President’s statement
2008 began with strong earnings and market success. There was no lack of challenges during the year. However, Swedbank reported solid profitability in every area.
In Sweden, Swedbank continued to develop its customer offerings at a rapid pace, all the while focusing on service leadership and utilizing the branch network we share with the savings banks to work closely with customers. This was certainly no less important when the crisis accelerated last autumn.
In Estonia, Latvia and Lithuania, measures were taken to improve efficiencies and co-ordinate product development and customer offerings. We began the rebranding to Swedbank in Estonia, Latvia and Lithuania. Earlier in the year, the new brand was introduced in Russia and Ukraine. The overriding aim is to create uniformity in how Swedbank is perceived.
In the Baltic countries, the focus on risk and credit has gradually increased, not least against the backdrop of macroeconomic conditions. Weaker economic development impacted Swedbank in the form of higher provisions for loan losses.
In Ukraine, there was a limited expansion of operations: the product range was broadened and central operations involving risk management, treasury and financial control were co-ordinated and competencies were strenghtened. In Russia, the pace of retail expansion has slowed, which is natural given the current market conditions. Instead, Swedbank concentrated on establishing processes and consolidating its existing operations. As a result, both countries are performing satisfactorily.
The dramatic events in global markets left a mark on 2008. The effects of the financial crisis in the U.S. in the form of a stagnant funding market and higher refinancing costs became evident after the second quarter. During the summer, the signals became increasingly alarming, and in the autumn, the conditions in which banks and financial institutions functioned normally had radically changed.
As the bank with the largest customer base in Sweden, Swedbank found itself at the centre of media attention. To some extent, Swedbank came to symbolize the general crisis of confidence that followed the continued financial crisis in Sweden.
Swedbank worked extensively through its branches, the Internet Bank and the Telephone Bank to intensify its dialogue with customers. Close contacts with customers were crucial to retain confidence in the bank. We can also point out that our sales increased in the Swedish market during that period.
Initiatives by governments and authorities definitely helped to spread calm amongst customers and the public. Swedbank’s management has taken measures in terms of our approach to credit provision, where the balance between good risk management and long-term, trusting customer relationships is the focus.
The indirect impact of the financial crisis on the economy has now worsened conditions in markets where the bank is active. Lay-offs, lower consumer spending and falling house prices pose huge challenges for the bank’s customers. It is more important than ever that we serve our customers as a constructive partner.
Despite a turbulent year, I am pleased that Swedbank delivered a strong result. This can certainly be seen as validation of our basic business model, where local influence takes priority and the bank’s shared operations are used to support local activities in all the markets where we have a presence.
This rests on a solid foundation of values rooted in the Swedish savings bank movement, as expressed by our aim of service leadership.
There is room for further improvements, both large and small, for our customers, however, Swedbank has a strong base to stand on. This puts us on solid ground looking ahead to a challenging 2009.
Since I will relinquish my position as CEO in March, I feel it is particularly important to thank our customers, who have continued to do business with Swedbank, and our highly competent employees, whose performance has been excellent.
Stockholm, February 2009
Jan Lidén
President and Chief Executive Officer
