Roadshow, Abu Dhabi

32
Abu Dhabi Roadshow 18 March 2008 Mikael Inglander CFO

description

Swedbank was founded in 1820, as Sweden’s first savings bank was established. Today, our heritage is visible in that we truly are a bank for each and every one and in that we still strive to contribute to a sustainable development of society and our environment. We are strongly committed to society as a whole and keen to help bring about a sustainable form of societal development. Our Swedish operations hold an ISO 14001 environmental certification, and environmental work is an integral part of our business activities.

Transcript of Roadshow, Abu Dhabi

Page 1: Roadshow, Abu Dhabi

Abu Dhabi Roadshow18 March 2008

Mikael InglanderCFO

Page 2: Roadshow, Abu Dhabi

(2)

LatviaTotal population: 2.3mEmployees: 2,501Private customers: 0.8mCorp. customers: 53,000Branches: 77Typical market share: 30%

The leading bank in four small countries

SwedenTotal population: 9.2mEmployees: 8,750Private customers: 4.1mCorp. customers: 275,000Organisations: 120,000Branches: 459Typical market share: 25%

LithuaniaTotal population: 3.5mEmployees: 3,384Private customers: 3.0mCorp. customers: 78,000Branches: 128Typical market share: 30%

EstoniaTotal population: 1.3mEmployees: 3,227Private customers: 1.2mCorp. customers: 88,000Branches: 94Typical market share: 50%

• Supporting markets: Denmark, Finland, Norway, Russia,Ukraine, USA, Luxemburg, China, Japan and Spain

80%

6% 5% 5% 4%

Swed

en

Esto

nia

Latv

ia

Lith

uani

a

Oth

ers

Share of group lending

• Potential home markets: Russia and Ukraine

Page 3: Roadshow, Abu Dhabi

(3)

Strong position for profitability and growth

Ukraine and RussiaBalticsSweden

Stable base Growth and experience

Future growth and profitability

Swedbank is the leading bank in Sweden. Profitability is high and stable and the bank is consolidating its market shares in important segments in both the private and corporate sectors.

Swedbank has a small but growing presence in Ukraine and Russia. In the long term, a significant share of Swedbank’s growth will be generated in these markets.

The Baltic economies are experiencing strong economic growth that is expected to remain for many years. As the largest bank in the region, growing with the market ensures attractive earnings growth.

Share of profit 2007: 66%

Share of lending 2007: 80%

Share of profit 2007: 2%

Share of lending 2007: 2%

Share of profit 2007: 32%

Share of lending 2007: 16%

Page 4: Roadshow, Abu Dhabi

(4)

Swedbank, group overview

52%

32%

2%8% 8%

-2%-10%

0%

10%

20%

30%

40%

50%

60%

SwedishBanking

BalticBanking

InternationalBanking

SwedbankMarkets

AssetManagement & Insurance

SharedServices& Group

Staffs

Share of Group net profit 2007

Page 5: Roadshow, Abu Dhabi

(5)

2007 – A successful and eventful year

• Profit attributable to shareholders increased 10% to SEK 12bn– Net interest income increase by 20%– Net commission income increased by 11%

• Swedish Banking show a stable result, low risks and high return on equity

• Record result in Baltic Banking with balanced risks• Swedbank Markets’ results on same level as last year’s all time high

A successful year despite global credit turmoil and Baltic slowdown

Page 6: Roadshow, Abu Dhabi

(6)

Q4 2007 – Good development and strong results

• Good volume development in Sweden– Stable margins on new lending

• Continued strong results in Baltic banking– Economic slowdown align with expectations

• Strong finish of the year for Swedbank Markets– Success in fixed income trading and structured investment products in

Sweden and corporate finance in Norway

• Swedbank Ukraine continues to develop well

Profit increased 7% compared with Q4 2006

Page 7: Roadshow, Abu Dhabi

(7)

Solid profit development

*Loan losses, net = write-offs + provisions – recoveries + change in property taken over

