presentation - swedbank's second quarter 2014 results
TRANSCRIPT
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8/12/2019 Presentation - Swedbank's Second Quarter 2014 Results
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Swedbank
Swedbankssecond quarter2014 resultsMichael Wolf, CEOGran Bronner, CFO
Anders Karlsson, CRO
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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
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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
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Stable result
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Swedish Banking including Sparbanken resund
SEKm Q2 14 Q1 14 Q/Q Y/Y
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
Profit beforeimpairments
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
Volumes, SEKbn Q2 14 Q1 14 Q/Q Y/Y
Loans 987 949 38 68
Deposits 401 379 20 23
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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
SEKm Q2 14 Q1 14 Q/Q Y/Y
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
Profit beforeimpairments
1 141 1265 -124 237
Credit impairments 21 -30 51 -177
ROE, % 23.1 26.9
C/I ratio 0.41 0.40
Volumes, SEKbn Q2 14 Q1 14 Q/Q Y/Y
Loans 157 152 5 6
Deposits 98 99 -1 29
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Strong revenues
No financial impact from the crisis in
Ukraine Increased market activity
Good cost efficiency
6
Baltic Banking
SEKm Q2 14 Q1 14 Q/Q Y/Y
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
Profit beforeimpairments
975 858 117 356
Credit impairments -16 -101 85 -4
ROE, % 15.6 15.2
C/I ratio 0.39 0.41
Volumes, SEKbn Q2 14 Q1 14 Q/Q Y/Y
Loans 122 118 4 3
Deposits 122 117 5 12
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Strong result
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Group results including Sparbanken resund
SEKm Q2 14 Q1 14 Q/Q Y/Y
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
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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
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Strong asset quality
Low risk position confirmed byFitch and S&P
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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
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Swedbankssecond quarter 2014 results
Q & A
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Appendix
S b k d
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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
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Sparbanken resund
S b k d
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Sparbanken resund ownership structure
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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
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Sparbanken resund - Facts
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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
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Conservative provision ratio
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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
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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
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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
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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
Liquidity and funding
Term funding issuance completed and planned
SEKbn
Liquidity and funding
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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
Liquidity and funding
SEKbn
0
50
100
150
200
2014 2015 2016 2017 2018 2019 2020-
Senior unsecureddebt
Covered bonds
Liquidity and funding
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Prefunded in excess of 12 months
19
Liquidity and funding
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
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Real estate prices Sweden 12 months development
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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/ -
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200400
600
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1 000
1 200
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1 600
1 800
Jan-05
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Vilnius
Nr.of deals EUR/m2
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Tallinn
Nr.of deals EUR/m2
Baltic countries
Real estate prices
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EUR/m2 /Nr of deals
EUR/m2 /Nr of deals
EUR/m2 /Nr of deals
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Riga
Nr.of deals EUR/m2