Swedbank AB (publ)

Thank you, Naz. Good morning, everyone, and a very warm welcome to the presentation of Swedbank's 2020 year-end result. In the room with me today is Jens Henriksson, our CEO, Anders Karlsson, our CFO, and also Rolf Marquardt, our CRO. We will, as usual, begin with a presentation and opening comments, followed by a Q&A. For this time, we would like to limit the number of questions to two per person and at a time in order to allow everyone a chance to ask the questions. So without further ado, I'll hand over to Jens.

Well, thank you, Annie, and good morning, everyone, and welcome. I am proud to today present a stable quarter in difficult times. It was a quarter once again dominated by COVID-19. Overall, income was stable. The housing market and private mortgage demand is strong. Companies, though, have held back on new loans. We see a continued inflow of deposits, while central banks are adding liquidity in the capital markets and pushing credit spreads down. The economic uncertainty remains, and it's still bleak in society and the economy due to the pandemic. Life is still held back by restrictions. But thanks to the vaccine, there is a light at the end of the tunnel. A few days ago, IMF forecasted world economic growth this year at 5.5%. If that would materialize, it would be the highest world growth rate since 1973. Continued government support through fiscal and monetary policy is critical. Our economy is that Swedbank also sees a recovery. This year, GDP in Sweden is expected to rise 3%. And we are closely monitoring developments and are prepared for the possibility of setbacks. The rollout of the vaccine is the biggest risk, provided that fiscal support is sustained. Well, you all know that 2020 was a year filled with challenges. A tough year. During spring, the Swedish FSA gave us a hefty fine and we received a precept from the Estonian FSA. A few days later, Clifford Chance presented their report on our historical shortcomings combating financial crime. And then the pandemic hit the world and the bank once again adapted in a way at least I had not thought was possible. Within a few days, and weeks we were working from home, taking care of our customers through customer centers, while taking precautions to make our local branches safe. Our most important accomplishments in 2020 are tied to the challenges we faced. Let me start by AML. During 2020, we addressed our history and strengthened our efforts to prevent financial crime, while being transparent about it. At the end of 2020, we closed our 244-point action plan to remedy the historical deficiencies, which we had reported on since I came in. Further actions are now a part of the bank's continuing development work. And last quarter, we responded to the Estonian FSA precept, and last week, they informed us that we have met their requirements. We have introduced new enterprise risk management, reworking our whole risk appetite framework. And today we are presenting a new corporate structure for a clearer governance of our Baltic subsidiary banks in Estonia, Latvia and Lithuania. And we have hired people. During 2021, we will be nearly 1,500 people working full-time against financial crime, or almost every tenth person in the bank. On top of that, all employees in the bank have the personal responsibility to combat financial crime in their daily work. Let's then move to sustainability. In 2020, we saw once again green financing growth. and Swedbank was in the top three of the ranges of green, social, and sustainability bonds in the Nordic region. We've also developed a framework for green equity. And during the fourth quarter, we, as the only Nordic bank, qualified for the Dow Jones Sustainability Index. It's a mark of quality. We want to be a part in the transition from oil and coal to renewables. Our fund company, Robur, is showing the way with their decision that all its assets under management will align with the Paris Agreement by 2025 and be carbon neutral by 2040. In this context, and in line with our revised strategic direction, the Bank has taken the strategic decision to stop financing unconventional fossil fuel production such as shale oil and gas, Arctic oil and gas, or oil sand. Nor will we finance exploration of new oil or gas fields with the exception of clients whose business strategy is aligned with the Paris Agreement. and then move to the, I think the most important part, mainly meeting customer needs in COVID-19 times. During the pandemic, Swedbank has continued to adapt. We are a digital bank with physical presence. Our digital tools, including a calculator for government support, have been visited millions of times. Events held through our digital channels have had hundreds of thousands of views. And we now have virtual solutions where customers can receive advice face to face. And we have a way for young people to get the bank idea without having to visit the branch to schedule COVID tests, for example. And we will continue to invest in stability and resilience so that we are available 24 hours Seven days a week, 365 and sometimes 366 days a year without interruptions. Our customers need to be able to trust Swedbank. I am proud that Swedbank now is the most popular brand in the Baltic region and our efforts to strengthen trust in Sweden are moving forward. In the end of 2020, we decided on a new strategic direction. It's not a revolution, but an evolution based on our 200 year history. It is fully anchored with all our 16,000 employees through our culture work. Our purpose, Swedbank's purpose, is to empower the many people and businesses to create the better future. And our vision of the better future is a financially sound and sustainable society. And based on our long-lasting and strong commitment to sustainability, we have defined our customer promise. Together, we make your financial life easier. And this will guide how we develop our customer offering. Our values, open, simple, caring, are still valid. We have also defined the foundation we base our business upon. First, Swedbank should be an attractive workplace with a culture based on inclusion and accountability. We will continue our work with employee engagement and have launched a program to strengthen leadership within the bank. Our infrastructure should be standardized, scalable, and stable. Customers should be able to trust that they can access Swedbank when they need through the channels they prefer. And We shall be an efficient, profitable and compliant bank and financial services platform. We maintain our target of return on equity of 15% and we should have the leading cost income ratio. We continue to invest in compliance and our capability to effectively and efficiently fight financial crime. With this strategic direction, All employees in Swedbank will work to create long-term value for our shareholders, customers and society. And during the year, I will come back in a structural way on how this strategy will be realized. Now, let me say a few words on our results for the fourth quarter. Swedbank's fourth quarter delivered a stable result in difficult times. Total income increased. primarily due to strong development of net commissions and net gains and losses. Net interest income was slightly down due to higher deposit guarantee fees for the full year. Expenses are higher due to seasonal effects and the hiring of more people in the anti-financial crime area. Credit impairments for the quarter ends at half a billion and is mainly explained by provisions related to our exit portfolio in the oil and offshore sector. And due to continued uncertainty on the economic outlook, we had a management overlay on 600 million to neutralize a release due to the projected upswing. Return on equity was thus negatively impacted by seasonally higher expenses, credit impairments, and further accumulation of net profit had ended at 11.8%. The capital situation improved, and we ended the quarter with a buffer around 500 basis points above the requirement. So where does this lead us on 2020? Well, first, 2020 was a year like no other for the global economy, for our customers in their daily lives, and for the bank's business. Over the course of the year, earnings were stable, even under these extreme circumstances. But profit as a whole was weaker than usual, weighed down by the fine from the FSA and provisions for credit impairments in accordance with IRS 9. Expenses have increased due to AML-related work and continued IT investments. Our liquidity and capital position remain strong. And the board has suggested a dividend of 25% for 2019, corresponding to 4.35 kroner per share that will be discussed at an extra general meeting February 15. For 2020, the board of directors is proposing a further dividend of 2.90 per share, and this will be discussed at the annual general meeting. And with that, I give the floor to our CFO, Anders Karlsson, who will in more detail present the result. Now it's your turn, Anders.

