CEO presentation Q4 2009
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Year-end report 20099 February 2010Michael Wolf, CEOErkki Raasuke, CFOGöran Bronner, CRO
2
Progress made in 2009
• Reduced CEE exposure
• Restructuring units established (FR&R and Ektornet)
• Capital strengthening through rights issue and managed risk weighted assets
• Improved funding structure
• Enhanced organisational and governance structure
3
Results by business areaQ4 updateSwedish BankingContinued solid performance, strong growth in deposits, low credit impairments
Baltic BankingLower total income due to contracting economy, lower growth rate in impaired loans
International BankingSlowing credit impairments in Ukraine,Russia weaker, further capacity adjustments
Swedbank MarketsStrong year, weak trading in Q4
Asset ManagementContinued positive trend in new sales
Profit before impairments
-3 000
-2 000
-1 000
0
1 000
2 000
3 000
SwedishBanking
BalticBanking
InternationalBanking
SwedbankMarkets
AssetManagement
SEKm
Q3 09Q4 09
Operating result
-3 000
-2 000
-1 000
0
1 000
2 000
3 000
SwedishBanking
BalticBanking
InternationalBanking
SwedbankMarkets
AssetManagement
SEKm
Q3 09Q4 09
4
Continued headwinds in net interest incomeNet interest income
Q3 Q4
5 017
4 702
-71-4-58-134-57
10
0
1 000
2 000
3 000
4 000
5 000
6 000
Net interestincome
SwedishBanking
BalticBanking
Intl Banking SwedbankMarkets
AssetManagement
Other Net interestincome
SEKm
5
• FX gains in Ukraine SEK 82m
• Slow trading in Swedbank Markets
• Inefficiencies of hedge accounting and repurchase of own debt in Group Treasury
SEKm Q4 09* Q3 09 Q4 08
Swedish Banking 96 -233 834
Baltic Banking 88 196 -3
International Banking 143 -197 228
Swedbank Markets 59 268 335
Asset Management 2 18 -20
Shared Services and Group Staffs -167 35 -156
Ektornet 2
Eliminations 0 0 26
Swedbank Group 223 87 1 244
Net gains and lossesSlow quarter in trading
* Excluding capital gain of SEK 39m (sale of Aktia shares SEK 24m and of Tallinn Stock Exchange shares SEK 15m)
6
CostsCapacity and expenses development• FTE reduction ahead of plan
• SEK 389m reserves of variable remuneration reversed in Q4
• Variable remuneration expenses down from 2008 by SEK 920m
• Risk management and restructuring related expenses increasing in short-term
• Day-to-day operations expenses will be lowered further
FTE plan actualreduction H2 09 H2 09Swedish Banking 0 -102
Baltic Banking -690 -860
Intl Banking -660 -821
Total -1 350 -1 783
7
Fourth quarter results 2009Income statement
SEKm Q4 2009 Q3 2009 Change
Net interest income 4 702 5 017 -315
Net commission income 2 273 2 208 65
Net gains/losses on financial items, fair value 223 87 136
Other income 784 830 -46
Total income 7 982 8 142 -160
Staff costs 2 319 2 241 78
Profit-based staff costs -389 207 -596
Other expenses 2 370 2 078 292
Total expenses 4 300 4 526 -226
Profit before impairments 3 682 3 616 66
Impairment of tangible assets 352 77 275
Credit impairments 5 003 6 121 -1 118
Operating profit -1 673 -2 582 909
Tax expense 115 734 -619
Result for the period -1 788 -3 316 1 528
Profit for the period attributable to: Shareholders of Swedbank AB -1 804 -3 337 1 533
8
High liquidity maintained
8
Liquidity & Funding
Stress test of liquidity as of 31 December 2009
• Survival period further increased thanks to long-term funding issuance
• Need for short-term funding continuously reduced as loan-to-deposit ratios improve
• Liquidity managed from a long-term and cost efficient view
0
50
100
150
200
250
300
D1 1W 2W 3W 1M 2M 3M 4M 5M 6M 9M 12M
SEKbn
9
Liquidity & FundingLoans and deposits development• Good growth of deposits
• Loan/deposit ratios improved in all business areas
• Quality of funding improved
Loan/deposit ratio 2008 2009
Swedish Banking 279 263
Baltic Banking 204 164
Estonia 176 150
Latvia 292 243
Lithuania 182 135
Group 262 240
Swedish Banking (SEKbn)
920
930
940
950
960
970
Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09315
325
335
345
355
365Loans (left)Deposits (right)
Baltic Banking (EURbn)
15
16
17
18
19
20
21
Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 095
6
7
8
9
10
11Loans (left)Deposits (right)
Improved funding situation
• SEK 66bn of long-term debt issued during Q4 (and another SEK 30bn during January 2010)
• Central bank repos down to SEK 116bn
• Average maturity of full wholesale funding further extended to 22 months (>36 months for covered bonds)
Liquidity & Funding
Outstanding wholesale funding Q2-Q4 SEKbn, notional value
122
