Swedbank’s second quarter 2017 results...© Swedbank Public Information Jun 2017class Swedish...
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© Swedbank Public Information class Swedbank’s second quarter 2017 results Birgitte Bonnesen (CEO), Anders Karlsson (CFO), Helo Meigas (CRO)
Transcript of Swedbank’s second quarter 2017 results...© Swedbank Public Information Jun 2017class Swedish...
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Swedbank’s second quarter 2017 results Birgitte Bonnesen (CEO), Anders Karlsson (CFO),
Helo Meigas (CRO)
1
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Swedish Banking
Strong result
SEKm Q2 17 Q1 17 ▲QoQ
Net interest income 3 792 3 637 155
Net commission income 1 881 1 757 124
Other income 442 1 069 -627
Total income 6 115 6 463 -348
Total expenses 2 217 2 208 9
Profit before impairments 3 898 4 255 -357
Credit impairments 86 -3 89
Jun 2017 2
• Net interest income
– Continued mortgage loan volume growth and
stable margins
– Improved deposit margins and seasonal
deposit volume growth
– Lower resolution fund fee
• Net commission income
– Strengthened by higher customer card activity
and positive stock market development
• One-off gain from sale of Hemnet in
Q1(SEK 680m)
Ratios Q2 17 Q1 17
ROE, % 21.0 25.4
C/I ratio 0.37 0.34
Volumes, SEKbn Q2 17 Q1 17 ▲QoQ
Loans 1 125 1 116 9
Deposits 510 490 20
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Baltic Banking
Solid result
SEKm Q2 17 Q1 17 ▲QoQ
Net interest income 1 044 1 001 43
Net commission income 561 527 34
Other income 209 190 19
Total income 1 814 1 718 96
Total expenses 658 636 22
Profit before impairments 1 156 1 082 74
Credit impairments 7 -66 73
Jun 2017 3
• Positive FX effects
• Net interest income
– Mixed margins
– Continued growth in private lending
• Net commission income
– Higher customer card activity
• Strong asset quality Ratios Q2 17 Q1 17
ROE, % 19.7 19.5
C/I ratio 0.36 0.37
Volumes, SEKbn Q2 17 Q1 17 ▲QoQ
Loans 142 141 1
Deposits 169 168 1
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Large Corporates & Institutions
Improved result
SEKm Q2 17 Q1 17 ▲QoQ
Net interest income 892 823 69
Net commission income 587 580 7
Net gains and losses 515 452 63
Other income 21 28 -7
Total income 2 015 1 883 132
Total expenses 884 923 -39
Profit before impairments 1 131 960 171
Credit impairments 307 408 -101
Jun 2017 4
• Net interest income
– Improved deposit margins
– Lower resolution fund fee
• Good customer activity supports
commission income
• Higher FX trading activity
• Additional provisions for oil related
exposures Ratios Q2 17 Q1 17
ROE, % 11.4 9.0
C/I ratio 0.44 0.49
Volumes, SEKbn Q2 17 Q1 17 ▲QoQ
Loans 203 200 3
Deposits 126 146 -20
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Group results
Robust profitability and capital generation
SEKm Q2 17 Q1 17 ▲QoQ
Net interest income 6 090 5 971 119
Net commission income 3 000 2 822 178
Net gains and losses 567 486 81
Other income 736 1 372 -636
Total income 10 393 10 651 -258
Total expenses 3 966 4 003 -37
Profit before impairments 6 427 6 648 -221
Credit impairments 400 339 61
Other impairments 1 2 -1
Tax 1 276 1 181 95
Net profit 4 746 5 124 -378
Jun 2017 5
Ratios Q2 17 Q1 17
ROE, % 15.6 15.9
C/I ratio 0.38 0.38
CET1 capital ratio, % 24.6 24.2
• Net interest income strengthened
– Mortgage loan volume growth
– Lower resolution fund fee
– Mixed margins
• Higher commission income from cards and
asset management
• One-off gain from sale of Hemnet in Q1
(SEK 680m)
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Capital
Strong capitalisation – no excess capital
Jun 2017 6
• CET1 capital increased by SEK 0.7bn
− Positive effect from net profit of SEK
0.9bn excl. dividend
− Negative pension liability valuation effect
(IAS 19) of SEK 0.4bn
• REA decreased by SEK 4bn
• Capital buffer of around 260bps
23.8%25.0% 24.2% 24.6%
22.0%
Q3 2016 Q4 2016 Q1 2017 Q2 2017 CET1 capitalratio
requirement
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-0.6
-2.9
1.5
7.5
-6.5
-3.0
410.7
406.7
400
402
404
406
408
410
412
414
416
418
420
Q1 2017 Exposurechange
IRBsovereignexposures
IRB acquiredmortgages
(SparbankenÖresund)
Ratingmigration
(PD)
LGDchanges
Other risk Q2 2017
Increase Decrease
Capital
Lower REA
Jun 2017 7
• IRB-model implementation
– Sovereign exposures
– Acquired mortgages from Sparbanken
Öresund
• Positive PD migrations and collateral
valuations
SEKbn
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Group
Solid asset quality
Credit impairments, SEKm Q2 17 Q1 17 ▲QoQ
Swedish Banking 86 -3 89
Baltic Banking 7 -66 73
Large Corporates & Institutions 307 408 -101
Swedbank Group 400 339 61
Jun 2017 8
Ratios Q2 17 Q1 17
Credit impairment ratio, % 0.10 0.09
Share of impaired loans, gross % 0.53 0.50
Total provision ratio for impaired
loans, % 45 51
• Credit impairments in line with
expectations
– Additional provisions for oil related
exposures
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Q&A
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Appendix
1
0
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0
10
20
30
0
50
100
150
200
2012 2013 2014 2015 2016 Q1 17 Q2 17
NSFR LCR CET1 capital ratio, CRDIV (RHS)
-0.10
0.00
0.10
0.20
0.30
0.40
Q1 12 Q1 13 Q1 14 Q1 15 Q1 16 Q1 17
This is
Swedbank
Swedbank – low-risk bank with strong capital base • Low risk – a Board of Directors’ strategic priority – ensures access to funding
