SEB Carnegie Conference March 2008
30
Carnegie Large Cap Seminar 5 March 2008 1 Per-Arne Blomquist CFO
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Transcript of SEB Carnegie Conference March 2008
Carnegie Large Cap
Seminar
5 March 2008
1
Per-Arne BlomquistCFO
2
Content
Road to Excellence
Baltic countries
Financial targets
Cost management
Capital and liquidity
33
Highest customer
satisfaction
Highest RoE
4
Sustainableprofit growth Installing operational
excellence
Phase IPhase II
Focused growth in areas of strength
Operational excellence
Road to excellence – strategic priorities
2007 2008 2010 2009 2006
●Productivity
●Quality
●Streamlining
●Mindset and culture
Strategic PrioritiesSustainable growth prioritiesOperational excellence priorities
●Deepen customer relationships
● Invest in areas of strengths
●Entrepreneurial spirit
●Complementary acquisitions
5
A multiple and balanced business mix
37%
38%
15%
10%
Retail
WealthLife
MB
5%8%6%
5%
6%
50%
4%
8%8%
Sweden
NorwayDenmark
FinlandGermany
Estonia
LithuaniaOther
Latvia
Note: Adjusted for negative profit of Other
20%20%
Divisions Geography
Operating profit split Jan – Dec 2007
Note: Adjusted for sale of SEB´s Baltic real estate
6
Baltics – three different marketsCredit exposure growth, Baltic countries%
30
18
19
47
40
39
SEB inLithuania
SEB in Latvia
SEB inEstonia
Jan – Dec 2007 Jan – Dec 2006
43% 31%
26%
Lithuania Estonia
Latvia
Total Baltic public lending SEK 137bn (12.8% of Group)
7
Estonia* Latvia Lithuania
Development of lending market shares – Baltics Per cent, Dec 2004 – Dec 2007*
0%
10%
20%
30%
40%
50%
0%
10%
20%
30%
40%
50%
0%
10%
20%
30%
40%
50%
SEBSwedbankDnB NordParex BankaSampoNordea
*) Estonia; Swedbank & Sampo – Aug 2007, SEB -Dec 2007
8
Increased resilience from a growing business
67%
12%
7%
11%
3%
Retail & Corp.banking
Equities & Corp. fin
Life
Trading excl.FX & equities
14%
2007SEK 42.1bn**
Total operating income
** Note: Adjusted for MTM portfolio loss of SEK 1.8bn and one-off gain of SEK 0.1bn
Wealth
2000
* Note: Adjusted for one-off gains of SEK 2.3bn
Operating profit SEK 17.0bnOperating profit SEK 8.8bn
Income SEK 33.2bn*
9
Financial targets
Return on equitySEB Group, per cent
19,3
15,8
20,8
2005 2006 2007
17,015,6
11,2
2005 2006 2007
Operating profitSEKbn
Profit Growth Leading RoERoE%
10
Targets
Customer satisfaction● #1 in our chosen markets
Financial performance● Leading in terms of RoE● Sustainable profitable growth
Capital policy ● Core capital ratio >7%● Dividend pay-out ratio 40%
over a business cycle● AA rating ambition
11
…how to get there!…how to get there!
12
Customer satisfaction● #2 customer
satisfaction globally in cash management
● Best cash management in Nordic and Baltic countries
● Best bank in Latvia
Bank of the year in Estonia och Lithuania
Diners Club and Eurocard – Best Nordic customer service
Number one in Trade Finance in Nordic countries, Sweden and Lithuania
● Nordic brokerage, equity research and corporate finance
● Institutional asset management
SEB: Global FX forecasts top ranked
13
Example: SEB Asset SelectionProduct innovation
Promote activity – prioritised areas
Example: Swedish cash management customers in the SME segment (thousands)
50
60
70
80
90
2005 2006 2007
Customer acqusition
500600700800900
1,000
Q12005
Q2 Q3 Q4 Q12006
Q2 Q3 Q4 Q12007
Q2 Q3 Q4
Example: SEB Group RWA (SEKbn)Volume growth
13
Cash management excellencePoll of 4,500 treasurers globally (11 of 24 categories)
14
Repositioning of SEB’s Swedish Retail
15
A holistic cost control approach
Group Staff,
Group IT, Group
Business Support
Wealth Management
Life
Merchant Banking
Customer interface
Support functions
Identifiedcostreductionby 2009
Retail Banking
Group-wide prioritisations
Explore synergies and scale potential
16
Group StaffMajor change in support staff location, FTE’s
2006
Group
Group support
Divisional & Business
areas
15%10%
75%
2007
Δ>10%
20%
55%*
25%
* Including Germany, Estonia, Latvia, Lithuania and Luxembourg, to be moved formally from Divisions Jan 1, 2008
17
Cost-management program2007 – 2009, SEKm
22,537
23,194
22,496
-546
505
486
212
Costs Jan – Dec 2006
Inflation/Other
Efficiency gains
New cost base
Growth
Redundancy cost *
Costs Jan – Dec 2007
Jan – Dec 2007 vs. Jan – Dec 2006
Total savings 2007 – 2009: SEK 1.5-2.0bn
2007 planned efficiency gains:
-500
* Redundancy cost for 2007: 2812006: 70
18
Improved operational excellence
18
SEB Way – Front & back office; freed up time equals 690 FTEsNo of transactions +30 %
Productivity +34 %30 personsTime-to-market cut 2 weeks
MB: Equity-linked notes
No of transactions +30 %Productivity +34 %
129 personsNo of FTE’s freed-up 21%Redirect from admin to sales
RB Sweden: District
195 personsFewer FTE’s and cut lead time
RB Lithuania: SME credit process
No of transactions +30 %Productivity +34 %No of FTEs +0.2 %
No of transactions +30 %Productivity +34 %No of FTEs +0.2 %
Group Operations Δ 2007
19
* Excluding restructuring costs and one-off charges of SEK 890m in Q4 2005
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
Q1-05 Q2-05 Q3-05 Q4-05 Q1-06 Q2-06 Q3-06 Q4-06 Q1-07 Q2-07 Q3-07 Q4-07
Income Expenses Operating profit
Road to excellence – Improved operating leverage SEB Group*, SEKm 12 month rolling
20
SEB – divisional growth Distribution of SEB’s profit growth*Operating profit full-year - 2005 vs. 2007, SEKbn and the 2-year profit growth by division
* Adjusted for negative effect in Other and eliminations SEK -0.3bn and with SEK1.8bn for MTM losses in 2007
3.68.21.81.0
2.61.85.0 6.6
2005 2007 2005 2007 2005 2007 2005 2007
+3,2
+3,0
+0,8+0,8
Merchant Retail Wealth Life
21
● Continued financial turbulence?● Slowdown in real economy?● Falling capital expenditure? ● Hard landing in Baltic countries?
