Investor presentation

Transcription

1 Anders Kvist Head of Group Treasury Ulf Grunnesjö Head of Investor Relations Investor presentation 22 September

2 Overview of the SEB Group 2

3 SEB history SEB history Stockholms Enskilda Bank 1972 Stockholms Enskilda Bank founded and Skandinaviska Banken 1864 Skandinaviska Banken merge founded in Gothenburg 1982 SEB International 1997 Trygg Hansa 1998 Acquisition of three Baltic banks 1999 BfG Germany 2004 Codan Denmark 2004 Bank Agio Ukraine 2005 Privatbanken Norway 2006 SEB 150 years 2007 Merger SEB BoLån and SEB AB 2007 Factorial Bank - Ukraine 3 3

4 SEB the key to North-European markets SEB has an attractive platform high customer satisfaction resilient income generation several leading positions...a strong customer base 2,500 large companies and financial institutions customers 400,000 SME customers 5 million private customers 4

5 Lithuania Latvia Estonia Finland Share of operating profit before credit losses Jan June 2009 Germany 6% 3% 4% 5% 8% Sweden 52% Retail Banking Wealth Management 23% 4% 9% Life Denmark 8% Norway 14% Geography Adjusted for Other Divisions Adjusted for Other 64% Merchant Banking 5

6 Highlights Q 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) Q1 07 Q2 Q3 Q4 Q1 08 Q2 Q3 Q4 Bond repurchase gains Profit before gains and credit losses Goodwill impairment Provisions for credit losses Q1 09 Q2 6

7 Net interest income Net interest income SEB Group, SEK m 8,644 7,690 Total +30% +13% Customer driven* 11,274 8,724 Lending and deposits to/from the public, SEB Group, SEK bn 1,600 Lending 1, % Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q NII drivers SEB Group, SEK m YTD Deposits +9% Jan-Jun 08 Jan-Jun 09 * volumes and margins on lending and deposits Total Volumes Margins Other 2, ,595 7

8 Commission income Gross fee and commission H1 y-o-y -20% 3,468 +8% 3,985 3,683 YTD Gross development equity markets DJ STOXX Nordic index % 2, Dec -06 Mar -07 Jun - 07 Sep -07 Dec -07 Mar -08 June -08 Sep -08 Dec -08 Mar -09 June % ,900 1,603 Nordic M&A*, Jan Jun 2009 (EUR m) SEB Morgan Stanley 9 Deals 7 Deals 2,216 2,475 New issues & advisory Secondary market & derivatives Custody & mutual funds Payment, cards, str. lending, deposits, guarantees Deutsche Bank UBS Nordea 3 Deals 10 Deals 6 Deals 1,817 1,628 1,589 * Rank based on completed deals. All Nordic involvement. Source: Thomson Financial 8

9 Commission income Gross fee and commission Q1 07- Q2 09 2,500 Gross development equity markets DJ STOXX Nordic index , , Dec -06 Mar -07 Jun - 07 Sep -07 Dec -07 Mar -08 June -08 Sep -08 Dec -08 Mar -09 June -09 1, Nordic M&A*, Jan Jun 2009 (EUR m) SEB 9 Deals 2,475 Morgan Stanley 7 Deals 2,216 0 New issues & advisory Secondary market & derivatives Custody & mutual funds Payment, cards, structured lending, deposits, guarantees Deutsche Bank UBS Nordea 3 Deals 10 Deals 6 Deals 1,817 1,628 1,589 * Rank based on completed deals. All Nordic involvement. Source: Thomson Financial 9

10 Resilient income generation capacity Financial performance Q1 vs. Q2, on a comparable basis * SEK bn Operating income 12 0% 12 Operating cost Pre provision earnings 0% = 0% Q1 09 Q2 09 Q1 09 Q2 09 Q1 09 Q2 09 C/I * Excluding Bond portfolio valuation, bond repurchase gain, goodwill and FX effects 10

11 Resilient income generation 12-month rolling earnings generation excluding one-off effects SEK bn Q1-05 Q2 Q3 Q4 Q1-06 Q2 Q3 Q4 Q1-07 Q2 Q3 Q4 Q1-08 Operating income Profit before credit losses and goodwill Operating profit Q2 Q3 Q4 Q1-09 Q2 Diversified income generation SEK m Net interest income Non-interest income * Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q %* H vs. H *Income adjusted for capital gains 11

