Growth opportunities for Swedbank Markets Annika Wijkstrm Head of - - PowerPoint PPT Presentation

Growth opportunities for Swedbank Markets

Annika Wijkström Head of Swedbank Markets

Swedbank Markets’ strategic focus

• Investment and Merchant Banking

– Group responsibility for banks and financial institutions – Client-driven business area – Higher profitability than peer average – Capture growth opportunities in the region

• Group Supplier of Capital Markets’ products

– Innovative product development for all customer segments

Capital Markets Project & Corporate Finance CRM/Financial Institutions Operations Emerging Markets First Securities Equities Project Finance Payments Back Office Trade related risk Equities FX/Fixed income Corporate Finance Custody Middle Office FX/Fixed Income Loans & Syndications Acquisition Finance Trade Finance Corporate finance Stockholm New York Oslo Stockholm Stockholm Stockholm Stockholm Shanghai Future Branch Oslo

Swedbank Markets’ product areas

100 200 300 400 500 600 Q3-04 Q4-04 Q1-05 Q2-05 Q3-05 Q4-05 Q1-06 Q2-06 Q3-06 Operating profit Profit for the period attributable to the shareholders

SEKm

Profit trend, Swedbank Markets

Where are profits generated?

Breakdown of Swedbank Markets' operating profit

FX/Fixed Income Equity Structured Products Project and Corporate Finance First Securities

2004 2005 Q1-3 2006

Nordnet 2% Neonet 3% UBS 3% Avanza 2% E-trade 3% Swedbank 4% Nordea Sec. 3% Morgan Stanley 5% H&Q 3% Handelsbanken 8% Carnegie 8% Enskilda Sec. 10% Others 29% Deutsche Bank 2% Fischer Bank 5% Kaupting 4% Goldman Sachs 4%

Market shares, equities

Stockholm Stock Exchange, Q1-3 2006

Structured products, sales

Cumulative sales, Swedbank Markets 2001 - 2006

• Swedbank’s market share is 29 percent (Oct. 06)

1 2 3 4 5 6 7 8 9 10 11 12 13 j f m a m j j a s

• n

d 2001 2002 2003 2004 2005 2006 B2006 SEK bn

Market shares, issued corporate bonds

Swedish market in SEK, accumulated Q1-3 2006

SEB 22% Nordea 18% Danske Markets 13% Others 9% Handels- banken 13% Swedbank 25%

Fixed income, Scandinavia

Underwriter league tables

First Securities’ performance since start-up

First Securities’ main business areas:

• Stock broking
• Fixed Income/FX
• Corporate Finance
• 100

200 300 400 500 600 700 800 900 1 000 1999 2000 2001 2002 2003 2004 2005 2006e 25 50 75 100 125 150 Revenue Number of employees

Revenues, NOK M

• No. of employees

Increasing market shares in a bull market

• 500

1 000 1 500 2 000 2 500 3 000 3 500 4 000 4 500 5 000 5 500 6 000 2001 2002 2003 2004 2005 2006 YTD Q3 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12% Market turnover, Oslo Exchange First Securities' market share of equities sales income

Market turnover, NOK billion Market share

Swedbank Markets’ growth strategy

• Expand in selected product areas

– Competitive advantage, find new customers for existing products (e.g. Norway) – Support home market clients, new offerings for existing customers (e.g. Shanghai, New York)

• Ongoing examples of capturing growth

– Investment in First Securities and growth of fixed income, money market and foreign exchange operations in Norway – Establishment of Project & Corporate Finance organisation – Establishment of a broker dealer company in New York

Swedbank Oslo fixed income

Case study business synergies

• Since the launch in February 2003, the results have been

very satisfactory. By the end of 2006 we will see;

– Increase in income of ≈ 600% and increase in profit of ≈ 1,500% – Increase in market share for credit bonds from 3.5% to17% – Number two underwriter in NOK bonds – Increase in annual number of issues from 12 to 120

Project & Corporate Finance

base for continued growth

• Next step Group Project & Corporate Finance:

– Continued growth within corporate finance in Sweden

• Increase market share, gradual increase in deal size will enhance

revenue

• Expand staff to meet and increase deal flow

– Establish a cross-border organisation to serve corporate customers with corporate finance and specialty finance needs in the Baltic and Russian markets and to meet cross-border deal-flow

Swedbank First Securities

base for future growth

• Equity broker dealer operation in New York set up Q4 2006
• US and UK asset managers are main international buyers
• f Nordic and Baltic risk
• International sales capacity is essential for the Nordic and

Baltic Corporate Finance and Equity business

• Value of the Nordic security market in 2005 estimated at

USD 100 M in commissions

• Swedbank Markets, Hansabank Markets and First

Securities shall be a leading, multi-domestic market player in the region with the competitive advantage of serving our customers with access to/from the CEE region.

Capital Markets’ business is increasingly global, based on a local customer base and local excellence in products and competence. There is growing demand for cross-border solutions in the region. By combining local excellence in Estonia, Latvia, Lithuania, Norway and Sweden we can create superior cross-border offerings for our customers.

Swedbank Markets’ business objective

Capturing synergies and growth opportunities

• Create Group functions where there are obvious synergies:

– Project & Corporate Finance: Implement Group PCF – Financial Institutions: Business coordination – Structured Products: Coordinate product development – Custody: Develop regional customer offering

• Develop the broker dealer operation in New York selling

Nordic and Baltic risk

• Explore and take advantage of IT synergies going forward

Capturing synergies and growth opportunities

Sweden Norway Estonia Latvia Lithuania Key Ratios 2005 YTD 2005 YTD 2005 YTD 2005 YTD 2005 YTD Income, MEUR 220.2 187.9 94.7 91.2 18.7 15.9 9.1 8.0 2.8 3.0 FTE 582 589 132 147 31 43 17 15 17 27

• The Baltic and Nordic regions are in different development stages
• Market shares in the Nordic countries are lower but the income is

much higher; vice versa in the Baltic countries

• The strategy going forward is to defend Swedbank’s position in the

growing capital markets in the Baltic countries

Capturing synergies and growth opportunities

Market potential

Market capitalisation/GDP

0% 20% 40% 60% 80% 100% 120% 140% 2004 2005

Baltic Markets Sweden Norway

Summary

• Positive trend in earnings over time
• Full range of capital market product areas, all

performing very well

• Strong market position in several product areas
• Strong customer base, directly and indirectly
• Growth opportunities

– in different geographic regions – in several product areas – in customer segments