● Transparency renews trust?● Resilience among consumers?● Alignment of risk and pricing?● Acquisition opportunities?
Outlook
SEBBusiness
mix Region Franchise Competence Capital
22
60,7
72,7
Dec 2006 Dec 2007
A strong capital baseCore capital, +20%SEKbn
Hybridcapital
+8.7
+3.4
Adjusted equity capital
53.1 61.8
7.5
10.9
8.2% 8.6%Core capital ratio
The strategic valueSupport organic growth
Enable acquisitions
Create financial flexibility
Key driver: Profit Growth
23
● Over collateral within the Swedish covered pool 66% (SEK 89bn) as of December 2007
● Free eligible asset pledgeable within central banks SEK 198bn after 5 % haircut
Funding structureSEB Group, December 2007SEK 1,617bn
8%
44%2%6%3%
3%
12%
22%
Mortgage covered bonds, Sweden
CPs/CDs
Mortgage covered bonds, GermanyPublic covered bonds, SwedenSenior debt
Subordinated debt
Deposits – Financial institutions
Deposits – General public
24
Strategy – more of the same!
Top customer satisfaction and profitable growthThe leading bank in Northern Europe
Operational Excellence(Productivity and quality)
Increased integration
Continued investments in core areas of strength
25
26
Key figuresChangeChange
SEKmJan – Dec Jan – Dec Q4 Q4
2007 2006 2007 2006
Operating income 40,440 4% 10,035 0%Operating expenses -23,194 3% -5,928 4%Operating profit 17,018 9% 4,581 11%Net profit 13,642 8% 3,757 -1%
Return on Equity, % 19.3 20.8 20.2 23.2Cost / income ratio 0.57 0.58 0.59 0.57Credit loss level, % 0.11 0.08 0.14 0.10
RWA, Basel I, SEKbn 892 +151Core capital, SEKbn 73 +12Core capital ratio, Basel II 8.63 8.19
Dividend per share, SEK 6.50 6.00
27
Profit and loss accountJan – Dec 2007 vs. Jan – Dec 2006SEB Group, SEKm Jan – Dec Jan – Dec Change
2007 2006 %
Net interest income 15,998 14,281 12Net fee and commissions 17,051 16,146 6Net financial income 3,239 4,036 -20Net life insurance income 2,933 2,661 10Net other income 1,219 1,623 -25
Total operating income 40,440 38,747 4Staff costs -14,921 -14,363 4Other expenses -6,919 -6,887 0Depreciation of assets -1,354 -1,287 5
Total operating expenses -23,194 -22,537 3Gain/loss tangible/intangible assets 788 70Net credit losses etc -1,016 -718 42
Operating profit 17,018 15,562 9Net profit 13,642 12,623 8
28
Operating profit per divisionJan – Dec 2007 vs. Jan – Dec 2006SEKm
0 2,000 4,000 6,000 8,000
Life
WealthManagement
Retail Banking
MerchantBanking
Jan-Dec 2007
Jan-Dec 2006
Growth vs. Jan – Dec 2006
-13%
+26%
+12%
+19%
ROEJan – Dec 2007
17.6%
20.8%
34.5%
21.1%
Sweden +13%Estonia +8%Latvia +44%Lithuania +63%Germany +616%Cards -2%
GTS +33%TCM -40%Corp.Banking +4%
29
Business activity
Turnover cardsSEKbn
AuM incl LifeSEKbn
400600800
1 0001 200
Q12005
Q2 Q3 Q4 Q12006
Q2 Q3 Q4 Q12007
Q2 Q3 Q4
Lending to the publicSEKbn
+12%
400
500
600
700
800
Q12005
Q2 Q3 Q4 Q12006
Q2 Q3 Q4 Q12007
Q2 Q3 Q4
Deposits from the publicSEKbn
+17%
0200400600800
1 0001 2001 4001 600
Q105
Q205
Q305
Q405
Q106
Q206
Q306
Q406
Q107
Q207
Q307
Q407
30
40
50
60
70
Q12005
Q2 Q3 Q4 Q12006
Q2 Q3 Q4 Q12007
Q2 Q3 Q4
+9%+9%
30
Contact information, Investor Relations
Ulf Grunnesjö, Heade-mail: [email protected]: +46 8 763 85 01
Laurence Westerlunde-mail: [email protected]: +46 8 763 86 27
Per Anderssone-mail: [email protected]: +46 8 763 81 71
