Nomura Financials Conference 2011 Gran Bronner, CFO This is - - PowerPoint PPT Presentation

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Nomura Financials Conference 2011 Gran Bronner, CFO This is - - PowerPoint PPT Presentation

Nov 14, 2023 116 likes •313 views

Nomura Financials Conference 2011 Gran Bronner, CFO This is Swedbank Market leading retail franchise in its home markets Largest retail bank and fund manager in Sweden Market shares, May 2011 Market shares, May 2011 % % 60 60

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SLIDE 1

Nomura Financials Conference 2011

Göran Bronner, CFO

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SLIDE 2

10 20 30 40 50 60 Sweden Estonia Latvia Lithuania % Mortgage lending Corporate lending 10 20 30 40 50 60 Sweden Estonia Latvia Lithuania % Deposits Private Deposits Corporate

Market leading retail franchise in its home markets

2

Source: Source Sweden: Statistics Sweden (SCB) Source Estonia: Estonian Central Bank Sources Latvia: Association of Commercial Banks of Latvia (ACBL) & The Financial and Capital Market Commission (FCMC) Source Lithuania: Association of Lithuanian Banks (LBA)

This is Swedbank Market shares, May 2011

  • Largest retail bank and fund manager in Sweden

Market shares, May 2011

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SLIDE 3

Sweden – the dominating home market

  • Around 87% of total lending is originated in Sweden
  • Estonia makes up 41% of total CEE lending

3

This is Swedbank

427 395 154 67 41 521 584 97 69 39 948 979 251 136 80 100 200 300 400 500 600 700 800 900 1 000 Q4 08 Q2 11 Q4 08 Q2 11 Q2 11 Sweden SEKbn CEE Private Corporate

excl Estonia

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SLIDE 4

200 400 600 800 1 000 1 200 1 400 FY 2008 Q1 2011 FY 201X

Significantly reduced risk level since 2008

4

Liabilities*

Source: Swedbank, Dec 31, 2008 and Jun 30, 2011 * Simplified balance sheet assets and liabilities

Balance sheet development

200 400 600 800 1 000 1 200 1 400

FY 2008 Q1 2011

Assets*

  • 116
  • 12

+82

  • 63

CEE lending Estonia Other corporate lending, Sweden &

  • ther Nordic

Other private, Sweden Swedish mortgage loans Central bank + Government guaranteed

+11 +218

  • 46
  • 218

+11

Senior Covered bonds Deposits Core T1

  • Suppl. cap

Q2 2011 Q2 2011 FY 2008 FY 201X

  • CEE lending deleveraged by 46%
  • Limited senior funding need, no dependence on short-term funding
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SLIDE 5

Proactive funding creates flexibility

5

Funding

Term issuance & maturities since Q3 2009

  • SEK 587bn term funding issued

Q3 2009 – YTD (30 Aug 2011), and maturities of SEK 386bn

  • Average maturity of wholesale funding*,

34 months (42 months for covered bonds)

  • Long-term funding issuance in the first

half of 2011 totalled SEK 153bn, with maturities of SEK 79bn during the same period

  • H2 maturities of nominal SEK 80bn,
  • f which government guaranteed debt

SEK 46bn

* Based on all debt securities in issue, long-term and short-term. For subordinated debt, maturity dates are assumed to be next call date.

(nominal SEKbn)

  • 120
  • 100
  • 80
  • 60
  • 40
  • 20

20 40 60 80 100 120 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11

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SLIDE 6

Conservative liquidity levels

Conservative liquidity levels

  • Conservative liquidity

reserves to match temporary larger maturities

  • No dependence on short-term

funding

  • USD balance sheet well

matched

6

Liquidity

Liquidity reserve according to SFSA definition SEK 203bn Outstanding short-term debt securities in issue SEK 94bn Additional liquid securities

  • utside Group Treasury

SEK 65bn Long-term debt securities in issue maturing in the next 12 months SEK 180bn

