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Morgan Stanley European Financials Conference, London 26 March 2014 Jan Erik Back, CFO
Resilience and franchise growth key attributes post-Lehman
Enhanced profitability and customer satisfaction key future deliveries
2
The past
3
Our way of doing business
Full-service customers
Holistic coverage
Investments in core services
Large Corporate
2,200 customers
Financial Institutions
700 customers
Corporate
400k customers
Private
4m customers
Since 1856 focus on…
4
Leverage ratio (Basel 3)
CET 1 ratio (Basel 3)
Strong asset quality and balance sheet
CT 1 (Basel 2.5)
Liquidity resources
Customer deposits
2009 2012 2013
28.6bn 13.8bn 9.5bn
65% 66% 72%
0.92% 0.08% 0.09%
750bn 862bn 849bn
>10% ~25% ~25%
N.A. 113% 129%
11.7% 15.1% 17.8%
N.A. 13.1% 15.0%
4.2%
Non-performing loans
Liquidity coverage ratio
NPL coverage ratio
Asse
t qua
lity
Fund
ing
and
liqui
dity
C
apita
l (SEK)
Net credit loss level
5
Substantially reduced non-performing loans SEK bn
NOTE: Sale of the German retail operations reduced German NPLs by SEK 817m in Mar ‘11
NPLs / lending:
NPL coverage ratio:
0
5
10
15
20
25
30
Dec
'07
Dec
'08
Dec
'09
Dec
'10
Dec
'11
Dec
'12
Mar
'13
Jun
'13
Sep
'13
Dec
'13
Dec
'07
Dec
'08
Dec
'09
Dec
'10
Dec
'11
Dec
'12
Mar
'13
Jun
'13
Sep
'13
Dec
'13
Dec
'07
Dec
'08
Dec
'09
Dec
'10
Dec
'11
Dec
'12
Mar
'13
Jun
'13
Sep
'13
Dec
'13
Dec
'07
Dec
'08
Dec
'09
Dec
'10
Dec
'11
Dec
'12
Mar
'13
Jun
'13
Sep
'13
Dec
'13
SEB Group Nordics Germany Baltics
Portfolio assessed - past due >60 days
Individually assessed - impaired loans with specific reserves
0.7%72.0%
0.2%75.8%
0.8%86.9%
5.0%66.6%
-32%
-7%-4%
-44%
6
A liquid balance sheet based on a solid funding base
80%
100%
120%
140%
160%
Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13
1. Liquid assets = trading assets excluding derivatives + central bank holdings + bond portfolios in Treasury + bank lending. 2. Short-term funding = central bank funding + CP/CD + bank funding 3. Core Gap = Core Gap Ratio is an SEB defined internal measure similar to the regulatory-defined NSFR but based on internal behavioural modelling. It measures the amount of more than 1 year funding in relation to more than 1 year assets.
80%
100%
120%
140%
160%
Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13
Structural liquidity – Core gap ratio: stable funding to long-term assets3 has been stable
Short-term liquidity – Liquid assets1 to short-term funding2 has structurally improved
7
2008 2009 2010 2011 2012 2013
Basel 2.5 Core Tier 1 ratio (per cent)
Strong capital situation
17.8 Strong capital formation
Basel III leverage ratio 4.2%
Maintain buffer to minimum regulatory levels
- In Sweden CET 12% in 2015 (+ countercyclical buffer+ pillar 2+…?)
Significantly more capital attributed to divisions to support capital rationalisation and pricing dynamics
8.6
Basel III fully implemented 13.1 15.0
8
2006 2007 2008 2009 2010 2011 2012 2013
Profit before losses, FY Operating profit, FY
Profit generation throughout the financial and sovereign debt “crises”
2006 2007 2008 2009 2010 2011 2012 2013
Operating income Operating expenses Net credit losses
2006 2007 2008 2009 2010 2011 2012 201320062007200820092010201120122013
2)
1)
3)
1) of which SEK 1.3bn buy back of sub debt 2) of which SEK 3.0bn goodwill write-offs 3) of which SEK 0.8bn restructuring costs in our German subsidiary, SEB AG 4) write-down of IT infrastructure SEK 0.8bn 5) of which SEK 1.0bn in write-backs of credit loss provisions
4)
5)
36.7 37.7 38.8
23.8 23.5 23.7
15.2 15.0 14.2
11.4 13.0
14.2
22.3
41.6
19.3 18.1
Income, expenses and net credit losses (SEK bn)
Highest operating profit to date (SEK bn)
9
5.8 5.9 5.7 5.6
Avg 2010 Avg 2011 Avg 2012 Avg 2013
Increased operating leverage Average quarterly income (SEK bn)
9.2 9.4 9.8 10.4
Avg 2010 Avg 2011 Avg 2012 Avg 2013
Average quarterly expenses (SEK bn)
Notes: Excluding one-offs (restructuring in 2010, and bond buy-back and IT impairment in 2012) Estimated IAS 19 costs in 2010
Average quarterly pre-provision profit (SEK bn)
3.4 3.5 4.1
4.8
Avg 2010 Avg 2011 Avg 2012 Avg 2013
10
Ope
ratin
g ex
pens
es
(SE
K b
n)
<22.5bn
23.8 23.5 22.9 22.3
