Earnings
Swedbank has increased its focus on cost control as a result of the financial crisis and economic slowdown. At the same time the bank is adjusting its size to lower demand, primarily by reducing personnel and the number of branches. Capacity adjustments primarily affect the Baltic countries, Ukraine and Russia. Adjustments are also being made in Sweden, mainly through attrition. In addition to cutting the number of employees and branches, efforts are also being made to identify potential savings in several areas, e.g., by coordinating various Group functions.
To create long-term growth, Swedbank will capitalise on growth opportunities in selected areas. A number of areas have been identified where Swedbank, through relatively small investments, can better utilise its existing capacity. Large corporates offerings, Private Banking, Life Insurance & Pensions within Swedish Banking are such examples.
Activities and development in 2009
Capacity adjustments have been implemented in Baltic Banking since 2008, and within the entire Group since the first quarter of 2009. The number of full-time employees was reduced by a total of 2 571 during the year, including 1 352 positions in Baltic Banking and 1 068 in International Banking. During the year the number of bank branches was reduced in Baltic Banking by 52 (or 19 per cent), in International Banking by 53 (25 per cent) and in Swedish Banking by 38 (9 per cent).
Furthermore, Swedbank continued its efforts to improve work and procurement processes and more efficiently utilise electronic channels.
Costs for the FR&R teams, including Ektornet, increased by SEK 423m in 2009 compared with the previous year. They are expected to further increase in 2010, though not as much as in 2009. A considerable portion of the cost increase will be related to Ektornet. These costs are cyclical and will fall as commitments are terminated and the economy recovers.
Potential growth areas were evaluated and preparations were begun during the year. Swedbank Markets signed a contract with an experienced equity research team in Finland that will be employed in early 2010. With this added capacity, Swedbank will take another step towards creating a comprehensive Nordic offering.
Measures to improve the Private Banking offering, which have been under way since 2005, were intensified in 2009. A new head of Private Banking was appointed in Swedish Banking during the year with a mandate to improve the unit’s position.
Pricing of Swedbank’s lending was risk-adjusted during the year to reflect the underlying risk and the actual funding cost. The adjustments are having a faster impact on large corporations than on smaller businesses, and have been implemented faster in Sweden than in the Baltic countries. In the long term, however, margins are expected to increase more in Baltic Banking than in Swedish Banking.
