CFO Danske Nordic Bank Seminar - SEB Group€¦ · A strong large corporate franchise . Nordic target Strong growth in core markets. market . 5 Gross premium income, unit-linked insurance

1

Jan Erik BackCFO Danske

–

Nordic Bank Seminar

Copenhagen

2 September 2009

2

Going forwardEconomic outlook and the new financial landscape

Strong income and balance sheetQ2-recap, liquidity and capital

SEB’s competitive position A long-term relationship bank

Asset qualityStable and diversified credit portfolio

3

SEB –

A relationship

bank

Cash management globallyScandinavian currencies

globallyNordic stock brokerNordic and Baltic investment

bankCustody Nordics and BalticsNordic asset managementSMEs

Sweden

Strong customer base Product excellence

700

400,000

5 million

1,800

Large companies

Financial institutions

SMEs

Private individuals

3

4

H1 08 H1 09Sweden Other Nordic

Income Nordic “top 50”

(public companies)

+33%

+79%

Perceived quality

100

100

100Core

banking relation-

ships%

Large corporates

Sweden

Large

corporates

Nordics

00

2008 2009

A strong large corporate franchise Strong growth in core marketsNordic target

market

5

Gross premium income, unit-linked insurance %, Q1 2009

14

14

9

26

28Lithuania

Latvia

Estonia

Denmark**

Sweden*

SEB Market share Competitors

12331

SEB RankMarket shares

Rightly positioned to leverage recovery of markets

*

Q2 2009**

Full year 2008

-30,000-20,000-10,000

010,00020,00030,00040,00050,00060,00070,000

Jan-05 Jan-06 Jan-07 Jan-08 Jan-09

SEBSHBRoburNordea

Mutual Funds Net Sales SwedenCumulative Jan 2005 –

Jun 2009, including PPMSEK m 1,478

1,267

743

617

595

224

Nordea

SEB

Sw edbank

Danske Bank

DnB NOR

Handelsbanken

Assets under ManagementJune 30, 2009, SEK bn

Source: Morgan Stanley

6

The natural partner for corporations…from start-up to international expansion! SME bank of the year,

2008, Privata Affärer

Growing franchise of Swedish Retail

ROE 19%

Net credit loss level 12 bps

115120125130135140145150

Q12007

Q2 Q3 Q4 Q12008

Q2 Q3 Q4 Q12009

Q2

Lending volumes in local currencyGross new lending –

household mortgagesSEK bn

10.212.4

10.08.8

10.1

14.4

Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09

Thousands

No of corporate customers

7

Strong income and balance sheetQ2-recap, liquidity and capital

SEB’s competitive position A long-term relationship bank

Going forwardEconomic outlook and the new financial landscape

Asset qualityStable and diversified credit portfolio

8

-6-5-4-3-2-101234567

Q107 Q2 Q3 Q4

Q108 Q2 Q3 Q4

Q109 Q2

Bond repurchase gainsProfit before gains and credit lossesGoodwill impairmentProvisions for credit losses

Strong and sustainable underlying business–

SEK 5.3bn before provisions for credit losses, goodwill write offs and bond repurchase gain

Cost development under control–

-4% on a comparable basis

Sharp increase of impaired loans in the Baltic region

Full goodwill write-off in the Baltics and Russia of SEK 2.4bn

Strong balance sheet with Tier 1 of 13 per cent and restored liquidity profile

Operating profit (SEK bn)

4.2

4.6

3.7 4.6

2.4

3.5

2.5

4.0 1.8

0.6

Highlights

Q2 2009

99

12-month rolling earnings generation excluding one-off effects

01020304050

Q1 -05

Q2 Q3 Q4 Q1-06

Q2 Q3 Q4 Q1 -07

Q2 Q3 Q4 Q1 -08

Q2 Q3 Q4 Q1 -09

Q2

Profit before credit losses and goodwill

Operating income

Operating profit

SEK bn

01 0002 0003 0004 0005 0006 0007 0008 000

Q1-05

Q2Q3Q4Q1-06

Q2Q3Q4Q1-07

Q2Q3Q4Q1-08

Q2Q3Q4Q1-09

Q2

Net interest income Non-interest income *

Diversified income generationSEK m

Resilient income generation

+21%*H1 2009

vs. H1 2008

*Income adjusted for capital gains

10

Income drivers

Renewed strength of fee and commission earnings –

SEB’s

traditional area of excellence

Diversified flow based/low risk trading income

Sticky unit-linked life insurance income

Long- term

Net

inte

rest

in

com

eN

on-in

tere

st

inco

me

NII effect of market turbulence subsiding, but asset re-pricing will continue for some years