2010 2011 2012 2013
Improved cost efficiency
Structural
Activ
ities
Mindset
• Common support functions • Pooled procurement • Agile IT development • Off-shoring
• Decentralisation • Cost caps
11
Building-up the client franchise… Fr
anch
ise
Share-of-wallet in customer segments Number of clients
Large corporates
2009 2013
2,200 +400
Sweden
Baltics
SME/MidCorp
2009 2013
140,000 +41,000
2009 2013
94,000 +21,000
Sweden
Baltics
Private
2009 2013
466,000 +60,000
2009 2013
844,000 +179,000
12
...and creating credit portfolio growth SEK bn
300
400
500
600
700
800
900
Dec '09 Jun '10 Dec '10 Jun '11 Dec '11 Jun '12 Dec '12 Jun '13 Dec '13
+185bn, CAGR 7%
Households
Corporates
+125bn, CAGR 7%
13
Increased focus on savings and asset gathering Full range of savings products through bancassurance model
050
100150200250
2008 2009 2010 2011 2012 2013
Unit-linked AuM (SEK bn)
+15% CAGR
Private Banking AuM (SEK bn)
0
200
400
600
2008 2009 2010 2011 2012 2013
+25% CAGR
Household deposits (SEK bn)
+8% CAGR
0
50
100
150
200
2008 2009 2010 2011 2012 2013
14
Sum-up: profit growth enabling dividend growth
Dividend policy: 40% or above of Net profit (EPS)
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
2010 2011 2012 2013
Total dividend Net profit
DPS, SEK 1.50 1.75 2.75 4.00 Pay-out ratio 49% 35% 52% 59%
SEK m
15
The future
16
Our strategic direction remains
The leading Nordic bank for corporates & institutions
Top universal bank in Sweden and the Baltics
17
Execution is key
Corporate expansion Nordics & Germany
SME expansion Sweden
Cost control (flexibility)
Balance sheet resilience
2010 2011 2012 2013 2014 2015 2016
Improve customer loyalty
Increase share-of-wallet
Profitable growth
Continued resilience and flexibility
Business Plan 2010-2012
Business Plan 2013-2015
Business Plan 2014-2016
18
SME NPS
Baltics
+27 +30
2012 2013
Sweden
+19 +24
2012 2013
Private NPS
Sweden
Baltics
+34 +34
2012 2013
+19 +28
2012 2013
Improving customer satisfaction…and loyalty C
usto
mer
s Customer loyalty/satisfaction Targeted measures
Financial Institutions
Willingness to recommend
#1
Willingness to recommend
#1
Large corporates
19
Private SKI SME SKI
60.0
62.0
64.0
66.0
68.0
70.0
72.0
74.0
76.0
78.0
80.0
2007 2009 2011 2013
SEB SHBNordea Swedbank
60.0
62.0
64.0
66.0
68.0
70.0
72.0
74.0
76.0
78.0
80.0
2007 2009 2011 2013
SEB SHBNordea Swedbank
413
305
209
# of new clients
84
Increase share of wallet Large Corporates and Financial Institutions New client income contribution (%)
2%
5%
7%
10%
171
49
93
100
5
4
3
2
1
0 2010 2011 2012 2013
”Vintage”2010
2011
2012
2013
2014
6
7
8
9
Average MB client
Number of products per customer
20
Actions to raise divisional performance
Merchant Banking
Retail Banking
Asset Gathering
Baltic
Income growth by 2015
~15%
~20%
~5%
~15%
Second phase in the Nordic and German expansion
Increase cross-selling on existing customer base
Further strengthen corporate profile
Leverage multi-channel approach
Reduce complexity in fund offering and grow PB
Improve Life insurance online solutions
Focus on customer profitability
Improve advisory services to corporates
21
Income growth in line with communicated target
Growth target 2012-15
3 years
Each year
Actual growth 2013
Merchant Banking ~15% ~5% vs. +6%
Retail Banking ~20% ~6% vs. +10%
Life & Wealth ~5% ~1.5% vs. +2%
Baltic ~15% ~5% vs. +3%
Group ~15% ~5% vs. +7%
Operating profit
(SEK bn)
Large Corps &
Institutions
Asset
Gathering
Baltic
Private &
Corporates
Target ROE>peers = approx. 13%
Capital generation assuming dividend payout >40%
”2015”
Approx. 20
ROE approx. 13%
I L L U S T R A T I V E
15.4
2012
ROE 11%
From Q4 2012:
22
Business conditions
Deloitte/SEB Swedish CFO Survey
30
35
40
45
50
55
60
65
70
2006 2007 2008 2009 2010 2011 2012 2013 2014
23
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
24
Putting extra focus on…
Grow SME business
Continued expansion in Nordics and Germany
Increase private customer satisfaction
Growth in debt capital markets
Capture Savings opportunity
25
Sum-up
26
Keeping SEB’s uniqueness against competitors
27
Competitive and sustainable returns
Enhance customer loyalty and brand perception
Increase share-of-wallet
Cost, capital & funding efficiency +