Docstoc

SEB Morgan Stanley Presentation

Document Sample
SEB Morgan Stanley Presentation Powered By Docstoc
					Morgan Stanley European Financials   Jan Erik Back
Conference, London 27 March 2012     CFO SEB
 In the new world, what are SEB’s priorities?


  Relationship banking as the
  key franchise driver




  Response to the new regulatory
  landscape



  Structural enhancement of
  profitability




2012-03-27 | Morgan Stanley Conference London   2
Relationship banking as key
franchise driver
 Fundamentals remain robust in Northern Europe

Nordic GDP growth (per cent)
        3.2
                       2.4
                                                 1.8
                                                                           Finland
                                      0.9
                                                           Norway
                                                                Sweden Estonia
                                                                         Latvia
                                                        Denmark
       2010           2011          2012E       2013E                  Lithuania


                                                           Germany
Eurozone GDP growth (per cent)

       1.8            1.5
                                                 0.7



                                     -0.8
     2010            2011          2012E        2013E




2012-03-27 | Morgan Stanley Conference London                                        4
 SEB’s Core Markets enjoy strong sovereign finances
 % of GDP

Sovereign debt                                  Budget deficit                      Current Account Balance
     Estonia                                         Norway                             Norway
 Luxemburg                                           Estonia                        Luxemburg
    Slovenia                                        Sweden                          Netherland
   Lithuania                                     Luxemburg                             Sweden
    Sweden                                           Finland                          Germany
   Denmark                                         Denmark                            Denmark
       Latvia                                      Germany                              Estonia
     Norway                                             Malta                           Finland
     Finland                                        Belgium                               Latvia
      Poland                                        Hungary                              Austria
        Spain                                            Italy                        Lithuania
      Cyprus                                          Austria                          Belgium
 Netherland                                           Cyprus                           Hungary
        Malta                                   Netherlands                              Ireland
      Austria                                       Slovenia                           Slovenia
    Hungary                                           France                             France
           UK                                      Lithuania                                  UK
      France                                           Latvia                               Italy
   Germany                                            Poland                               Spain
    Portugal                                        Portugal                             Poland
      Ireland                                           Spain                              Malta
    Belgium                                                UK                            Cyprus
         Italy                                       Greece                            Portugal
     Greece                                           Ireland                           Greece

             0%         50%   100%    150%                 -40%   -20%   0%   20%              -20% -10%   0%   10% 20%

   Source: Datastream




2012-03-27 | Morgan Stanley Conference London                                                                             5
 Successful repositioning in the Swedish SME market
 Growing number of clients                                      Availability and offerings

 140,000
                                                   +11,000
 120,000
 100,000
  80,000
  60,000
  40,000
                2007       2008      2009        2010    2011

 Corporate loans and commitments, SEK bn                        Market share
                                                                14%
  200
                                                                12%
                                                   +25.5bn
   150                                                          10%

   100                                                           8%
                                                                 6%
    50
                                                                 4%
     0                                                           2%
           2007        2008        2009         2010     2011
                                                                 0%
                                                                          2005       2006       2007 2008 2009   2010   2011
                                                                 Note: Active cash management customers




2012-03-27 | Morgan Stanley Conference London                                                                                  6
 Nordic and German corporate expansion delivers
 Nordic & German large corporate expansion               Customers’ intention to expand banking services
                                                         over next 12 months (net)
     Large cap clients (#)


           +88                 +114             +202              +9%

             2010               2011

     Client executives (#)
                                                                              +6%           +6%


           +63                 +48              +111
             2010               2011
                                                                                                           +3%   +3%
     Loans and commitments (SEK bn)


           +62                 +46              +108
             2010               2011                             SEB

Note: Loans and commitments at constant exchange rates   Source: Corporate Banking year-end 2011 Nordics


2012-03-27 | Morgan Stanley Conference London                                                                          7
 Example: SEB in Finland
 Transforming the business                                        Increased customer satisfaction (Quality index)
                                                                  200
  Value
  for SEB                               Target                    150
                                                    A “true
                                                 relationship     100
                                                 ” perception
                                                                  50                                                   SEB
                                                                   0
                                                                  -50
                                                                         2007        2008    2009     2010       2011

