Strategy 2030: Investments to Future-Proof SEB
SEB's real estate portfolio is resilient to higher interest rates
Total real estate and household mortgage lending compared to Nordic peers
SEK bn, Q2 2022
2,400
1,600
800
Conservative underwriting standards
Household mortgages
Residential real estate and housing co-ops
■Commercial real estate
•
Group-wide risk tolerance and divisional volume caps.
Cash-flow based underwriting standards, interest rate stress tests,
restrictions on Loan-to-value and Debt Service Ability.
Majority of large clients hedging interest rates (average 3-4 years).
Professional clients operating in Sweden and Nordics with diversified
property portfolios and funding sources.
0
Peer 1
Peer 2
Peer 3
Peer 4
Peer 5
SEB
Commercial real estate lending compared to Nordic peers
SEK bn, Q2 2022
400
200
0
Peer 1
Peer 2
Peer 3
Peer 4
Peer 5
SEB
Average Loan-to-Value, Q3 2022
Commercial real estate
45.0%
Residential real estate
Housing co-ops
46.6%
27.9%
Commercial and residential property values need to drop more than ~25%
in order to reach regulatory risk weight floors, given current Probability of
Default (PD) levels.
20 largest real estate clients resilient against higher interest rates
.
Average Interest Coverage Ratio (ICR) at 4.5x by Q2 2022.
Internal stress test assuming a 3M STIBOR at 4% by year-end 2023.1
Average ICR in stressed scenario: 2.0x.
All clients at or above 1x ICR in stressed scenario.
29
Note: Peer lending figures based on best estimate. Source: Fact books, interim reports, risk reports.
1 Given average interest rate hedging of 3-4 years, this translates to about 200bps higher funding cost vs. Q2 2022. Includes commercial and residential real estate clients.
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