-1,000

1,000

3,000

5,000

7,000

9,000

11,000

13,000

15,000

17,000

2000 2001 2002 2003 2004 2005 2006 2007-1,000

1,000

3,000

5,000

7,000

9,000

11,000

13,000

15,000

17,000

Profit before loan losses Capital gains EnterCard and KIABLoan losses, net* Operating profit (excl. capital gains)

SEKm SEKm

Page 8: Roadshow, Abu Dhabi

(8)

Minor direct effects from the credit turmoil

Valuation- and accounting effects, SEK MQ4

2007Q3

2007

Swedbank Markets – 40 – 60

Group Treasury, liquidity portfolio – 5 – 68

Group Treasury, intra-group lending 20 – 90

Swedbank Mortgage 66 – 129

Page 9: Roadshow, Abu Dhabi

(9)

Business volumes

84

13 24

334

102

19 31

289

398 401

0

100

200

300

400

500

Deposits,Sweden

Deposits,Baltics

AM funds,Sweden

AM funds,Baltics

Structuredproducts,

bondsDec, 2006 Dec, 2007

SEKbnSavings

919

425333

53 74 3477 100 61

390475

1,103

0

200

400

600

800

1,000

1,200

Lending,Group

Private,Sweden

Corporate,Sweden

Private,Baltics

Corporate, Baltics

Other

Dec, 2006 Dec, 2007

SEKbnLending

Page 10: Roadshow, Abu Dhabi

(10)

Credit quality, group

2000

2001

2002

2003

2004

2005

2006

2007

-0.080.000.080.160.240.320.400.480.560.64

Loan loss ratio, net Share of impaired loans

Share of provisions

%

Page 11: Roadshow, Abu Dhabi

(11)

Margins

0.0

1.0

2.0

3.0

4.0

5.0

6.0

Q3-06

Q4-06

Q1-07

Q2-07

Q3-07

Q4-07

Estonia LatviaLithuania Sweden

% Lending

0.0

1.0

2.0

3.0

4.0

5.0

6.0

Q3-06

Q4-06

Q1-07

Q2-07

Q3-07

Q4-07

Estonia LatviaLithuania Sweden

Deposits%

Page 12: Roadshow, Abu Dhabi

(12)

Swedish Banking• Continued stable earnings and high profitability• Strong corporate lending during Q4

– Total lending increased by 4% vs. Q3 and 14% during the full year

• Continued good deposit trend– Deposits increased by 3% vs. Q3 and 15% during

the full year• Share of new savings from households

increased to 18% (17% in Dec 06)• Rise in funding costs are gradually, but with

certain delay, passed on through higher lending rates

• Minor valuation effects as a consequence of the turmoil on the credit market

• Covered bonds as from Q2 2008• In agreement to sell 8 branches to savings

banks• Swedish economy still relatively strong.

0500

1,0001,5002,0002,5003,0003,5004,0004,5005,000

Q206

Q306

Q406

Q107

Q2 07

Q307

Q407

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

Income Costs C/I-ratio

SEKm %

Page 13: Roadshow, Abu Dhabi

(13)

Baltic Banking Operations• Continued high profitability • Net interest income increased 7% vs. Q3• Lending growth in 2007 was 33%, the gradual

slowdown is expected to continue• Weak trading income due to market turmoil• Costs affected by

– Annual wage increases in Latvia and Lithuania, hits P&L as of October every year

– Investments in operational excellence project for increased productivity

– High marketing costs.0200400600800

1,0001,2001,4001,6001,8002,0002,2002,400

Q206

Q306

Q406

Q107

Q2 07

Q307

Q407

0.0

0.1

0.2

0.3

0.4

0.5

Income Costs C/I-ratio

SEKm %

Page 14: Roadshow, Abu Dhabi

(14)

Credit quality, Baltic Banking

Loan loss ratio, net (average portfolio)

-2.0%

-1.2%

-0.4%

0.4%

1.2%

2.0%

2002 2003 2004 2005 2006 2007

Estonia Latvia Lithuania Group

Share of impaired loans (12 month old portfolio)

0.0%

0.5%

1.0%

1.5%

2.0%

2002 2003 2004 2005 2006 2007

Estonia Latvia Lithuania Baltics Group

Page 15: Roadshow, Abu Dhabi

(15)