12 Income drivers Net interest income Non-interest income YoY* +26% QoQ -9% YoY* +10% QoQ +18% NII effect of market turbulence subsiding, but asset re-pricing will continue for some years Moderately lower lending volumes Funding duration extension 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 Longterm Shortterm trend * Income rolling twelve months adjusted for capital gains 12

13 Cost development Cost management program Achieved by Q SEK 1,470m Target by Q SEK 1,500 2,000m FTE development since year-end 2008 Group -922 net Sweden net net Efficiency and productivity gains offset inflation on a comparable basis Q4 06 Q1 07 Total cost base reported Excluding pensions, redundancies, CEE goodwill impairment and FX effect Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Rolling 12 m costs in Q up SEK 0.3bn or 6% vs. FY

14 Capital 14

15 Capital adequacy SEB Group Total capital ratio, % Tier I capital ratio, % Core Tier I (from 2007) Basel II (without transition rules) Basel II Transitional rules 12.1% Basel I 9.6% Dec Dec Dec Dec Dec Dec Dec Q1 Q2 SEK bn Capital base Risk-w. Assets Basel I 1,080 15

16 A successful rights issue Trading performance since announcement Key themes Indexed Price 150% 140% 130% 120% 110% 100% 90% 80% 70% 60% 4- Feb 10- Feb 16- Feb 22- Feb 28- Feb 6- Mar 12- Mar 18- Mar 24- Mar 30- Mar 28.0% Strong Outperformance 0.9% (1.8%) (12.4%) SEB Euro Stoxx Banks Nordic Banks Composite OMX SEK 15,070m added Strong primary take-up 98.6% Secondary rights oversubscription Broad Institutional Support Very significant retail participation Strong liquidity in shares and rights Source: Bloomberg as of 30-Mar-2009 Note: Nordic Banks Composite consists of Swedbank, Nordea, Danske Bank, DNB Nor and SHB 16

17 Capital situation and RWA dynamics Capital ratios, Basel II without floors Per cent Core Tier 1 ratio Tier 1 ratio 15% Risk-weighted assets SEK bn Dec % Long-term Basel II Tier 1 target Migration FX Op Risk % Required minimum Tier 1 in order to qualify for Swedish stabilisation measures is 4% Jun Volume changes and capital process efficiency IRB methods 0% 17

18 SEB Tier 1 ratio vs. peers SEB Tier 1 ratio vs. peers Credit Suisse SEB SHB Nordea Sw edbank UBS Barclays DB Std Chartered RBS HSBC Lloyds ING SocGen Danske Santander CASA BNP Paribas DnB NOR BBVA Unicredito Intesa Sanpaolo (3) (1) (1) (3 ) (1) (3) (2) (3) (1) (3) (3) (3) Nordic banks Other Western European Banks Ratios are based on latest available company reports (presented on Basel II basis and, where available, without transitional floors) and adjusted pro forma for announced dividend cuts, capital injections, mergers and acquisitions. Peers include the top 20 Western European banks by market cap and the six largest Nordic banks by market cap. Notes: (1) Pro forma for capital injection (2) Pro forma for acquisition (3) As of Q

19 Asset Quality & Stress Tests 19

20 SEB has a stable and well diversified credit portfolio 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 85% Norway 7% Denmark 3% Finland 3% Sweden 48% Germany 24% Corporates 40% Households 28% Other 5% Estonia 3% Latvia 3% Lithuania 5% 10% Public administration 6% Banks 12% Property mgmt 14% Credit portfolio, SEK 1.8 trillion as of June Note: the chart above show the distribution by industry and location of SEB s credit portfolio excluding the fixed-income investment portfolio. 20

21 Credit Portfolio On and off balance, SEK bn Jun '09 (Dec '08) Swedish Other Nordic* German Baltic Total Corporates 358 (391) 179 (175) 105 (120) 81 (95) 722 (782) Property Management 111 (105) 22 (22) 98 (104) 31 (32) 262 (262) Households 290 (269) 48 (45) 103 (104) 65 (68) 506 (486) Public Administration 24 (32) 3 (2) 74 (79) 5 (6) 105 (119) Total non-banks 782 (797) 251 (244) 380 (407) 182 (200) 1,595 (1 649) Banks 123 (175) 39 (41) 48 (68) 2 (2) 211 (286) Total 905 (972) 290 (285) 428 (475) 184 (202) 1,806 (1 934) Geography based on client relationship management *Including other 21

