Nomura Financial Services Conference Jan Erik Back, CFO · 2014-09-18 · Nomura Financial Services...
Transcript of Nomura Financial Services Conference Jan Erik Back, CFO · 2014-09-18 · Nomura Financial Services...
Nomura Financial Services Conference London, 29 August 2012 Jan Erik Back, CFO
2
SEB’s strategy remains firm
Universal bank in Sweden and the Baltics
Corporate bank in the Nordics, Germany and internationally
Resilience and flexibility: Capital, liquidity and costs
3
SEB has actively reduced its earnings volatility
0
5
10
15
Last 16 quarters Last 12 quarters Last 8 quarters Last 4 quarters
SEB Peer average
Source: Nordea Equity Research, June 2012
Income volatility, Q2 2008 – Q1 2012 (per cent)
Divestment of non-core businesses
Reduced size of investment portfolios
Secured funding and liquidity reserves
Maintained high asset quality
Growth in areas of strength
Strategic actions to reduce income volatility
4
SEB’s DNA
LargeCorporates
FinancialInstitutions
Private
SME
Customer segments Size
2,000customers
700customers
4mcustomers
400kcustomers
Income distribution 2011 ( per cent)
0% 10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
SEB
Swedbank
SHB
Nordea
Large Corporates & InstitutionsRetailLifeWealth
5
For the first time SEB named Best Bank for Large Corporates and Institutions in the Nordics 2011
Note: Net change between 2010 and 2011 (left-hand graph). Country scores 2011 (right-hand graph)The result is based on 62 surveys across the Nordics. Source: Prospera Large Corporates & Institutions Surveys 2011
Voice of the customer: SEB is the #1 wholesale bank in the Nordics
+20%
SEB #2 #3
SEB SEB
SEB SEB
6
Large corporate Nordic and German expansion Platform now in place
1.0
H1 2011 H1 2012
Operating profit growth (SEK bn)
0.8
H1 2011 H1 2012
0.4
H1 2011 H1 2012
0.6
H1 2011 H1 2012
+20% +29%
+22% -1%
Expansion KPIs from start 2010
+254 +SEK 126bn
new large cap clients
new loans and commitments
Note: Germany excludes centralised Treasury operations and wind-down portfolio of real estate assets
7
Swedish SMEs: Market share steadily increases with 1 per cent per annum
Increased number of customers*
020,00040,00060,00080,000
100,000120,000140,000
2005 2006 2007 2008 2009 2010 2011 H12012
+20.600
SME credit portfolio (SEK bn)
Note: Active cash management corporate customers
Tailored solutions Advisory International/FXMore complex financing Insurance Occupational insurance (corporate
paid)
Standardised solutions Solutions, not products Directly covers 70 per cent of
the customers need
020406080
100120140160180
2008 2009 2010 2011 H12012
+35bn
8
Enhanced Retail franchise in Sweden – continuous growth among private customers
12.0%11.8%11.6%11.6% 11.3%
2008 2009 2010 2011 Q2 2012
Mortgage market share*
13.3%13.0% 13.5%
15.1% 15.5%
2008 2009 2010 2011 Q2 2012
Increased market sharesGrowth private marketFull service customers (thousands)
0
100
200
300
400
500
2008 2009 2010 2011 H1 2012
+28,000
Household deposit market share*
Source: Swedish statistics
9
Swedish mortgage portfolio: Low LTVs and strict lending criteriaMortgage lending based on affordability Credit scoring and assessment 7% interest rate test and 60 years
amortisation in cash flow calculation 85% regulatory first lien mortgage cap
&minimum 15% of own equity required If LTV >75% requirement to amortiseMax loan amount 5x total gross household
income irrespective of LTV ‘Sell first and buy later’ recommendation
0-50%
51-85% 18%
>85% 2%
Loan-to-value Share of portfolio
80%
Customer margin
Funding cost for 3 month fixed mortgage rate
Transparent interest rate discussionIndividual pricing based on; Household disposable income Collateral Size of other assets Total mortgage amount vs. property value
Funding cost transparent and updated daily
Low LTVs by regional and global standards
SEB’s Liquidity cost
Stibor 90 days
10
Highlights Q2 2012
Franchise and income growth
Continued cost efficiency
10
Balance sheet strengthened further
11
9.95.7
-0.3
Operating income Operating expenses Net credit losses
Pre-provision profit and operating profit (SEK bn)
Profit and loss development Q2 2010 – Q2 2012 (SEK bn)
Profit and loss trend
Q2-10 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Q2-12
Operating profit
Pre-provision4.2
11
Q2-12 Q2-12 Q2-12Q2-11Q2-10 Q2-11Q2-10 Q2-11Q2-10
12
Net interest income development
12
012345
Q2-10 Q3 Q4 Q1-11 Q2 Q3 Q4 Q1-12 Q2
Net interest income Q2 2010 – Q2 2012 (SEK bn)
Funding & otherDeposits
0.8
Q2-10 Q2-11 Q2-12
Lending
0.6
Q2-10 Q2-11 Q2-12
3.1
Q2-10 Q2-11 Q2-12