markets and low funding cost
• Retail profile and four home markets a key feature
– 86% of total loans originated in Sweden - Swedish mortgages account for 50% of
total loans
– 90% of total loans are collateralised (78% real estate and 12% other collateral)
• Strong capital position – Board of Directors’ decision to maintain a buffer above
prevailing SFSA capital requirements to have operational flexibility – current buffer
around 260bp
• Conservative funding and liquidity position – survival horizon longer than 12 months
assuming closed funding markets, NSFR 110% and LCR 128%
• Baltic operations self-funded – loan-to-deposit
ratio < 100%
Jun 2017 11
Liquidity & capital, %
Credit impairment ratio, %
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Swedbank – strong and stable earnings capacity
• Four home markets – Sweden, Estonia, Latvia and Lithuania
– Strong and stable economies
– Market-leading position in all home markets
– Largest customer base in all home markets
• Retail profile ensures stable earnings with low volatility
• High cost efficiency – a strategic priority – ensures good profitability
• Stable earnings support a low risk profile and a strong capital position
Jun 2017 12
Profit before impairments
This is
Swedbank
0
1 000
2 000
3 000
4 000
5 000
6 000
7 000
8 000
9 000
Q1 12 Q1 13 Q1 14 Q1 15 Q1 16 Q1 17
Profit before impairments One-off related to Visa
SEKm
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12 000
14 000
16 000
18 000
20 000
2012 2013 2014 2015 2016 Target2017
Acquistion of Sparbanken Öresund
0.30
0.35
0.40
0.45
0.50
0.55
0.60
2012 2013 2014 2015 2016 Q12017
Q22017
Swedbank – market leader in cost efficiency
• Best-in-class cost efficiency – an executive management strategic priority
• Executive management strongly focused on cost and change management
− Integrated in corporate culture
− Focus on straight-through-processing
− Evolving household banking model – digitisation trend
• Retail profile a key feature
− Four home markets – Sweden, Estonia, Latvia and Lithuania – reduce
complexity
− Largest private and SME customer base
− High degree of digitisation in home
markets
Jun 2017 13
Total expenses, SEK m
C/I ratio, %
This is
Swedbank
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Swedbank creates value
Jun 2017 14
Dividend per share 75% payout ratio for 5th year in a row
SEK 13.20
Return on Equity >15% target
15.6%
Common Equity Tier 1 ratio One of the highest among European banks
24.6%
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25
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2012 2013 2014 2015 2016 Q1 2017 Q2 2017
SEK%
Return on Equity (LH scale) CET1 capital ratio (LH scale)
Dividend per share (RH scale)
Strategy
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Oil sector under stress
• Loan portfolio negatively impacted by lower oil price, SEK 14.9bn
– 1.0% of total loans, gross
– In addition, derivatives exposures of SEK 2.0bn (incl. collateral)
• Provisions* of SEK 316m in Q2
Jun 2017 15
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Def 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21
2014-12-31 2015-12-31 2016-12-31 2017-06-30
Oil-related, exposure by risk grade, SEKbn
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2016-12-31 2017-06-30
LC&I Shipping & Offshore, loans, gross, SEK 25bn
60% of the portfolio is
negatively impacted by
lower oil price
* Total provisions of SEK 1 344m for the whole Shipping and Offshore sector with a provision ratio (for impaired loans) of 34%.
Asset
quality
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0 20 40 60 80 100 120 140 160 180 200 220 240 260 280 300 320 340 365
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100 Covered bonds Senior unsecured debt
Planned, covered bonds Planned, senior unsecured debt
Conservative funding position
Jun 2017 16
• LCR 128% (Swedish FSA definition FFFS 2012:6)
• NSFR 110% (Basel committee)
• Issued SEK 115bn of term funding YTD Q2 2017
• Plan to issue around SEK 200bn in 2017
Term funding issuance – completed and planned
Days forward
SEKbn SEKbn Prefunded for more than 12 months
Survival horizon
Liquidity
and
funding
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0
50
100
150
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2017 2018 2019 2020 2021 2022 2023 2024-
Other
GBP
USD
EUR
SEK
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2017 2018 2019 2020 2021 2022 2023 2024-
Senior unsecured debt Covered bonds
Long-term funding maturity profile
Jun 2017 17
Long-term funding maturity profile, by funding source
SEKbn SEKbn
Long-term funding maturity profile, by currency
Liquidity
and
funding
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100
120
140
160
180
200
220
240
260
05 06 07 08 09 10 11 12 13 14 15 16 17
Real estate price performance – Sweden, 12 month
Jun 2017 18
Single-family homes1 Tenant-owner rights2 Combined3
12M Δ 12M Δ 12M Δ
Jul 16 10% 7% 8%
Aug 16 9% 6% 8%
Sep 16 9% 6% 8%
Oct 16 8% 7% 7%
Nov 16 9% 7% 8%
Dec 16 9% 8% 9%
Jan 17 9% 8% 9%
Feb 17 9% 8% 9%
Mar 17 9% 8% 9%
Apr 17 8% 8% 8%
May 17 8% 9% 9%
Jun 17 9% 10% 10%
House price index, Sweden3
2005=100
Source: Valuegard www.valuegard.se (Based on data from Mäklarstatistik), 1 HOXHOUSESWE, 2 HOXFLATSWE (apartments), 3 HOXSWE
Swedish
housing
and
mortgage
market
