Core Viewpoint - Investors are facing a challenging market environment with numerous factors to consider for capital allocation [1] Group 1 - The current market is described as difficult to predict, indicating high volatility and uncertainty [1]

Group 1 - There is a significant investment boom in AI infrastructure, indicating that current interest rates may not be as restrictive as previously thought, potentially leading to further rate cuts and concerns about market bubbles [1] - Major US companies are heavily investing in data centers to leverage AI technology, which is expected to have a substantial impact on their business operations [2][3] - The spending on data centers is not particularly sensitive to interest rates, as it is driven by long-term assessments of productivity and investment potential in the AI sector [3] Group 2 - The company is utilizing various data sources to track inflation and growth in the absence of government data, including price statistics and wage inflation data from ADP [4][5] - The Beige Book is also referenced as a valuable source of information, providing insights into economic conditions, although it does not replace government data [5]

Financial Highlights - The company's market capitalization is $90 billion[5] - Total assets reached $719 billion[5] - Gross loans amounted to $377 billion[5] - Total deposits reached $601 billion[5] - Institutional Assets Under Administration (AUA) totaled $6415 billion[5] - Fee income accounted for 300% of revenue[5] Q3 2025 Performance - Commercial & Personal Banking Services revenue was $5020 million, with average deposits of $393 billion[8] - Institutional Banking Services revenue was $1764 million, with average deposits of $175 billion[10] - Net interest income, as reported, reached $4750 million[50] - Noninterest income, excluding securities gains, was $2074 million[50]

Core Viewpoint - Employees are increasingly expected to manage their own retirement planning, with the Central Provident Fund (CPF) in Singapore being a primary source of retirement savings, but it should be supplemented with income-generating equities [1] Group 1: CapitaLand Integrated Commercial Trust (CICT) - CICT is the first and largest real estate industrial trust (REIT) listed on the Singapore Exchange, owning a diverse portfolio of malls, offices, and integrated developments primarily in Singapore, with additional assets in Australia and Germany [3][4] - The REIT currently offers a yield of 4.7%, with an average lease term exceeding three years, ensuring a stable income stream [4] - CICT benefits from a strong sponsor, Capitaland Investment, which provides a pipeline of assets for future growth, although it is sensitive to interest rate changes that can affect borrowing costs and property values [5][6][7] Group 2: DBS Group Holdings - DBS is Singapore's largest bank and company by market capitalization, significantly influencing the Straits Times Index [8] - The bank has shown impressive growth, with net profit increasing by 142% from S$4.7 billion in 2020 to S$11.4 billion in 2024, and dividends per share rising by 181% from S$0.79 to S$2.22 [9] - Currently, DBS offers a yield of around 5% and has a strong track record of increasing dividends, alongside a S$3 billion share buyback program [9][10] Group 3: Singapore Exchange (SGX) - SGX has performed well financially over the past five years, with net profit increasing by nearly 46% from S$445 million in FY2021 to S$648 million in FY2025, despite previous perceptions of being primarily a dividend stock [13] - The exchange operates as a "toll gate" business, generating revenue from transaction fees, with only 2% of FY2025 revenue coming from listing fees [14] - SGX maintains a strong dividend yield of around 2.2% and has consistently increased dividends since FY2009, benefiting from its monopoly status in a major financial hub [14][16][17]

