ubs global financial services conference new york, 20 may 2014 · norway . finland . sweden ....
TRANSCRIPT
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Barclays Global Financial Services Conference New York City, September 8, 2014
Jan Erik Back CFO
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A Nordic bank with a global reach
London
S:t Petersburg
Geneva
Hong Kong Shanghai New Delhi Beijing
Kiev
Dublin
Moscow Denmark
Norway Finland
Sweden
New York
São Paulo
Singapore
Lithuania Latvia
Estonia
Germany Warsaw
Luxembourg
2,900 Corporates & Institutions 400,000 SME:s 4 million private individuals
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SEB’s Core Markets Economic fundamentals remain relatively robust
Lithuania
Denmark
Norway Finland
Sweden Latvia Estonia
Germany
-10-8-6-4-202468
2009 2010 2011 2012 2013 2014E 2015E 2016E
Sweden Norway Finland Denmark
Nordic GDP development *
-4.5-3.5-2.5-1.5-0.50.51.52.53.5
2009 2010 2011 2012 2013 2014E 2015E 2016E
Eurozone GDP development *
-20
-15
-10
-5
0
5
10
2009 2010 2011 2012 2013 2014E 2015E 2016E
Germany Estonia Latvia Lithuania
German and Baltic GDP development *
* Source: SEB Nordic Outlook, August 2014
%
%
Lithuania
%
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SEB’s Core Markets Strong sovereign finances % of GDP
Sovereign Debt
0% 50% 100%150%200%
GreeceItaly
PortugalIrelandCyprus
SpainFrance
UKHungaryBelgium
GermanyNetherlands
AustriaSlovenia
MaltaPolandFinland
DenmarkSweden
LithuaniaLatvia
NorwayLuxemburg
Estonia
Source: IMF WEO Actual figures for 2013
Budget Deficit Current Account Balance
-20% -10% 0% 10% 20%
SloveniaIrelandSpain
UKPortugalCyprusPolandFrance
NetherlandsItaly
MaltaBelgiumFinlandGreece
HungaryLithuania
AustriaLatvia
SwedenDenmarkEstonia
GermanyLuxemburg
Norway
-5% 0% 5% 10% 15%
UKPoland
BelgiumFranceCyprus
EstoniaFinland
LatviaPortugalGreece
SpainItaly
LithuaniaMalta
AustriaHungarySwedenSlovenia
IrelandDenmark
LuxemburgGermany
NetherlandsNorway
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Strategy has remained the same
Build business platform for growth 1 Enhance customer satisfaction 2
Create strong asset quality and balance sheet 4 Achieve operating leverage 3
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Share-of-wallet in customer segments Number of clients
Large corporates
2010 H1 2014
2,200
+400
Sweden
SME/MidCorp
2010 H1 2014
146,000
+47,000
Sweden
Private
2010 H1 2014
472,000 +66,000
Built business platform for growth
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SME NPS*
Sweden
+19
+24
2012 2013
Sweden
+19
+28
2012 2013
Improved customer satisfaction Customer loyalty/satisfaction Targeted measures
Financial Institutions
Willingness to recommend
#1 Nordic
Willingness to recommend
#1 Nordic
Large corporates
* Net Promoter Score
Private NPS*
Willingness to recommend
#1 Germany
Targeted corporates
Baltic countries Private & SMEs NPS *
+47 /+48
Germany
Baltics
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Average quarterly income (SEK bn)
9.2 9.4 9.8 10.4 10.8
Avg 2010 Avg 2011 Avg 2012 Avg 2013 Jan-Jun2014
Average quarterly expenses (SEK bn)
5.8 5.9 5.7 5.6 5.4
Avg 2010 Avg 2011 Avg 2012 Avg 2013 Jan-Jun2014
Average quarterly profit before credit losses (SEK bn)
Notes: Excluding one-offs (restructuring in 2010, and bond buy-back and IT impairment in 2012) Estimated IAS 19 costs in 2010
3.4 3.5 4.1 4.8 5.3
Avg 2010 Avg 2011 Avg 2012 Avg 2013 Jan-Jun2014
Operating leverage
15% income growth target
2012-2015
Flat cost target 2012-2015
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We are mid-term in our 3-year plan
2012 2015 Op. profit (SEK bn)
RoE CET1
15
11% 13%
>20
13% (15%)
15% (13%)*
10
13% (15%)
16% (13%)*
* Communicated capital target in Feb 2013
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Organic growth strategy has created earnings stability
23%
23%
30%
Percent depicts Business Area in percent of total income
