2019 Annual and Sustainability Report
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2019 Annual and Sustainability Report Contents Swedbank in brief 2 Income, balance sheet and notes, Group The year in brief 4 Income statement 54 CEO statement 6 Statement of comprehensive income 55 Goals and results 8 Balance sheet 56 Value creation 10 Statement of changes in equity 57 Business model 12 Statement of cash flow 58 Sustainability 14 Notes 59 The share and owners 24 Income, balance sheet and notes, Parent company Board of Directors’ report Income statement 154 Financial analysis 26 Statement of comprehensive income 154 Swedish Banking 30 Balance sheet 155 Baltic Banking 31 Statement of changes in equity 156 Large Corporates & Institutions 32 Statement of cash flow 157 Group Functions & Other 33 Notes 158 Corporate governance report 34 Alternative performance measures 192 Board of Directors 46 Group Executive Committee 50 Sustainability Disposition of earnings 52 Sustainability report 194 Materiality analysis 195 Sustainability management 197 Notes 199 GRI Standards Index 212 Signatures of the Board of Directors and the CEO 217 Auditors’ report 218 Sustainability report – assurance report 222 Annual General Meeting 223 Market shares 224 Five-year summary – Group 225 Three-year summary – Business segments 228 Definitions 231 Contacts 233 Financial information 2020 Annual General Meeting 2020 Q1 Interim report 23 April The Annual General Meeting will be held on Thursday, 26 March at 11 am (CET) at Cirkus, Djurgårdsslätten Q2 Interim report 17 July 43–45, Stockholm, Sweden. The proposed record day for the dividend is 30 March 2020. The last day for Q3 Interim report 20 October trading in Swedbank’s shares including the right to the dividend is 26 March 2020. For more information, see page 223 and the notice of the AGM at www.swedbank.com. While every care has been taken in the translation of this annual and sustainability report, readers are reminded that the original annual and sustainability report, signed by the Board of Directors, is in Swedish. 1 Vision We enable people, businesses and society to grow. Purpose We promote a sound and sustainable financial situation for the many households and businesses. Values Simple, open and caring. Swedbank Annual and Sustainability Report 2019 h 2 SWEDBANK IN BRIEF Swedbank is a digital bank with physical meeting points With over seven million private customers and 550 000 corporate customers, Swedbank is the leading bank for the many households and businesses in our four home markets: Sweden, Estonia, Latvia and Lithuania. We are active mainly in lending, payments and savings. We are available 24 hours a day through our digital channels and our customers can also meet us in any of our physical meeting points. Digital channels Physical meeting points Learn more about Swedbank On our website www.swedbank.com APP AND INTERNET BANK BRANCHES In our interim reports: Everyday banking services 168 in Sweden www.swedbank.com/ ir Sales 99 in Baltic countries Virtual assistants CONTACT CENTER Telephone, email, chat, social media In our risk and capital FLEXIBLE MEETING PLACES adequacy reports: Pop-up branches www.swedbank.com/ ir Partners COMPETENCE HUBS Complex questions Specialists Market shares, per cent Lending Lending Deposits Deposits ( private)1 ( corporate)1 ( private) ( corporate) Payments2 Funds Sweden 24 17 19 16 36 20 Estonia 44 38 50 45 58 41 Latvia 33 20 32 24 51 41 Lithuania 38 20 43 26 50 37 1) Excluding the Swedish National Debt Office and repurchase agreements. 2) Bank Giro transactions (Sweden) and domestic payments (Estonia, Latvia and Lithuania). Swedbank Annual and Sustainability Report 2019 h 3 SWEDBANK IN BRIEF Market-leading Sustainability is part Stable cost efficiency of our DNA earnings Costs in relation to income, C/I ratio Dow Jones Sustainability Index Score Return on equity 0.46 76 14.7 % Low risk Continuosly innovative Credit impairment ratio Digital customer interactions per year 0.09 % 1.8 BN Return on equity of at least 50 per cent of profit for the 15 per cent year is paid as a dividend % SEK % 20 15 100 12 80 15 9 60 10 6 40 5 3 20 0 0 0 15 16 17 18 19 15 16 17 18 19 Return on equity Goal Dividend per share Dividend payout ratio 1) Board of Directors’ proposal. Financial information, SEKm 2019 2018 Total income 45 960 44 222 Result burdened Net interest income 25 989 25 228 by higher costs Net commission income 12 984 12 836 Net gains and losses on financial items 3 629 2 112 • Lower resolution fund fee and higher Other income 1,2 3 358 4 046 lending volumes upported net interest Total expenses 19 984 16 835 income Profit before impairments 25 976 27 387 Depreciation/amortisation of tangible • Net commission income benefitted and intangible assets 87 314 from higher income from cards and Impairments 1 469 521 asset management Taxes 4 711 5 374 Profit for the year attributable to the shareholders 19 697 21 162 • Costs weighted by investigation costs Earnings per share, SEK, after dilution 17.56 18.89 • Higher credit impairments