.9% 5 000 10 000 15 000 20 000 25 000 30 000 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 10 SEKm

Individual provisions Portfolio provisions Write-offs, gross, cum Provision ratio

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SLIDE 20

Ektornet – recouping value over time

  • Repossessed properties valued at SEK 784m
  • Intake forecast by 2012 SEK 5-10bn

– Forecast for 2010 is SEK 4bn – Three quarters of this is expected in the Baltic countries

  • Large portion of real estate assets are currently non-cash

flow generating

– Negative pre-tax loss of SEK 200-300m

20

Asset quality

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SLIDE 21

Conclusion

  • Significant improvement of asset and liability risk profiles
  • Economy gaining momentum
  • Still many areas of concern

– Exit strategy central banks – Fiscal consolidations

  • Swedbank’s resilience has vastly improved

21

191% 209% 290% of equity 251 188 172 106

50 100 150 200 250 300

Q4 08 Q4 09 Q1 10

117%

SEKbn

without Estonia

CEE lending

Private Corporate

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SLIDE 22

22

Appendix

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SLIDE 23

23

Balance sheet

Swedbank Group SEKm Mar 10 Dec 09 % Loans to credit institutions 152 780 92 131 66% Loans to the public 1 214 007 1 290 667

  • 6%

Interest-bearing securities 275 266 170 615 61% Fund shares for which customers bear the investment risk 85 023 78 194 9% Shares and participating interests 11 350 9 505 19% Derivatives 76 524 72 969 5% Other assets 75 104 80 606

  • 7%

Total assets 1 890 054 1 794 687 5% Amounts owed to credit institutions 259 782 231 687 12% Deposits and borrowings from the public 511 142 504 424 1% Debt securities in issue 723 596 703 258 3% Financial liabilities for which customers bear the investment risk 90 186 80 132 13% Derivatives 73 364 72 172 2% Other liabilities and provisions 108 482 75 057 45% Subordinated liabilities 33 922 37 983

  • 11%

Equity 89 580 89 974 0%

  • Non-controlling interest

240 304

  • 21%
  • Equity attributable to shareholders

89 340 89 670 0% Total liabilities and equity 1 890 054 1 794 687 5%

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SLIDE 24

20 40 60 80 100 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 2015-

SEKbn, nom

Swedbank, long-term maturity profile (including Swedbank Mortgage)

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Liquidity & Funding

Long-term funding

  • SEK 110bn in remaining term funding maturities to

roll or replace in 2010

  • Continued focus on covered bonds

(YTD SEK 79bn issued)

  • YTD issued SEK 21bn in senior

unsecured funding

  • Average maturity of wholesale

funding further extended to 24 months

24

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SLIDE 25

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Liquidity & Funding

Funding under the Swedish guarantee programme

  • Swedbank exits guarantee

programme as per 30 April 2010

  • Outstanding long-term guaranteed

funding decreased by SEK 6bn to around SEK 174bn during the quarter

  • Outstanding short-term guaranteed

funding decreased by SEK 33bn to around SEK 28bn – fully repaid in June 2010

  • Strive to buy back longest maturities
  • f guaranteed funding when liquidity

rules are clearer

25

(total outstanding as per 31 March, notional SEK 202bn)

Currency distribution Maturity distribution

JPY 2% CHF 4% SEK 23% USD 30% EUR 41% < 12 M 33% 1-2Y 42% 2-3Y 10% 3-4Y 15%

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SLIDE 26

Cover pool and new issuance of covered bonds Q1 2010

  • Two euro covered bonds have been

issued during Q1

– Euro MTN CB 3Y, EUR 1bn, issued Jan 2010 – Euro MTN CB 7Y, EUR 1bn, issued Mar 2010

  • Also continued good demand

for domestic covered bond issuance through tap system

  • Registered CBs
  • Private placements
  • YTD SEK 79bn issued in domestic and

international markets

26

Total pool size SEK 613bn Average loan size SEK 400 821 Number of loans outstanding 1 524 546 Types of loans – Residential mortgages 90.5% – Public 2.7% – Commercial 0.1% – Forest and Agriculture 6.7% Fixed /Floating interest loans 1 – Fixed 49% – Floating 2 51% Remaining fixing period – Fixed 32% – Floating 2 68% Average LTV 4, 5 – WA LTV on loan level 3 44% – WA LTV on property level 58% Average seasoning 55 months Non-performing loans 6 None Geographic distribution Sweden 100% Dynamic pool Yes

1 Distribution by origination

2 floating interest loans < 365 days 3 LTV: by volume 4 Index valuation as of 31 Dec 2008 5 Maximum LTV: Residential 75%, Commercial 60%, Forest and