Decreasing Baltic lending growth

0%

10%

20%

30%

40%

50%

60%

07/D

ec

07/S

ep

07/J

un

07/M

ar

06/D

ec

06/S

ep

06/J

un

06/M

ar

05/D

ec

05/S

ep

05/J

un

05/M

ar

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000 Hansabank, Estonia

0%10%20%30%40%50%60%70%80%90%100%

07/D

ec

07/S

ep

07/J

un

07/M

ar

06/D

ec

06/S

ep

06/J

un

06/M

ar

05/D

ec

05/S

ep

05/J

un

05/M

ar

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000 Hansabank, Latvia

0%

10%

20%

30%

40%

50%

60%

70%

07/D

ec

07/S

ep

07/J

un

07/M

ar

06/D

ec

06/S

ep

06/J

un

06/M

ar

05/D

ec

05/S

ep

05/J

un

05/M

ar

0

1,000

2,000

3,000

4,000

5,000

6,000 Hansabank, Lithuania

0%

10%

20%

30%

40%

50%

60%

70%

07/D

ec

07/S

ep

07/J

un

07/M

ar

06/D

ec

06/S

ep

06/J

un

06/M

ar

05/D

ec

05/S

ep

05/J

un

05/M

ar0

2,0004,0006,0008,000

10,00012,00014,00016,00018,00020,000 Baltic Banking

0%

100

000000000000

0

10, Total lending, EURm YoY growth

Page 16: Roadshow, Abu Dhabi

(16)

Baltic macro development

Real GDP growth

0%2%4%

6%8%

10%12%

2005 2006 2007F 2008F 2009FEst Lat Lit

CPI growth

0%2%4%6%8%

10%12%

2005 2006 2007 2008F 2009FEst Lat Lit

• Economic slowdown in Estonia continues: GDP growth slows from ~7% in 2007 to ~5% in 2008; the bottom of the cycle is expected to be in Q2 2008

• In Latvia growth slows from ~10.5% to 6% in 2008, the bottom of the cycle is expected to be in H2 of 2008

• Slowdown in Lithuania started in Q4 2007: GDP growth will slow from 2007’s 8.7% to ~7.5% in 2008

• Weak domestic demand reduces imports and exports growth continues. Trade and current account deficits are falling. CPI will peak in Q1 2008. Long term GDP growth (6-7%) will be above EU average.

Source: Hansabank Market

Page 17: Roadshow, Abu Dhabi

(17)

Swedbank Markets

• Good end to the year despite the capital market turmoil

• Strong results in, above all, fixed income and FX trading, structured investment products and corporate finance fees First Securities

• Minor valuation effects due to market turmoil, SEK - 40m

• Continued market leader in corporate bonds, new issues in SEK

• Sustained growth and market leading position in structured products, sales grew by 39% in 2007.

050

100150200250300350400450500

Q106

Q206

Q306

Q406

Q107

Q2 07

Q307

Q407

Profit for the period attributable to shareholdersof Swedbank

SEKm

Page 18: Roadshow, Abu Dhabi

(18)

International Banking

• Continued strong lending growth in Ukrainian Banking, + 112% to SEK 11bn in 2007

• Loan loss ratio, net in Ukrainian Banking decreased after adjusting calculation method to Swedbank Group’s principles

• Annual lending growth in Russian Banking was 50% to SEK 10bn

• Following positive court rulings regarding VAT dispute in leasing operations, a reversal of SEK 60m was made in Russian Banking

• Lending in Nordic branches more than doubled in 2007, reaching SEK 13bn.