                           An “advisory”
                            perception                            Increased income and credit exposure (EUR m)
                                                                                Corporates   Non-corporates
                                                                  200
  From                                                            150
                                                                  100
    A product                                                      50
     provider                                                       0
    perception                                    Value for the                  2006                      2011
                                                   Customer               Credit Exposure            Credit Exposure
                                                                             EUR 3bn                    EUR 8bn




2012-03-27 | Morgan Stanley Conference London                                                                                8
 Increased presence in the Swedish household
 mortgage market reflects SEB’s customer base
 Swedish mortgages, SEK bn                                             Selective origination
                                                                 322   ● Over-proportionally
                                                272                      represented in higher income
                                   247
           218                                                           segments
                                                                       ● Above market average credit
                                                                         quality*
                                                                       ● LTV on new lending <60%
           Dec                    Dec           Dec              Dec   ● Multi-product focus
           '08                    '09           '10              '11


     Low LTVs by regional and global standards                         Strict credit policy

           Loan-to-value                          Share of portfolio   ● Affordability
             >85%                                               2%
                                                                       ● LTV and leverage caps
           51-85%                                             22%
                                                                       ● Amortisation
                                                                       ● Stress tests
             0-50%                                             76%


* Source: Swedish Credit Bureau (“UC AB”)


2012-03-27 | Morgan Stanley Conference London                                                           9
 Resilient mortgage market with repricing features

 Majority of Assets and Debt held by households                           Mortgage lending rates are going up due to
 with higher income                                                       stricter regulatory framework

       Share of total debt                   Share of financial assets              Germany         Denmark      Spain
       Share of real assets                                                         Netherlands     USA          Sweden
 60                                                                      9
                                                                         8
            Income group 1 has the lowest disposable income
 50
            Income group 5 the highest                                    7
 40                                                                      6
                                                                         5
 30
                                                                         4
 20                                                                       3
                                                                         2
 10
                                                                          1
  0                                                                      0
        Income        Income          Income        Income     Income         -07         -08     -09     -10   -11
        group 1       group 2         group 3       group 4    group 5
 Source: Sveriges Riksbank Nov 2009                                      Source: Reuters EcoWin




2012-03-27 | Morgan Stanley Conference London                                                                             10
SEB’s response to the new regulatory
landscape
 Swedish finish on regulation

 Capital                                                  Liquidity
 Common Equity Tier 1                           > 10%     Liquidity Coverage   > 100%
 Ratio                                          by 2013   Ratio                by 2013

 Common Equity Tier 1                           > 12%     Net Stable Funding   > 100%
 Ratio                                          by 2015   Ratio       ]        by 2018/19
                                                                 [T BD
 Countercyclical buffer                         0-2.5%
                  ]
             [T BD                              by 2013




2012-03-27 | Morgan Stanley Conference London                                               12
 Strong capital situation

 Core Tier 1 ratio (per cent)
                                                                            Maintain buffer to minimum
 Basel II                                                                   regulatory levels
 15%

                                                Basel II
                                                                  13.7      RWA stable in continuing
 13%                                                                        operations. Lending to high-
             Regulatory                                    Basel III 12.5   quality customers and increased
 11%        target range
                                                                            use of collateral for RWA
  9%                                                                        purposes offset Basel 2.5 effects
                                                                            and volume growth.
  7%
                                                                            Regulatory treatment of IAS 19
  5%                                                                        still not clarified
        Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
        08          09          10          11




2012-03-27 | Morgan Stanley Conference London                                                                   13
 SEB has maintained conservatism across all customer
 segments in terms of risk modelling RWA
 Basel II total IRB risk weight, per cent, Q1 2009 – Q4 2011
 45

 40

 35

 30

 25

 20

 15

 10

   5

  0
                   Peer 1                       Peer 2     Peer 3   SEB




2012-03-27 | Morgan Stanley Conference London                             14
 SEB has the most conservative view on the
 residential mortgage market despite highest quality
 The highest quality of mortgage customers                     The most conservative average risk weight
 Household Mortgage Sweden - UC risk score (similar to FICO)   Basel II reported risk-weight for residential mortgage lending. Dec 2011

                         Total Market              SEB
 1.2                                                           20


