Annual Report 13 Contents 2013 in brief This is SEB Cover Chairman’s statement 2 2013 2012 President’s statement 3 Operating income, SEK m 41,553 38,823 Strategy and markets 4 Profi t before credit losses, SEK m 19,266 15,171 People and culture in SEB 12 Operating profi t, SEK m 18,127 14,235 Corporate sustainability 14 Return on equity, per cent 13.1 11.1 The SEB share 16 Earnings per share, SEK 6.74 5.31 Proposed dividend, SEK 4.00 2.75 Report of the Directors 18 Common Equity Tier I capital ratio1), per cent 15.0 13.1 Financial review of the Group 18 Core Tier I capital ratio2), per cent 11.0 10.1 Result and profi tability 18 1) Basel III 2) Basel II with transitional rules Financial structure 24 Divisions and business support 26 Risk, liquidity and capital management 36 The most important events in 2013: Corporate governance at SEB 49 Internal Control over Financial Reporting 57 ● The EU decided on implementation of the requirements on capital Board of Directors 58 and liquidity under Basel III - CRR/CRD IV. Group Executive Committee 60 ● SEB’s investments in the corporate segments resulted in 108 new Remuneration report 62 The new regulatory framework 64 large corporate and institutional customers and 16,700 new SME Defi nitions 66 customers. The number of private customers increased by some 37,400. Financial Statements 67 ● SEB launched a new mobile app for corporate customers and SEB Group 68 an upgraded internet bank for private individuals in Sweden. Income statement 68 ● SEB was the bank that large Nordic corporations and fi nancial Balance sheet 69 institutions were most willing to recommend (Prospera). Statements of changes in equity 70 ● Cash fl ow statement 71 SEB was awarded as the best bank for small and medium-sized Skandinaviska Enskilda Banken 72 companies in Sweden by the magazine Privata Aff ärer. Notes to the fi nancial statements 76 ● For the fourth year in a row SEB received Global Private Banking Five-year summary 148 Award as the best Nordic bank for private banking services Proposal for the distribution of profi t 150 (The Banker and PWM). Auditor’s report 151 ● SEB facilitated the fi rst issue of green bonds in the Nordic region (the City of Gothenburg) as well as the fi rst green corporate bond Calendar and other information Cover issue in the world (Vasakronan). SEB creates value Cover As a relationship bank strongly committed to deliver customer value, SEB in Sweden and the Baltic countries offers financial advice and a wide range of financial services. In Denmark, Finland, Norway and Germany the Bank’s operations have a strong focus on a full-service offering to corporate and institutional clients. SEB’s SEB’s divisions Operating profi t Merchant Banking – Commercial and investment banking services to large corporate and institutional clients in 18 countries, mainly in the Nordic region and Germany. SEK 8,171m (7,109) Retail Banking – Banking and advisory services to private individuals and small and medium-sized corporate customers in Sweden as well as card operations in the Nordic countries. SEK 5,743m (4,353) Life & Wealt Management Life – Life insurance products for private individuals and corporate customers, mainly in Sweden, Denmark and the Baltic countries. SEK 1,892m (1,980) Wealth Management– Asset management, including mutual funds, and private banking services to institutional clients and high net worth individuals in the Nordic countries. SEK 1,610m (1,289) Baltic – Banking and advisory services to private individuals and small and medium-sized corporate customers in Estonia, Latvia and Lithuania. SEK 1,280m (918) SEB’s representation worldwide Subsidiaries, branches and representative offi ces SEB’s activities principally embrace customers based in the Nordic and Baltic countries and Germany. The Bank ces in Sweden and the Baltic countries. Operating income By geography, per cent Germany operations. activities are carried out with a long-term perspective to fulfi l the Bank’s role to assist individuals, businesses and markets to thrive. The international nature of SEB’s business is refl ected in its presence in some 20 countries worldwide. SEB serves approximately 4 million customers and has around 16,000 employees. SEB’s strength SEB’s value distributionbutbuutitioiononn 1) 2013 2012 While creating economic value to customers and society, the Increased earnings SEK bn Bank also distributes value to Net profi t, SEK bn 14.8 11.7 40 direct stakeholders. 35 Continued high asset quality Credit loss level 0.09 0.08 30 Salaries, pensions and 25 Solid funding and liquidity benefi ts to 16,000 employees Liquidity coverage ratio 129 113 20 Dividends to 270,000 15 Strong capital shareholders Common Equity Tier 1 (Basel III) 15.0 13.1 10 Taxes and fees 5 Business partners and suppliers (13,000) 0 2011 2012 2013 1) See inside back cover SEB’s fi nancial targets Outcome Target 1) 2013 2012 Dividend ≥40 % 592) 52 payout ratio earnings per share Common Equity 13 % 15.0 13.1 Tier 1 capital ratio according to Basel III Return on Equity 15 % 13.1 11.1 competitive with peers on equity The capital target may be revised as the Swedish implementation of the European Capital Requirements Directive, CRD IV, is clarifi ed. 1) The targets are explained on page 9. 