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SLIDE 7

Buy-back program continues

  • CT1-ratio to stay above 13%

2011-2012

  • 4.56 per cent of total shares

repurchased as per 30 August

  • Stress tests support low risk

level

– ICAAP 2011 – EBA

  • Continued focus on capital

efficiency

7

Capital management

13.0%

Risk appetite (ICAAP buffer, SEK 15.3bn) Minimum requirement (SEK 35.7bn) Excess capital (SEK 9.2bn)

10.0% 7.0%

Extra buffer due to prevailing circumstances (SEK 15.3bn)

14.8%

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SLIDE 8

Solid Q2 performance

  • Net profit of SEK 3 452m
  • Core Tier 1 capital ratio of 14.8 per cent after buy-backs
  • Return on equity of 14.4 per cent in Q2

8

Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11

Profit performance

Profit for the period

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SLIDE 9

On target with flat costs

  • Lower number of employees
  • Bank accounting principles in Ektornet increase expenses

9

Expenses

4 423 4 238 4 590 4 384 4 345 0.57 0.55 0.58 0.52 0.52 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 (SEKm) T

  • tal expenses

Cost-income ratio

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SLIDE 10

Swedbank’s actions in current market situation

  • Reassessment of

– Equity collateral – Exposures towards banks and financial institutions – Collateral documentation

  • Increased focus on funding market development

– Swedish banks has a strong relative position

  • Started to develop cost continuity plans if income weakens by

market sentiment

10

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SLIDE 11

Appendix

11

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SLIDE 12

GIIPS exposure, 30 June 2011

GIIPS exposure, 30 June 2011 SEKm Greece Ireland Italy Portugal Spain Total Bonds 51 2 243 27 20 343

  • f which soveriegn

51 234 27 10 322

  • f which held to maturity1

51 102 27 6 186 Loans (money market and certificates) 330 303 633 Loans (committed credit facilities) Derivatives net2 14 43 57 Other3 16 59 10 89 174 Total 67 16 632 37 455 1 207

12 1

Actual market values are below the carrying amounts by approximately SEK 51m.

2

Derivatives at market value taking into account netting and collateral agreements. Considering the bank's internal risk add-ons for counterparty risk at potential future change in prices, the derivative exposures amount to: Greece SEK 72m, Italy SEK 437m and Spain SEK 196m. Total SEK 705m."

3

Trade finance and mortgage loans.

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SLIDE 13

Scenario: “Eastern slowdown – Western standstill”

13

ICAAP 2011 – adverse scenario

  • Chinese housing market collapses
  • The export led recovery in the US halts as

Asian demand dries up

  • US protectionism and US economic

pessimism turns world growth negative

  • US enters into a “Japanese” scenario
  • A weak EU is severely hit by falling

demand in China and the US Sweden

  • Negative GDP for three consecutive years, 2012-

2014 (a drop of 7% relative 2011)

  • Unemployment rate rises from 8.4% in 2010 to

16.9% in 2014

  • Residential real estate price drop of 33% until 2014
  • Swedish krona strengthens 31% against the USD
  • Interest rates remain low (treasury bill rate of 0.3%)

Baltic countries

  • 30% devaluation in Latvia and Lithuania early 2012,

Estonia affected by contraction of external demand

  • Negative GDP growth in all three countries during

2011-2014 (drops of 9%-11% relative 2010)

  • Unemployment rates peak in 2013-2014: EE 19.5%,

LV 21.5%, LT 20.0%

  • Residential real estate price drops. Trough in 2014

EE -24%, LV -15%, LT -21%

Triggers Outcome

Adverse scenario 2011 - GDP development

GDP index (2010=100)

80 85 90 95 100 105 110 115 120 2010 2011 2012 2013 2014 2015 2016 Sweden, base case Sweden, adverse US, base case US, adverse EU-27, base case EU-27, adverse

