Swedbank New York and Boston roadshow, September 24 – 26, 2007 Mikael Inglander, Chief Financial Officer
The leading bank in four small countries Sweden Estonia Total population: 9.0m Total population: 1.3m Private customers: 4.1m Private customers: 1.2m Share of group lending Corp. customers: 262,000 Corp. customers: 84,000 Organisations: 120,000 Branches: 96 Branches: 472 Typical market share: 50% Typical market share: 25% GDP growth 2006: 11.2% GDP growth 2006: 4.4% 84% Latvia Lithuania Total population: 2.3m Total population: 3.4m Private customers: 0.7m Private customers: 2.9m Corp. customers: 47,000 Corp. customers: 73,000 6% 5% 4% 1% Branches: 76 Branches: 127 Typical market share: 30% Typical market share: 30% Estonia Latvia Lithuania Sweden Others GDP growth 2006: 11.5% GDP growth 2006: 7,4% Potential home markets: Russia and Ukraine Supporting markets: Denmark, Finland, Norway, Russia, Ukraine, USA, Luxemburg, China, Japan and Spain 2
Swedbank overview Shared and New Asset management Swedish Baltic Swedbank Markets Operations Banking Banking and Insurance Retail and corporate Investment and merchant Asset management and life IT development and IT Retail and corporate banking, including asset banking in Sweden, Norway insurance, Sweden. operations, common support banking in Sweden. management, in Estonia, and New York. Banking functions. Latvia and Lithuania. branch in Shanghai. Corporate banking in Nordic branches, rep. Russia. offices in Tokyo and Kiev. Share of Group’s net profit attr. to shareholders (Jan-Jun 07), % 60 52 50 40 32 30 20 9 8 -1 10 0 Swedish Banking Baltic Banking Swedbank Markets Asset Mgmt & Shared and New -10 Operations Insurance 3
Strong position for profitability and growth Sweden Baltics Russia and Ukraine Swedbank is the leading bank in Sweden. Swedbank has a small but growing The Baltic economies are experiencing strong Profitability is high and stable and the bank presence in Russia and Ukraine. Long- economic growth that is expected to remain is gaining market share in important term, a significant share of Swedbank’s for many years. As the largest bank in the segments such as retail mortgages and growth will be generated in these markets. region, growing with the market ensures deposits. Swedbank an attractive earnings growth. Stable base Growth and Future growth and experience profitability Customer satisfaction Profitability Attractive employer Swedbank had the highest increase in Swedbank’s average annual growth of In Sweden, Swedbank is ranked as the earnings per share the last 5 years was most attractive employer in the financial customer satisfaction in Sweden during 16.5 percent. The peer group average was services sector*. In the Baltics we have 2006. Customer satisfaction in the Baltics 15.5 percent. been able to attract the best talent for a is rising from an already high level. long period of time. 25 72 70 20 * According to 68 15 Universum 66 10 64 5 62 0 60 4 2001 2002 2003 2004 2005 2006 2001 2002 2003 2004 2005 2006
Excellent long-term growth potential in Ukraine • Acquisition of TAS-Kommerzbank was completed July 9th Sweden Finland • Ukraine is expected to have a continued Norway high GDP growth Russia Estonia Latvia Denmark • Under penetrated banking market Lithuania – Retail loans/GDP, cards, current accounts Ukraine • Clear strategy focusing on retail- and SME segments High Growth Potential 2005 2000 Retail Loans / GDP (%) 30% Slovakia Hungary Estonia 25% Poland Czech R. Latvia 20% Lithuania 15% Czech R. Ukraine 10% Poland Estonia Latvia Hungary 5% Slovakia Lithuania 0% 0 2 000 4 000 6 000 8 000 10 000 12 000 GDP / Capita 5 2005 2000 Source: EIU, Global Insights World Overview, broker reports
Expansion to Russian retail market • Swedbank given green light to resume Russian banking operations • The already successful corporate banking will be complemented by retail banking services – The Russian retail market has a substantial growth potential, s trong GDP growth and increased demand for traditional retail banking products such as mortgages, cards and savings products • Leverage on our experience in fast growing markets • Initially, branches in prime locations in Moscow and St. Petersburg • ATMs, telephone and Internet banks • Profitable organic growth. 6
7 Market position – home markets
