SEB's second quarter 2015 results presentation
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This document contains a press conference presentation by Annika Falkengren, President & CEO of SEB, covering the bank's financial results for January-June 2015. The key points are: - SEB reported an underlying profit before credit losses of SEK 12.4 billion for the first half of 2015, up 17% from the same period in 2014. Reported profit was SEK 11 billion. - Net interest income was down 1% to SEK 9.6 billion due to margin pressure, while net fee and commission income rose 48% to SEK 2.8 billion due to higher market volatility and customer activity. - All business divisions reported higher profits compared to the first half of 2014
SEB's second quarter 2015 results presentation
- 1. SEB January – June 2015 Press Conference Annika Falkengren President & CEO
- 2. Repricing of risk Swedish credit spreads 5y covered bonds vs. 5y Sovereign Stock exchanges MSCI World and OMXSPI, Indexed to 100 2007 0 20 40 60 80 100 120 140 160 2007 2008 2009 2010 2011 2012 2013 2014 2015 OMXSPI MSCI World 0 20 40 60 80 100 120 140 160 180 200 2007 2008 2008 2009 2010 2011 2012 2013 2014 2015 2
- 3. Highlights Q2 2015 3 High customer activity Continued strong asset quality and improved performance Strengthened resilience in uncertain markets
- 4. Profit & Loss, (SEK m) H1-15 Underlying One-off H1 2014 % vs. Underlying Total Operating income 23,598 -902 22,696 21,520 10 whereof NII 9,660 -82 9,578 9,761 -1 whereof NFI 2,841 -820 2,021 1,924 48 Total Operating expenses -11,164 -11,164 -10,857 3 Profit before credit losses 12,434 -902 11,532 10,663 17 Net credit losses etc. -490 -490 -557 -12 Operating profit 11,944 -902 11,042 10,106 18 H1-15 Reported 4 Financial summary Key figures Underlying H1 2015 Rep H1 2015 H1 2014 Return on Equity, % 14.2 12.9 13.1 Cost /income ratio 0.47 0.49 0.50 Earnings per share, SEK 4.33 3.92 3.67 CET1 ratio B3, % 17.2 16.0 Leverage ratio B3, % 4.4 4.0 Credit loss level, % 0.06 0.08
- 5. Net interest income development SEK bn, excluding one-off 5 Net interest income Jan-Jun 2015 vs. Jan-Jun 2014 Net interest income type Q2 2013 – Q2 2015 3.6 4.0 4.4 Q2-13 Q2-14 Q2-15 0.6 0.7 0.1 Q2-13 Q2-14 Q2-15 0.5 0.2 0.2 Q2-13 Q2-14 Q2-15 Deposits Funding & other Lending 9.8 9.7 Jan-Jun '14 Jan-Jun'15 -1%
- 6. Net fee and commission income development SEK bn 6 Net fee and commissions Jan-Jun 2015 vs. Jan-Jun 2014 Gross fee and commissions by income type Q2 2013 – Q2 2015 Custody and mutual funds Payments, cards, lending, deposits & guarantees Advisory, secondary markets and derivatives 0.8 1.3 2.0 Q2-13 Q2-14 Q2-15 1.7 1.8 2.2 Q2-13 Q2-14 Q2-15 2.5 2.6 2.5 Q2-13 Q2-14 Q2-15 +14% 7.9 9.1 Jan-Jun '14 Jan-Jun '15
- 7. 1.1 0.8 1.2 1.1 0.8 0.7 0.3 1.3 1.6 Q2-13 Q3-13 Q4-13 Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 Net financial income development SEK bn, excluding one-off 7 NFI and total Markets result Q1 2013 – Q1 2015 Net financial income Jan-Jun 2015 vs. Jan-Jun 2014 Net financial income development Q2 2013 – Q2 2015 Increased volatility in the quarter* 10 12 14 16 18 20 22 24 26 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14Mar-15 Jun-15 * (VIX S&P 500 volatility) +48% 1.9 2.8 Jan-Jun '14 Jan-Jun '15
- 8. Average quarterly income (SEK bn) 9.2 9.4 9.8 10.4 11.0 11.8 Avg 2010 Avg 2011 Avg 2012 Avg 2013 Avg 2014 Jan-Jun 2015 Average quarterly expenses (SEK bn) 5.8 5.9 5.7 5.6 5.5 5.6 Avg 2010 Avg 2011 Avg 2012 Avg 2013 Avg 2014 Jan-Jun 2015 Average quarterly profit before credit losses (SEK bn) Notes: Excluding one-offs (restructuring in 2010, bond buy-back and IT impairment in 2012, sale of MasterCard shares and Euroline in 2014, Swiss withholding tax in 2015) Estimated IAS 19 costs in 2010 3.4 3.5 4.1 4.8 5.5 6.2 Avg 2010 Avg 2011 Avg 2012 Avg 2013 Avg 2014 Jan-Jun 2015 Operating leverage excluding one-offs 8
- 9. 5.7 3.1 1.5 1.2 0.7 Divisional performance Excluding one-off Operating profit Jan-Jun 2015 vs. Jan-Jun 2014 (SEK bn) 9 RoBE 14.1% (14.3) 14.0% (21.0) 23.1% (17.7) 24.1% (22.1) 15.3%* (15.5) Business Equity (SEK bn) 61.9 (51.7) 34.3 (24.4) 9.8 (8.7) 8.4 (8.2) 8.2 (9.2) H1 2015 H1 2014 Merchant Banking Retail Banking Wealth Life Baltic *RoBE excl RHC in Baltic Division is 18.9%
- 10. Client segments affected by central bank activities Higher corporate Nordic IPO activity… (Deal value, Jan – Jun 2015,EUR m) 693 626 594 444 439 SEB Peer 1 Peer 2 Peer 3 Peer 4 0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 Jun-10 Jun-11 Jun-12 Jun-13 Jun-14 Jun-15 SWE 10y SWE 5y 0 200 400 600 800 1,000 1,200 Dec '09 Jun '10 Dec '10 Jun '11 Dec '11 Jun '12 Dec '12 Jun '13 Dec '13 Jun '14 Dec '14 Jun '15 …and Institutional demand for risk mgmt (Swap interest rates, Bloomberg) Corporate credit portfolio (SEK bn) 10
- 11. Investments in digital solutions 11 Innovation Lab EPICENTER
- 12. The traditional role of a bank has evolved post-Lehman 12 US Treasury volumes vs. dealer inventory Indexed to 100 in 2001 50 100 150 200 250 300 350 400 450 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 US Treasuries outstanding US Dealer inventory Source: DB Research, SIFMA, NY Fed, US Treasury US corporate bond volumes vs. dealer inventory Indexed to 100 in 2001 0 100 200 300 400 500 600 700 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 US dealer inventory US Corp. Bonds outstanding
- 13. Continued resilience and flexibility 13 Net credit loss level 0.06% NPL coverage ratio 58% CET1 17.2% LCR 123% Liquidity resources ~25% AssetQualityLiquidityCapital RoE 12.9% RoE 14.2%(excl one-off)
- 14. Going forward 14 Continued disciplined execution Resilience and long-term perspective in challenging economic climate Focus on customer relationships