BofA Merrill Lynch - Banking & Insurance CEO Conference

8/8/2019 BofA Merrill Lynch - Banking & Insurance CEO Conference

1/15

an ng & nsurance on erence29 September 2010

Michael Wolf, CEO


2/15

Progress continued throughout Q2

Net profit of SEK 1.6bn

Improved credit quality

Strengthened capitalisation to 12.7 per cent Core Tier 1

approva to uy ac er on s

2


3/15

Recent business achievements

Higher mortgage new sales market shares in Sweden

Increased corporate activity

Retails tailored service concept well received

New in-principle framework agreement with Savings Banks

Association

3


4/15

Result by business area

Q2 update Profit before impairments

RetailSolid credit quality, higher customer activity

1 000

2 000

Q1 10

Q2 10

Large Corporates & InstitutionsGood credit quality, repricing continues, slowertrading

-1 000

0

Baltic BankingImproving asset quality, stabilised NII, Estoniaback to rofit

-2 000

Retail LargeCorporates &

BalticBanking

Russia &Ukraine

AssetManagement

Ektornet

Russia & UkraineStabilising credit quality, continued restructuring

2 000

SEKm Operating result

Q1 10

n uss a

Asset ManagementStable earnin s

0

1 000Q2 10

EktornetRepossessed properties valued at SEK 1 010m, -2 000

-1 000

4

e a argeCorporates &

Institutions

a cBanking

uss aUkraine

sseManagement

orne


5/15

Pressure decreasing

Net interest income

5 000

SEKm

4 0233 7994 000

4 500Retail LCI Baltic Banking Russia

& UkraineGroup Treasury

and Other

-34 41-

-2043 500

2 500

1 500

2 000

500

1 000

5

0

NII Q1 10 NII Q2 10


6/15

Commissions back to re-crisis levels

Net commission income

Positive trend from Q1 2009

Market leader in cards and payments

Growth driven by Asset Management

Net commission income*

2 500

3 000

m

1 500

2 000

500

1 000

Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10

6

* Excl non-recurring items


7/15

Term funding ahead of lan

Liquidity & Capital management

YTD, SEK 150bn in term funding ofwhich around SEK 50bn during the

-

Outstanding wholesale funding(nom SEKbn )

secon quarter

SEK 60bn in remaining term funding

397

459

173Total long-

-term, non-guaranteed

YTD around SEK 95bn of central bankrepos and guaranteed funding has been

180

174

89Central bank

term,guaranteed*

redeemed Average maturity of wholesale funding

116

87

112Total short-term, non-

repos

(38 months for covered bonds)

97

28

0Total short-

term,***

guaranteed**

Q2 2010

* Issued with more than 12 months maturity, government fee of 83bp

** Including interbank deposits

***

Q1 2010

Q4 2009

7

ssue w ess an mon s ma ur y, governmen ee o p


8/15

Asset ualit develo ment

Asset quality

No impact of European sovereign debt crises

Further stabilisation/improvement in the Baltic countries

and liability side

we an s res ence vast y mprove ICAAP

n erna s ress es s

Stress test of the Committee of European Banking Supervisors

8


9/15

Asset quality

Credit im airments significantl reduced

Sweden very low levels8 000

SEKm

ma recover es n uss a anUkraine

6 672

6 121

6 000

7 000

Few new problems

Property prices stabilising/increasing

5 003

4 000

5 000

Insolvency and debt restructuring laws Positive trend likely to continue 2 210

3 000

963

1 000

-1 000

Q2 09 Q3 09 Q4 09 Q1 10 Q2 10

9

Retail LCI Baltic Banking Russia & Ukraine Other


10/15

Significant rogress made still work to be done

5Y CDS spreads

400

300

350

200

250

150

50

100

0

30/12/2005 30/06/2006 31/12/2006 30/06/2007 31/12/2007 30/06/2008 31/12/2008 30/06/2009 31/12/2009 30/06/2010

10

Source: Datastream and Reuters


11/15

Will lending margin ressure decrease?

Swedbank has re-priced a larger part of liabilities compared to

Source: SEB Enskilda Equity Research

Nordic banks long term funding broken down by time of issuance (based on ~3,000 bonds)

Portion of pre-, post and mid-crisis funding matters

The two extremes: Swedbank has only 30%

pre-crisis funding and

50% mid crisis funding80%

100%

120%

Handelsbanken has 60%

pre-crisis funding and ony

around 20% mid-crisis

funding20%

40%

60%

Swedbank DnB NOR Nordea SEB Danske BankHandelsbanken

Pre-crisis Mid-crisis Post-crisis

11

EQUITY RESEARCH 10


12/15

Basel 3 im act on Swedbank ost Jul amendments*

NSFR is more or less in-line with proposed future minimum requirements,

Core Tier 1 capital expected to decrease less than 4%, and RWA expected

Swedbank has a leverage ratio with a substantial margin to the proposed

12

*Preliminary calculations


13/15

Summar

NII pressure decreasing

Improved risk profiles on both the asset and liability side

Resilience vastly improved

13


14/15


15/15

New insolvenc law in Latvia

Legal protection proceedings Insolvency proceedingsof legal entities

Insolvency proceedingsof private persons

NOVELTIESNOVELTIES

LPP plan = business plan

Diminished possibility to use LPP in bad

faith, to delay time

Debtor should be able to make factually

Debtors property should be

enforced in 6 months

Simplified procedure to cancel

appointment of administrator, also

Debtors property should be enforced in 6 months

Simplified procedure to cancel appointment of administrator,

also with participation of secured creditors

Possibility to restructure obligations of our clients by reaching

a paymen s un er agreemen s

concluded with bank

Additional requirement to quality of the

LPP plan money flow, substantiation of

incomes etc.

w par c pa on o secure

creditors

Administrator by agreement with

bank is entitled to sell property

without auction, also the company

an agreemen a e c en w ma e concre e paymen s o e

bank. Other creditors will not be entitled to ask enforcement of

this pledge

Possibility to check agreements concluded by debtors 3 years

before proclamation of insolvency

SWEDBANKS VIEWSWEDBANKS VIEW

Positive

Improvement of speed and efficiency of

Positive

Improvement of speed and

Negative

Efficiency of proceedings depends on the court practice.

procee ngs e c ency o procee ngs men men s, w c are cruc a or we an :

If total liabilities exceed LVL 100th (EUR 142th), insolvency

procedure lasts 3.5 years

If total liabilities do not exceed LVL 100th (EUR 142th),

insolvency procedure lasts 2 years. Client has to repay theunsecure part o t e oan t at as rema ne a ter t e sa e o

collateral covering 30% of his/her official income, but not less

than LVL 60 (EUR 85) per month (i.e. 1/3 of min salary)

Neutral(in total)

e new aw prov es many pos t ve nove t es to t e ex st ng regu at on o nso vency procee ngs, ut ts e c ency w epen on mec an sm o

implementation. In total the law changes are not expected to change the trend in credit impairments.

15

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