Merrill Lynch Banking & Insurance Sept 2009

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Merrill Lynch Banking & Insurance CEO Conference London 30 September 2009 Annika Falkengren President and CEO 1

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Merrill Lynch Banking & Insurance CEO Conference in London. 30 September 2009.

Transcript of Merrill Lynch Banking & Insurance Sept 2009

Page 1: Merrill Lynch Banking & Insurance Sept 2009

Merrill Lynch Banking & Insurance

CEO Conference

London

30 September 2009

Annika

FalkengrenPresident and CEO

1

Page 2: Merrill Lynch Banking & Insurance Sept 2009

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Strong income, focus on efficiency and balance sheetRobust liquidity and capital position

Mitigating effects from the financial crisesCurrent status with a stable and diversified credit portfolio

The starting point: SEB has a strong competitive position A long-term relationship bank

Going forwardEconomic outlook and the new financial landscape

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#1 Cash management globally#1 Scandinavian currencies

globally#1Nordic stock broker#1Nordic and Baltic investment

bank#1 Custody Nordics and Baltics#2 Nordic asset management#1 SME offering Sweden

Strong customer base Product excellence

700

400,000

5 million

1,800

Large companies

Financial institutions

SMEs

Private individuals

SEB –

A relationship

bank

3

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H1 08 H1 09Sweden Other Nordic

Income Nordic “top 50”

(public companies)

+33%

+79%

Perceived quality*

-100

100

100Core

banking relation-

ships%

Large corporates

Sweden

Large corporates

Nordics

0

2008 2009

A strong large corporate franchise Strong growth in core marketsNordic target market

2006

* Relative to peer group

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Gross premium income, unit-linked insurance %, Q1 2009

14

14

9

26

28Lithuania

Latvia

Estonia

Denmark**

Sweden*

SEB Market share Competitors

12331

SEB RankMarket shares

Rightly positioned to leverage recovery of markets

*

Q2 2009**

Full year 2008

Assets under ManagementJune 30, 2009, SEK bn

1 478

1 267

743

617

595

224

Nordea

SEB

Sw edbank

Danske Bank

DnB NOR

HandelsbankenSource: Morgan Stanley-30,000

-20,000-10,000

010,00020,00030,00040,00050,00060,00070,000

Jan-05 Jan-06 Jan-07 Jan-08 Jan-09

SEBSHBRoburNordea

Mutual Funds Net Sales SwedenCumulative Jan 2005 –

Aug 2009, including PPMSEK m

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Growing franchise of Swedish Retail

ROE 19%

Net credit loss level 12 bps 115

120125130135140145150

Q12007

Q2 Q3 Q4 Q12008

Q2 Q3 Q4 Q12009

Q2

ThousandsNo of corporate customers

High customer interaction: 24h –

7 –

365d

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Strong income, focus on efficiency and balance sheetRobust liquidity and capital position

Mitigating effects from the financial crisesCurrent status with a stable and diversified credit portfolio

The starting point: SEB has a strong competitive position A long-term relationship bank

Going forwardEconomic outlook and the new financial landscape

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9%4%

64%

23%

Retail Banking

Wealth Management

Life

Merchant Banking

Stability from a diversified platform Share of pre-provision earnings* Jan –

Jun 2009

* Adjusted for goodwill impairmentsGeography –

Adjusted for Other and SEK 1,3bn capital gain on repurchased bondDivisions –

Adjusted for Other

Sweden

NordicsGermany

Baltic countries

52%

14%

8% 26%

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12-month rolling earnings generation excluding one-off effects

01020304050

Q1 -05

Q2 Q3 Q4 Q1-06

Q2 Q3 Q4 Q1 -07

Q2 Q3 Q4 Q1 -08

Q2 Q3 Q4 Q1 -09

Q2

Profit before credit losses and goodwill

Operating income

Operating profit

SEK bn

01,0002,0003,0004,0005,0006,0007,0008,000

Q1-05

Q2Q3Q4Q1-06

Q2Q3Q4Q1-07

Q2Q3Q4Q1-08

Q2Q3Q4Q1-09

Q2

Net interest income Non-interest income *

Diversified income generationSEK m

Resilient income generation

+21%*H1 2009

vs. H1 2008

* Income adjusted for capital gains

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Efficiency and productivity

21.620.4

19.3

Dec 06 Jun 08 Jun 09

02468

1012

Q107

Q2 Q3 Q4 Q108

Q2 Q3 Q4 Q109

Q2

CEENon-CEE

FTE developmentSEB Group, thousands

Exploiting cost synergies from increased integration while developing continuous productivity enhancements through SEB Way

Group OperationsNo. of transaction, millions

Efficiency and productivity gains offset inflation on a comparable basis

202224262830

Q4 06 Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09

Total cost base reportedExcluding pensions, redundancies, CEE goodwill impairment and FX effect

Rolling 12 m costs in Q2

2009 up SEK 0.3bn or 6% vs. FY

2006

Cost/transaction

-6% y-o-y

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Financial strategyEstablish and maintain a strong capital and liquidity position

Core capitalSEK bn

60.7

103.2

89.3

53.1

Dec 2006 Jun 2009

Hybridcapital

"Book

equity"

7.5

13.9

8.2% 11.3%Core Tier

1 ratio

+36.2

45.9

17.5

41.8

40.2

Long-term funding (>1 year)SEK bn

~15 months matched funding

117.3

74.7

52.448.7

7.132.931.2

71.4

H1 08 H2 08 H1 09 Q3 09

Covered bondsOther

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Strong income, focus on efficiency and balance sheetRobust liquidity and capital position

Mitigating effects from the financial crisesCurrent status with a stable and diversified credit portfolio

The starting point: SEB has a strong competitive position A long-term relationship bank

Going forwardEconomic outlook and the new financial landscape

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The "perfect storm" scenario...

