Today, Swedbank will present the business priorities and financial plan for
reaching 15 per cent return on equity in 2025 at a digital Investor Day. The
live webcast starts at 10.00 CET.
"A sustainable bank is a profitable bank. Our target is therefore to reach a 15
per cent return on equity. We will reach that target by growing income faster
than costs, maintaining a low-risk profile and reaching a CET1 capital buffer of
200 basis points in 2025 and onwards. With strong fundamentals and clear
business priorities, we make Swedbank 15/25 a reality", says President and CEO
Jens Henriksson.
Business priorities
Swedbank strives to have the best full-service offering. To enhance the customer
experience, we will improve our availability, increase the frequency and quality
of advice, and make it easier to do business with us via faster processes. We
have four priorities for the private and corporate segments in Sweden, Estonia,
Latvia, and Lithuania, in line with our core business.
Leverage proven business model and pricing strategy
We serve more than 7.5 million customers across our home markets. Thanks to a
high degree of digital activation, we can give individual offers and price
volumes in an automated and efficient way, while striking a long-term balance
between pricing, competition, and profitability. In the Baltic countries, where
mortgage penetration is relatively low, we are supporting the need for property
modernisation.
Grow share of wallet for existing customers
We will help our customers find the proper offering in our wide range of
products and services. To enhance the customer experience and support financial
health, we will become more proactive towards our customers and improve our
advisory capabilities. In the Baltic region, we also continue to contribute to
building a long-term savings culture by making non-deposit savings affordable
and available to retail customers.
Grow business in prioritised segments
Through improved service and advice across the bank, we will increase business
volumes in the segments where we have identified possibilities to grow market
share. Large Corporates and Institutions and Swedish Banking will jointly
prioritise midsized corporates by aligning corporate business capabilities in
Sweden. We will also grow corporate lending in Latvia and Lithuania and support
the green transition in all three Baltic countries.
Improve availability and operational excellence
We will continue to invest in the quality, frequency, and speed of customer
service and advice by introducing a new communication platform, and a new
advisory platform, as well as further automating onboarding and lending
processes. Shorter lead times, less time spent on administration and more time
spent on service and advice will improve customer satisfaction, drive business
growth, and reduce costs.
Focus on core business
During 2022, we have made a strategic review of our international presence to
make it sharper and more focused, in line with how we work with the savings
banks in Sweden. The review has resulted in a new partnership with Sparebank1 SR
-Bank in Norway, as communicated in Q2. In Denmark, we will close our business
and work with Sydbank as a partner for corporate customers. The Finnish business
has been deemed the right size. Our offices in Shanghai, China, and New York
City, US, will remain, while the South African rep office will close.
We have concluded the strategic review of our merchant payment business. The
market is characterised by increased competition, disruption, and fast-moving
technological development. We will continue to develop the profitable Baltic
merchant payment business. For the Nordic business, we have improved our
customer offerings and now our focus is on making the business profitable.
Financial plan
The KPIs and assumptions supporting a return on equity of 15 per cent in 2025
include:
Supporting KPIs
· Cost/Income ratio of 0.40, supported by strict cost control. Inflationary
headwinds shall be mitigated by efficiency gains from automating internal
processes and structural cost reductions.
· CET1 capital management buffer to regulatory requirement of 100-300 basis
points, aiming to reach a buffer of 200 basis points in 2025 and onwards.
Additional assumptions
· Average annual income growth of 3 percentage points higher than annual
average cost growth, driven by our pricing strategy and gearing towards a
normalised rate environment, growing lending volumes, commissions, and other
income as outlined by the business priorities.
· Credit impairment ratio of 7 basis points in 2025, derived from the ten-year
historical average, which includes impairments in the shipping and offshore
portfolio. Excluding those impairments, the ten-year average is 3 basis points.
Dividend policy
· Annual dividend policy of 50 per cent payout ratio maintained.
· In addition to ordinary dividends, by 2025, we expect to have generated
around 300 basis points of capital in excess of our target management buffer of
200 basis points.
· Any excess capital will be distributed to shareholders.
· The timing and size of capital distributions and a potential reassessment of
dividend policy over the course of the plan are subject to further clarity on
capital needs.
"In times like these, it is of uttermost importance that we have sustainable and
thus profitable banks. By being profitable we contribute to a financially sound
and sustainable society. By being profitable we can support our customers,
distribute dividends to our shareholders, continue to develop the bank, and
contribute to financial stability. For our customers, our employees and for
society at large", says Jens Henriksson.
Webcast and presentation
The live webcast starts at 10.00 CET and can be accessed here (http://creo
-live.creomediamanager.com/09cfd163-38c7-4d31-95e2-da03a6598ee7). Presentations
will be given by Jens Henriksson (President and CEO), Anders Karlsson (CFO),
Mikael Björknert (Head of Swedish Banking), Pål Bergström (Head of Large
Corporates and Institutions), Jon Lidefelt (Head of Baltic Banking) and Kerstin
Winlöf (Head of Group Products and Advice). The presentations will be followed
by a Q&A session where Rolf Marquardt (CRO) also will participate.
The presentation material will be available on
swedbank.com/ir (https://www.swedbank.com/investor-relations.html) at around
9.30 CET. A webcast recording will be published on the same website after the
event.
Contact:
Annie Ho
Unni Jerndal
Head of Investor Relations
Senior Advisor
annie.ho@swedbank.com
unni.jerndal@swedbank.com
+46 70 343 7815
+46 73 092 1180
Disclaimer
Certain statements made in this press release are forward looking statements.
Such statements are based on current expectations and are subject to several
risks and uncertainties that could cause actual results and performance to
differ materially from any expected future results or performance, express or
implied, by the forward-looking statements.
Factors that might cause forward looking statements to differ materially from
actual results include, among other things, regulatory and economic factors.
Swedbank AB assumes no responsibility to update any of the forward-looking
statements contained herein.
No representation or warranty, express or implied, is made or given by or on
behalf of Swedbank AB or its directors, officers or employees or any other
person as to the accuracy, completeness or fairness of the information or
opinions contained in this press release.
None of Swedbank AB or any of its directors, officers or employees nor any other
person accepts any liability whatsoever for any loss howsoever arising from any
use of this press release or its contents or otherwise arising in connection
therewith.
This press release does not constitute or form part of any offer or invitation
to sell or issue, or any solicitation of any offer to purchase or subscribe for,
any securities of Swedbank AB, nor shall it or any part of it nor the fact of
its distribution form the basis of, or be relied on in connection with, any
contract or investment decision.
Swedbank empowers the many people and businesses to create a better future. Our
vision is a financially sound and sustainable society. Swedbank is the leading
bank with over 7 million retail customers and 600 000 corporate customers in our
four home markets Sweden, Estonia, Latvia and Lithuania. Swedbank is also
present in other Nordic countries, the U.S. and China. Together we make your
financial life easier. Find out more: www.swedbank.com