080219 Roadshow Boston NY
Content
US Roadshow
19-20 February 2008 Jan Lidén CEO
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
(2)
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
(3)
Solid profit development
SEKm 17,000 15,000 13,000 11,000 9,000 7,000 5,000 3,000 1,000 -1,000 2000 2001 2002 2003 2004 2005 2006 2007 SEKm 17,000 15,000 13,000 11,000 9,000 7,000 5,000 3,000 1,000 -1,000
Profit before loan losses Loan losses, net*
Capital gains EnterCard and KIAB Operating profit (excl. capital gains)
(4)
*Loan losses, net = write-offs + provisions – recoveries + change in property taken over
Strong position for profitability and growth
Sweden
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.
Baltics
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 Swedbank an attractive earnings growth.
Ukraine and Russia
Swedbank has a small but growing presence in Ukraine and Russia . Long-term, a significant share of Swedbank’s growth will be generated in these markets.
Stable base
Share of profit 2007: 66% Share of lending 2007: 80%
Growth and experience
Share of profit 2007: 32% Share of lending 2007: 16%
Future growth and profitability
Share of profit 2007: 2% Share of lending 2007: 2%
(5)
Minor direct effects from the credit turmoil
Valuation- and accounting effects, SEK M Swedbank Markets Group Treasury, liquidity portfolio Group Treasury, intra-group lending Swedbank Mortgage Q4 2007 – 40 –5 20 66 Q3 2007 – 60 – 68 – 90 – 129
(6)
Business volumes
SEKbn 500 398 400 334 289 300
600 475 425 800
Savings
SEKbn 1,200 1,103 919
Lending
401
1,000
200
400
390 333
100
84
102 13 19 24 31
200 53 77 0 74 100 34 61
0 Deposits, Deposits, AM funds, AM funds, Structured Sweden Baltics Sweden Baltics products, bonds
Lending, Private, Corporate, Private, Corporate, Other Group Sweden Sweden Baltics Baltics
Dec, 2006
Dec, 2007
Dec, 2006
Dec, 2007
(7)
Credit quality, group
% 0.64 0.56 0.48 0.40 0.32 0.24 0.16 0.08 0.00 -0.08 2000 2001 2002 2003 2004 2005
2006
Loan loss ratio, net Share of provisions
Share of impaired loans
2007
(8)
Margins
%
Lending
%
Deposits
6.0 5.0 4.0 3.0 2.0 1.0 0.0
6.0 5.0 4.0 3.0 2.0 1.0 0.0
Q306 Q406 Q107 Q207 Q307 Q407
Q306
Q406
Q107
Q207
Q307
Q407
Estonia Lithuania
Latvia Sweden
Estonia Lithuania
Latvia Sweden
(9)
Swedish Banking
SEKm 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 Q2 06 Q3 06 Q4 06 Q1 07 Q2 07 Q3 07 Q4 07 0.3 0.2 0.1 0.0 % 0.7 0.6 0.5 0.4
• •
Continued stable earnings and high profitability Strong corporate lending during Q4
– Total lending increased by 4% vs. Q3 and 14% during the full year Deposits increased by 3% vs. Q3 and 15% during the full year
•
Continued good deposit trend
–
• •
• • • •
Income
Costs
C/I-ratio
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.
(10)
Baltic Banking Operations
SEKm 2,400 2,200 2,000 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 Q2 06 Q3 06 Q4 06 Q1 07 Q2 07 Costs Q3 07 Q4 07 C/I-ratio % 0.5 0.4 0.3 0.2 0.1 0.0
• • • • •
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.