We prepared for “the worst”:●Extreme stress scenario –

Scenario with simultaneous severe recessions with significant contraction in all SEB’s geographic markets for 3 consecutive years

●Significant decline in pre- provision earnings

●Significant increase in RWAs from risk class migration

From rights issue

March 2009

13

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...has not materialised

Sweden, other Nordics and Germany already turning the corner with stable asset quality

Limited impact from risk migration; on the contrary RWA decline due to lower demand for lending and efficiency gains

Flight to quality; SEB increased share of wallet among large corps and resilient life insurance operations

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SEBLending totalSEB Lending

EURbn EURbn EURbnEstonia Latvia Lithuania

Excluding Leasing portfolioSource: Central Banks and SEB

0

10

20

30

40

Q205

Q4 Q206

Q4 Q207

Q4 Q208

Q4 Q209

0%

10%

20%

30%

40%

0

10

20

30

40

Q205

Q4 Q206

Q4 Q207

Q4 Q208

Q4 Q209

0%

10%

20%

30%

40%

0

10

20

30

40

Q2 -05

Q4 Q206

Q4 Q207

Q4 Q208

Q4 Q209

0%

10%

20%

30%

40%

SEB’s Baltic lending relative the market Per cent, Q2 2005 –

Q2 2009

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0

500

1,000

1,500

2,000

Q1-08 Q2-08 Q3-08 Q4-08 Q1-09 Q2-09

Specific Collective

The Baltics: problematic, but contained

Provisioning to build-up Baltic reservesSEK m

65% collective provisions

Non performing loans % of lending

0%

5%

10%

15%

Portfolio assessed, past due > 60 daysIndividually assessed

Estonia

Latvia

LithuaniaLending

45

39

75

(SEK bn)

Actions

Gradual tightening of credit and portfolio policies requirements since Q4 2005

Accelerated collective provisions

Substantial work-out resources

Review of all loans >€1m completed

Separate division

Full goodwill write-off in CEE

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Stable and well diversified credit portfolio

49%34%

10%7%

Gross impaired loans* Q2-09Distribution of SEK 16,690m within SEB Group

Sweden48%

Lithuania 5%Latvia 3%

Estonia 3%

Germany24%

Norway 7%

Other 5%

Denmark 3% 85%

10%

-500 0 500 1,000 1,500 2,000 2,500 3,000

SwedenDenmarkNorway FinlandEstonia

LatviaLithuaniaGermany

Other

Finland 3%

Impaired loans*-

change Q2-09 vs. Q4-08SEK m

Sweden

Germany Baltic countries

Other

Credit portfolio Q2-09SEK 1,806bn

5%

*Individually assessed

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Strong income, focus on efficiency and balance sheetRobust liquidity and capital position

Mitigating effects from the financial crisesCurrent status with a stable and diversified credit portfolio

The starting point: SEB has a strong competitive position A long-term relationship bank

Going forwardEconomic outlook and the new financial landscape

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Sweden –

Positioned for recovery

Improved situation for manufacturing

Low mortgage rates support consumption, debt service burden historically low

GDP bounces back

Riksbank

starts to increase rates

spring 2010

-8-6-4-202468

97 98 99 00 01 02 03 04 05 06 07 08 09 10 11

OECD Sweden

-60-40-20

020406080

91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09

Orders Expected orders

0

2

4

6

8

10

12

1981 1985 1989 1993 1997 2001 2005 2009

Household

debt

service burdenPercent of disposable

income

New export ordersManufacuring

industry, net

GDP growthYearly

growth, percent

Source: SEB Nordic Outlook, 1 Sept 2009

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Economic sentimentIndex

Current

accountsPercent of GDP

Baltics –

Stabilisation on a low level

A broader recovery in 2011

First signs of improved economic sentiment

GDP deficits leaves the negative territory

Wage cuts continue

-30-25-20-15-10-505

01 02 03 04 05 06 07 08 09

Estonia Latvia Lithuania

Source: SEB Nordic Outlook, 1 Sept 2009

40

60

80

100

120

140

95 96 97 98 99 00 01 02 03 04 05 06 07 08 09

Euro-zone Estonia Latvia Lithuania

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Multiple growth opportunities

Merchant BankingMarket penetration*

* indicative

Penetration to date

Leading Nordic asset manager and bancassurance

business!

Recognised product excellence

Bank relationship – a closer tie

Untapped potential

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Capital requirements

Liquidity regimes

Regulatory environment

Government ownership

The big unknown: A new financial landscape –

Still limited visibility and no level playing field

SEB has a strong balance sheet

Tier 1 13.1%

15 months match funding

Liquidity reserves

>10% assets

Loan/deposit ratio 154%

22

Reserve ratio 72%

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SEB well positioned to support our customers and seize growth opportunities on a selective basis

Stabilising economy for 90 per cent of credit portfolio

Full attention and actions on Baltic challenges

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