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Swedbank's presentation of the results for 2013.
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© Swedbank
Swedbank’s year-end 2013 results
Michael Wolf, CEO
Göran Bronner, CFO
Anders Karlsson, CRO
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Stable results
• Stable NII – Loan growth
– Stable back-book mortgage
margins
– Lower deposit margins
• Strong commission income
• Solid asset quality
2
Swedish Banking
SEKm Q4 13 Q3 13 ▲ Q/Q
Net interest income 3 448 3 473 -25
Net commissions 1 649 1 577 72
Total income 5 536 5 491 45
Total expenses 2 533 2 389 144
Profit before
impairments 3 003 3 102 -99
Credit impairments 140 106 34
ROE, % 27.6 28.1
C/I ratio 0.46 0.44
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Good performance
• Improved NII
– Loan and deposit growth
• Better trading income
• Strong commission income
3
Large Corporates & Institutions
SEKm Q4 13 Q3 13 ▲Q/Q
Net interest income 889 864 25
Net commissions 559 467 92
Total income 1 987 1 755 232
Total expenses 878 759 119
Profit before
impairments 1 109 996 113
Credit impairments 5 7 -2
ROE, % 20.3 18.3
C/I ratio 0.44 0.43
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Continued improvement
• Improved NII
– Continued re-pricing
– Deposit growth
• Strong commission income
• Operational efficiency
• Continued recoveries
4
Baltic Banking
SEKm Q4 13 Q3 13 ▲Q/Q
Net interest income 844 807 37
Net commissions 454 446 8
Total income 1 511 1453 58
Total expenses 661 604 57
Profit before
impairments 850 849 1
Credit impairments -177 -147 -30
ROE, % 15.1 16.6
C/I ratio 0.44 0.42
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• Stable NII
– Volume growth
– Margins
• Strong commission income
• Improved NGL
– Trading
– Valuation effects
• Increased cost
– Provision for staff restructuring
– Variable pay
– General cost pressure
• Continued solid asset quality
– Ektornet
Improving revenue and increasing cost
5
Group results
SEKm Q4 13 Q3 13 ▲Q/Q
Net interest income 5 626 5 641 -15
Net commission income 2 699 2 520 179
Net gains and losses 461 170 291
Total income 9 652 9 225 427
Total expenses 4 484 3 995 489
Profit before
impairments 5 168 5 230 -62
Credit impairments -32 -56 24
Other impairments 323 95 228
Tax 1 212 998 214
Profit from continuing
operations 3 665 4 193 -528
ROE continuing
operations, % 13.6 16.2
C/I ratio 0.46 0.43
CET 1 ratio, % (Basel 3) 18.3 18.0
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Focus on customer activities
• Flat expenses target for 2014
6
Expenses
Expenses 2012
Expenses 2013
Customer
related
cost
IT
development
Ektornet Group
functions
Efficiency
measures
Expenses
2013 Expenses
2014
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Increased RWA
Capital
7
• Loan growth
• Positive rating migration
• Market risk
• FX
Swedbank’s RWA development
Basel 2441.6
11.1
-2,9 -0,80.0
- 1.8
2.22.5
Basel 2 451.9
420
425
430
435
440
445
450
455
SEKbn
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Other?
25% Risk weight floor onSwedish mortgages
15% Risk weight floor onSwedish mortgages
0-2.5% Countercyclical buffer
12% Minimum CET1 (Pillar 1)requirement (incl. SIFI-buffer andCapital conservation buffer)
Regulatory uncertainty – higher capital requirements
• Countercyclical buffer
• RW floor on mortgages
• Pillar 2
• Hard limits vs buffers
• Leverage ratio – corporate
risk weights
8
Capital
16.5 - ? %
CET1 ratio
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Continued strong asset quality
• Continued solid asset quality
in Sweden
• Net recoveries in Baltic
Banking
• Ektornet
9
Credit impairments,
SEKm Q4 13 Q3 13 ▲Q/Q
Swedish Banking 140 106 34
Large Corporates &
Institutions 5 7 -2
Baltic Banking -177 -147 -30
Estonia -139 -38 -101
Latvia 50 -70 120
Lithuania -88 -39 -49
Group Functions &
Other 0 -22 22
Swedbank Group -32 -56 24
Asset quality
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Swedbank’s year-end 2013 results
Q & A
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Appendix
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Regulatory initiatives targeting the mortgage market
12
Source: Swedbank
• LTV cap of 85%
• Amortisation
• Risk-weight floor of up to 25% on
mortgage loans
• Capital and liquidity requirements
– High minimum regulatory
requirements (including
SiFi buffer)
– Countercyclical buffer?