Income
(11)
Credit quality, Baltic Banking
2.0%
Share of impaired loans (12 month old portfolio)
1.5%
1.0%
0.5%
0.0%
2002
2003 Estonia Latvia
2004 Lithuania
2005 Baltics
2006 Group
2007
2.0% 1.2% 0.4% -0.4% -1.2% -2.0%
Loan loss ratio, net (average portfolio)
2002
2003
2004
2005
2006
2007
(12)
Estonia
Latvia
Lithuania
Group
Decreasing Baltic lending growth
8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 05/Jun 06/Jun 07/Jun 05/Mar 06/Mar 07/Mar 05/Sep 06/Sep 07/Sep 05/Dec 06/Dec 07/Dec 10% 0% 40% 30% 20%
Hansabank, Estonia
60% 50%
7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 05/Jun
Hansabank, Latvia
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 07/Jun 07/Sep 07/Sep 07/Dec 70% 60% 50% 40% 30% 20% 10% 0% 07/Dec
05/Mar
06/Mar
06/Jun
05/Sep
06/Sep
05/Dec
6,000 5,000 4,000 3,000 2,000 1,000 0 05/Jun
Hansabank, Lithuania
70% 60% 50% 40% 30% 20% 10% 0%
20,000 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 05/Jun 05/Mar 05/Sep 05/Dec
Baltic Banking
06/Jun
07/Jun
06/Jun
06/Dec
07/Mar 07/Mar
05/Mar
06/Mar
07/Mar
05/Sep
06/Sep
07/Sep
06/Mar
06/Sep
05/Dec
06/Dec
07/Dec
1 0 0 ,
0 0
1 0 0 Total lending, EURm 0 %
06/Dec
07/Jun
YoY growth
(13)
Baltic macro development
• • • • 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.
Real GDP growth 12% 10% 8% 6% 4% 2% 0% 2005 2006 2007F 2008F Est Lat Lit 2009F 12% 10% 8% 6% 4% 2% 0% 2005 2006 Est 2007 2008F 2009F Lat Lit CPI growth
(14)
Source: Hansabank Market
Swedbank Markets
SEKm 500 450 400 350 300 250 200 150 100 50 0
Q1 06 Q2 06 Q3 06 Q4 06 Q1 07 Q2 07 Q3 07 Q4 07
• •
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.
• • •
Profit for the period attributable to shareholders of Swedbank
(15)
International Banking
SEKm 100 75 50 25 0 -25 -50 -75 -100 Q2 06 Q3 06 Q4 06 Q1 07 Q2 07 Q3 07 Q4 07
• •
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.
• •
•
International Banking, profit for the period of which Russian Banking of which Ukrainian Banking Operations
(16)
Income statement, group
SEKm Net interest income Net commission income Net gains/losses on financial items at fair value Other income Total income Staff costs Profit-based staff costs Other expenses Total expenses Profit before loan losses Loan losses Operating profit Tax Profit for the period Attributable to shareholders of Swedbank Q4 2007 5,259 2,536 386 693 8,874 2,111 522 1,893 4,526 4,348 238 4,110 950 3,160 3,108 Q3 2007 4,806 2,503 196 526 8,031 2,075 337 1,720 4,132 3,899 230 3,669 793 2,876 2,866 % 9 1 97 32 10 2 55 10 10 12 3 12 20 10 8 Q4 2006 % 4,303 22 2,309 10 908 – 57 392 77 7,912 12 1,878 12 302 73 1,917 –1 4,097 10 3,815 14 – 72 – 431 3,887 6 928 2 2,959 7 2,913 7
(17)
4,600
4,800
5,000
5,200
SEKm 5,400
4,806 1 101 - 10
Net interest income Q3-07 Swedish Banking
Baltic Banking Operations Baltic Banking Investment
12
International Banking
359
Net interest income Q4-07 (Q3-07)
Swedbank Markets
- 10
Shared Services and other
5,259
Net interest income Q4-07
(18)
Net interest income Swedish Banking, change
SEKm Net interest income Q3 2007 Net interest income Q4 2006 Changes: Higher lending volumes Decreased lending margins Higher deposit volumes Higher deposit margins Other changes Total change Net interest income Q4 2007 Q4 2007 vs Q3 2007 2,926 Q4 2007 vs Q4 2006 2,943 46 – 81 43 52 – 59 1 2,927 215 – 306 122 142 – 189 – 16 2,927
(19)
Baltic Banking, change in net interest income