22 Corporate credit portfolio by industry SEB Group, SEK bn % 1% 6% 6% 11% 11% 484 6% 29% 6% Dec 2006 Dec 2007 Dec 2008 Jun % Finance and insurance Transportation Business and household services Manufacturing Mining and quarrying Other 18% Wholesale and retail Shipping Construction Agriculture, forestry and fishing Electricity, gas and water supply 22

23 Property management credit portfolio by geography* SEB Group, SEK bn Commercial Multi-family % 3% 6% 8% 3% 1% 43% % Dec 2006 Dec 2007 Dec 2008 Jun 2009 Sweden Germany Estonia Latvia Lithuania Other Nordic Other European Other * By obligor s domicile 23

24 Stable asset quality outside CEE Level of Impaired Loans* Level of net credit losses* 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% SEB Group Nordic Dec '06 Mar '07 Jun '07 Sep Dec Mar Jun '07 '07 '08 '08 Germany Baltic Sep Dec Mar Jun '08 '08 '09 ' Germany Nordics Isolated quarters Q Q Estonia Latvia Lithuania Baltics Baltics SEB Group Jun 2009* * % of Credit Exposure excluding Banks *Annualised figures 24

25 Stable asset quality outside CEE Distribution of credit provisions Level of Impaired Loans Distribution of SEK 5,953m within SEB Group CEE 22% 78% Outside CEE 2,0% 1,5% 1,0% 0,5% 0,0% Dec '06 Mar '07 NPL 0.6% Jun Sep Dec Mar '08 Jun Sep Dec Mar '09 Jun Germany Nordics % of total exposure 3%* Shipping & Offshore Limited exposure to Bulk and Container sub-segments 3%* SMEs Sweden Bankruptcies increasing (from a low base) 1%* Acq. Finance Well diversified with 95% senior debt 7%* Commercial Real Estate* Mainly related to large real estate companies * Excluding Baltic exposures 25

26 Comparison of recent stress tests SEK bn Scenario Period Pre-loss earnings Credit losses Trough Tier 1 ratio Total Group Acc Riksbanken Main ,0 15,0 n.a. 15,9 22,0 n.a. 37,8 11,2% 9,6% n.a. Stress ,0 15,0 n.a. 29,0 42,0 n.a. 71,0 10,1% 6,9% n.a. Swedish FSA Main ,2 17,9 19,0 13,4 20,3 15,7 49,4 11,3% 10,2% 9,9% Negative ,8 15,4 17,3 26,3 36,7 22,9 85,9 10,2% 8,4% 7,4% 26

27 Resilient capital base confirmed by Riksbank stress tests results Stress Test Results Operating Profit Loan Losses RWA Core T1 Ratio T1 Ratio SEKbn 2009E 2010E Total 2009E 2010E Total 2009E 2010E 2009E 2010E 2009E 2010E Riksbank Base Case % 9.3% 11.9% 10.9% Riksbank Stress Case % 5.9% 10.1% 6.9% Riksbank Assumptions Base Case: Cumulative loan losses to four Swedish banks of SEK 170bn over 2009 and 2010, of which SEK 37bn are attributable to SEB Stress Case: Cumulative loan losses over 2009 and 2010 of SEK 311bn to four major Swedish banks, of which SEK 71bn are attributed to SEB. Loan loss assumptions used: - Sweden: 0.2% p.a. on household mortgages, 0.7% on CRE, 2.5% on other household and corporate loans - Denmark & Norway: 1.5x Swedish levels - Finland & Germany: 1.0x Swedish levels - Baltics: 10% p.a. of total lending Profits before loan losses equal 85% of the consensus forecasts 2009 and 2010 No dividends paid during the scenario period No loan growth assumed during Risk-weighted assets increase by an average of 5% per year Loan losses deducted from RWA at the end of each period Source: SEB reports, Riksbank Report as of 2-Jun

28 and further confirmed by the stress test conducted by the Swedish FSA Stress Test Results Pre-loss Earnings Credit Losses Total Group Tier 1 Ratio SEKbn Acc Acc Main Scenario SEB 17,2 17,9 19,0 54,1 12,9 19,4 15,0 47,3 11.3% 10.3% 10.1% Negative Scenario SEB 14,8 15,4 17,3 47,5 25,7 35,1 21,7 82,5 10.2% 8.2% 7.8% FSA Assumptions Main Scenario: Assumes a continuation of current economic indicators in Sweden as stipulated in the latest forecasts. Cumulative loan losses to four Swedish banks of SEK ~203bn over 2009, 2010 and 2011, of which SEK 47,3bn are attributable to SEB Negative Scenario: Cumulative loan losses over 2009 and 2010 of SEK 311bn to four major Swedish banks, of which SEK 82.5bn are attributed to SEB: Lending growth until 2011 for SEB is revised downward: -5%, -5% and 0% for the 3 years. Credit loss levels for Baltic countries range from 34% to 58%, whereas Western EU credit losses almost double to 3.9% Dividend payments are cancelled for the 3 year period, and Tier 2 capital does not absorb any losses incurred. Source: SEB reports, Riksbank Report as of 2-Jun-2009 Source: Finansinspektionen Report as of 10-Jun