Swedbank profit trend Operating profit Total assets SEK m SEK bn Sale of KIAB 6000 1500 5250 Sale of EnterCard 1250 4500 1000 3750 3000 750 2250 500 1500 250 750 0 0 2 2 2 2 3 3 3 3 4 4 4 4 5 5 5 5 6 6 6 6 7 7 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 - - - - - - - - - - - - - - - - - - - - - - 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Operating profit Total assets Operating profit incl. capital gains 8 Operating profit according to IFRS as of Q1, 2004
Group financial objectives • The return on equity shall exceed the average of all other large, publicly listed Nordic banks*. (Current status: RoE 19.5 percent for Jan-June 2007 > peers) • Swedbank will maintain sustainable growth in earnings per share exceeding the average for comparable banks. (Current status: has out-grown peers last 5-year period) • Operational efficiency is measured as the relation between costs and income, the C/I-ratio. The long-term goal is that the group’s C/I ratio before loan losses will be less than 0.50. (Current status: C/I-ratio amounts to 0.50) • The tier 1 capital ratio will average 6.5 percent. (Current status: Tier 1 stands at 6.7 percent prior to completion of TAS acquisition) • The dividend, excluding one-offs, will amount to around 40 percent of after-tax earnings. (Current status: Dividend ratio for 2006 was 40 percent) 9 * The comparable banks are SEB, SHB, Nordea, Danske Bank and DnB NOR
Positioning strategy Customer perception Values Accessible Results-oriented Open Uncomplicated Service Innovative Leadership Proactive Committed 10
Strategic focus – Sweden • Effectively leverage on Sweden’s largest customer base and interface – Retain high market shares in key product areas – Utilize potential in growth segments in retail and corporate sectors • Pension savings • Cash management • Credit cards • Leasing / administrative services • Private banking • FX, interest rate derivatives • Non-life insurance • Maintain excellent asset quality • Pursue and increase cost efficiency 11
Strategic focus – Baltics • Capture market growth opportunity – Convergence towards EU average will continue during many years – Sustainable lending growth will be well above EU average level for many years – Large potential in up coming savings market – Many other financial services are yet immature • Pursue favourable revenue and cost trends • Minimizing risks and maintaining organizational flexibility – Maintain excellent asset quality, Readiness for slowdown, Operational excellence • Manage challenging macro scenario 12
Summary Q2 2007 (Q1 2007) • Continued improved results: SEK 3,112m (2,910 in Q1 2007) – Earnings per share increased 7% compared with Q1 2007 – Net interest income was up for the fifth consecutive quarter – For the first half year , earnings per share rose 19 percent • Swedish Banking: SEK 1,484m (1,632) – Continued strong volume growth in both lending and deposits – Lending margins under pressure – Higher costs partly driven by one-off investments • Baltic Banking: SEK 1,180m (995) – Yet another record result – Good development across the board – Continued slowdown of credit growth, although the overheating risks in the economies persist • Swedbank Markets: SEK 236m (313) – Continued positive business volume development – Equities and corporate finance had a good quarter, while profits in fixed income decreased • TAS-Kommerzbank acquisition completed July 9th. 13
Business volumes, savings Growth Q2-07, SEKbn Balance, June 2007 SEKbn SEKbn 500 25 446 400 20 313 300 15 200 10 16 93 5 100 9 3 0 0 Deposits, Deposits, AM funds, Deposits, Deposits, AM funds, Sweden Baltics Group Sweden Baltics Group 14
Business volumes, lending Growth Q2-07, SEKbn Balance, June 2007 SEKbn SEKbn 1,000 50 1,000 800 40 30 600 20 400 38 449 362 10 200 95 14 12 66 6 5 0 0 Lending, Private, Corporate, Private, Corporate, Lending, Private, Corporate, Private, Corporate, Group Sweden Sweden Baltics Baltics Group Sweden Sweden Baltics Baltics 15
Margins Lending Deposits % % Market interest rates 4.5 increased 4.5 substantially during 4.0 4.0 the quarter. Margins 3.5 3.5 expected to decrease 3.0 3.0 during Q3 due to 2.5 2.5 market rates falling 2.0 2.0 back 1.5 1.5 Lending margin in 1.0 1.0 Baltic Banking 0.5 0.5 increased by 5 bps 0.0 0.0 during Q2 Q1- Q2- Q3- Q4- Q1- Q2- Q1- Q2- Q3- Q4- Q1- Q2- 06 06 06 06 07 07 06 06 06 06 07 07 Estonia Latvia Estonia Latvia Lithuania Sweden Lithuania Sweden 16
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