Moderately lower lending volumes

Funding duration extension

+26%

-9%

YoY*

QoQ

+10%

+18%

YoY*

QoQ

* Income rolling twelve months adjusted for capital gains

Short- term

trend

11

Cost development

Achieved by Q2 2009 SEK 1,470m

Target by Q4 2009 SEK 1,500 –

2,000m

Cost management program 2007 –

2009

FTE development

-435 net

Group

Sweden net -500 -922

net

-435

net

since year-end 2008

Efficiency and productivity gains offset inflation on a comparable basis

202224262830

Q406

Q107

Q207

Q307

Q407

Q108

Q208

Q308

Q408

Q109

Q209

Total cost base reportedExcluding pensions, redundancies, CEE goodwill impairment and FX effect

Rolling 12 m costs in Q2

2009 up SEK 0.3bn or 6% vs. FY

2006

12

Capital situation and RWA dynamics

Risk-weighted assetsSEK bn

31

18

790

818

47

1 5

Dec 2008

Jun 2009

Migration FX Op

Risk

Capital ratios, Basel II without floorsPer cent

0%

5%

10%

15%Core Tier 1 ratio Tier 1 ratio

Long-term Basel II Tier 1 target

Required minimum Tier 1 in order to qualify for Swedish stabilisation measures is 4%

13.111.3

Volume changes and capital process efficiency

IRB methods

13

Funding raised with original maturity >

1 year

SEK bn

June 2009: 12 months match funding

Instrument 2008 1h 2008 1h 2009 Q1 2009 Q2 2009 Q3 2009YCD 5.9 4.1 1.3 0.0 1.3 1.5Senior unsecured Germany 2.0 0.8 1.1 0.1 1.0 2.1Senior unsecured Sweden 37.4 23.2 34.7 0.0 34.7 36.2Structured bonds 13.4 13.1 4.7 4.1 0.6 0.4Covered bonds Germany 29.7 27.5 12.5 6.7 5.7 3.3Covered bonds Sweden 72.9 43.9 20.4 13.9 6.5 3.8Hybrid tier 1 4.7 4.7 0.0 0.0 0.0 0.0Total 166.0 117.3 74.7 24.8 49.9 47.3

14

Strong income and balance sheetQ2-recap, liquidity and capital

SEB’s competitive position A long-term relationship bank

Going forwardEconomic outlook and the new financial landscape

Asset qualityStable and diversified credit portfolio

15

85% of total credit exposure is in Nordics and Germany and only 10% in Baltics

Credit portfolio is well diversified across types of borrowers

Corporate portfolio has a pre-dominance of large corporate clients

SEB has a stable and well diversified credit portfolio

Sweden48%

Lithuania 5%Latvia 3%

Estonia 3%

Germany24%

Property mgmt14%

Banks12%

Households28%Corporates

40%

Public administration

6%

Norway 7%

Other 5%

Denmark 3%Finland 3%

Credit portfolio, SEK 1.8 trillion as of June 30 2009Note: the chart above show the distribution by industry and location of

SEB’s credit portfolio excluding the fixed-income investment portfolio.

85%

10%

16

0

500

1,000

1,500

2,000

Q1-08 Q2-08 Q3-08 Q4-08 Q1-09 Q2-09

Specific Collective

Continued buffering for CEE challenges

Provisioning to build-up Baltic reservesSEK m

Provisions for Net Credit LossesDistribution of SEK 5,953m within SEB Group

*Isolated quarters on an annualised

basis

22%

74%

Nordics, Germany, etc.

Baltic countries

Net credit loss levelQ1 2009*

Q2 2009

H1 2009*

Estonia 1.73

3.66

2.76Latvia

6.41

8.86

7.74Lithuania

3.59

5.97

4.83Baltics

3.70

6.00

4.93

65% collective provisions4.8%

0.2%UkraineRussia

Non performing loans % of lending

0%5%

10%15%20%25% Portfolio assessed, past due > 60 days

Individually assessed

Estonia Latvia Lithuania UkraineLending 45 39 75 2

(SEK bn)

Actual losses:SEK 73m!