 1.1

                                                               15    Regulatory target range?
 1.0


 0.9
                                                               10
 0.8


 0.7                                                            5

 0.6


 0.5                                                            0
                                                                           SEB             Peer 1            Peer 2            Peer 3
       2010 2010 2010 2011 2011 2011 2011 2011 2011 2011
        10 11 12 01 02 03 04 05 06 07                               SEB’s market share 16%, shared #3 in the market



2012-03-27 | Morgan Stanley Conference London                                                                                             15
 Solid funding and deposit situation
 Balance sheet structure
 Dec 2011, SEK bn                                                  Structurally sound balance sheet
                                                    1,270
                                                    Stable         Loan-to-deposit ratio excluding
                 1,080                             funding
               “Banking                            Funding,        household mortgage lending 92%
                book”                             remaining
                                                maturity >1 year   Unutilised capacity for covered bonds
                Household                                          SEK 123bn vs total LT senior funding
                 Lending
                                                                   of SEK 108bn
                                                    Deposits
                                                    from the
                                                     General
                                                      Public
                   Other
                  Lending


                                                     Equity

                 Assets                   Equity & Liabilities

                  +190bn more stable funding



2012-03-27 | Morgan Stanley Conference London                                                              16
 Loan growth funded through deposit growth and
 issued long-term covered and senior bonds
Household lending, deposits and                                    Corporate & public lending, deposits and
covered bond funding                                               senior bonds
              Lending                                                               Lending
              Deposits                                                              Deposit
              Covered Bonds                                                         Senior Debt
              Net = lending - deposits - outstanding cov bonds                      Net = Lending - deposits - senior debt
  500                                                              800
                                                                   700
  400                                                              600
                                                  Retail Germany
                                                  disposal         500
  300
                                                                   400
  200                                                              300
                                                                   200
  100                                                              100
                                                                      0
    0
                                                                   -100
 -100                                                              -200
        Dec- Jun- Dec- Jun- Dec- Jun- Dec- Jun- Dec-                      Dec- Jun- Dec- Jun- Dec- Jun- Dec- Jun- Dec-
         07   08   08 09     09   10   10   11   11                        07   08   08 09     09   10   10   11   11




                                                Stable net funding base

2012-03-27 | Morgan Stanley Conference London                                                                                17
 SEB’s stable corporate business is not
 captured in Basel III
 Example: accredited stability in structural liquidity ratio (”NSFR”)
 SEB’s household deposits, SEK bn                                SEB’s corporate deposits, SEK bn

   900                                                            900

   800                                                            800

   700                                                            700

   600                                                            600

   500                                                            500

   400                                                            400

   300                                                            300

   200                                                            200

   100
                                    92%                           100
                                                                                                     38%
     0                                                              0
         Jun- dec Jun- dec Jun- dec Jun- dec Jun- dec Jun- dec          06- dec   07- dec 08- dec 09- dec           10-   dec   11-   dec
          06       07       08       09       10       11               Jun       Jun     Jun     Jun               Jun         Jun
                            Balance sheet amount                                          Balance sheet amount
                            Basel III funding stability                                   Basel III funding stability




2012-03-27 | Morgan Stanley Conference London                                                                                               18
 Inbound flight-path to NSFR compliance by “2018”

 Long-term funding activities (SEK bn)
                                                                  Reduced long-term debt
          Issued Covered Bonds         Issued Senior Unsecured
                                                                  dependence for current lending due
          Matured Covered Bonds        Matured Senior Unsecured   to proactive pre-funding
 140
                                                                  –  Issuance exceeding maturities
 120
                                                                     2009-2011
                                                                  –  Modest refinancing needs 2012-
 100                                                                 2015
  80
                                                                  NSFR below 100% due to exclusion
                                                                  from Available Stable Funding of a
  60                                                              number of funding sources - e.g.

