SEB fourth-quarter 2012 earnings presentation
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Annika Falkengren, President & CEO of SEB, summarized the bank's annual report for 2012 in the following areas: 1. Business expansion with increased number of clients and credit portfolio in both large corporate and SME segments across Nordics and Germany. 2. Improved customer satisfaction ratings compared to peers for both large corporate and SME segments. 3. Increased operating leverage with higher average quarterly income and lower average quarterly expenses. 4. Strong balance sheet with capital and liquidity ratios exceeding requirements.
SEB fourth-quarter 2012 earnings presentation
- 1. Annika Falkengren Annual Accounts 2012 President & CEO
- 2. Delivery of 2010–2012 plan 1 Business expansion 2 Customer satisfaction 3 Operating leverage 4 Strong balance sheet 2
- 3. Business expansion Large Corporate Number of clients Credit portfolio (SEK bn) Nordics & Germany +300 2,100 +130 2009 2010 2011 2012 SME Number of clients Credit portfolio (SEK bn) Sweden +31,500 130,000 +60 2009 2010 2011 2012 3
- 4. Customer satisfaction Large Corporate performance Nordics Peer 4 Overall Peer 2 Peer 3 Peer 1 Willingness to recommend SME Swedish Quality Index SEB Avg. Swedish peers Sweden #2 #4 #3 2010 2011 2012 Private Bank of the Year 2012 Best Nordic Private Bank Sweden & Baltics Sweden Estonia Lithuania Latvia 4
- 5. Increased operating leverage Average quarterly income (SEK bn) Average quarterly expenses (SEK bn) 9.2 9.4 9.8 5.8 5.9 5.7 Avg 2010 Avg 2011 Avg 2012 Avg 2010 Avg 2011 Avg 2012 Operating leverage Average quarterly profit before credit losses (SEK bn) 4.1 3.4 3.5 Avg 2010 Avg 2011 Avg 2012 Notes: Excluding one-offs (restructuring in 2010, and bond buy-back and IT impairment in 2012) Estimated IAS 19 costs in 2010 5
- 6. Strong balance sheet Capital, liquidity and asset quality CET1 Basel III 13.1% LCR 113% Liquid resources SEK 632bn Loan to deposit ratio 134% NPL coverage ratio 66% Loan losses 8bps 6
- 7. Underlying business development Pre-provision profit and operating profit (SEK bn) Operating profit Pre-provision profit 5 4.3 4 3 2 1 0 Q4-10 Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Q2-12 Q3-12 Q4-12 Notes: Excluding one-offs (bond buy-back and IT impairment in Q4 2012) Estimated IAS 19 costs in 2010 7
- 8. Results presented today exclude one-off effects announced last week Results presentation excludes: Buy-back of covered bonds at negative income of SEK 402m IT impairment at cost of SEK 753m
- 9. Income statement Profit and loss (SEK bn) Q4-12 % Q3-12 % Q4-11 FY 2011 FY 2012 % Total Operating income 10,039 +4 +8 37,686 39,225 +4 Total Operating expenses -5,771 +2 -4 -23,513 -22,899 -3 Profit before credit losses 4,268 +6 +29 14,173 16,326 +15 Net credit losses etc. -274 780 -936 Operating profit 3,994 +4 +30 14,953 15,390 +3 Operating income by type, 2011 vs. 2012 (SEK bn) 17.6 13.6 9% 12% Customer- 15.2 15.9 44% driven NII 4.6 3.4 35% 2011 2012 2011 2012 2011 2012 2011 2012 Net interest Net fee and Net financial Net life insurance income commissions income income Note: Excluding one-offs (bond buy-back and IT impairment) 9
- 10. Net interest income development Net interest income Q4 2010 – Q4 2012 (SEK bn) 5.0 4.5 4.0 3.5 3.0 2.5 Q4-10 Q1 Q2 Q3 Q4-11 Q1 Q2 Q3 Q4-12 Net interest income by income type Q4 2010 – Q4 2012 (SEK bn) 3.4 0.6 0.4 Q4-10 Q4-11 Q4-12 Q4-10 Q4-11 Q4-12 Q4-10 Q4-11 Q4-12 Lending Deposits Funding & other 10
- 11. Net fee and commission income development Net fee and commissions Q4 2010 – Q4 2012 (SEK bn) 5.0 4.5 4.0 3.5 3.0 2.5 Q4-10 Q1 Q2 Q3 Q4-11 Q1 Q2 Q3 Q4-12 Gross fee and commissions by income type Q4 2010 – Q4 2012 (SEK bn) 2.4 1.8 0.7 Q4-10 Q4-12 Q4-12 Q4-10 Q4-11 Q4-12 Q4-10 Q4-11 Q4-12 Advisory, secondary markets and derivatives Custody and mutual funds Payments, cards, lending, deposits and guarantees 11