29 Liquidity Management 29

30 SEB has the lowest loans-to-deposit ratio among Nordic peers Loans-to-deposits ratio* 200% 180% 160% 140% 120% 100% Q *excl re-classified bonds SEB s loans-to-deposits ratio vs. peers Nordic banks Other Western European Banks 253% 272% 71% 95% 98% 113% 116% 132% 138% 142% 148% 151% 153% 154% 155% 159% 167% 177% 178% 200% Source: Goldman Sachs, based on headline numbers for loans to customers SEB 30

31 A range of short and long term funding options Short Term Funding programmes CP Programmes Sweden France Global CP ECP USCP US Extendible CDs Yankee CD London Branch Swedish Government Guaranteed CDs Long Term Funding programmes CDs Yankee CD London Branch Senior unsecured bonds Germany Sweden Structured bonds Covered bonds Germany Public (Pfandbriefe) Mortgage (Pfandbriefe) Sweden (Säkerställda Obligationer) Subordinated debt/hybrid Tier 1 Swedish Government Guaranteed Bonds 31

32 Net liquidity position across maturities 20 August, SEK bn SEK bn d 2d 3d 1 week 2 weeks 4 weeks 8/20/2009 3/31/2009 SEB is matchfunded 15 months 2 months 3 months 4 months 5 months 6 months 7 months 8 months 9 months 10 months 11 months 12 months 12-15months 15-18months >18months Note this is a cash flow based model where assets and liabilities are mapped to contractual maturities. SEB will manage approx 12 months without any new funding if the loans and liabilities mature without prolongation. Not ongoing business if funding is disturbed or lending increases. 32

33 Funding raised with original maturity > 1 year as of SEK bn Instrument h h 2009 Q Q Q YTD 2009 YCD 5,9 4,1 1,3 0,0 1,3 1,5 2,8 Senior unsecured SEB AG 2 0,8 1,1 0,1 1,0 2,1 3,2 Senior unsecured SEB AB 37,4 23,2 34,7 0,0 34,7 36,2 70,9 Structured bonds 13,4 13,1 4,7 4,1 0,6 0,4 5,1 Covered bonds SEB AG 29,7 27,5 12,5 6,7 5,7 3,3 15,8 Covered bonds SEB AB 72,9 43,9 20,4 13,9 6,5 3,8 24,2 Hybrid tier 1 4,7 4,7 0,0 0,0 0,0 0,0 0,0 Total 166,0 117,3 74,7 24,8 49,9 47,3 122,0 33

34 Funding structure SEB Group, June 2009 SEK 1,701 bn CPs/CDs; 8% Schuldscheins and Reg Bonds; 3% Mortgage Covered Bonds Sweden; 10% Deposits - General Public; 42.3% Mortgage Covered Bonds Germany; 3% Public Covered Bonds Germany; 6% Senior debt; 3% Deposits - Central Banks; 8% Deposits - Financial Institutions; 14% Subordinated debt; 3% Free eligible asset pledgeable within central banks 71 bn SEK after 5 % haircut. Part of the 71 bn SEK is used for clearing and intraday collateral. 34

35 Liability structure Wholesale Funding SEB Group, June 2009 SEK 610 bn Subordinated debt; 7% CPs/CDs; 22% Senior debt; 9% Public Covered Bonds Germany; 18% Schuldscheins and Reg Bonds; 8% M ortgage Covered Bonds Germany; 7% M ortgage Covered Bonds Sweden; 29% 35

36 Baltics 36

37 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 Economic sentiment Index 140 Estonia Latvia Lithuania Euro-zone Oct-95 Oct-97 Oct-99 Oct-01 Oct-03 Oct-05 Oct-07 Oct-09 Current accounts Percent of GDP 5 Estonia Lithuania Latvia Mar- Mar- Mar- Mar- Mar- Mar- Mar- Mar- Mar Source: SEB Nordic Outlook, 1 Sept