  40
                                                                  –  50% allowance of unsecured
                                                                     wholesale / corporate deposits
  20                                                              –  0% allowance of all other (non-
                                                                     deposit, non-stable, financial
   0
                                                                     corporates etc)
         2009       2010      2011     2012 2013 2014 2015




2012-03-27 | Morgan Stanley Conference London                                                          19
 SEB will be LCR compliant by 2013
 Liquid resources / Short-term funding
                                                                    SEB has a very liquid balance sheet
 December 31, 2011, SEK bn
                                                                    LCR at 95 per cent end of 2011 and
    700                                                             above 100 per cent in EUR and USD
                                                                    60 per cent of core liquidity reserve
    600       Credit Institutions                                   invested in central banks due to
                                       SEK 190bn more in liquid
                                       assets than the ST funding
                 Net Trading
                                                                    limited availability of AAA-rated
    500
                   Assets                                           papers in local markets
    400
                                                                    LCR varying heavily due to its short-
                                       Credit Institutions          term nature
    300
               Cash & Deposits
                    in CB                                           –  deposit base development

    200
                                                                    –  excess liquidity investments

                                          Funding <1y
    100       Liquidity Portfolio


       0
                    Assets                  Liabilities




2012-03-27 | Morgan Stanley Conference London                                                               20
Structural enhancement of
profitability
 Flat costs
 Cost by type (SEK bn)                                                 Income and cost trends, 12m rolling (SEK bn)
            13.9     13.9                                                  45
                                             9.8                           40
                                                       9.2
                                                                           35
                                                                           30
                                                                           25
                                                                           20
                                                                           15
                                                                                Q1-     Q2   Q3    Q4    Q1-10 Q2   Q3    Q4   Q1-11 Q2   Q3   Q4
             Staff costs                    IT & Other costs                    09
                            2010     2011                                                Operating income                Operating expenses




                                    SEK 24bn cost cap met (SEK bn)
                                                                                                              Cost cap 24bn
                                                                                                              New ambition
                                                24.0         23.1


                                                2010         2011   2012         2013             2014




2012-03-27 | Morgan Stanley Conference London                                                                                                       22
 Example: Efficiency boost from off shoring
Established support centre in Riga 2006 and in Vilnius 2008
470 employees
Group Operations, Accounting, HR and IT

        As-is/In-house                      Labor arbitrage          + Efficiency gains
                                                                    +15% efficiency gains per
                                          SEK 0.3-0.5 million/FTE
                                                                        transferred FTE




                                                                                                 Total savings
                                                                                                 Total savings
                                                                                                0.4-0.6 millions /
                                                                                                0.4-0.6 millions /
                                                                                                      FTE
                                                                                                       FTE
                                                                                                    equaling
                                                                                                    equaling
                                                                                                  +50% of cost
                                                                                                  +50% of cost




The business case for captive sourcing is strong, with 50%+ savings of cost base


2012-03-27 | Morgan Stanley Conference London                                                                        23
 Substantial reduction of SEB’s non-performing loans
 Non-performing loans, SEK bn
   30
                                 -25%                                  Individually assessed - impaired loans with specific reserves
   25
                                                                       Portfolio assessed - past due >60 days
   20
                                                                                                                                   -23%
   15
                                                               -20%
   10

    5
                                                                                          -43%

    0




         Sep '11
        Dec '11




         Sep '11
         Dec '11
          Jun '11
         Sep '11
        Dec '11




         Sep '11
        Dec '11
        Mar '11
          Jun '11




        Mar '11
          Jun '11




        Mar '11
        Mar '11
          Jun '11




        Dec '08




        Dec '08



        Dec '09


        Sep '10
        Dec '10
        Dec '08



        Dec '09




        Dec '08
        Mar '09

        Sep '09
        Dec '09


        Sep '10
        Dec '10




        Mar '09

        Sep '09
        Dec '09


        Sep '10
        Dec '10




        Mar '09

        Sep '09
        Jun '09




        Jun '09
         Jun '10




        Mar '10
         Jun '10
        Mar '09




        Sep '10
        Dec '10




        Mar '10
        Jun '09
        Sep '09




        Jun '09
        Mar '10
         Jun '10




        Mar '10
         Jun '10
                     Group                      Nordic countries                Germany                         Baltic countries


NPL % of lending:            1.4%                     0.3%                      1.0%                                  10.9%
NPL coverage ratio:          64%                      73%                       80%                                    59%



                       6 bps credit loss level outside Baltics
                                                   (average over 10 year period)




2012-03-27 | Morgan Stanley Conference London                                                                                             24
Sum-up
                          Robust region         Balanced growth

                          Cost management       High asset quality




2012-03-27 | Morgan Stanley Conference London                        26
   The leading
relationship bank
    in our part
   of the world

				
DOCUMENT INFO
Shared By:
Categories:
Tags:
Stats:
views:10
posted:10/14/2012
language:English
pages:27