Thank you, Jens. Let us turn to the quarterly result in more detail. I will first talk you through the volume development and the P&L in more detail and then ask Rolf to speak about asset quality and credit provisioning before I sum up with a few remarks on capital and some forward-looking comments. then handing back to Jens to conclude. Compared to last quarter, we had underlying lending growth, but due to a significantly strengthened Swedish krona, the total loan portfolio decreased by 6 billion. Mortgage lending in both Sweden and the Baltics continued to grow steadily in local currencies, but corporate lending continued to be neutered. Corporates remain prudent on refinancing risk, which is reflected in the growth that we see in committed facilities, although the propensity to utilize these facilities has continued to gradually decrease since the second quarter. Instead, corporates have been turning to the debt and equity capital markets for funding and capital at attractive levels. Customer deposit inflows continued, this quarter increasing by $55 billion, mostly from corporates. Now, let us look at the quarter-over-quarter results, starting off with net interest income. Where the underlying NII is stable, the FX and a higher deposit guarantee fee for the full year impacted negatively. The trend that we saw over the third quarter continued into the fourth quarter, where deposit volumes increased and average lending volumes decreased slightly. Market rates continued to fall, impacting lending margins positively, but deposit margins negatively, reminding you that assets reprice gradually while deposits are impacted immediately. Over to net commission income, which was strong. Card commissions were lower as a result of the second wave of the pandemic impacting card activity, but the asset management business continues to perform and are well reflecting development in the equity markets. Income was also positively impacted by annual performance and market making fees in Sweden. And we had a positive development within ECM. Turning to net gains and losses. That were higher in the fourth quarter. There were good levels of client activity in LC&I, particularly in FX trading. and the CVA, DVA, and bond valuations also impacted NGL positively. Other income was stable. While the income from insurance and the partly-owned savings banks was stable, the share of profit from Intercard was lower. Let us look at expenses before I hand over to Rolf. Full year 2020 underlying expenses ended spot on our 19.7 billion guidance. Total cost ended on 24.56 billion, of which 4 billion were related to the fine from the Swedish FSA and 850 million to costs related to the AML investigations. As previously discussed, the number of FTEs has increased markedly over the year as a consequence of us hiring new competencies and a low attrition rate due to COVID-19. Out of the increase of almost 1,000 FTEs during 2020, around 500 was in AML and compliance, and around 350 were in IT. In the fourth quarter, higher headcount and the usual seasonal increase of costs led to higher expenses. I will now hand over to Rolf to talk about asset quality and the credit provisions that were made in the quarter. Please Rolf.