17

Proactive and conservative approach in the Baltic region

Long-term commitment remains

20082006 …… …… 2009

Increased capitalisation

Tightening of credit policy

ROE priority > volume

Work-out units

High Risk Committees

Baltic SPVs

Dialogue with authorities

Accelerated collective provisions

Review of all loans >€1m completed

Separate division

Full goodwill write-off

18

Commercial Real Estate*

Mainly related to large real estate companies

Well diversified with 95% senior debt

Bankruptcies increasing (from a low base)

Acq. Finance

SMEs Sweden

Limited exposure to Bulk and Container sub-segments

Shipping & Offshore

3%*

1%*

3%*

7%*

* Excluding Baltic exposures

0,0%0,5%1,0%1,5%2,0%

Dec'06

Mar'07

Jun Sep Dec Mar'08

Jun Sep Dec Mar'09

Jun

Level of Impaired Loans

Nordics

Germany

22%78%

Distribution of credit provisionsDistribution of SEK 5,953m within SEB Group

Outside CEECEE

% of total exposure

Stable asset quality outside CEE

NPL 0.6%

19

Strong income and balance sheetQ2-recap, liquidity and capital

SEB’s competitive position A long-term relationship bank

Going forwardEconomic outlook and the new financial landscape

Asset qualityStable and diversified credit portfolio

20

Sweden -

Positioned for recovery

Improved situation for manufacturing

Low mortgage rates support consumption, debt service burden historically low

GDP bounces back

Riksbank starts to increase rates Spring 2010

-8-6-4-202468

97 98 99 00 01 02 03 04 05 06 07 08 09 10 11

OECD Sweden

-60-40-20

020406080

91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09

Orders Expected orders

0

2

4

6

8

10

12

1981 1985 1989 1993 1997 2001 2005 2009

Household

debt

service burdenPercent

of disposable

income

New export ordersManufacuring

industry, net

GDP growthYearly

growth, percentage

Source: SEB Nordic Outlook, 1 Sept 2009

21

Economic sentimentIndex

Current

accountsPercent

of GDP

Baltics -

Stabilisation on a low level

A broader recovery in 2011

First signs of improved economic sentiment

GDP deficits leaves the negative territory

Wage cuts continue

020406080

100120140

Oct-95 Oct-97 Oct-99 Oct-01 Oct-03 Oct-05 Oct-07 Oct-09

Estonia Latvia Lithuania Euro-zone

-30-25-20-15-10-505

Mar-01

Mar-02

Mar-03

Mar-04

Mar-05

Mar-06

Mar-07

Mar-08

Mar-09

Estonia Lithuania Latvia

Source: SEB Nordic Outlook, 1 Sept 2009

22

Estimated Tier 1 effect (%)-

Market risk -0.3

-

Insurance goodwill -0.7

-

Advanced IRB roll-out

>1.0

The big unknown: A new financial landscape -

Still limited visibility and no level playing field

Capital framework

Leverage

ratio

Liquidity

requirements

SEB’s leverage ratio 5.3% (FDIC rules)

SEB’s matched funding >12 mthsLiquidity reserves >10% of assets

Dynamic

provisioning Changes timing but (hopefully) not magnitude of losses

And more...

23

SEB has a strong position to meet the new financial landscape

12 months matched

funding

Tier

1 capital ratio

13.1%

Reserve

ratio*72%

Implementation around 2011-2013 means limited business restrictions (until next downturn?), but structurally lower ROE across banking sector vs. pre-crisis

*Individually appraised non-performing loans

24

+ =

Wholesale banking going forward Restricted capital leads banks to a more selective choice of relationships

Business

–

selected clients

●

Reduced gearing

●

Lending cap towards certain industries

●

Tight credit documentation and monitoring.

●

Even more focus on repayment capacity

●

First priority to existing core

clients

●

Second priority to new prime clients.

●

360°analysis

●

Ancillary business (!)

●

Focus on risk return

Bank relationship –

a closer tie

●

A stronger relationship between client and bank

●

Fewer banks per client

●

Risk based pricing restores attractiveness of lending

Credits

–

tight conditions

25

Stabilising economy but long and winding road to recovery

Full attention and actions on Baltic challenges

SEB well positioned to support our customers and seize growth opportunities on a selective basis

25

2626