UBS Nordic Financial Services Conference Magnus Carlsson 4 September 2008
UBS Nordic Financial Services
Conference
Magnus Carlsson
4 September2008
Outline
An overall business update
The Merchant Banking division
Germany
The Baltic countries
Concluding remarks
10%13%
42%
35%
RetailBanking
WealthManagement
Life
Merchant Banking
SEB – An activity based bankShare of operating profit Jan – Jun 2008
48%
20%
14%
18%
Sweden
Nordics
Germany
Baltic countries
Geography - Adjusted for OtherDivisions - Adjusted for Other
Highlights Q2 2008
Income regained strength – second best quarter ever– High business activity– Limited bond portfolio losses
Higher costs due to continued investments and sales activities
Accelerated slowdown in Estonia and Latvia increases credit losses
Strong capitalisation and liquidity
Key figuresSEB Group
Q2 Q1 Q2SEKm 2008 2008 2007
Income 10,403 18% -3%Expenses 6,445 7% 10%Operating profit 3,507 46% -23%
Return on Equity, % 15.2 9.6 20.7Cost / income ratio 0.62 0.69 0.55Credit loss level, % 0.17 0.13 0.12Basel II, Tier 1 ratio, % 8.64 8.85 8.45
Change
High business activity – long-term savings
12.0 10.7 9.712.0 13.3 11.9
Q1-07 Q2 Q3 Q4 Q1-08 Q2
4.95.8
3.52.62.9
4.1
Q12007
Q2 Q3 Q4 Q12008
Q2
Swedish mutual funds: net inflowsJan-Jun, SEKbn
-7.2 -8.5
-3.0
-13.3
3.8
Robur SHB Nordea SEB Others
Life – Total salesSEKbn
Private Banking – Net salesSEKbn
Business Activity
High business activity – Retail Sweden
Cash management customers (thousands)
50
60
70
80
90
2005 2006 2007 2008
Retail Sweden, SME segment
Incomegrowth
173 176 183 189 196 201 207
Q4 06 Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08
Retail Sweden household mortgagesLending, SEKbn
Growth rates
+3.5% +2.3% +3.6% +3.1% +3.9% +2.3%
+6%
+ 5,200
Business Activity
*
*
Cost management program 2007 - 2009
SEK -748m SEK 1.5 – 2.0bn
2007 2009
Achieved Target
2008 2010
~4% total cost growth due to acquisitions, pensions and One IT Roadmap
SEK 202m in efficiency gains achieved in H1
Cost Management
Cost development
0.000.100.200.300.400.500.600.700.80
2003 2004 2005 2006 2007 Q12008*
Q22008*
Germany Baltics Nordics SEB Group
Level of Net Credit Losses, %(incl. change in collective provisions)
* Annualised
Estonia 1.68Latvia 0.48Lithuania 0.17Baltics 0.73
Non-Baltic39%
Lithuania6% Latvia
10%Estonia
45%
SEB Group Net credit losses
Jan – Jun 2008 SEK 820m
Asset Quality
Credit exposure – on and off balanceSEK 1,631bn
24%
11%
65%
German
Nordic
14%
38%
14%
6%
28%
Property management
Public administration
BanksCorporate
Baltic
Households
By geography By sector
Asset Quality
Risk-weighted assets (Basel I)Q4 2006 - Q2 2008, SEKbn
0
200
400
600
800
1,000
1,200
Group
+18%
Volume growth supported by strong capital
Tier 1 capital ratiosPer cent
6
7
8
9
10
11
Q12007
Q22007
Q32007
Q42007
Q12008
Q22008
Basel II (no floors)Basel II (transition rules)Basel I
Capital
Net liquidity position across maturities30 June, SEKbn
-50
0
50
100
150
200
250
1 week
2 weeks
4 weeks
2 months
3 months
4 months
5 months
6 months
9 months
12 months
SEB is match-funded approx.
