Debt investor presentation first quarter 2010 April 2010 Jonas - PowerPoint PPT Presentation

Debt investor presentation first quarter 2010 April 2010 Jonas Erikson, Head of Group Treasury Peter Stenborn, Head of Debt Investor Relations

Improved risk profile • Long-term competitiveness – traditional banking model • Tangible results from actions taken and improved macro – Full access to debt capital markets – Exiting state guarantee programme • CEE lending now 15% of total lending or 191% of equity – Trend will continue 2

CDS spread development Improved risk profile Restructuring units Reduced CEE Improved funding Rights issue established exposure structure 400 350 Swedbank 300 SEB Nordea 250 Handelsbanken 200 150 100 50 Source: Reuters, 5y CDS spreads in EUR 0 09-03-01 09-05-01 09-07-01 09-09-01 09-11-01 10-01-01 10-03-01 3

Strategic priorities 2010 • Achieve operational excellence, enhance earnings Customer focus and improve customer satisfaction • Secure long-term competitive funding terms Risk reduction • Close sub par profitability gaps Earnings capacity • Continuous cost focus • Be prepared for new regulations and long-term Liquidity & Capital management funding structure 4

Result by business area Q1 update Profit before impairments SEKm 2 000 Retail Q4 09 Lower NII, good credit quality, new customer- 1 000 Q1 10 oriented organisational structure 0 Large Corporates & Institutions -1 000 Stronger quarter, increased deposits -2 000 Baltic Banking -3 000 Stabilising, decreasing overdues Retail Large Baltic Russia & Asset Ektornet Corporates & Banking Ukraine Management Institutions Russia & Ukraine Operating result SEKm Credit quality in Ukrainian Banking stabilising, 2 000 re-sizing Russian Banking operations Q4 09 1 000 Q1 10 Asset Management 0 Stable earnings -1 000 Ektornet -2 000 Ektornet managed repossessed properties valued at SEK 784m -3 000 Retail Large Baltic Russia & Asset Ektornet Corporates & Banking Ukraine Management Institutions 5

Net interest income Decreased risk and pre-provision earnings CEE lending Funding SEKbn SEKbn 250 800 700 200 600 Covered bonds 500 150 400 Government guaranteed 100 300 200 50 Central bank repos 100 0 0 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Credit impairments Result development SEKm SEKm 0 6 000 Profit before impairments 5 000 -1 000 Net profit 4 000 -2 000 3 000 -3 000 2 000 -4 000 1 000 0 -5 000 -1 000 -6 000 -2 000 -7 000 -3 000 -8 000 -4 000 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 6

Net interest income Continued headwinds and temporary effects SEKm NII Q4 09 Retail LCI Baltic Russia & Group NII Q1 10 Banking Ukraine Treasury 5 000 and Other 4 702 4 500 163 147 44 4 023 73 4 000 252 3 500 Q4 2009 4 702 3 000 Funding maturity mismatch -208 Trading strategy -145 2 500 Wholesale funding cost -121 Baltic Banking, Russia & Ukraine -118 2 000 NII and equity hedges -37 1 500 Other -50 Q1 2010 4 023 1 000 500 0 7

Net gains/losses on financial items, fair value Stronger net gains • Trading strategy pressed NII and boosted net gains and losses • Stable currency rates in Ukraine • Lower P&L impact from wholesale funding valuation SEKm Q1 10 Q4 09* Q1 09 Retail 32 45 43 Large Corporates & Institutions 441 55 1 332 Baltic Banking 72 88 183 Russia & Ukraine 27 149 10 Group Treasury and Other 75 -114 143 * Excluding capital gain of SEK 39m (sale of Aktia shares SEK 24m and of Tallinn Swedbank Group 647 223 1 711 Stock Exchange shares SEK 15m) 8

First quarter 2010 results Income statement SEKm Q1 2010 Q4 2009 Change Net interest income 4 023 4 702 -679 Net commission income 2 282 2 361 -79 Net gains/losses on financial items, fair value 647 223 424 Other income 715 751 19 Non recurring items -55 -55 Total income 7 667 7 982 -315 Staff costs 2 296 2 319 -23 Variable staff costs 79 23 56 Other expenses 2 016 2 370 -354 Non recurring items -412 412 Total expenses 4 391 4 300 91 Profit before impairments 3 276 3 682 -406 Impairment of intangible assets 14 0 Impairment of tangible assets 36 352 -316 Credit impairments 2 210 5 003 -2 793 Operating profit 1 016 -1 673 2 689 Tax expense 469 115 354 Result for the period 547 -1 788 2 335 Profit for the period attributable to: Shareholders of Swedbank AB 536 -1 804 2 340 9