46
206
184
318
99
99
165
175
338
75
97
116
166
391
Totalguaranteed
funding < 12M
Total short-term, non-
guaranteed*
Central bankrepos
Totalguaranteed
funding > 12M
Total long-term, non-
guaranteed
Q4
Q3
Q2
10
11
Capital managementWell capitalised
%
Core Tier 1 capital ratio* YE 08 9.68%
Result loss: SEK10.5bn -1.51%
RWA reduction +1.50%
Rights issue +2.10%
Other +0.24%
Core Tier 1 capital ratio* YE 09 12.01%
* According to Basel 2
Core Tier 1 capital ratio*
9.7 9.4 9.8 9.912.0
0
2
4
6
8
10
12
Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
12
Asset qualityContinued risk reduction• CEE lending as % of equity down from 290% to 209%
948 959
251188
Development – lending to the public
428 404
154 104
520 555
9784
0
200
400
600
800
1 000
1 200
Sweden 2008 Sweden 2009 Baltic countries &Eastern Europe 2008
Baltic countries &Eastern Europe 2009
SEKbn
PrivateCorporate
13
Quarterly change of 60-day past due loans – stabilisation continues
-50
0
50
100
150
200
250
300
350
400
Q408
Q109
Q209
Q309
Q409
Q408
Q109
Q209
Q309
Q409
Q408
Q109
Q209
Q309
Q409
EURm
Asset quality
Estonia Latvia Lithuania Ukraine Russia
Q408
Q109
Q209
Q309
Q409
Q408
Q109
Q209
Q309
Q409
14
Asset qualityDevelopment of impaired loans• Impaired loans increased by SEK 4.4bn (SEK 6.5bn excl definition change)
• The rate of increase in impaired loans is decreasing
• As expected weak performance in Latvia, Lithuania and Ukraine
10 5789 343
9 736
6 113
4 362
19 921
29 657
35 770
40 132
0
5 000
10 000
15 000
20 000
25 000
30 000
35 000
40 000
45 000
FY 08 Q1 09 Q2 09 Q3 09 Q4 09
SEKm
FY 09
Share of impaired loans, gross
Ukraine 53.5%
Russia 18.2%
Lithuania 14.2%
Latvia 21.1%
Estonia 6.8%
Sweden 0.2%2 196
5 465
13 401
7 705
2 238
8 180
947
15
Asset qualityCredit impairments in Q4
• Credit impairment SEK 5 003m
+ Sweden and Estonia continued good development
+ Ukraine: reduced provisioning ratio as portfolio knowledge increases
– Russia high losses due to thorough review of portfolio
– Lithuania: collateral value adjustment
6 845 6 672
6 121
5 003
0
1 000
2 000
3 000
4 000
5 000
6 000
7 000
8 000
Q1 09 Q2 09 Q3 09 Q4 09
SEKm
Sweden Baltic Banking Russia & Ukraine Other
3 1615 932
9 864
15 58220 882
3 193
6 835
8 914
6 922
5 135
64.8%
62.9%63.3%
64.1%
60.1%
0
5 000
10 000
15 000
20 000
25 000
30 000
Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009
SEKm
Individual provisions Portfolio provisions Provision ratio
16
Asset qualityProvisioning• All portfolios thoroughly reviewed in 2009
• Portfolio provisions - individual
• Provision ratio for Group increased during Q4 from 63% to 65%
Provision ratios:
Swedish Banking 96%
Baltic Banking Op 57%
Ukraine 78%
Russia 66%
17
Asset qualityRepossessed assets
• Increased to SEK 1.7bn, of which SEK 0.5bn is managed by Ektornet
0
200
400
600
800
1 000
1 200
1 400
1 600
1 800
2 000
Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009
SEKm
Real Estate Residential Real Estate Commercial Passenger Transport
Commercial Transport Shares Other
18
Ektornet – recouping value over time• Independent business area as of the fourth quarter
• Management team in place – real estate experience background
• External market appraisal
• Seized collateral at year-end of SEK 517m, mainly real estate– Nordic region, SEK 173m– Estonia, SEK 150m– Latvia, SEK 64m– US, SEK 130m
• Intake forecast for 2010 is SEK 5bn
• Slow intake process continues into 2012
Asset quality
1919
Asset qualityMain risks 2010
• Global macro situation– Deleveraging– Sovereign risks with high fiscal debt levels
• Sweden– Interest rate stimulus withdrawn– Late impairment losses in certain segments
• Latvia– Political uncertainty: Election in September
• Ukraine– Political uncertainty
• Positives: Potential Estonian euro entry 2011
20
Strategic priorities 2010
Customer satisfaction • Increased customer segment focus • Local empowerment
• Reducing parts of exposure in CEE countries• Protecting value through FR&R and Ektornet
• New business initiatives in Sweden • Strong focus on cost and efficiency
• Increased covered bonds issuance• Balancing loan/deposit in all business areas
Risk reduction
Earnings capacity
Liquidity & Capital management
21
Customer-centric organisational model
CEO
Russia & Ukraine
Asset Management EktornetRetail
Large Corporates &
Institutions
Baltic Banking
22
Outlook
Given that the global macro economy continues to develop positively without substantial divergence, particularly in Latvia and Ukraine, a profit for the full-year 2010 is feasible.