one year
Examples of transactions:April: Euro covered bond at spread of 17 bps
May/June: Euro floating rate notes at spread of 48 bps
SEK 113bn in long-term funding raised in H1 2008
Liquidity
An overall business update
The Merchant Banking division
Germany
The Baltic countries
Concluding remarks
A leading franchise
● #1 Nordic stock broker
● #1 Nordic and Baltic corporate finance
● #1 Nordic and Baltic cash manager
● #1 Custody Nordic and Baltic markets
● #1 Scandinavian currencies
Client Relationship Management
SGUSLUUKDEFINODK FR
BRCN
SE
LVLTEE PL RU
Organisation
IN
FX Capital Markets
Commercial Real Estate
SEB Enskilda Corporate Finance
Structured Finance
CashManagement, Trade Finance
& SecuritiesServices
SEB Enskilda Equities
CPM(Investment portfolio)
TCM Corporate Banking GTS
Global product organisation – local specialists
Highlights last 12 months
>300 new clients
Top rankings in investment banking, research, trade finance custody and cash management
SEB Way on track (productivity gains 20% ahead of target)
MTM losses on investment portfolio and Capital markets
Clientacquisition
Customer satisfaction
MTM losses
Operational Excellence
1 32
OK
OK
12
3
45
From To
Financial development SEKm
0
500
1,000
1,500
2,000
2,500
Q1-07 Q2-07 Q3-07 Q4-07 Q1-08 Q2-08
Operating profit Excluding portfolios
0500
1,0001,5002,0002,5003,0003,5004,0004,5005,000
Q1-07 Q2-07 Q3-07 Q4-07 Q1-08 Q2-08
Income excluding portfolios Income Expenses
High business activity…
0
1,000
2,000
Trading &CapitalMarkets
CorporateBanking
GlobalTransaction
Services
Q2 07 Q1 08 Q2 08
Merchant Banking: Operating IncomeSEKm
0
100
200
300
400
500
600
Merchant Banking
+26%
Risk-weighted assets (Basel I)Q1 2007 - Q2 2008, SEKbn
Trading and Capital Markets income by main product cluster, excl. investment portfolios
36%26% 28% 33% 38% 41%
49%44% 46% 64% 46%49%
8%22% 15% 11%3% 6%
7%11%8% 5%4%
Q1 - 07 Q2 Q3 Q4 Q1 - 08 Q2
Structured derivatives& Other TCMCapital Markets
Equities
FX
…in Trading and Capital Markets
4.7%
5.2%
5.4%
5.6%
8,9%
SHB
Glitnir
Carnegie
Morgan Stanley
SEB
Market Shares Nordic Stock Exchanges *Jan – June 2008
High business activity…
0
1,000
2,000
Trading &CapitalMarkets
CorporateBanking
GlobalTransaction
Services
Q2 07 Q1 08 Q2 08
Merchant Banking: Operating IncomeSEKm
0
100
200
300
400
500
600
Merchant Banking
+26%
Risk-weighted assets (Basel I)Q1 2007 - Q2 2008, SEKbn
Swedish syndicated loans league (and bookrunner %)July 2007 – June 2008
* Source: The Nordic Stock exchanges** Source: Dealogic Analytics
17.6%
12.4%
5.6%
3.5%
3.0%
0 1 2 3
SEB
SHB
Calyon
RBS
ABN AMRO
EUR bn
…in Corporate Banking
High business activity…
0
1,000
2,000
Trading &CapitalMarkets
CorporateBanking
GlobalTransaction
Services
Q2 07 Q1 08 Q2 08
Merchant Banking: Operating IncomeSEKm
0
100
200
300
400
500
600
Merchant Banking
+26%
Risk-weighted assets (Basel I)Q1 2007 - Q2 2008, SEKbn
…in Global Transaction ServicesCustody volume development
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
2004 2005 2006 2007 20080
25,000
50,000
75,000
100,000
125,000
150,000
Assets under custody, SEKbnNo of transactions/day
High business activity
0
1,000
2,000
Trading &CapitalMarkets
CorporateBanking
GlobalTransaction
Services
Q2 07 Q1 08 Q2 08
Merchant Banking: Operating IncomeSEKm
0
100
200
300
400
500
600
Merchant Banking
+26%
Risk-weighted assets (Basel I)Q1 2007 - Q2 2008, SEKbn
Investment portfolio – SEK 126bn
11%89%
Investment portfolio valuations, SEKm
Q2 08
Held for trading (MTM over income)
Available for sale
(MTM over equity)
Accumulatedsince
Q2 08 Q3 07
Income -66 -2,707Equity -56 -2,384Total -122 -5,091
Accounting classification
Status and actions
Q2 08
Financial institutions
Composition
97.2% AAA rated after limited rating actions
Mark- to-market prices applied; no level 3 assets
Reduction of income volatility
9%
49%
42%Covered
bonds etc.