Liquidity & Capital management Improved funding situation • Outstanding wholesale funding Swedbank exits guarantee SEKbn, notional value programme as per 30 April 2010 Total long- 459 term, non- • 397 SEK 100bn of long-term debt guaranteed issued during Q1 Total long- 174 term, 180 • guaranteed* SEK 110bn in remaining term funding maturities to roll or replace 108 Central bank in 2010 repos 116 • Average maturity of wholesale Total short- 87 term, non- funding further extended to 24 97 guaranteed** months (37 months for covered Total short- bonds) 28 term, Q1 2010 61 guaranteed*** Q4 2009 * Issued with more than 12 months maturity, government fee of 83bp ** Including interbank deposits *** Issued with less than 12 months maturity, government fee of 50bp 10

Liquidity & Capital Management 2010 Funding plan Issued & redeemed Aug 09 – Mar 10, SEKbn 40 30 20 10 GG CP's 0 GG Bonds -10 Domestic CB Euro CB -20 Senior Unsecured Bonds Structured bonds -30 -40 -50 Plans for remainder of 2010 – 2 further covered benchmark deals in Euro market this year – 1-2 further senior unsecured issues – Further covered bond issuance on tap (domestic), registered covered bonds and private placements – Short-term funding outstandings to increase 11

Liquidity & Capital management High liquidity maintained • Funding ahead of needs to further reduce liquidity risk and prepare for regulatory changes • Changing funding structure to replace guaranteed funding, prolong average maturity and build up Stress test of liquidity as per 31 March 2010 Liquidity stress test – 31 March 2010 liquidity portfolios SEKbn 300 250 200 150 100 2009-12-31 50 2010-03-31 0 D1 1W 2W 3W 1M 2M 3M 4M 5M 6M 9M 12M 12

Capital management Well capitalised Core Tier 1 capital ratio* Core Tier 1 capital ratio* YE 09 12.01% % 14 Result +0.09% RWA reduction +0.16% 12 12.3 12.0 Other +0.05% 10 9.9 Core Tier 1 capital ratio* Q1 10 12.31% 9.8 9.4 8 6 4 2 0 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 *according to full Basel 2 13

Asset quality Q1 development • Significantly improved macro – Stabilised/increasing property prices in CEE • Swedbank risk profile continued to improve – Limited new problems – Increasingly confident in known problems – Anecdotal evidence positive • Swedbank resilience has greatly improved 14

Asset quality Volumes – continued risk reduction in CEE lending • Sweden – weak corporate credit demand • CEE lending now 191% of equity SEKbn 1 200 Private Corporate 948 959 952 1 000 800 521 555 559 600 290% 209% 191% of equity 400 251 188 172 427 200 404 97 393 88 81 154 100 91 0 Q4 08 Q4 09 Q1 10 Q4 08 Q4 09 Q1 10 Sweden CEE Note: CEE lending as % of equity calculated as net lending to the public divided by balance sheet equity 15

Asset quality Quarterly change of 60-day past due loans • Stabilisation continues EURm 400 350 300 250 200 150 100 50 0 -50 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Estonia Latvia Lithuania Russia Ukraine 16

Asset quality Impaired loans – almost no new problems • Without FX effect up SEK 1.5bn SEKm 45 000 Impaired loans as % of gross lending 40 328 40 132 40 000 8 432 4 362 196 35 770 Ukraine 57% 35 000 6 113 29 657 2 381 Russia 20% 30 000 7 896 Lithuania 17% 25 000 9 736 19 921 20 000 13 370 9 343 15 000 Latvia 25% 10 578 10 000 5 473 5 000 Estonia 7.6% 1 150 LCI 0.3% 1 625 0 Retail 0.2% FY 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q1 10 17

Asset quality Credit impairments in Q1 • SEKm Significant improvement 8 000 • Sweden still very low levels 6 845 7 000 6 672 • Small recoveries in Russia and 6 121 6 000 Ukraine 5 003 5 000 • Baltic countries – Few new problems 4 000 – Property prices stabilise/increase 3 000 2 210 2 000 1 000 0 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 -1 000 Retail LCI Baltic Banking Russia & Ukraine Other 18

Asset quality Provisions • Stability in portfolio provisions – limited rating migration SEKm 30 000 Provision ratios: 65.9% 64.8% 62.7% Retail 101% 25 000 4 684 5 135 63.1% Large Corporates 106% 63.9% 20 000 Baltic Banking 60% 6 839 Russia 63% 15 000 8 856 Ukraine 74% 21 889 Group 66% 20 882 10 000 6 796 15 582 3 531 4 339 5 000 9 864 5 932 1 027 958 385 0 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 10 Individual provisions Portfolio provisions Write-offs, gross, cum Provision ratio 19