SEKm Net interest income Q3 2007 Net interest income Q4 2006 Changes: Higher lending volumes Higher lending margins Decreased lending margins FX-effects, lending Higher deposit volumes Higher deposit margins FX-effects, deposits Other changes Total change Net interest income Q4 2007 Q4 2007 vs Q3 2007 1,487 Q4 2007 vs Q4 2006 1,126 61 14 4 2 84 2 -66 101 1,588 273 -10 12 56 260 6 -135 462 1,588
(20)
Net commission income, Group
SEKm 5,000 4,000 3,000 2,000 1,000 0
Asset management Payments Brokerage Insurance Lending Corporate finance Other
2007
2006
(21)
Expenses
SEKm Swedish Banking Baltic Banking International Banking Of which Ukrainian Banking Swedbank Markets Other business areas Total expenses of which staff costs in: Swedish Banking Baltic Banking International Banking Swedbank Markets Q4 2007 2,279 1,062 272 163 560 353 4,526 Q3 2007 2,208 864 279 134 416 365 4,132 % 3 23 –3 22 35 –3 10 Q4 2006 2,327 811 126 535 298 4,097 % –2 31
5 18 10
1,096 587 155 351
1,093 511 134 225
0 15 16 56
998 450 49 345
10 30 2
(22)
Business areas
2007 vs 2006, SEKm Net interest income Net commission income Other income Total income Staff costs Other expenses Total expenses Profit before loan losses Loan losses Operating profit Tax Profit for the period To Swedbank's shareholders Return on allocated equity % Swedish Banking 2007 11,701 4,504 1,473 17,678 4,296 4,704 9,000 8,678 71 8,607 2,413 6,194 6,182 23.2 % Baltic Banking 2007 5,667 1,854 1,252 8,773 2,044 1,502 3,546 5,227 450 4,777 455 4,322 4,322 31.2 % Internat. Banking 2007 986 196 97 1,279 405 366 771 508 170 338 70 268 268 6.9 Swedbank Asset Markets Mgmt 2007 % % 2007 % 1,343 83 1,441 1,868 773 232 3,557 1 2,183 19 1,239 425 753 463 1,992 3 888 31 1,565 0 1,295 13 0 0 1,565 -1 1,295 13 427 320 1,138 975 1,010 24.2 3 975 11 57.0
(23)
4
42
3 5 -2
32 50 49
–2
46
Key figures
Jan - Dec, 2007
Return on equity, % Earnings per share, SEK Equity per share, SEK C/I ratio before loan losses Loan loss ratio, net, % Share of impaired loans, % Dividend, SEK* Tier 1 capital ratio, new principles, % Tier 1 capital ratio, transition principles, % Capital adequacy ratio, new principles, %
*according to Board of Directors’ proposal **according to old principles
Jan - Dec, 2006
19.3 21.11 116.37 0.52 – 0.02 0.07 8.25 6.5 ** 9.8 **
18.9 23.28 131.96 0.51 0.07 0.13 9.00 8.5 6.2 12.7
(24)
Tier-1 ratio, Group
% 10 9 8 7 6 5 4 3 2 1 0 Q1-05 Q2-05 Q3-05 Q4-05 Q1-06 Q2-06 Q3-06 Q4-06 Q1-07 Q2-07 Q3-07 Q4-07 % 10 9 8 7 6 5 4 3 2 1 0
• • •
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.
Tier 1 ratio, Basel 2 Tier 1 ratio, transition rules Target Tier 1 ratio
(25)
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
(26)
Capital Markets Day 2008
• 5 March, Kiev • Prel. schedule, registration, accommodation, flights etc.:
swedbank.com/cmd
(27)
Appendix
(28)
Credit quality, group
% 225 200 175 150 125 100 75 50 25 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 % 0.32 0.28 0.24 0.20 0.16 0.12 0.08 0.04 0.00 -0.04
Share of impaired loans (right scale) Provision ratio, individual (left scale)
Provision ratio, total (left scale) Loan loss ratio (right scale)
(29)
Group lending by sectors – Baltic Banking
Portfolio, December 2007
Individuals Real-estate mgmt Retail & Wholesale Industry Transport Construction Other 0 1,736 1,692 1,111 6% 546 3,012 8,282
Portfolio growth, Q4 07
42%
82 452
39%
15%
7%
9% 8%
111 10% 42 34 0
4% 3% 0%
231
3%
2,786 2,000
14%
4,000 6,000 8,000
0
20%
250 500
% - share of portfolio and portfolio growth
(30)
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
(31)
Additional questions?
