presentation - swedbank's second quarter 2014 results

8/12/2019 Presentation - Swedbank's Second Quarter 2014 Results

1/21

Swedbank

Swedbankssecond quarter2014 resultsMichael Wolf, CEOGran Bronner, CFO

Anders Karlsson, CRO


2/21

Stable result

2

Swedish Banking - excluding Sparbanken resund

SEKm Q2 14 Q1 14 Q/Q Y/Y

Net interest income 3 314 3 314 -71

Net commission income 1 771 1 649 121 283

Other income 604 459 146 206

Total income 5 689 5 422 267 418

Total expenses 2 491 2 443 48 144

Profit beforeimpairments

3 198 2 979 219 275

Credit impairments 21 31 -10 -39

ROE, % 30.5 28.3

C/I ratio 0.44 0.45

Lower deposit margins

Mortgage margins Improved towards end of quarter

Volume growth both in private andSME segments

Higher market activity supportscommission income

One-off income from Entercard

Volumes, SEKbn Q2 14 Q1 14 Q/Q Y/Y

Loans 970 949 21 51

Deposits 389 379 10 10


3/21

Sparbanken resund impact in Q2

3

Sparbanken resund

SEKmOrdinarybusiness

One-offs Total

Net interest income 48 48

Net commission income 18 18

Other income 13 461 474

Total income 79 461 540

Staff costs 47 393 440

Other expenses 39 222 261

Total expenses 86 615 701

Credit impairments 4 4

Tax expense -2 -135 -137

Profit for the period -9 -19 -28

Volumes, SEKbn

Loans 16

Deposits 12


4/21

Stable result

4

Swedish Banking including Sparbanken resund


Net interest income 3 362 3 314 48 -23

Net commission income 1 790 1 649 141 301

Other income 1 077 459 618 679

Total income 6 229 5 422 807 957

Total expenses 3 192 2 443 749 844


3 037 2 979 58 113

Credit impairments 25 31 -6 -35

ROE, % 29.7 28.3

C/I ratio 0.51 0.45

Sparbanken resund impact:

Total income SEK 540m Of which SEK 461m in one-off

bargain purchase (badwill)