- 12. Net financial income development Net financial income Q4 2010 – Q4 2012 (SEK bn) 2.5 2.0 1.5 Excl. GIIPS de-risking 1.0 0.5 0.0 Q4-10 Q1 Q2 Q3 Q4-11 Q1 Q2 Q3 Q4-12 Net financial income development (SEK bn) NFI Divisions GIIPS 1.2 1.2 1.2 1.1 1.2 1.3 1.1 1.0 NFI Treasury & Other -0.2 -0.2 -0.2 Q1-11 Q2 Q3 Q4-11 Q1 Q2 Q3 Q4-12 12
- 13. Delivery on cost-cap for underlying business Operating expenses excluding one-offs, SEK bn 23.0 23.1 Excl. IAS 19 22.7 <23.0bn 2010 2011 2012 23.3 23.5 New cost cap <22.5bn Incl. IAS 19 22.9 2010 2011 2012 2013 2014 Notes: Excluding IT impairment Estimated IAS 19 costs in 2010 13
- 14. Divisional performance Operating profit 2011 vs. 2012 (SEK m) 7.5 Jan-Dec 2011 7.1 Jan-Dec 2012 4.4 3.1 2.9 2.0 2.0 1.4 1.3 1.1 Merchant Banking Retail Banking Wealth Management Life Baltic Note: Excluding IT impairment 14
- 15. Summary of 2012 financials Operating profit: SEK 14.2bn EPS: SEK 5:31 Proposed dividend: SEK 2:75 CET1 ratio: 13.1% Note: Total operations (including one-off effects) 15
- 16. Ambition going forward The leading Nordic bank for corporates & institutions Top universal bank in Sweden and the Baltics 16
- 17. The relationship bank in our part of the world 17
- 18. Uncertain macroeconomic environment persists Macro improving but from low level European crisis making slow progress Customer activity remains subdued Central banks keeping rates low 18
- 19. Financial ambitions Dividend payout 40% or above Common Equity Tier 1 Long-term ROE ratio of 13% aspiration 15% Generate ROE that is competitive with peers 19
- 20. What is a competitive ROE in the near-term? ROE 2014 – Consensus analyst estimate (Post Q3 2012, %) With 13% CET1 ratio Improved 15 operating leverage 13 13 13 12 11 11 10 Peer 1 Peer 2 Peer 3 SEB Peer 4 Peer 5 Source: Consensus analyst estimates from equity research reports 20
- 21. Back-of-the-envelope calculation for ROE 13% Operating profit ILLUSTRATIVE (SEK bn) Asset Baltic Approx. 20 Private & Gathering Corporates Large Corps & Institutions 15.4 Target ROE>peers = approx. 13% Capital generation assuming dividend payout >40% 2012 ”2015” ROE 11% ROE approx. 13% Note: Excluding one-offs (bond buy-back, IT impairment and tax effect) 21
- 22. Merchant Banking Large Corporates Institutions Second phase in the Nordic region Pic Pic Acquisition of new clients and in Germany Enhance capital markets Increase cross-selling on existing Pic capabilities customer base Increase customer flows in Greater co-ordination of the Pic Pic emerging markets offering and packaging Impact Income growth ~15% by 2015 22
- 23. Retail Banking Corporates Private Holistic relationship banking in Advisory driven service based on focus: “Hela företagaren” customer needs Strengthen customer growth and Improve customers ability to local competence travel seamlessly between channels Invest in self-service and e-banking Invest in e-banking for cost efficient for service improvements service and offerings Impact Income growth ~20% by 2015 23
- 24. Asset Gathering and Baltic Asset Gathering Baltic Reduce complexity in fund offering Focus on Home Banking customers and improve performance Enhance private banking client Standardize product offering and segmentation and client processes to simplify customer experience experience Improve Life insurance online Improve advisory service to SME solutions and risk products and Corporate Customers Impact Impact Income growth ~5% by 2015 Income growth ~15% by 2015 24
- 25. Conclusion Deep and broad long-term customer relationships remain at heart of SEB’s strategy Profit growth from disciplined execution of investments and cost control Strong balance sheet and low risk profile maintained New financial targets reflect SEB’s strong commitment to bring value to shareholders 25
- 26. The relationship bank in our part of the world 26