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SLIDE 14

Scenario model results

Income statement (SEKm) 2010F 2011F 2012F 2013F 2014F 2015F 2016F

Total 2011-2016

Profit before impairments 12 485 13 233 13 766 7 666 7 287 7 150 7 610 56 712 Credit impairments 3 005 5 972 19 318 15 359 10 231 6 734 4 290 61 904 Profit for the year 7 084 5 033

  • 5 696
  • 7 694
  • 2 944

146 1 971

  • 9 184

(SEKm) 2010F 2011F 2012F 2013F 2014F 2015F 2016F Risk-weighted assets, full Basel 2 541 327 519 839 524 279 464 569 434 894 413 542 399 855 Core Tier 1 capital 75 470 77 815 69 084 55 936 52 981 53 069 54 043 Core Tier 1 capital ratio, % 13.94 14.97 13.18 12.04 12.18 12.83 13.52

14

ICAAP 2011 – adverse scenario

  • Core Tier 1 capital ratio troughs in 2013
  • Low interest rates combined with lending volume decline during the

scenario period decrease NII and risk-weighted assets

NB: Not adjusted for the buy-back programme or any additional regulatory changes.

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SLIDE 15

Macroeconomic assumptions

ICAAP 2011 – base scenario and adverse scenario

15

Sweden Baltic countries

80 90 100 110 120 2010 2011 2012 2013 2014 2015 2016

GDP growth

e e 0% 5% 10% 15% 20% 2010 2011 2012 2013 2014 2015 2016

Unemployment

Sweden, base case Sweden, adverse 60 70 80 90 100 110 2010 2011 2012 2013 2014 2015 2016

Real estate price index

e e Sweden, base case Sweden, adverse 5% 10% 15% 20% 2010 2011 2012 2013 2014 2015 2016

Unemployment

70 80 90 100 110 120 130 140 150 2010 2011 2012 2013 2014 2015 2016

Real estate price index

Estonia, base case Estonia, adverse Latvia, base case Latvia, adverse Lithuania, base case Lithuania, adverse 80 90 100 110 120 130 140 2010 2011 2012 2013 2014 2015 2016

GDP growth

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SLIDE 16

Loans past due 60 days – performance Q/Q

16

  • 150
  • 100
  • 50

50 100 150 200 250 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 EURm Estonia Latvia Lithuania Russia Ukraine

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SLIDE 17

17

Real estate prices

Source: Swedbank, Estonian Land Board Source: Swedbank, State Enterprise Centre of Registers Source: Swedbank 1 762 601 200 400 600 800 1 000 1 200 1 400 1 600 1 800 2 000 Jan-05 Aug-05 Mar-06 Oct-06 May-07 Dec-07 Jul-08 Feb-09 Sep-09 Apr-10 Nov-10 Jun-11

Riga

Nr.of deals EUR/m2 1 731 1 074 200 400 600 800 1 000 1 200 1 400 1 600 1 800 2 000 Jan-05 Aug-05 Mar-06 Oct-06 May-07 Dec-07 Jul-08 Feb-09 Sep-09 Apr-10 Nov-10

Vilnius

Nr.of deals EUR/m2 1 616 915 200 400 600 800 1 000 1 200 1 400 1 600 1 800 Jan-05 May-05 Sep-05 Jan-06 May-06 Sep-06 Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09 Jan-10 May-10 Sep-10 Jan-11 May-11

Tallinn

Nr.of deals EUR/m2

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SLIDE 18

Liquidity reserve*

18

* As defined by the Swedish FSA

SEKm Cash and holdings in central banks and deposits in other banks available overnight 90 723 Securities issued or guaranteed by sovereigns, central banks or multilateral development banks 57 327 Securities issued or guaranteed by municipalities or Public sector entities Covered bonds 53 711

  • Issued by other institutions

53 711

  • Own issued

Securities issued by non-financial corporates Securities issued by financial corporates (excl. covered bonds) 1 089 Other Total 202 850 Liquid assets outside Group Treasury organisation 65 000 Total 267 850