-100

-75

-50

-25

0

25

50

75

100

Q206

Q306

Q406

Q107

Q2 07

Q307

Q407

International Banking, profit for the periodof which Russian Bankingof which Ukrainian Banking Operations

SEKm

Page 19: Roadshow, Abu Dhabi

(19)

Income statement, group

SEKmQ4

2007Q3

2007 %Q4

2006 %Net interest income 5,259 4,806 9 4,303 22Net commission income 2,536 2,503 1 2,309 10Net gains/losses on financial items at fair value 386 196 97 908 – 57Other income 693 526 32 392 77Total income 8,874 8,031 10 7,912 12Staff costs 2,111 2,075 2 1,878 12Profit-based staff costs 522 337 55 302 73Other expenses 1,893 1,720 10 1,917 – 1Total expenses 4,526 4,132 10 4,097 10Profit before loan losses 4,348 3,899 12 3,815 14Loan losses 238 230 3 – 72 – 431Operating profit 4,110 3,669 12 3,887 6Tax 950 793 20 928 2Profit for the period 3,160 2,876 10 2,959 7Attributable to shareholders of Swedbank 3,108 2,866 8 2,913 7

Page 20: Roadshow, Abu Dhabi

(20)

Net interest income Q4-07 (Q3-07)

4,806

5,259

- 10

359

12

- 10

101

1

4,600

4,800

5,000

5,200

5,400N

et in

tere

stin

com

eQ

3-07

Sw

edis

hB

anki

ng

Bal

tic B

anki

ngO

pera

tions

Bal

tic B

anki

ng

Inve

stm

ent

Inte

rnat

iona

l B

anki

ng

Sw

edba

nk

Mar

kets

Sha

red

Ser

vice

s an

dot

her

Net

inte

rest

inco

me

Q4-

07

SEKm

Page 21: Roadshow, Abu Dhabi

(21)

Net interest income Swedish Banking, change

SEKmQ4 2007

vs Q3 2007Q4 2007

vs Q4 2006Net interest income Q3 2007 2,926Net interest income Q4 2006 2,943

Changes:Higher lending volumes 46 215Decreased lending margins – 81 – 306Higher deposit volumes 43 122Higher deposit margins 52 142Other changes – 59 – 189

Total change 1 – 16

Net interest income Q4 2007 2,927 2,927

Page 22: Roadshow, Abu Dhabi

(22)

Baltic Banking, change in net interest income

SEKmQ4 2007

vs Q3 2007Q4 2007

vs Q4 2006Net interest income Q3 2007 1,487Net interest income Q4 2006 1,126

Changes:Higher lending volumes 61 273Higher lending margins 14Decreased lending margins -10FX-effects, lending 4 12Higher deposit volumes 2 56Higher deposit margins 84 260FX-effects, deposits 2 6Other changes -66 -135Total change 101 462Net interest income Q4 2007 1,588 1,588

Page 23: Roadshow, Abu Dhabi

(23)

Net commission income, Group

0

1,000

2,000

3,000

4,000

5,000A

sset

man

agem

ent

Pay

men

ts

Bro

kera

ge

Lend

ing

Insu

ranc

e

Cor

pora

tefin

ance

Oth

er

2007 2006

SEKm

Page 24: Roadshow, Abu Dhabi

(24)

Expenses

SEKmQ4

2007Q3

2007 %Q4

2006 %Swedish Banking 2,279 2,208 3 2,327 – 2Baltic Banking 1,062 864 23 811 31International Banking 272 279 – 3 126 Of which Ukrainian Banking 163 134 22Swedbank Markets 560 416 35 535 5Other business areas 353 365 – 3 298 18Total expenses 4,526 4,132 10 4,097 10

of which staff costs in: Swedish Banking 1,096 1,093 0 998 10Baltic Banking 587 511 15 450 30International Banking 155 134 16 49 Swedbank Markets 351 225 56 345 2

Page 25: Roadshow, Abu Dhabi

(25)

Business areas

2007 vs 2006, SEKm 2007 % 2007 % 2007 % 2007 % 2007 %Net interest income 11,701 5,667 986 1,343 83 Net commission income 4,504 1,854 196 1,441 1,868Other income 1,473 1,252 97 773 232Total income 17,678 4 8,773 42 1,279 3,557 1 2,183 19Staff costs 4,296 2,044 405 1,239 425Other expenses 4,704 1,502 366 753 463Total expenses 9,000 3 3,546 32 771 1,992 3 888 31Profit before loan losses 8,678 5 5,227 50 508 1,565 0 1,295 13Loan losses 71 450 170 0 0 Operating profit 8,607 -2 4,777 49 338 1,565 -1 1,295 13Tax 2,413 455 70 427 320Profit for the period 6,194 4,322 268 1,138 975To Swedbank's shareholders 6,182 – 2 4,322 46 268 1,010 3 975 11Return on allocated equity % 23.2 31.2 6.9 24.2 57.0