38 Proactive and conservative approach in the Baltic region 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 Long-term commitment remains 38

39 Proactive and conservative approach in the Baltic region Estonia Gross new lending, SEK m Latvia Lithuania 7,341 5,220 3,354 2,222 2,685 1,097 1, Q1 08 Q1 09 Q2 09 Q1 08 Q1 09 Q2 09 Q1 08 Q1 09 Q2 09 Long-term commitment remains 39

40 Estonia Latvia Lithuania EURbn EURbn EURbn 40 SEB s Baltic lending relative the market Per cent, Q Q % 40 40% 40 SEB Lending total SEB Lending 40% 30 30% 30 30% 30 30% 20 20% 20 20% 20 20% 10 10% 10 10% 10 10% 0 Q2 05 Q4 Q2 06 Q4 Q2 07 Q4 Q2 08 Q4 0% 0 Q2 05 Q4 Q2 06 Q4 Q2 07 Q4 Q2 08 Q4 0% 0 Q2-05 Q4 Q2 06 Q4 Q2 07 Q4 Q2 08 Q4 0% Excluding Leasing portfolio Source: Central Banks and SEB 40

41 Baltic countries credit portfolio On and off balance, SEK bn Yearly SEB Estonia SEB Latvia SEB Lithuania 95.2 Banks Public Administration Households Property Management Corporate Dec '06 Dec '07 Dec '08 Jun '09 Dec '06 Dec '07 Dec '08 Jun '09 Dec '06 Dec '07 Dec '08 Jun ' YTD YTD YTD +38% +17% -2% -5% +40% +18% +5% -8% +47% +30% +8% -10% Growth rates in local currency 41

42 Continued buffering for CEE challenges Provisions for Net Credit Losses Distribution of SEK 5,953m within SEB Group Net credit loss level Q1 2009* Q H * Estonia Latvia Lithuania Baltics Baltic countries Non performing loans % of lending 25% 20% 15% 10% 5% 0% Portfolio assessed, past due > 60 days Individually assessed Estonia Latvia Lithuania Ukraine Lending (SEK bn) 73% 22% Nordics, Germany, etc. *Isolated quarters on an annualised basis 4.8% 0.2% Ukraine Russia Provisioning to build-up Baltic reserves SEK m 2,000 1,500 1, Specific Collective 65% collective provisions Q1-08 Q2-08 Q3-08 Q4-08 Q1-09 Q

43 Conservative provisioning policy Gross level of Impaired loans Individually assessed, per cent of lending Group Baltics Q4 08 Q1 09 Q2 09 Reserve ratios* % Q4 08 Q1 09 Q2 09 Group 69% 72% 72% Baltics 60% 69% 68% excluding homogeneous groups 43

44 Baltic countries Net Credit Losses SEK m Estonia Latvia Lithuania Total Jan-Jun '09 Net Write-offs & Actual Losses % Net New Specific Provisions ,401 32% Net New Collective Provisions ,152-1,292-2,870 66% of which: Homogeneous groups % Individually appraised loans ,110-2,028 47% Net Credit Losses ,601-2,057-4, % 44

45 Sharp economic deterioration in Ukraine Dramatically changed economic environment since acquisition in 2004 and 2007 No expansion plan Full goodwill write-off SEK 594m GDP forecast 12 Initial and revised GDP forecast Lending SEK 2.7bn Customers 105,000 # of branches 100 Employees 1,331 Q1 09 op profit SEK -153m 45

46 Summary 46

47 Long-term financial stability high capitalisation and a proven income capacity Restored liquidity profile 12 months matched funding Strong capital position Tier 1 capital ratio 13.1% Maintained reserve ratio 72% Proven income capacity + 21%* H1-08 vs. H1-09 * Adjusted for capital gain 47

48 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 48

49 49

50 Appendices 50

51 Macroeconomics: Sweden 51

52 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 Household debt service burden Percent of disposable income GDP growth Yearly growth, percentage 8 OECD Sweden New export orders Manufacuring industry, net 80 Orders Expected orders Source: SEB Nordic Outlook, 1 Sept

53 Sweden: High savings and rising income indicates consumption will grow again 16 Sweden: Savings and unemployment Per cent Savings Unemployment SEB forecast Source: SCB, SEB

54 Sweden: Weakening public finances, but debt low in an international comparison 80 Central government debt will climb Per cent of GDP Sources: Statistics Sweden, SEB