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