Net interest income by income type Q2 2010 – Q2 2012 (SEK bn)
13
0
300
600
900
1,200
1,500
Dec-00
Dec-01
Dec-02
Dec-03
Dec-04
Dec-05
Dec-06
Dec-07
Dec-08
Dec-09
Dec-10
Dec-11
Corporates and households Jun 2012 (SEK bn)
“Financial crisis”
Lending (6.5% CAGR)
Deposits (6.3% CAGR)
+95
+150
Lending and deposit volumes
Excluding divested businesses
“Sov debt crisis”
+145
+80
+85
+19
Customer centric strategy
Supporting core customers in times of need
Deposit patterns show flight to quality in turbulent times
14
Net fee and commission income development
0
1
2
3
4
5
Q2-10 Q3 Q4 Q1-11 Q2 Q3 Q4 Q1-12 Q2
Gross fee and commissions by income type Q2 2010 – Q2 2012 (SEK bn)
2.4
Q2-10 Q2-11 Q2Advisory, secondary markets and derivatives Custody and mutual funds
1.7
Q2-10 Q2-11 Q2Payments, cards, lending, deposits and
guarantees
Net fee and commissions Q2 2010 – Q2 2012 (SEK bn)
0.6
Q2-10 Q2-11 Q2
14
15
Net financial income development
15
Net financial income development (SEK bn)
1.2 1.2 1.2 1.1 1.2 1.3
0.0-0.2
0.00.0-0.2 -0.2
Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Q2-12
NFI Divisions NFI Treasury & Other GIIPS
Net financial income Q2 2010 – Q2 2012 (SEK bn)
0
1
2
3
4
Q2-10 Q3 Q4 Q1-11 Q2 Q3 Q4 Q1-12 Q2
Excl. GIIPS de-risking
Stability from customer-driven flows in divisions
Limited impact from volatility on MTM liquidity portfolio
Highest quality sovereign and covered bonds with full central bank eligibility
Drivers of net financial income
16
Operating leverage through cost efficiency
Average quarterly income (SEK bn)
9.2 9.4 9.8
Avg 2010 Avg 2011 Avg 2012
Average quarterly expenses (SEK bn)
Operating leverage
5.9 5.8 5.7
Avg 2010 Avg 2011 Avg 2012
3.2 3.6 4.1
Avg 2010 Avg 2011 Avg 2012
Average quarterly profit before credit losses (SEK bn)
17
Other3%
Germany15%
Baltics9%
Nordics73%
Continued high asset quality
NPLs by region Q2 2010 – Q2 2012 (SEK bn)
Distribution of loan portfolio and credit losses Q2 2010 – Q2 2012 (SEK bn)
3.3
Q2-10 Q2-11 Q2-12
Nordics Germany Baltics
-0.3
Q2-10 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Q2-12
1.8
Q2-10 Q2-11 Q2-12
11.2
Q2-10 Q2-11 Q2-12
Group credit loss level 0.07%
18
~90 per cent of 2012 maturities re-financed
Long-term funding activities (SEK bn)
0
20
40
60
80
100
120
140
Issued Covered Bonds Issued Senior UnsecuredMatured Covered Bonds Matured Senior Unsecured
2009 2010 2011 2012 2013 2014 2015
Instrument 2011H1
2012Maturing
2012
Senior unsecured SEB AB 32 21 31
Covered bonds SEB AB 95 39 35
Covered bonds SEB AG 0 1 4
Total 126 61 70
Senior unsecured and covered bonds (SEK bn)
19
8.7
13.7
15.3
13.7
15.3
~ -0.5
Business volumes
~ +2.1
RWA real estate model
Generated capital
Higher quality
Q2-08
Q4-08
Q2-09
Q4-09
Q2-10
Q4-10
Q2-11
Q4-11
Q2-12
Illustrative
Basel II Core Tier 1 ratio (%)
15.3
Higher Core Tier 1 ratio through generated capital and efficient risk management
13.7
15.3
Regulatory target range
20
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
Equity/Assets Basel I Basel II transitionrules
Basel II Basel III post IAS19
Basel III post IAS19, RWA
mitigation and15% mortgagerisk weight floor
SEB Nordea Swedbank SHB
Source: SEBEnskilda
SEB is well capitalised across all metrics 30 June, 2012
--------------------------------------------------- Core/common equity tier 1 ratios ---------------------------------------------------
21
Capital
Still missing pieces in Swedish finish on regulation
LiquidityLiquidity Coverage Ratio
Net Stable Funding Ratio
> 100% by 2013
> 100% by 2018/19
[TBD]
Common Equity Tier 1 Ratio
Common Equity Tier 1 Ratio
> 10% by 2013
> 12% by 2015
[TBD]Countercyclical buffer 0-2.5%
by 2013
[TBD]Mortgage risk-weights ?
22
Recent economic development in Sweden
• Swedish economy so far rather resilient to the Euro crises– Strong Q2 GDP development driven by retails sales,
rebound to be expected in H2– But sub-par growth also 2013
• Krona strengthening accelerated vs. EUR and USD– EUR/SEK +10 per cent during the summer– Limited impact so far, but more focus on long-term impact
• Swedish Central Bank repo rate in focus– Two cuts anticipated before early -13 to stimulate growth
• House price worries abating– Soft landing anticipated
Swedish economic indicatorsGDP, YoY, per cent House prices indexRiksbanks repo rateSEK/EUR
012345
2005 2007 2009 2011 20130
50
100
150
2005 2007 2009 2011-10
-5
0
5
10
2005 2007 2009 2011 2013789
101112
2005 2007 2009 2011 2013
23
Outlook
Slow pace of recovery to continue
Flight to quality to benefit strong banks
Need for continued resilience and flexibility
24
The Relationship bank in our part of the world