-- Stronger income in the fourth quarter -- Cost efficiency measures started yielding results -- Activities to reach our Cost efficiency targets now fully committed -- Operating result* decreased by 10 per cent on comparable basis to SEK 7,153 M. -- Total costs decreased 7 per cent on comparable basis to SEK 22, 679 M. -- Net interest income rose 5 per cent on comparable basis to SEK 13,053 M. -- Net commission income decreased by 20 per cent on comparable basis to SEK 11,576 M. -- Credit losses amounted to SEK 547 M (815). -- Return on equity was 11.9 per cent (16.9). -- Earnings per share amounted to SEK 7.17 (9.43). -- A dividend of SEK 4:00 (4:00) is proposed. -- Operating result in the fourth quarter, excl. restructuring costs, was SEK 1,860 M (1,694 in the third quarter 2001 and 1,729 in the fourth quarter of 2000).
*Operating result includes pension settlements/provisions. Excluding pension provisions of SEK 1,002 M (943), the statutory operating result amounted to SEK 6,151 M (8,800). However, external studies have shown that customer satisfaction has decreased amongst our retail customers in Sweden. This is an area that we now address, partly by focusing on our local branches, reinforcing their customer responsibility.
2001 was a turbulent year. The stock markets were weak and the economies in most countries experienced a sharp downturn reinforced by the terror attacks of September 11.
SEB has a strong position in equity related products. The sharp downturn in equity markets thus affected SEB more than many of its competitors.
In February last year we announced a proposed merger with ForeningsSparbanken with the idea of creating a Nordic bank that could actively participate in the restructuring of the European financial industry. However, EU Merger Task Force put such demands on us that we in September mutually decided to withdraw our application.
We therefore decided to realise our own potential by launching a restart programme implying
-- a renewal of our management team -- a cost efficiency program to reduce costs by SEK 2.5 billion, net, over the next 18 months -- a culture change programme called "3 C", which stands for Customer satisfaction, Cross-servicing and Cost efficiency.
The "3 C" programme is a change process being initiated in the entire group to ensure long term profitability. Customer satisfaction is key to long-term success. In many parts of the Group customer satisfaction is high compared to our peers, for example in SEB Germany and in Merchant Banking.
Cross-servicing offers an important potential to enhance our revenues, by increasing our market share with existing customers. Further strengthening the co-operation between the units within the Group will achieve this target and improve service to our customers at the same time.
The Cost-efficiency projects that are now under way in most parts of the bank reflect the need for adapting to weaker markets but also for creating a long term cost efficiency culture in the Group. The total cost reduction programme, which focuses on support and administrative functions, amounts to SEK 3 billion, gross, and will give an annual net effect of SEK 2.5 billion as from the first quarter of 2003 - all other things equal.
We have already made decisions that will achieve annual cost savings of SEK 1 billion. Furthermore, we have identified, in specified projects, another SEK 2 billion in annual cost savings. Our business units are firmly committed to these projects which are well reflected in their own plans.
The fourth quarter result was better than that of previous quarters in 2001, partly due to stronger stock markets. The improvement was due to lower operating costs and a stronger equity market. However, we have chosen to take an up-front restructuring charge for the initial costs of the change programme. Most of the charge has been taken in 2001 but some will also be affecting 2002.
A large contribution was made from Corporate & Institutions where Merchant Banking reported strong income due to good performance in customer-driven business. Enskilda Securities' result was weaker, as for most investment banks, and cost reduction measures have been taken.
SEB Germany's income decreased due to the weak German economy. However, this was to a large extent offset by further cost savings in the restructuring programme.
The Baltic banks continue to grow, showing strong results.
Nordic Retail & Private Banking was affected by the declining stock markets but managed to keep costs under control. In the international part of private banking some major steps were taken to reduce costs and adapt to the market environment.
The number of e-banking customers totalled 1,128,000 at year-end (800,000). The increases continued both in Sweden, Germany and in the Baltic countries.
Our credit volumes remained at stable levels overall. We saw expansion in the Nordic corporate segment, the Baltic and in mortgage lending to Swedish households. Credit losses were at a low level and doubtful claims, gross, declined somewhat. However, a number of companies have been downgraded by the rating institutes and it is not unreasonable to expect an increase in the general credit loss level in the banking industry.
All in all, in terms of result, we can conclude that 2001 was a tough year. However under the circumstances I feel comfortable given the measures now under way.
Since stock markets and the general economy still do not show any clear signs of a forthcoming recovery, our cost efficiency programmes are of utmost importance for our future. These programmes have top priority within all parts of the group!
Profit and loss account, SEK M Change, Change on 2001 2000 per comparable cent basis, per cent Net interest income 13,053 11,616 12 5 Net commission income 11,576 13,846 -16 -20 Net result of financial 2,964 3,552 -17 -16 transactions Other operating income 2,627 3,644 -28 4 Total income 30,220 32,658 -7 -8 Staff costs -12,353 -12,761 -3 -8 Pension compensation 1,002 943 6 6 Other operating costs -8,763 -8,751 0 -4 Merger and restructuring costs -716 0 Depreciation -1,849 -1,763 +5 +1 Total costs -22,679 22,332 2 -7 Net credit losses and write-downs -616 -890 -31 -51 Net result from associated companies -29 95 -131 Non-life insurance 257 212 21 Operating result 7,153 9743 -27 -10
The size of the dividend in SEB is determined by the financial position and growth possibilities of the Group. SEB strives to achieve long-term growth based upon a captial base for the financial group of undertakings that must not be inferior to a core capital ratio of 7 per cent. The dividend per share shall, over a business cycle, correspond to around 40 per cent of earnings per share, calculated on the basis of operating result after tax.
Earnings per share was SEK 7.17 (9.43). The Board of Directors proposes a dividend of SEK 4.00 (SEK 4.00) per Series A and Series C shares. This proposal corresponds to 56 per cent (40.9) of earnings per share. The total dividend amounts to SEK 2,818 M (2,818). The SEB share will be traded ex dividend as from 11 April 2002.
Financial information during 2002 7 May Interim report January-March 22 August Interim report January-June 7 November Interim report January-September
The Annual General Meeting will be held on Wednesday 10 April, 2002 at 12.30 p.m. (Swedish time) at Cirkus, Djurgardsslatten, Stockholm.
Reports are also found on Internet (www.seb.net).
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www.waymaker.net/bitonline/2002/02/21/20020221BIT00170/bit0001.doc The Full Year-End Report www.waymaker.net/bitonline/2002/02/21/20020221BIT00170/bit0001.pdf The Full Year-End Report
CONTACT: SEB, Stockholm Gunilla Wikman, Head of Group Communications +46 8 763 81 25 Per Anders Fasth, Head of Group Investor Relations +46 8 763 95 66 Annika Halldin, Responsible for financial information +46 8 763 85 60 Laurence Westerlund, Investor Relations +46 8 763 86 27