Structured credits
Near-term uncertainty
Long-term opportunities
MidCorpgrowth
● Grow Nordic, German and Baltic client base through focus on MidCorp segment● Implement cross-sell model throughout Nordics, Germany and Baltic countries
Expanded FI coverage
Nordic Expansion
● Expand sales, relationship management and analytical capacity● Fully leverage existing product platform
● Leverage SEB’s leadership in Nordic products by expanding institutional client base in Europe, US & Asia (including central banks, hedge funds and sovereign wealth funds)
Prioritising customer acquisition
Energy, oil & gas
● Build on existing expertise to expand position in energy, oil/offshore and shipping segments
● Continue developing commodities offering
International ● Improve business origination and subsidiary coverage at strategic locations
An overall business update
The Merchant Banking division
Germany
The Baltic countries
Concluding remarks
SEB in Germany
Retail Banking
Asset Management
Merchant Banking (incl. Commercial Real Estate)
SEB in Germany
-244 -226
-22
60136
74134
H1 05 H2 H1 06 H2 H1 07 H2 H1 08
Retail Germany: Operating profitSEKm
Distribution of German Operating profitJan – Jun 2008
9%
91%
807
189
843
H1 07 H2 H1 08
SEB in Germany: Operating profitSEKm
Retail
Other business
Munich
Frankfurt
Stuttgart
Leipzig
Berlin
Hamburg
Merchant Banking in Germany
Cologne
EssenDüsseldorf
Bremen
Hannover
Focus on export- oriented larger Mittelstand companiesMain competitors are domestic German banksCross-sale model with leading competence in FX, cash management derivatives and export and trade finance
Merchant Banking’s second largest marketCountry-wide sales forceIncreased profitability in 2007RoE in line with Merchant Banking globally.
An overall business update
The Merchant Banking division
Germany
The Baltic countries
Concluding remarks
SEB in the Baltic countriesOperating profit by country; SEKm
Accumulated profit since acquisition in 1998: SEK 11.5bn
Acquisition price: SEK 3.8bn0
1,000
2,000
3,000
4,000
2002 2003 2004 2005 2006 2007 H12008
LithuaniaLatviaEstonia
* Adjusted for sale of Baltic real estate
9% 10% 11% 13% 15% 18% 18%% of Group operating profit
*
Baltic countries: economic slowdown accelerates
-5
0
5
10
15
2002 2003 2004 2005 2006 2007 2008 (f) 2009 (f)
Estonia Latvia Lithuania
Annual GDP growthPer cent
The Baltics:Economic sentiment
deteriorating
Economic sentiment, index
75
85
95
105
115
125
-98 -99 -00 -01 -02 -03 -04 -05 -06 -07 -08
Estonia Latvia Lithuania
Jan 06 Jul 06 Dec 06 2007● Tightening of
credit policy incl. cautious property mgmt
● ROE priority > volume growth
● Further tightening of credit policy
● Volume restrictions● Collective
provisioning policy
● Concluding internal review of Baltic economies
● Increased capitalisation
● Overheating risks communicated
Phase I - Actions to manage overheating
0%2%4%6%8%
10%12%
2006 2007 2008
Credit growth per quarter
Priorities for managing overheating
Phase II - Actions to manage correction
Targeted credit portfolio reviewsJoint local and head-office work-out teamEarly conservative provisioning
Individual country approachFull integration in SEB Group to broaden product paletteDevelop relationships with existing and new customers
Asset quality
Business development
Priorities for managing recession
An overall business update
The Merchant Banking division
Germany
The Baltic countries
Concluding remarks
Looking ahead
● Strong capital and liquidity● Top line growth● Continued investments● Cost efficiency