Average quarterly income 2008-2013 and Q1 2014
0
2,000
4,000
6,000
8,000
10,000
12,000
2008 2009 2010 2011 2012 2013 H1 2014
Swedish Retail Banking Large Corporate and Transaction Banking Life and Wealth Markets Business Baltics
21%
21%
23%
23%
12%
8%
13%
21%
30%
28%
SEK m
10
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Focus on full service customers – Residential mortgage lending growth is a consequence of the strategy
350
370
390
410
430
450
470
2008 2009 2010 2011 2012 2013 H12014
472
386
50
150
250
350
450
2008 2009 2010 2011 2012 2013 H12014
+68 >80% conversion to full-service customers
Number of full service customers (thousands)
Household mortgage lending growth (SEK bn)
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SEB’s portfolio – Low LTVs
0-50%
51-70% 16%
>85% 0%
Loan-to-value
Share of portfolio
80%
4% 71-85%
Strong credit characteristics and strict underwriting standards underpin SEB’s mortgage lending
Focus on affordability
Cash flow analysis Amortisation 7% interest rates
Indebtedness Max loan amount 5x total
gross household income Collateral valuation 85% LTV cap If LTV >70% mandatory
amortisation Sell first and buy later
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0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
2002 2004 2006 2008 2010 2012 2014
SEB’s customer becomes quickly more digital Number of active private customers by channel each month
Number of customer meetings
Digital
Branch Telephone
Internet ≈ 95%
Branch ≈ 15%
Telephone ≈ 10%
≈ 50% Internet & Branch
≈ 97%
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SEB – A perfect Entrepreneur
Top ranking in SME surveys
The corporate bank in Sweden
Client Coverage
Branches
Digital channels
Product Areas
Partnership and “24/7” accessibility
Focus on Entrepreneurship and start-ups
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Broadened Nordic and German franchise through customer acquisition and cross-selling
0.4
0.4
1.0
0.5
1
1
1.7
1.3
Operating profit, rolling 12 months (SEK bn, FX-adj)
CAGR 2010 - June 2014
+31%
+25%
+16%
+32% 2010
June 2014
Denmark
Finland
Norway
Germany
2010
June 2014
2010
June 2014
2010
June 2014
Large Corporates and Financial Institutions New client income contribution (%)
Average product penetration 2010 – 2013
cash management trade
finance foreign exchange relationship
lending
leasing
corporate finance
fixed income commodities
structured finance
corporate cards
life custody
fund services
equities
asset management
debt capital markets
2010 Now 2011 2012
5
4
3
2
1
0
New clients 2010
2011 2012
2010 2011 2012 2013 2014
10%*
440
*June YTD figure i.e the income on new clients in H1 makes up 10% of MB income in H1.
2%
5%
7%
10%
209
305
413
# of new clients, cumulative
84 2013
2013
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Growth of German corporate bank
H1-13 H1-14
725
1,058
SEB Germany operating profit (SEK m)
Sixt EUR 250m Joint Bookrunner
Ströer EUR 500m Coordinator/Book-runner
ThyssenKrupp EUR 1,200m Joint Bookrunner
ProSiebenSat.1 EUR 2,000m Coordinator/Book-runner/MLA
Deutsche Bahn SEK 1,600m Sole Bookrunner
Nordzucker EUR 400m Bookrunner/MLA
Select SEB transactions H1 2014
~15% Real Estate CAGR 2002-2014 -12% Continuous capital re-
allocation to corporates
~85% Corp & Inst CAGR 2002-2014 +8% Focus on corporates
acquisition and cross-selling
Key activities going forward
Increase client penetration while maintaining new prospecting Strengthen capital markets competence and offering Leverage international capabilities through SEB's network
AM AM
MB
MB
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Strong corporate bond franchise Significant deals in Q2 2014
23,304
26,299
33,390
35,352
40,274 SEB
H1 2014 (SEK m)
79 Issues
89 Issues
95 Issues
83 Issues
63 Issues
SEK League Tables – Corporate Bonds
Nordic market lending and bond financing
73% 82%
46%60%
76%
27% 18%
54%40% 24%
2010 2011 2012 2013 H1 2014
Bonds
Loans
Source: Dealogic on Nordic markets