23
Appendix
24
Results 2009Income statement
SEKm FY 2009 FY 2008 Change
Net interest income 20 765 21 702 -937
Net commission income 7 825 8 830 -1 005
Net gains/losses on financial items, fair value 2 731 2 351 380
Other income 3 461 3 580 -119
Total income 34 782 36 463 -1 681
Staff costs 9 184 9 142 42
Profit-based staff costs 17 950 -933
Other expenses 8 647 7 966 681
Total expenses 17 848 18 058 -210
Profit before impairments 16 934 18 405 -1 471
Impairment of intangible assets 1 305 1 403
Impairment of tangible assets 449 27 422
Credit impairments 24 641 3 156 21 485
Operating profit -9 461 13 819 -23 280
Tax expense 981 2 880 -1 899
Result for the period -10 442 10 939 -21 381
Result for the period attributable to: Shareholders of Swedbank AB -10 511 10 887 -21 398
25
Balance sheetSwedbank Group SEKm Dec 09 Dec 08 %
Loans to credit institutions 92 131 128 536 -28%
Loans to the public 1 290 667 1 287 424 0%
Interest-bearing securities 170 615 133 694 28%
Fund shares for which customers bear the investment risk 78 194 51 638 51%
Shares and participating interests 9 505 6 557 45%
Derivatives 72 969 128 055 -43%
Other assets 80 606 75 786 6%
Total assets 1 794 687 1 811 690 -1%
Amounts owed to credit institutions 231 687 316 730 -27%
Deposits and borrowings from the public 504 424 508 456 -1%
Debt securities in issue 703 258 593 365 19%
Financial liabilities for which customers bear the investment risk 80 132 52 074 54%
Derivatives 72 172 116 720 -38%
Other liabilities and provisions 75 057 93 128 -19%
Subordinated liabilities 37 983 44 755 -15%
Equity 89 974 86 462 4%
- Non-controlling interest 304 232 31%
- Equity attributable to shareholders 89 670 86 230 4%
Total liabilities and equity 1 794 687 1 811 690 -1%
26
Liquidity & FundingLong-term funding• In Q4 Swedbank issued
SEK 66bn of covered bonds and senior unsecured bonds compared to maturities of SEK 14bn
• No Government guaranteed bonds issued since announcement of rights issue (Aug)
• Average maturity of wholesale funding further extended to 22 months
• Maturities of SEK 141bn over next 12 months
26
0
20
40
60
80
100
Q1
10
Q2
10
Q3
10
Q4
10
Q1
11
Q2
11
Q3
11
Q4
11
Q1
12
Q2
12
Q3
12
Q4
12
Q1
13
Q2
13
Q3
13
Q4
13
Q1
14
Q2
14
Q3
14
Q4
14
2015
-
SEKbn, nom
Swedbank, long-term maturity profile(including Swedbank Mortgage)
27
Liquidity & FundingFunding under the Swedish guarantee programme
• Total outstanding guaranteed funding with maturity >12 months decreased by SEK 9bn to ca SEK 166bn
• No issuance under the government guarantee during Q4
• Total outstanding guaranteed funding with maturity <12 months decreased by SEK 24bn to ca SEK 75bn
• Small FX effects during the quarter
27
(total outstanding as per 31 December, notional SEK 241bn)
Currency distribution
Maturity distribution
100%
100%
< 12 M 32%
1-2Y 34%
2-3Y 17%
3-4Y 17%
JPY 2%
CHF 4%
SEK 22%
USD 29%
EUR 43%
28
Cover pool and new issuance of cover bonds
• Since Q3, two euro covered bonds have been issued– Euro Mid Term Note CB 7Y,
EUR 1.25bn, Sep/Oct 2009– Euro Mid Term Note CB 3Y,
EUR 1bn, Jan 2010
• Also continued good demand for domestic covered bonds issuance through tap system
28
Cover pool dataTotal pool size SEK 608bn
Average loan size SEK 398 818
Number of loans outstanding 1 524 546
Types of loans Residential Mortgages (90.3%), Public (2.9%), Commercial (0.1%),Forest and Agriculture (6.7%)
Fixed / Floating interest loans 1 Fixed 49%, Floating 51%
Average LTV 2 WA LTV on loan level 44%, on property level 58%
Maximum LTV 3 Underwriting maximum LTV limits 75%
Average maturity 54 months
Non performing loans 4 None
Geographic distribution (Sweden only) West 20%, South 24%, East 17%, Middle 32% and North 7%
Dynamic pool Yes
1 Distribution by origination, floating interest loans < 365 days2 LTV: by volume (loan level), index-valuation as of 31 Dec 20083 Commercial properties 60%, Forest and Agricultural 70%4 Past due loans > 60 days are not eligible for the cover pool
Loan to value (LTV)
0
50 000
100 000
150 000
200 000
250 000
<30% 30-50% 50-60% 60-75% 75-85% >85%
SEKm
Single-family homes Cooperative apartment Multi-family houses (incl housing coop. ass.)