– Leverage ratio?
Swedish housing market
0
20
40
60
80
100
120
2005 Q4 2013
Total equity, SEKbn
Swedbank’s equity doubled
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0
200
400
600
800
1 000
1 200
90 92 94 96 98 00 02 04 06 08 10 12
Acc increase in population
Acc increase in housing completions
0
10 000
20 000
30 000
40 000
50 000
60 000
70 000
80 000
75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11
Apartment buildings Single-family dwellings
Shortage of housing
13
Housing completions 1975-2012
Num
ber
of
housin
g u
nits
Population and housing growth 1990-2012
Num
ber
of
hom
es / p
ers
ons,
thousands
Source: Statistics Sweden and Swedbank
Swedish housing market
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Conservative provision ratio
14
Asset quality
* Russia and Ukraine reported as discontinued operations
* * *
10 9519 934
7 077
4 429 4 047 3 570 2 818
2 040
1 774
1 545
1 420 1 3981 325
1 256
64% 65%62%
57%54% 53% 54%
0
5 000
10 000
15 000
20 000
Q212 Q312 Q412 Q113* Q213* Q313* Q413*
Individual provisions Portfolio provisions Provision ratio
SEKm Provision ratio, % Q413
Swedish Banking 73
LC&I 42
Baltic Banking 51
Group 54
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Shipping and offshore
16
6
4
24 23
26 25 26
0
10
20
30
Q4-12 Q1-13 Q2-13 Q3-13 Q4-13
SEKbn Shipping and Offshore
Offshore Tanker Other
15
Credit portfolio – Large Corporates & Institutions
• Lending exposure to Shipping & Offshore
sector of SEK 25.5 bn
– Portfolio duration 4-5y
– Average fleet age 7y
– Strong employment profiles
0 5 10 15 20 25
SEK
EUR
USD
NOK
JPY
Q4-13
Q3-13
Shipping and offshore portfolio by currency, SEKbn
0.1
0.8
0.1
0.4
0.1
0.2
0.1
0.2
0.1
0.2
0.1
0.1
0.2
0.0 0.2 0.4 0.6 0.8 1.0
Cruise
Drilling & exploration
Oil service
Supply
Accommodation
Floating production
Chemical
Product
Crude oil
Gas (LNG/LPG)
Dry bulk
Container
ROROQ4-13
Q3-13
Shipping and offshore portfolio by subsegment, SEKbn
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0
20
40
60
80
100
120
Covered bonds Senior unsecured
Lower funding needs
• LCR 142% (Swedish FSA definition FFFS 2012:6)
• NSFR 89%
• Issued SEK 103bn of term-funding FY 2013 of which SEK 14bn in Q4
16
Liquidity and funding
Term funding issuance – completed and planned
SEKbn
Source: Swedbank, Dec 31, 2013, nominal amounts
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17
Long-term funding maturity profile
• Funding plan of SEK 120bn to meet next 12 months’ nominal SEK 103bn maturities
Long-term funding maturity profile, by funding source
Source: Swedbank Dec 31, 2013
Liquidity and funding
SEKbn
0
50
100
150
200
2014 2015 2016 2017 2018 2019-
Governmentguaranteed debt
Senior unsecureddebt
Covered bonds
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Liquidity reserve
18
1 90% of the securities in the liquidity reserve per Q4 2013 are rated AAA
According to the template defined by the Swedish Bankers' Association
2 82% of the additional liquid assets fulfill the Liquidity Reserve definition by the Swedish Bankers’ Association except for
that they are held outside Group Treasury. 3 80% of the additional assets are rated AAA
Liquidity and funding
Source: Swedbank Fact book, Dec 31, 2013
SEKm
Cash and holdings in central banks 59 382
Deposits in other banks available overnight 397
Securities issued or guaranteed by sovereigns, central banks or multilateral development banks 68 054
Securities issued or guaranteed by municipalities or public sector entities
Covered bonds 54 002
- Issued by other institutions 54 002
- Own issued
Securities issued by non-financial corporates
Securities issued by financial corporates (excl. covered bonds) 2 096
Other
Total1
183 931
Additional liquid assets, Group2, 3
52 510
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50
100
150
200
250
0 20 40 60 80 100 120 140 160 180 200 220 240 260 280 300 320 340 360
Prefunded in excess of 12 months
19
Liquidity and funding
SEKbn
Source: Swedbank Dec 31, 2013
Days forward
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Asset encumbrance
20
Liquidity and funding
Source: Swedbank Facts Dec 2013
1) Repoed securities.