due to Return on equity, % 14.7 16.1 Cost/income ratio, % 0.43 0.38 oil-related provisions Common Equity Tier 1 capital ratio, % 17 16.3 • Strong capitalization Credit impairment ratio, % 0.09 0.03 1) Includes income from sale of UC of SEK 677m in 2018. • Proposed dividend of SEK 8.80 2) Other income includes the items Net insurance, Share of profit or loss of associates, and Other income from the Group income statement. per share Swedbank Annual and Sustainability Report 2019 4 THE YEAR IN BRIEF The year 16 JANUARY Swedbank Robur appointed in brief Fund Manager of the Year Swedbank Robur has been appointed Fund Manager of the Year 2018 by Fondmarknaden.se A selection of key events for its iinvestment strategy and well-integrated sustainability work. In addition, Swedbank Robur American Fund was named North American Fund of the Year. during the year. 29 JANUARY Increased mortgage volumes in Sweden and broad-based lending 21 FEBRUARY growth in the Baltic countries The Swedish FSA laun- Year-end report for 2018. ches an investigation of Swedbank 20 FEBRUARY The television programme Uppdrag Granskning broad- Together with the Estonian supervisory authorities the Swedish casts a show on money laundering and directs allegations FSA starts to investigate what happened and whether Swed- bank breached the anti-money laundering regulation. A number against Swedbank of US authorities also initiated investigations about Swedbank Money laundering is one of the industry’s biggest challenges. during the year Preventing money laundering is one of our highest priorities. 27 FEBRUARY Swedbank hires the law firm Clifford Chance Swedbank hires the law firm Clifford 28 MARCH Chance to lead an internal investigation to confirm the facts and circumstances Swedbank’s CEO Birgitte linked to historical shortcomings in regula- tory compliance and exposure to money Bonnesen leaves the bank laundering. Swedbank’s Board of Directors appoints current CFO Anders Karlsson as Acting President and CEO of Swedbank. 25 APRIL Swedbank establishes 5 APRIL 17 MAY Investment in innovative Anti- Change in Chair digital services Financial Chair Lars Idermark leaves Swedbank and is Swedbank becomes one of three key replaced by Deputy Chair Ulrika Francke. investors in the fintech company Minna Technologies, which is expand- Crime ing in Europe. The bank and Minna became innovation partners in 2017 (AFC) unit 25 APRIL with the aim of creating innovative A new unit is established to focus digital services that add value for on preventing money laundering Strong capital and liquidity position Swedbank’s customers. and combating otherfinancial crime. Interim report for the first quarter 2019. Swedbank Annual and Sustainability Report 2019 5 THE YEAR IN BRIEF 28 MAY 19 JUNE Development of innovative payment solutions Swedbank starts a commercial collaboration with the fintech company Extraordinary KACHING Retail to continue to develop flexible and smart payment solutions for both merchants and consumers. General Meeting Göran Persson is elected as Chairman of the Board of Directors and Bo Magnusson as Deputy Chairman at the bank’s Extraordinary General Meeting. 5 JULY Strengthening KYC processes 27 JUNE Six Nordic banks (Danske Bank, DNB Bank, Nordea Bank, Skandinaviska Enskilda Banken, Svenska Handelsbanken, Swedbank) establish a joint venture to develop a platform for Investment in handling KYC (Know Your Customer) data on large and medi- um-sized companies in the Nordic region. The objective is to solar energy improve the customer experience by simplifying KYC pro- Swedbank partners with Eneo Solutions to build Sweden’s largest cesses for corporate customers while strengthening finan- solar park and reduce its carbon footprint, at the same time that the cial crime prevention in the Nordic region. bank continues to develop sustainably oriented services and products. 17 JULY 22 SEPTEMBER Dividend policy changed from 75 to 50 per cent of Responsible and sustainable annual profit Interim report for the second banking quarter 2019. Swedbank becomes one of the first banks to sign the UN’s Principles for Responsible Banking as part of an effort to integrate sustainability in its operations. By signing the principles, the bank commits to strategically adapt its business in line with the UN’s Sustainable Development Goals and the Paris Agreement. 28 AUGUST 1 OCTOBER Swedbank’s new CEO Gender equality The bank’s Board of Directors appoints Jens Henriksson as the new President and CEO of Swedbank. and diversity Swedbank is ranked as the third most equal com- pany in Sweden in Equileap’s 2019 Financial Ser- vices Gender Equality Global Report & Ranking. In the report Equileap ranked the 100 best companies on gender equality globally after analysing 3 519 9 DECEMBER companies in 23 countries. Swedbank creates a new organisation for more 29 OCTOBER transparent 23 OCTOBER Swedish SFA opens a sanction Good credit quality and strong case into Swedbank governance capitalisation Swedbanks agrees with many of their Interim report for the third quarter 2019.