AssetMgmt

Internat.Banking

Swedish Banking

BalticBanking

Swedbank Markets

Page 26: Roadshow, Abu Dhabi

(26)

Key figures

Jan - Dec, 2007

Jan - Dec, 2006

Return on equity, % 18.9 19.3Earnings per share, SEK 23.28 21.11Equity per share, SEK 131.96 116.37C/I ratio before loan losses 0.51 0.52Loan loss ratio, net, % 0.07 – 0.02Share of impaired loans, % 0.13 0.07Dividend, SEK* 9.00 8.25Tier 1 capital ratio, new principles, % 8.5 -Tier 1 capital ratio, transition principles, % 6.2 6.5 **Capital adequacy ratio, new principles, % 12.7 9.8 **

*according to Board of Directors’ proposal**according to old principles

Page 27: Roadshow, Abu Dhabi

(27)

Tier-1 ratio, Group

• Tier 1 ratio amounted to 8.5%

• Tier 1 ratio, according to transition principles, was 6.2%

• As of January 1, 2008, tier 1 ratio according to transition principles, increased by 31 bps due to the gradual implementation of Basel 2 regulations.

0123456789

10

Q1-

05

Q2-

05

Q3-

05

Q4-

05

Q1-

06

Q2-

06

Q3-

06

Q4-

06

Q1-

07

Q2-

07

Q3-

07

Q4-

07012345678910

Tier 1 ratio, Basel 2Tier 1 ratio, transition rulesTarget Tier 1 ratio

% %

Page 28: Roadshow, Abu Dhabi

(28)

2007 – A successful and eventful year

• Profit attributable to shareholders increased 10% to SEK 12bn– Net interest income increase by 20%– Net commission income increased by 11%

• Swedish Banking show a stable result, low risks and high return on equity

• Record result in Baltic Banking with balanced risks• Swedbank Markets’ results on same level as last year’s all time high

A successful year despite global credit turmoil and Baltic slowdown

Page 29: Roadshow, Abu Dhabi

(29)

Appendix

Page 30: Roadshow, Abu Dhabi

(30)

Group lending by sectors – Baltic BankingPortfolio, December 2007 Portfolio growth, Q4 07

546

1,111

1,692

1,736

3,012

8,282

2,786

0 2,000 4,000 6,000 8,000

Other

Construction

Transport

Industry

Retail &Wholesale

Real-estatemgmt

Individuals

0

34

42

111

82

452

231

0 250 500

42%

% - share of portfolio and portfolio growth

3%

6%

8%

9%

15%

10%

7%

39%

14% 20%

4%

3%

0%

Page 31: Roadshow, Abu Dhabi

(31)

Exposure FAQ• No direct US Sub-Prime exposure

– Minimal indirect exposure through investments of EUR 57m in bonds issued by US mortgage institutions who, in their turn, have exposures towards US sub-prime

• Total exposure towards structured credits is minimal– No commitments towards conduits or SIV’s of any kind– Negligible exposure towards CDO’s

• Swedbank holds a very small CDO trading stock for client trades in CDO’s which we have issued ourselves with mainly large Cap’s as underlying risk

• 80% of the tranches held are rated Aaa and 20% are rated A• Total holdings was EUR 27m at year end

– Exposure towards Mortgage Backed Securities is appr. EUR 719m• European Aaa and mainly residential• Held for EUR liquidity purposes and client trading

• Hedge fund exposure is appr. EUR 500m, all collateralized• Exposure towards private equity firms and their target companies is about

EUR 1 380m in total – Nordic related LBO’s

• In total, above mentioned exposures represent less than 1.6 % of total assets

Page 32: Roadshow, Abu Dhabi

Additional questions?Johannes Rudbeck

Investor [email protected]

+46858593322