Agriculture 70%

6 Past due loans > 60 days are not eligible for the cover pool

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SLIDE 27

The Swedish covered bond market

  • Can provide ~50% of Swedbank’s term funding needs
  • On tap through market makers
  • Continuous refinancing through roll-overs and buy-

backs

  • Total market of SEK 1,000bn (1/3 of GDP)
  • Swedish pension managers, assets under management,

~SEK 2.5trn of which ~2/3 in mutual funds or quasi Government institutions

  • Market making setup
  • Remained liquid throughout the financial crisis –for

primary as well as secondary flows

27

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SLIDE 28

Swedbank Mortgage, 31 Mar 2010, total loan portfolio SEK 676bn

  • 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%

28

Lending distributed by collateral

Cooparative apartments 15% Commercial properties 0.2% Municipalities 2% Multi-family houses 15% Forest & Agriculture 7% Single -family homes 60% 10 20 30 40 50 60 70 80 90 >0-10% >10-20% >20-30% >30-40% >40-50% >50-60% >60-70% >70-80% >80-90% >90%

Single-family homes Cooperative apartments Multi-family houses (incl housing coop. ass.)

Loan-to-value, property level

SEKbn

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SLIDE 29

2 000 4 000 6 000 8 000 10 000 12 000 14 000 16 000 18 000 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09

New built Multi-family dwellings and Single-family houses

29

Housing Investments at a conservative level

  • Housing investments in Sweden, as a

percentage of GDP, are at a low level compared to the Eurozone

Housing investments as a percentage of GDP New built Multi-family dwellings and Single-family houses in Sweden (third quarter every year)

Percent Year Number

Source: Reuters EcoWin

91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 1 2 3 4 5 6 7 8 9 10

Sweden UK Denmark Eurozone Spain U.S

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SLIDE 30

Repossessed assets – as expected

30

Asset quality

500 1 000 1 500 2 000 2 500 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 SEKm Real Estate Residential Real Estate Commercial Passenger & Commercial Transport Shares Other

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SLIDE 31

31

Market situation

  • Slight fluctuations in average price up
  • r down influenced by the small

transaction volumes

Tallinn Vilnius Riga

Real estate prices stabilised

1611 769

300 600 900 1200 1500 1800 300 600 900 1200 1500 1800 Q4'06 Q2'07 Q4'07 Q2'08 Q4'08 Q2'09 Q4'09 No of transactions EUR/m2

No of deals Average price

1 731 1 032

300 600 900 1200 1500 1800 300 600 900 1 200 1 500 1 800 Q4'06 Q2'07 Q4'07 Q2'08 Q4'08 Q2'09 Q4'09 No of transactions

EUR/m2

No of deals Average price

* Based on preliminary data for March *

1762 597

300 600 900 1200 1500 1800 300 600 900 1200 1500 1800 Q4'06 Q2'07 Q4'07 Q2'08 Q4'08 Q2'09 Q4'09 No of transactions

EUR/m2

No of deals Average price

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Swedbank – Contacts and Financial Calendar

Jonas Erikson, Head of Group Treasury jonas.erikson@swedbank.com +46 767 6550 88 Martin Rydin, Head of Long-Term Funding martin.rydin@swedbank.com +46 8 585 935 27 Peter Stenborn, Head of Debt Investor Relations peter.stenborn@swedbank.com +46 8 585 911 04 Johannes Rudbeck, Head of Equity Investor Relations johannes.rudbeck@swedbank.com +46 8 585 933 22 Ingela Saarinen-Kindbom, Head of Money Markets and Short-Term Funding Ingela.saarinen-kindbom@swedbank.com +46 8 700 98 10 Q2 Interim report, 22 July 2010 Q3 Interim report, 21 October 2010 www.swedbank.com/investor-relations

Swedbank Group Treasury Regeringsgatan 13 SE-106 11 Stockholm, Sweden

Investor relations on the Internet: For further information, please contact: Financial calendar Postal address: Visitors:

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Disclaimer

  • Certain statements made in this presentation are forward looking statements. Such statements are based on current

expectations and are subject to a number of risks and uncertainties that could cause actual results and performance to differ materially from any expected future results or performance, express or implied, by the forward looking statements. Factors that might cause forward looking statements to differ materially from actual results include, among other things, regulatory and economic factors. Swedbank AB assumes no responsibility to update any of the forward looking statements contained herein.

  • No representation or warranty, express or implied, is made or given by or on behalf of Swedbank AB or its directors, officers
  • r employees or any other person as to the accuracy, completeness or fairness of the information or opinions contained in

this presentation. None of Swedbank AB or any of its directors, officers or employees nor any other person accepts any liability whatsoever for any loss howsoever arising from any use of this presentation or its contents or otherwise arising in connection therewith.

  • This presentation does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to

purchase or subscribe for, any securities of Swedbank AB, nor shall it or any part of it nor the fact of its distribution form the basis of, or be relied on in connection with, any contract or investment decision.