EUR 500m Fixed Green Bond Lead Manager
SEK 1,5bn / 310m FRN/Fixed Green Bond Lead Manager
SEK 1.3bn / 200m FRN/Fixed Lead Manager
EUR 250m Fixed Joint Lead Manager
EUR 500m Fixed Joint Lead Manager
EUR 65m FRN Joint Lead Manager
Green Bonds
SEK 870m / 230m FRN/Fixed Green Bond Lead Manager
SEK 1.5bn Fixed Green Bond Lead Manager
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Household non-
mortgage5%
Residential Mortgages
33%
Public Sector5%
Corporates48%
Commercial Real Estate9%
Total Nordics ~60% ~80%
Organic growth strategy protects high asset quality
Credit portfolio growth from 2007 – Jun 2014 SEK bn
Credit portfolio, non-bank, Jun 2014 SEK 1,819bn
21
-91
-37
-24
-14
-5
48
61
90
207
258
Other
German retail
Baltics
German commercial real estate
German residential real estate
Public administration
Shipping & Private Equity Finance
Nordic commercial real estate
Swedish retail corporate
Swedish household mortgage
Large corporates
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Nordics continue to support high asset quality
0.11 0.30
0.92
0.15
-0.08
0.08 0.09 0.08
2007 2008 2009 2010 2011 2012 2013 H12014
(negative = reversals)
SEB Group
0.05 0.18 0.17 0.06 0.07 0.05 0.06 0.09
2007 2008 2009 2010 2011 2012 2013 H12014
Nordic countries Net credit losses in per cent Net credit losses in per cent
Credit quality Loan loss ratio, Group
SEK bn
40%
50%
60%
70%
80%
90%
0
10
20
30
40
Q2-03
Q2-04
Q2-05
Q2-06
Q2-07
Q2-08
Q2-09
Q2-10
Q2-11
Q2-12
Q2-13
Q2-14
Non-performing loansImpaired loans netTotal bad debt coverage ratio
-0.4%-0.2%0.0%0.2%0.4%0.6%0.8%1.0%1.2%
Q2-03
Q2-04
Q2-05
Q2-06
Q2-07
Q2-08
Q2-09
Q2-10
Q2-11
Q2-12
Q2-13
Q2-14
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SEB’s capital requirement According to SFSA 8 May 2014
4.5%
1.5% 0.7% 0.9%
2.0%
3.0%
0.6%
2.5%
15.7%
0.8%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
CET1 required CET1 available
Expected profit after dividend paid 15.6
16.5
CET1 ratio Q1 2014
• Strong capital formation
• Significantly more capital attributed to divisions to support capital rationalisation and pricing dynamics
• Revised capital target to be communicated when details clarified
Capital conservation buffer Countercyclical capital buffer Systemic risk buffer Systemic risks in Pillar 2 15 - > 25% risk weight floor on Swedish mortgages Current risk weight floor on Swedish mortgages Pillar 2 excl. risk - weight floor on Swedish mortgages and systemic risks Minimum common equity Tier 1
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(SEK bn) 2009 2013 Q2 2014
Non-performing loans 28.6bn 9.5bn 8.6bn*
NPL coverage ratio 65% 72% 74%*
Net credit loss level 0.92% 0.09% 0.08%
Customer deposits 750bn 849bn 890bn*
Liquidity resources >10% ~25% ~25%*
Liquidity coverage ratio N.A. 129% 127%*
CET 1 ratio (Basel 3) 11.7% 15.0% 16.0%*
Total capital ratio (Basel 3) 14.7% 18.1% 20.5%*
Leverage ratio (Basel 3) N.A. 4.2% 4.3%*
Strong asset quality and balance sheet As
set q
ualit
y Fu
ndin
g an
d liq
uidi
ty
Cap
ital
*end of June
Basel 2.5
Basel 2.5
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Financial targets
Profitability Return on Equity Competitive with peers
- long-term aspiration of 15% Capital
Common Equity Tier 1 ratio Total capital ratio
13% 16%
TBD, always compliant with
regulation
Dividend Pay-out ratio 40% or above of EPS
Ratings Funding access and credibility
as counterpart
Maintain credit ratings in support of competitive funding access and costs and as a viable counterpart in financial markets
Liquidity
Liquidity Coverage Ratio > 100% according to Swedish requirements
Efficiency Nominal cost cap < SEK 22.5bn 2013 and 2014 …and 2015
2013 2014
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Going forward
Long-term customer relationships
Disciplined execution of business plan
Finalisation of regulatory Swedish finish
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The relationship bank in our part of the world