From transaction to relation, Catrin Fransson, Head of Retail

1. From transaction to relation
Catrin Fransson, Head of Retail
© Swedbank

2. Retail – Prerequisites
Strong macro expected to drive earnings
g p g
• Swedish economy strong
• Continued interest rate hikes from the
Macroeconomics Riksbank expected (started 2010)
• Weak corporate lending but strong private
mortgage demand
• Expenses expected to remain stable
Stable financials through crisis • Core funding ratio at present levels or lower
• Modest balance sheet growth
• Re-pricing or replacing low yielding assets
Excellent credit quality
q y • Focus on return rather than balance sheet
growth
2

3. Retail
Commission income increasingly important
gy p
SEKm
5 000
NII Re-pricing or replacing low
yielding assets – modest growth
4 000 Corporate
C t
3 000 Private NCI Service concepts support net
2 000 commission income growth
1 000
through higher product penetration
penetration,
especially in savings & investments
0
Total NCI Savings & Investments Payments Other
Largest contributors Share of Change
to NCI NCI 2010
Asset management 47% 9%
Payments 38% 2%
Insurance 5% 17%
Brokerage 3% neg
3

4. Retail
Empowering frontline by enhanced steering model
p g y g
Key performance indicators (KPI) Changes from earlier:
Profitability P&L, Balance sheet
Income change
• Empowering the frontline
Cost/income ratio
– Full balance sheet
responsibility at b
ibilit t branch l
h level
l
Credit impairments
RAROC • Minimise KPI´s from 26 to 6
Loan/Deposit ratio
• Strong local connection
Sales activities Prioritised products
Fokus*
* Fokus – Tool for performance management
4

5. Retail
Market leader in most segments
g
Private customers Corporate customers
Segment Customer Market Market Share of Segment Customer Market Market Share of
base position share* revenue base position share revenue
Private 19 000 1 21% 5% Public 230 1 55% 3%
Banking Sector
Affluent 514 000 1 30% 39% Midcorp 1 200 4 9% 4%
Emerging 340 000 1 32% 15% SME 10 170 2 19% 15%
Affluent
Retail 355 000 1 40% 20% SSE 40 400 1 30% 14%
Mortgage
Retail 2 274 000 1 46% 19% Micro 168 000 1 30% 40%
Youth & 538 000 1 n/a 2% Forestry & 31 200 1 60% 11%
children agriculture
Associations 71 000 1 30% 13%
• Potential in more structural approach to existing customer base
• Profitability varies significantly between different segments for private
• Potential in corporate segments where relative market share is low
*Source: E- indicator
5

6. Retail
From transaction to relation
Increase income
– structured way
to manage
customer b
t base
More
Channel
efficient
strategy
t t
processes
Competence
and staffing
6

7. Retail
Increased customer satisfaction and profitability through service concepts
p y g p
Increase
income –
structured way
to manage
customer base More
Channel
efficient
strategy
processes
Compe
Compe-
tence and
Customer base in segments: staffing
Private Banking
Service No. of Pot.client Profitability Loyalty Product
Affluent concepts clients base change change change
Emerging affluent
E i ffl
Private 8 000 19 000 n/a +8 n/a
Banking
Retail with housing loans
Premium 6 304 525 000 ~ 5-10% +9 + 2,1
Retail with salary account
Retail other Nyckelkund
N k lk d 13 129 330 000 ~ 5 10%
5-10% +6 +13
1,3
Mer
Low volume customers
Nyckelkund 208 305 1 550 000 ~ 5-10% +6 + 2,0
Youth (age < 18)
Customer with service concept
Customer with card and Internet Bank • Ambition to have half of total
Others customer base in service concepts
• Current run rate ~25 000 new service
concept customers a month
7

8. Retail
Focused segments for future growth
g g
Increase
income –
structured way
to manage
customer base More
Channel
efficient
strategy
processes
Compe
Compe-
tence and
staffing
• New launch 2010
Private Banking
ate a g – segmentation, recruitments, improved
g , , p
offering
• AuM increased by SEK 15bn in 2010
• Launch of Premium 2010
Affluent
• Potential to increase AuM
• S i concepts enable reallocation of
Service t bl ll ti f
SME resources
• New corporate contact center
• Repricing
• Grow with existing contacts
Midcorp
• Aiming for 20% of new deals
• Increased RAROC
• 50 new Midcorp customers 2010
8

9. Retail – Channel strategy
Simplifying day-to-day banking activities
p y g y y g
Increase
income –
structured way
to manage
customers More
Channel base efficient
strategy
processes
Compe
Compe-
tence and
Self service Personal service staffing
Telephone Telephone
Branches Web log ins
Banking Banking Improve customers’ experience
340 + 24 million 5.2
5 2 million 200 000
in all channels
256* per month per month per month
No 1 No 1 No 1-2 No 1-2
• Internet – increased business
capabilities
Million customers
4
• Mobile – payment services
3
• Telephone – further develop
p p
advising service for affluent and
2
Internet Bank corporate customers
Mobile Bank
1 • B
Branch offices – more fl ibl
h ffi flexible
0
fleet of branch offices with lower
2006 2007 2008 2009 2010 fixed cost
* Savings banks branches
9

10. Retail
Competence & Staffing a key possibility and challenge
p g yp y g
Increase
income –
structured way
to manage
customer base More
Channel
efficient
strategy
processes
Compe
Compe-
tence and
staffing
Number of employees • Staffing according to customer
7 000
base in all branches
6 000
• Optimise allocation of resources
5 000 • Competence change,
competence development and
4 000
generation shift
ti hift
3 000 • Leadership – branch office head
2005 2006 2007 2008 2009 2010
in partly new role
10

11. Retail
More efficient processes
p
Increase
Average cash balance income –
structured way
to manage
(in ATMs, instorage and in transit) Channel
customer base More
efficient
strategy
processes
SEKbn Compe
Compe-
3.5 tence and
3.5 staffing
3.0
3.0 Free up time through:
2.5
2.5
• More efficient processes
2.0
2.0 – Take out more than 200 000
1.5
1.5
hours annually from lending
process
1.0
1.0
– Reduce cash handling –
0.5
0.5 annual costs of SEK 1bn
0.0
00
0.0
00
2007 2008 2009 2010
Monthly average Annual average
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12. Retail
Summary
y
12