2) Subject to the approval by the AGM of the proposed dividend Mission Corporate objectives To help people and businesses ● The leading Nordic bank for corporates thrive by providing quality and institutions advice and fi nancial resources ● The top universal bank in Sweden and the Baltic countries Vision To be the trusted partner for Strategic priorities customers with aspirations ● Long-term customer relationships ● Brand promise Growth in areas of strength ● Resilience and fl exibility Rewarding relationships SEB’s customers Rewarding relationships are the cornerstones of our business. Ever since A O Wallenberg founded SEB in 1856, we have provided fi nancial services to assist our customers in reaching their fi nancial objectives. 2,900 400,000 4,000,000 Corporates and institutions SME customers Private customers SEB is the leading corporate and invest- SEB off ers small and medium-sized corpo- SEB provides some four million indi- ment bank in the Nordic countries, serving rate customers several customised prod- viduals with advice and services to large corporations and fi nancial institu- ucts that were initially developed in coop- meet all their fi nancial needs. These tions with corporate banking, trading and eration with SEB’s large corporate clients. include products and services for capital markets and global transaction In addition, numerous services are specifi - daily fi nances, savings, loans, services. Comprehensive pension and cally designed for small companies and pension solutions, cards, wealth asset management solutions are also entrepreneurs. management and life insurance. off ered. chairman’s statement Our foremost mission is to create value for our customers and thereby generate sustainable returns to our shareholders. Founded more than 150 years ago in the the lowest credit loss levels in Europe. rate and institutional bank in the Nordic service of entrepreneurs and enterprise This is manifested by the Swedish bank- countries and Germany as well as the SEB has a deeply rooted ambition to ing system’s low funding costs, which top universal bank in Sweden and the work in active and close partnership to a large extent are passed on to the Baltic countries. with our customers. It is an undertaking banks’ customers. As shareholders of the Bank, we can that fi lls us with pride and it involves a look back at a year which rendered a great degree of responsibility. As a bank Regulations yet to be fi nalised return on equity of 13.1 percent and our foremost mission is to create value Everyone agrees that the function, effi - an increase in the share price by 53 for our customers and thereby generate ciency and stability of the global fi nan- per cent. A year ago we reviewed the sustainable and competitive returns to cial system must be safeguarded. long-term fi nancial targets in order to our shareholders over time. Accordingly, a number of new regula- increase the transparency and the tions are currently being implemented. expectations you as shareholders should Global growth is recovering The new regulations include an ambi- have on SEB. These targets remain with The much needed global recovery tion to establish effi cient interfaces a long-term aspiration for SEB to reach a including a recovery in Europe, is slowly between supervision at the macro and return on equity of 15 per cent. gaining momentum. In our region, the micro levels. They also extend to market Nordic countries have shown more re- conduct and infrastructure as well as to silience and we are now seeing a more consumer protection. On behalf of the Board, I want to positive corporate sentiment and Several risks arise in connection express our great appreciation to the activity levels higher than a year ago. with the implementation of such a huge Bank’s management and staff . Our number of new regulations in a short commitment remains the same. SEB Sound and profi table banks key period of time and with the full frame- will work relentlessly for the best inter- At its very core, SEB’s business model is work yet to be fi nalised. Given the high ests of our customers and shareholders, about building deep customer relation- level of interconnectivity and interde- and thus for society as a whole. ships based on our customers’ needs. pendencies in the global economy, This is as a broad undertaking, as we are great care must be taken to avoid un- Stockholm, February 2014 at the centre of the credit intermedia- intended consequences.