Johannes Rudbeck Investor relations [email protected] +46858593322
19-20 February 2008 Jan Lidén CEO
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
(2)
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
(3)
Solid profit development
SEKm 17,000 15,000 13,000 11,000 9,000 7,000 5,000 3,000 1,000 -1,000 2000 2001 2002 2003 2004 2005 2006 2007 SEKm 17,000 15,000 13,000 11,000 9,000 7,000 5,000 3,000 1,000 -1,000
Profit before loan losses Loan losses, net*
Capital gains EnterCard and KIAB Operating profit (excl. capital gains)
(4)
*Loan losses, net = write-offs + provisions – recoveries + change in property taken over
Strong position for profitability and growth
Sweden
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.
Baltics
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 Swedbank an attractive earnings growth.
Ukraine and Russia
Swedbank has a small but growing presence in Ukraine and Russia . Long-term, a significant share of Swedbank’s growth will be generated in these markets.
Stable base
Share of profit 2007: 66% Share of lending 2007: 80%
Growth and experience
Share of profit 2007: 32% Share of lending 2007: 16%
Future growth and profitability
Share of profit 2007: 2% Share of lending 2007: 2%
(5)
Minor direct effects from the credit turmoil
Valuation- and accounting effects, SEK M Swedbank Markets Group Treasury, liquidity portfolio Group Treasury, intra-group lending Swedbank Mortgage Q4 2007 – 40 –5 20 66 Q3 2007 – 60 – 68 – 90 – 129
(6)
Business volumes
SEKbn 500 398 400 334 289 300
600 475 425 800
Savings
SEKbn 1,200 1,103 919
Lending
401
1,000
200
400
390 333
100
84
102 13 19 24 31
200 53 77 0 74 100 34 61
0 Deposits, Deposits, AM funds, AM funds, Structured Sweden Baltics Sweden Baltics products, bonds
Lending, Private, Corporate, Private, Corporate, Other Group Sweden Sweden Baltics Baltics
Dec, 2006
Dec, 2007
Dec, 2006
Dec, 2007
(7)
Credit quality, group
% 0.64 0.56 0.48 0.40 0.32 0.24 0.16 0.08 0.00 -0.08 2000 2001 2002 2003 2004 2005
2006
Loan loss ratio, net Share of provisions
Share of impaired loans
2007
(8)
Margins
%
Lending
%
Deposits
6.0 5.0 4.0 3.0 2.0 1.0 0.0
6.0 5.0 4.0 3.0 2.0 1.0 0.0
Q306 Q406 Q107 Q207 Q307 Q407
Q306
Q406
Q107
Q207
Q307
Q407
Estonia Lithuania
Latvia Sweden
Estonia Lithuania
Latvia Sweden
(9)
Swedish Banking
SEKm 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 Q2 06 Q3 06 Q4 06 Q1 07 Q2 07 Q3 07 Q4 07 0.3 0.2 0.1 0.0 % 0.7 0.6 0.5 0.4
• •
Continued stable earnings and high profitability Strong corporate lending during Q4
– Total lending increased by 4% vs. Q3 and 14% during the full year Deposits increased by 3% vs. Q3 and 15% during the full year
•
Continued good deposit trend
–
• •
• • • •
Income
Costs
C/I-ratio
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.
(10)
Baltic Banking Operations
SEKm 2,400 2,200 2,000 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 Q2 06 Q3 06 Q4 06 Q1 07 Q2 07 Costs Q3 07 Q4 07 C/I-ratio % 0.5 0.4 0.3 0.2 0.1 0.0
• • • • •
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.