2) Collateral posted under CSA agreements, gross (3-year, SEKm,
High: 21 572, Low: 10 086, Average: 14 223).
3) Of which accrued interest of encumbered assets in the cover
pool, SEKm 2 091 as of 31 Dec 2013.
4) Collateral pledged in securities lending activities and with
exchanges.
5) Reversed repos are included.
6) All type of securities, including securities non pledgeable at
central banks, of which 78% are rated AAA, 2% are rated
below A- and 7% are not rated.
7) Of which accrued interest of assets in the cover pool
overcollateralisation, SEKm 932 as of Dec 2013.
8) Securities received as collateral in for example reversed
repo transactions that: either have (encumbered) or have not
(unencumbered), been used as collateral by Swedbank.
Encumbered assets - distribution by type of liability (row) and asset (column)
SEKm
Government
debt
instruments
Central banks
and
supranational
debt
instruments
Covered
bonds
Debt
instruments
issued by
credit
institutions
Securities
issued by
corporate and
other issuers ABS
Mortgage
loans Cash Total
of w hich
received
collateral
(off-
balance)
Central bank funding
Intraday settlement 1 912 9 243 11 155 5 397
Repurchase agreements 1) 19 272 7 475 26 747 7 314
Derivative 2) 968 1 266 7 178 9 412 2
Covered bonds 3) 514 186 514 186
Other 4) 860 510 1 370
Total 22 152 17 984 860 514 186 7 688 562 870 12 713
Financial assets pledged for insurance policy holders 118 627
Unencumbered assets - additional assets available for secured funding
SEKm
Government
debt
instruments
Central banks
and
supranational
debt
instruments
Covered
bonds
Debt
instruments
issued by
credit
institutions
Securities
issued by
corporate and
other issuers ABS
Mortgage
loans Cash Total
of w hich
received
collateral
(off-
balance)
Securities 5, 6) 39 699 32 925 80 358 14 248 9 157 705 177 092 23 761
Cover pool over collateralisation 7) 226 029 226 029
Cover pool eligible assets 8)
Total 39 699 32 925 80 358 14 248 9 157 705 226 029 0 403 121 23 761
Total assets (Balance sheet): SEKm 1 820 807
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Real estate prices – Sweden 12-month development
21
Swedish housing and mortgage market
Single-family homes1 Tenant-owner rights2 Combined3
12M Δ
12M Δ
12M Δ
Jan/13 3% 7% 5%
Feb/13 4% 7% 5%
Mar/13 3% 7% 5%
Apr/13 2% 8% 4%
May/13 4% 8% 5%
Jun/13 4% 10% 6%
Jul/13 4% 9% 6%
Aug/13 5% 11% 7%
Sep/13 5% 11% 7%
Oct/13 6% 11% 8%
Nov/13 4% 13% 7%
Dec/13 4% 13% 7%
Source: Valuegard www.valuegard.se (Based on data from Mäklarstatistik), 1 HOXHOUSESWE, 2 HOXFLATSWE, 3 HOXSWE
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Baltic countries
Real estate prices
22
0
200
400
600
800
1 000
1 200
1 400
1 600
1 800
Jan
-05
Jul-0
5
Jan
-06
Jul-0
6
Jan
-07
Jul-0
7
Jan
-08
Jul-0
8
Jan
-09
Jul-0
9
Jan
-10
Jul-1
0
Jan
-11
Jul-1
1
Jan
-12
Jul-1
2
Jan
-13
Jul-1
3
Tallinn
Nr.of deals EUR/m2
0
200
400
600
800
1 000
1 200
1 400
1 600
1 800
Jan
-05
Jul-0
5
Jan
-06
Jul-0
6
Jan
-07
Jul-0
7
Jan
-08
Jul-0
8
Jan
-09
Jul-0
9
Jan
-10
Jul-1
0
Jan
-11
Jul-1
1
Jan
-12
Jul-1
2
Jan
-13
Jul-1
3
Riga
Nr.of deals EUR/m2
0
200
400
600
800
1 000
1 200
1 400
1 600
1 800
Jan
-05
Ju
l-0
5
Jan
-06
Ju
l-0
6
Jan
-07
Ju
l-0
7
Jan
-08
Ju
l-0
8
Jan
-09
Ju
l-0
9
Jan
-10
Ju
l-1
0
Jan
-11
Ju
l-1
1
Jan
-12
Ju
l-1
2
Jan
-13
Ju
l-1
3
Vilnius
Nr.of deals EUR/m2
EUR/m2 /Nr of deals
EUR/m2 /Nr of deals
EUR/m2 /Nr of deals
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