Total expenses SEK 701m

Of which SEK 615m in one-offrestructuring costs


Loans 987 949 38 68

Deposits 401 379 20 23


5/21

Good customer activity

NII

Loan volume growth Lower accrued fees

Continued high customer activity

Corporate finance

DCM

Good cost control

Risk awareness going forward

5

Large Corporates & Institutions


Net interest income 846 867 -21 79

Net commission income 496 630 -134 184

Net gains and losses 575 565 10 58

Total income 1 945 2 099 -154 306

Total expenses 804 834 -30 69


1 141 1265 -124 237

Credit impairments 21 -30 51 -177

ROE, % 23.1 26.9

C/I ratio 0.41 0.40


Loans 157 152 5 6

Deposits 98 99 -1 29


6/21

Strong revenues

No financial impact from the crisis in

Ukraine Increased market activity

Good cost efficiency

6

Baltic Banking


Net interest income 894 874 20 263

Net commission income 522 429 93 118

Total income 1 596 1 465 131 401

Total expenses 621 607 14 45


975 858 117 356

Credit impairments -16 -101 85 -4

ROE, % 15.6 15.2

C/I ratio 0.39 0.41


Loans 122 118 4 3

Deposits 122 117 5 12


7/21

Strong result

7

Group results including Sparbanken resund


Net interest income 5 521 5 483 38 242

Net commissionincome

2 813 2 693 120 593

Net gains and losses 773 345 428 265

Other income 1 348 799 549 614

Total income 10 455 9 320 1 135 1 714

Total expenses 4 919 4 226 693 976

Profit before

impairments5 536 5 094 442 738

Credit impairments 30 -100 130 -218

Other impairments 70 135 -65 -252

Tax 1 063 1 074 -11 248

Profit from continuingoperations

4 369 3 980 389 955

Growth

Mixed margins

Strong commission income

One-offs

Meeting cost target Integrating Sparbanken resund

ROE continuing

operations, %16.6 14.6

Cost/income ratio 0.47 0.45

CET1 Capital ratio, % 20.9 18.3


8/21

Reduced REA following A-IRB approval

Capital

8

REA decreased by SEK 42bn to SEK 406.7bn during the quarter

A-IRB approval, Sparbanken resund acquisition and higher lending volumes

impacted the most

No regulatory excess capital

*

* Including equity investment in Sparbanken Skne, SEK 1.7bn

Swedbank REA development

18.3%

20.9%

10%

12%

14%

16%

18%

20%

22%

24%

Q1 2014 Q2 2014

CET1 capital ratio448.8

16.3

12.3 0.74.7

0.1 0.2

- 72.9

- 1.6 - 1.4 - 0.3

406.7

340

360

380

400

420

440

460

Mar 2014 AdvancedIRB

Sparbankenresund andSparbanken

Skne

Exposurechange

Ratingmigrations

LGD FX credi trisk

Other creditrisk

CVA risk Market risk Operationalrisk

Jun 2014

SEKbn

Increase Decrease


9/21

Strong asset quality

Low risk position confirmed byFitch and S&P

9

Asset quality

Credit impairments,SEKm

Q2 14 Q1 14

Swedish Banking 25 31

Large Corporates &Institutions

21 -30

Baltic Banking -16 -101

Group Functions & Other 0 0

Swedbank Group 30 -100


10/21

Swedbankssecond quarter 2014 results

Q & A


11/21

Appendix

S b k d


12/21

Long-term financial impact from Sparbanken resund

P&L impact 2016-2017 Estimated net profit contribution of SEK 350-450m

Incremental RoE to reach group target 2016

Long term Estimated net profit contribution of at least SEK 500m

Incremental RoE >25 per cent

12

Sparbanken resund

S b k d


13/21

Sparbanken resund ownership structure

13

Sparbanken resund

Sparbanken Skne

+ 8 Spb resundbranches

Sparbanken 1826

Swedbank

Sparbankenresund

SparbanksstiftelsenresundSparbanksstiftelsenGripen

Today

22% 78%

Before transaction

SparbanksstiftelsenFrs & Frosta

Sparbanksstiftelsen

1826

100%

Frs & Frosta

Sparbankenresund

Swedbank

70%30%

Sparbanksstiftelsen1826

SparbanksstiftelsenFrs & Frosta

Sparbanksstiftelsenresund

26%

22% 100%26%26%

S b k d


14/21

Sparbanken resund - Facts

14

Sparbanken resund

Split up of Sparbanken resund Swedbank Skne (1

Sparbanken

resund

Swedbank Sparbanken

Skne

Current Proforma Increase

%Employees 559 447(2 112 410 857(2 109

Branches 24 16 8 27 43 59

Customers 204 700 108 300 96 400 482 000 590 300 22

o/w Corporate (3 15 700 8 300 7 400 38 000 46 300 22

o/w Private 189 000 100 000 89 000 444 000 544 000 23

Lending, SEKbn 25 16 9 14 30 114

Mortgages, SEKbn (4 33 17 16 56 73 30

Deposits, SEKbn 24 12 12 34 46 35

Other (AUM, etc), SEKbn 20 10 10 34 44 29

1) In addition, one branch in Lomma will be sold to Swedbank by Sparbanken Skne2) Of which 61 relate to Cerdo Bankpartner3) Includes micro corporates4) Sparbanken resund is a distributor of SBAB mortgage loans. Volumes will gradually move to Swedbanks balance sheet.