Income
(11)
Credit quality, Baltic Banking
2.0%
Share of impaired loans (12 month old portfolio)
1.5%
1.0%
0.5%
0.0%
2002
2003 Estonia Latvia
2004 Lithuania
2005 Baltics
2006 Group
2007
2.0% 1.2% 0.4% -0.4% -1.2% -2.0%
Loan loss ratio, net (average portfolio)
2002
2003
2004
2005
2006
2007
(12)
Estonia
Latvia
Lithuania
Group
Decreasing Baltic lending growth
8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 05/Jun 06/Jun 07/Jun 05/Mar 06/Mar 07/Mar 05/Sep 06/Sep 07/Sep 05/Dec 06/Dec 07/Dec 10% 0% 40% 30% 20%
Hansabank, Estonia
60% 50%
7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 05/Jun
Hansabank, Latvia
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 07/Jun 07/Sep 07/Sep 07/Dec 70% 60% 50% 40% 30% 20% 10% 0% 07/Dec
05/Mar
06/Mar
06/Jun
05/Sep
06/Sep
05/Dec
6,000 5,000 4,000 3,000 2,000 1,000 0 05/Jun
Hansabank, Lithuania
70% 60% 50% 40% 30% 20% 10% 0%
20,000 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 05/Jun 05/Mar 05/Sep 05/Dec
Baltic Banking
06/Jun
07/Jun
06/Jun
06/Dec
07/Mar 07/Mar
05/Mar
06/Mar
07/Mar
05/Sep
06/Sep
07/Sep
06/Mar
06/Sep
05/Dec
06/Dec
07/Dec
1 0 0 ,
0 0
1 0 0 Total lending, EURm 0 %
06/Dec
07/Jun
YoY growth
(13)
Baltic macro development
• • • • 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.
Real GDP growth 12% 10% 8% 6% 4% 2% 0% 2005 2006 2007F 2008F Est Lat Lit 2009F 12% 10% 8% 6% 4% 2% 0% 2005 2006 Est 2007 2008F 2009F Lat Lit CPI growth
(14)
Source: Hansabank Market
Swedbank Markets
SEKm 500 450 400 350 300 250 200 150 100 50 0
Q1 06 Q2 06 Q3 06 Q4 06 Q1 07 Q2 07 Q3 07 Q4 07
• •
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.
• • •
Profit for the period attributable to shareholders of Swedbank
(15)
International Banking
SEKm 100 75 50 25 0 -25 -50 -75 -100 Q2 06 Q3 06 Q4 06 Q1 07 Q2 07 Q3 07 Q4 07
• •
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.
• •
•
International Banking, profit for the period of which Russian Banking of which Ukrainian Banking Operations
(16)
Income statement, group
SEKm Net interest income Net commission income Net gains/losses on financial items at fair value Other income Total income Staff costs Profit-based staff costs Other expenses Total expenses Profit before loan losses Loan losses Operating profit Tax Profit for the period Attributable to shareholders of Swedbank Q4 2007 5,259 2,536 386 693 8,874 2,111 522 1,893 4,526 4,348 238 4,110 950 3,160 3,108 Q3 2007 4,806 2,503 196 526 8,031 2,075 337 1,720 4,132 3,899 230 3,669 793 2,876 2,866 % 9 1 97 32 10 2 55 10 10 12 3 12 20 10 8 Q4 2006 % 4,303 22 2,309 10 908 – 57 392 77 7,912 12 1,878 12 302 73 1,917 –1 4,097 10 3,815 14 – 72 – 431 3,887 6 928 2 2,959 7 2,913 7
(17)
4,600
4,800
5,000
5,200
SEKm 5,400
4,806 1 101 - 10
Net interest income Q3-07 Swedish Banking
Baltic Banking Operations Baltic Banking Investment
12
International Banking
359
Net interest income Q4-07 (Q3-07)
Swedbank Markets
- 10
Shared Services and other
5,259
Net interest income Q4-07
(18)
Net interest income Swedish Banking, change
SEKm Net interest income Q3 2007 Net interest income Q4 2006 Changes: Higher lending volumes Decreased lending margins Higher deposit volumes Higher deposit margins Other changes Total change Net interest income Q4 2007 Q4 2007 vs Q3 2007 2,926 Q4 2007 vs Q4 2006 2,943 46 – 81 43 52 – 59 1 2,927 215 – 306 122 142 – 189 – 16 2,927
(19)
Baltic Banking, change in net interest income
SEKm Net interest income Q3 2007 Net interest income Q4 2006 Changes: Higher lending volumes Higher lending margins Decreased lending margins FX-effects, lending Higher deposit volumes Higher deposit margins FX-effects, deposits Other changes Total change Net interest income Q4 2007 Q4 2007 vs Q3 2007 1,487 Q4 2007 vs Q4 2006 1,126 61 14 4 2 84 2 -66 101 1,588 273 -10 12 56 260 6 -135 462 1,588
