FreningsSparbanken Nils-Fredrik Nyblus Deputy President and CFO 2 - - PowerPoint PPT Presentation

FöreningsSparbanken

Nils-Fredrik Nyblæus

Deputy President and CFO

2

Group objectives

• Market position
• Customers
• Employees
• Financial position

3

Basics of sustainable profitability

Customer satisfaction

Profitability

Human capital

4

• Brands

– The strongest brands in specific markets for financial services within the Nordic/Baltic region

Objectives - market position

Förenings Sparbanken Spintab Robur

5

• Market shares in Sweden

– Retail operations shall have at least 25 percent of new sales of savings and lending products by 2004, and 22 percent by 2003 – Swedbank Markets’ share of stock trading (transaction volume) shall be at least 12 percent – BABS shall maintain a market share of over 55 percent

• f card transaction clearance

Objectives - market position

6

Market share of total new savings*, Swedish market

0% 5% 10% 15% 20% 25% 30%

1999 2000 2001 9M 2002 2003 Target 2004 Target

*) deposits from household customers, mutual funds, unit-linked insurance from all customer categories, retail bonds and equity linked bonds

7

• Market shares in Baltic states

– Hansabank's market share for deposits and lending is at least 50 percent (currently 57 and 58, respectively) in Estonia, 25 percent (currently 18 and 20) in Latvia and 35 percent (currently 31 and 18) in Lithuania

• Market shares in Denmark, Norway and Finland

– FIH retains its market share of 12 percent for medium and long term lending to corporates – Norway and Finland dependent on alliances

Objectives - market position

8

• Regardless of geographical market, the bank shall

have the highest customer satisfaction among both private and corporate customers (not yet achieved)

• In Sweden, no less than 60 percent of customers

shall be very satisfied (not yet achieved)

• Operations in other countries have equivalent local
• bjectives

Objectives - customers

9

Customer satisfaction is improving

50 55 60 65 70 75 1997 1998/99 2000 2001 2002 Private individuals Corporates

Source: Svenskt Kvalitetsindex

Index

10

Internal benchmarking - large potential

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22

22 randomly measured local banks in Sweden

Share of very satisfied customers

TARGET 60%

11

• To be considered the most attractive employer in

the financial market among applicable employee groups (not yet achieved)

• In Sweden, an “employee empowerment index”

rating of at least 40 percent (achieved in October, 2002)

• Operations in other markets have equivalent local
• bjectives

Objectives - employees

12

Employee empowerment index

5 10 15 20 25 30 35 40 45 50 1996 1997 1998 1999 2000 2001 2002

Local banks, Sweden

%

13

• Profitability

– Return on equity (ROE) is higher than the average for

• ther listed Nordic competitors (currently yes)

– ROE exceeds the long-term risk-free rate (6%) plus a risk premium (6.5%) by 20% over a business cycle. Under current conditions, this would mean 15% (currently 12.1%)

• Operational efficiency

– Cost/income ratio not exceeding 50% (currently 62%)

Objectives - financial targets

14

• Dividend policy

– Payout ratio of at least 30 percent (56 in 2001)

• Financial strength

– Primary capital ratio in the range of 6.5-7.5 percent (currently 7.1) – Capital adequacy ratio to exceed 10.5 percent (currently 10.9)

• Credit risk

– Loan loss ratio shall not exceed 0.5 percent over a business cycle (currently 0.24)

Objectives - financial targets

15

10,3 12,3 14,8 18,2 15,6

15,8%

13,6%

13,1

December 2001 December 2000

ROE, September 2002

Adjusted for profit sharing schemes

S E B

RoE %

Average peer- group

11,4%

9,2 14,1 14,8

2 4 6 8 10 12 14 16 18 20 22

N

• r

d e a 9,0 D e n N

• r

s k e B a n k D e n D a n s k e B a n k H a n d e l s b a n k e n F ö r e n i n g s S p a r b a n k e n

September 2002

10,2 12,1

16

Pension adjustments, Swedish banks

Pension adjustments in the P&L as a share of pretax profits

• 30
• 20
• 10

10 20 30

d e c

• 9

7 a p r

• 9

8 a u g

• 9

8 d e c

• 9

8 a p r

• 9

9 a u g

• 9

9 d e c

• 9

9 a p r

• a

u g

• d

e c

• a

p r

• 1

a u g

• 1

d e c

• 1

a p r

• 2

a u g

• 2

SEB SHB Nordea FSPA %

Source: Riksbanken

17

Cost/income ratio

0,40 0,45 0,50 0,55 0,60 0,65 0,70 1997 1998 1999 2000 2001 9M-2002 Target %

18

Dividend pay-out ratio

10 20 30 40 50 60 70 80 90 100 1994 1995 1996 1997 1998 1999 2000 2001

Pay-out ratio * 560% in 1997

*

30% =minimum

%

19

Capital adequacy and tier 1 ratio

2 4 6 8 10 12 14

Dec-95 Mar-97 Sep-97 Mar-98 Sep-98 Mar-99 Sep-99 Mar-00 Sep-00 Mar-01 Sep-01 Mar-02 Sep-02

Capital adequacy Tier 1 ratio

%

20

Loan loss ratio 1994 - 2002

0,00 0,10 0,20 0,30 0,40 0,50 0,60 0,70 0,80 0,90 1,00 1994 1995 1996 1997 1998 1999 2000 2001 9M- 2002 Loan loss ratio

Restriction = 0.5 percent Loan loss ratio shall not exceed 0.5% over a business cycle %

21

2002 2001 2000 1999

Asset mgmt fees, mutual funds +/- 10 bp +/- 210 210 240 175 Stock market +/- 10 % +/- 187 220 270 200 Lending margins local banks +/- 10 bp +/- 133 135 125 100 Bank lending & deposit vol. +/- 1 % (avg) +/- 65 50 60 50 New savings in mutual funds SEK 1 bn (avg) +12 +15 +15 +10 Rents + 1 %

• 10
• 10
• 10
• 10

Salaries + 1 %

• 66
• 63
• 60
• 50

Loan loss level + 0.1 %

• 688
• 640
• 580
• 500

Current sensitivity analysis

22

P&L threats 2003

• Asset deterioration through worsened economy
• Renewed stock market decline
• Credit crunch
• Lower interest rates/deflation
• EMU costs and referendum uncertainty
• CFC taxation of Estonian subsidiaries (Hansa)
• Norway!

23

P&L opportunities 2003

• Continued underlying income stability and cost control
• Increased market shares
• Improved lending margins
• Improved margin-mix in savings vs 2002
• Improved stock market conditions
• Increased payment commissions
• From costs (SEK 300M in 2002) to savings (SEK 100M

in 2003) from staff reduction programme

• Continued stable doubtful claims and good

provision ratio

• OM and Marakanda write-downs in 2002
• Baltics, Norway