Asset quality


15/21

Conservative provision ratio

15

Asset quality

* Russia and Ukraine reported as discontinued operations

SEKm

10 9519 934

7 077

4 429 4 047 3 570 2 818 2 514 2 343

2 040

1 774

1 545

1 4201 398

1 3251 256 1 238 1 211

64% 65%62%

57%54% 53% 54%

60%

56%

0

5 000

10 000

15 000

20 000

Q212 Q312 Q412 Q113* Q213* Q313* Q413* Q114* Q214*

Individual provisions Portfolio provisions Provision ratio

Provision ratio, % Q2 14

Swedish Banking 62

LC&I 119

Baltic Banking 50

Group 56

Credit portfolio Large Corporates & Institutions


16/21

0.57.4

1.53.4

1.3

1.50.6

2.40.7

3.00.2

0.71.8

0 2 4 6 8 10

CruiseDrilling & exploration

Oil serviceSupply

Accommodation

Floating productionChemical

ProductCrude oil

Gas (LNG/LPG)Dry bulk

ContainerRORO

Q2-14

Q1-14

Shipping and offshore

16

Credit portfolio Large Corporates & Institutions

Lending exposure to Shipping & Offshore sector ofSEK 26.0bn

- Portfolio duration 3.77 years (weighted oncommitments)- Average fleet age 7 years- Strong employment profiles

Shipping and Offshore Portfolio by currency,SEKbn

Shipping and Offshore Portfolio by subsegment,SEKbn

0 5 10 15 20 25

SEK

EUR

USD

NOK

JPYQ2-14

Q1-14

16

5

4

2326

2526 25 26

0

10

20

30

Q1-13 Q2-13 Q3-13 Q4-13 Q1-14 Q2-14

SEKbn

Offshore Tanker Other

Shipping and Offshore

Liquidity and funding


17/21

0

10

20

30

40

50

60

70

80

90

100

Q112 Q212 Q312 Q412 Q113 Q213 Q313 Q413 Q114 Q214 Q314 Q414 Q115 Q215

Covered bonds Senior unsecured

Lower funding needs

LCR 123% (Swedish FSA definition FFFS 2012:6)

NSFR 102% (Basel committee)

Issued SEK 69bn of term-funding in H1 2014, of which SEK 32bn in Q2.

FY 2014 funding plan of SEK 120bn

17


Term funding issuance completed and planned

SEKbn



18/21

18

Long-term funding maturity profile

Funding plan of SEK 120bn to meet next 12 months nominal SEK 101bn maturities

All remaining government guaranteed debt (issued in 2009) matured in May 2014

Long-term funding maturity profile, by funding source


SEKbn

0

50

100

150

200

2014 2015 2016 2017 2018 2019 2020-

Senior unsecureddebt

Covered bonds



19/21

Prefunded in excess of 12 months

19


SEKbn

Days forward

1As defined by the Swedish Bankers Association

0

50

100

150

200

250

300

0 20 40 60 80 100 120 140 160 180 200 220 240 260 280 300 320 340 365

Swedish housing and mortgage market


20/21

Real estate prices Sweden 12 months development

20

Swedish housing and mortgage market

Single-family homes1 Tenant-owner rights2 Combined3

12M 12M 12M

Jul/13 4% 9% 6%

Aug/13 5% 11% 7%

Sep/13 5% 11% 7%

Oct/13 6% 11% 8%

Nov/13 4% 13% 7%

Dec/13 4% 13% 7%

Jan/14 7% 13% 9%

Feb/14 7% 13% 9%

Mar/14 7% 13% 9%

Apr/14 8% 12% 9%

May/14 8% 12% 9%

Jun/14 8% 11% 9%

Source: Valuegard www.valuegard.se(Based on data from Mklarstatistik), 1HOXHOUSESWE, 2HOXFLATSWE, 3HOXSWE

Real estate prices
http://www.valuegard.se/http://www.valuegard.se/


21/21

0

200400

600

800

1 000

1 200

1 400

1 600

1 800

Jan-05

Jul-05

Jan-06

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Jan-09

Jul-09

Jan-10

Jul-10

Jan-11

Jul-11

Jan-12

Jul-12

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Jul-13

Jan-14

Vilnius

Nr.of deals EUR/m2

0

200

400

600

800

1 000

1 200

1 400

1 600

1 800

Jan-05

Jul-05

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Jul-12

Jan-13

Jul-13

Jan-14

Tallinn

Nr.of deals EUR/m2

Baltic countries

Real estate prices

21

EUR/m2 /Nr of deals

EUR/m2 /Nr of deals

EUR/m2 /Nr of deals

0

200

400

600

800

1 000

1 200

1 400

1 600

1 800

Jan-05

Jul-05

Jan-06

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Riga

Nr.of deals EUR/m2

presentation - swedbank's second quarter 2014 results

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