SEK 0.5bn
Swedbank Mortgage, 31 Dec 2009, total loan portfolioSEK 672bn• 100% lending – Swedish properties
• 90% residential lending
• Average LTV* of 45% (loan level) 60% (property level). Cover pool 44% / 58%
• 79% of the total lending book within a loan-to-value* ratio below 50%
29
*LTV calculated on a loan-by-loan level
Loan-to-value* (LTV) Lending distributed by collateral
Forest & Agriculture
6%
Cooparative apartments
15%Municipalities
3%
Commercial properties 0.5%
Multi-family houses 16%
Single-family homes60%
30
Swedish Banking lending to the public, excluding Swedbank Mortgage, SEK 276bn
0
50 000
100 000
150 000
200 000
250 000
300 000SEKm
MunicipalitiesOther corporate lendingForestry and agricultureTransportationManufacturingConstructionHotels and restaurantsRetailReal estate managementPrivate individuals
Real estate management (SEK 91bn)
Residential27%
Housing cooperative associations
10%
Industry10%
Commercial properties
43%
Other10%
31
Foreign exchange positions as of 31 December 2009
SEKm EEK LVL LTL UAH RUB
Structural position -36 577 64 -14 234 410 -5
Net assets 20 301 7 642 5 651 1 080 1 042
Equity hedge 0 - 7 607 -5 645 0 0
Goodwill 11 541 0 0 0 13
Total position - 4 735 99 -14 228 1 490 1 050
Earnings capacity
32
Appendix – Baltic Banking
33
Baltic Banking gross lending by sectors*
3,162
1,244
1,361
853
358
2,645
0 2,000 4,000 6,000 8,000 10,000
Other**
Construction
Transport
Industry
Retail &Wholesale
Real estatemgmt***
Individuals
-40
-52
-43
-110
21
-230
-238
-300 -150 0 150
Portfolio, December 2009, EURm Portfolio growth, Q4 09, EURm
% share of portfolio* Lending portfolio split is based on NACE classification as presented to central bank ** Other portfolio includes Other business services, Energy, Agriculture, State & Municipality and Other loans. Largest decline in Other business services and State loans*** There is a customer Standard Industry Classification (SIC) code data update process ongoing and as a result, real estate management sector exposure increased. No major new
loans have been granted.
2%
5%
8%
7%
18%
14%
46%Mortgage Other
34
1 731
1 014
0
300
600
900
1 200
1 500
1 800
Q4'06 Q2'07 Q4'07 Q2'08 Q4'08 Q2'09 Q4'09
EUR
/m2
0
300
600
900
1200
1500
1800
No
of tr
ansa
ctio
ns
No of deals Average price
564
1 762
0
300
600
900
1200
1500
1800
Q4'06 Q2'07 Q4'07 Q2'08 Q4'08 Q2'09 Q4'09
EU
R/m
2
0
300
600
900
1200
1500
1800
No
of tr
ansa
ctio
ns
No of deals Average price
TallinnVilnius
Riga
1 611
758
0
300
600
900
1200
1500
1800
Q4'06 Q2'07 Q4'07 Q2'08 Q4'08 Q2'09 Q4'09
EUR
/m2
0
300
600
900
1200
1500
1800
No
of tr
ansa
ctio
ns
No of deals Average price
Real estate prices stabilised in the second half of 2009
35
LTV risk dimensions
Mortgage portfolio LTV
EE LV LT
Average LTV*: 2009-12-31 90% 166% 92%
Share of portfolio with LTV >100%** 39% 80% 42%
• Due to the price drop in all three Baltic countries, average LTVs have increased significantly
• Latvia was hurt most, due to higher share of portfolio issued at peak prices and a steeper price drop
*Average LTV: exposure weighted average of client LTVs within the portfolio**Share of portfolio with LTV>100%: sum of exposures where client LTV surpasses 100% in the total portfolio
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