(20)
Net commission income, Group
SEKm 5,000 4,000 3,000 2,000 1,000 0
Asset management Payments Brokerage Insurance Lending Corporate finance Other
2007
2006
(21)
Expenses
SEKm Swedish Banking Baltic Banking International Banking Of which Ukrainian Banking Swedbank Markets Other business areas Total expenses of which staff costs in: Swedish Banking Baltic Banking International Banking Swedbank Markets Q4 2007 2,279 1,062 272 163 560 353 4,526 Q3 2007 2,208 864 279 134 416 365 4,132 % 3 23 –3 22 35 –3 10 Q4 2006 2,327 811 126 535 298 4,097 % –2 31
5 18 10
1,096 587 155 351
1,093 511 134 225
0 15 16 56
998 450 49 345
10 30 2
(22)
Business areas
2007 vs 2006, SEKm Net interest income Net commission income Other income Total income Staff costs Other expenses Total expenses Profit before loan losses Loan losses Operating profit Tax Profit for the period To Swedbank's shareholders Return on allocated equity % Swedish Banking 2007 11,701 4,504 1,473 17,678 4,296 4,704 9,000 8,678 71 8,607 2,413 6,194 6,182 23.2 % Baltic Banking 2007 5,667 1,854 1,252 8,773 2,044 1,502 3,546 5,227 450 4,777 455 4,322 4,322 31.2 % Internat. Banking 2007 986 196 97 1,279 405 366 771 508 170 338 70 268 268 6.9 Swedbank Asset Markets Mgmt 2007 % % 2007 % 1,343 83 1,441 1,868 773 232 3,557 1 2,183 19 1,239 425 753 463 1,992 3 888 31 1,565 0 1,295 13 0 0 1,565 -1 1,295 13 427 320 1,138 975 1,010 24.2 3 975 11 57.0
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4
42
3 5 -2
32 50 49
–2
46
Key figures
Jan - Dec, 2007
Return on equity, % Earnings per share, SEK Equity per share, SEK C/I ratio before loan losses Loan loss ratio, net, % Share of impaired loans, % Dividend, SEK* Tier 1 capital ratio, new principles, % Tier 1 capital ratio, transition principles, % Capital adequacy ratio, new principles, %
*according to Board of Directors’ proposal **according to old principles
Jan - Dec, 2006
19.3 21.11 116.37 0.52 – 0.02 0.07 8.25 6.5 ** 9.8 **
18.9 23.28 131.96 0.51 0.07 0.13 9.00 8.5 6.2 12.7
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Tier-1 ratio, Group
% 10 9 8 7 6 5 4 3 2 1 0 Q1-05 Q2-05 Q3-05 Q4-05 Q1-06 Q2-06 Q3-06 Q4-06 Q1-07 Q2-07 Q3-07 Q4-07 % 10 9 8 7 6 5 4 3 2 1 0
• • •
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.
Tier 1 ratio, Basel 2 Tier 1 ratio, transition rules Target Tier 1 ratio
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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
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Capital Markets Day 2008
• 5 March, Kiev • Prel. schedule, registration, accommodation, flights etc.:
swedbank.com/cmd
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Appendix
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Credit quality, group
% 225 200 175 150 125 100 75 50 25 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 % 0.32 0.28 0.24 0.20 0.16 0.12 0.08 0.04 0.00 -0.04
Share of impaired loans (right scale) Provision ratio, individual (left scale)
Provision ratio, total (left scale) Loan loss ratio (right scale)
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Group lending by sectors – Baltic Banking
Portfolio, December 2007
Individuals Real-estate mgmt Retail & Wholesale Industry Transport Construction Other 0 1,736 1,692 1,111 6% 546 3,012 8,282
Portfolio growth, Q4 07
42%
82 452
39%
15%
7%
9% 8%
111 10% 42 34 0
4% 3% 0%
231
3%
2,786 2,000
14%
4,000 6,000 8,000
0
20%
250 500
% - share of portfolio and portfolio growth
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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
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Additional questions?
Johannes Rudbeck Investor relations [email protected] +46858593322