Financial Performance - The company's net income was a loss of $(5628) million, but adjusted net income was $649 million, a 16% increase compared to the last quarter[11] - Adjusted total revenue reached $2325 million, up 9% from the previous quarter[11] - Adjusted PPNR (Pre-Provision Net Revenue) increased by 20% to $928 million[11] - Net interest margin (NIM) increased by 44 bps to 350%[11] Balance Sheet and Capital - Total assets amounted to $242 billion, with total deposits of $198 billion[3] - Total loans reached $172 billion, with a loan to deposit ratio of 87%[3] - The total risk-based capital ratio stood at 1507%, and the TCE (Tangible Common Equity) ratio was 853%[3] - The company completed balance sheet repositioning, deleveraging the balance sheet by paying down higher cost deposits and wholesale borrowings[9, 12] Loan Portfolio and Credit Quality - Total loans increased by 2% on a linked quarter annualized basis, reaching $172 billion[12] - The ACL (Allowance for Credit Losses) ratio ended the quarter at 150%, up 2 bps[12] - The NCO (Net Charge-Off) ratio was 25 bps, with provision expense exceeding net charge-offs by $45 million[12] - Nonperforming loans represented 090% of total loans[11] Deposits and Funding - Total deposits decreased due to deleveraging, while the deposit mix and costs improved[12] - Noninterest-bearing deposits accounted for 221% of total deposits[57] - The cost of deposits decreased by 11 bps on a linked quarter basis[59] Interest Rate Sensitivity and Hedging - The company executed $1625 billion of interest rate swaps in 3Q25 to reduce the negative impact of falling rates by approximately 50%[76] - The company expects 4Q25 NIM to be 365% or higher[16]

SEB (OTCPK:SVKE.F) Q3 2025 Conference Call Summary Industry Overview - The call discusses the macroeconomic environment affecting SEB, including interest rates and foreign exchange (FX) movements, which are critical for the banking sector [2][4][14]. Key Points and Arguments Macro Environment - The average 3-month Stibor rate decreased in Q3 compared to Q2, with the Riksbank lowering the policy rate by 25 basis points to 1.75% [2][3]. - The average 3-month Euribor also saw a decline, while the European Central Bank maintained the deposit facility rate, impacting SEB's Baltic operations primarily on the deposit side [2][3]. Profit and Loss (P&L) Insights - FX movements significantly influence both the P&L and balance sheet, with a stronger SEK leading to lower income and costs, while a weaker SEK has the opposite effect [4][5]. - The P&L was affected by a negative impact from FX of approximately SEK 600 million, offset by a positive day effect of a similar magnitude [7][8]. - Net interest income (NII) was positively impacted by higher lending volumes and elevated NII from investor services, particularly during the dividend season [8][9]. - Business and retail banking experienced a decline of around SEK 200 million in NII compared to Q1 due to lower deposit margins and pressure on mortgage margins, although some stability was noted towards the end of the quarter [9][10]. Capital and Risk Exposure - SEB's current share buyback program amounts to SEK 2.5 billion, expected to conclude by October 21, 2025 [13]. - A transitory increase in risk exposure amount (REA) of about SEK 50 billion is anticipated due to Baltic IRB models, impacting the CET1 capital ratio by approximately 80 to 90 basis points [13][14]. - The dialogue with the European Central Bank regarding the approval of these models is ongoing, with gradual recognition of this effect expected starting late 2025 or early 2026 [14]. Costs and Expenses - Total expenses for 2025 are targeted at or below SEK 33 billion, with adjustments based on FX rates [11][12]. - Imposed levies are expected to decline, with an estimated total of around SEK 3.5 billion for the full year, similar to the previous year [12][19]. Market Activity and Outlook - The call noted that summer months typically see lower activity in capital markets, but SEB is positioned to capture opportunities as they arise [10][11]. - The competition in the Baltic region remains stiff, but loan growth is healthy [9][21]. Additional Insights - The sensitivity of the CET1 capital ratio to currency fluctuations was highlighted, with a 5% change in SEK affecting the ratio by around 40 basis points [5]. - The impact of share price on costs was discussed, indicating that a higher share price increases costs related to long-term incentive programs, although this is not a significant portion of total expenses [12][28][31]. Conclusion - The call provided a comprehensive overview of SEB's performance and outlook for Q3 2025, emphasizing the effects of macroeconomic factors, FX movements, and competitive dynamics in the banking sector. The management remains cautious yet optimistic about future growth opportunities while navigating the challenges posed by the current economic environment.

Group 1 - The stock market has reached new highs despite weaker labor market data, indicating a potential path for the Federal Reserve to lower interest rates [1][2] - The concentration of the stock market in mega-cap global tech stocks has created a tension, as profit growth cycles of benchmark indices have decoupled from the U.S. economic cycle [2] - Increased interest rate sensitivity, referred to as equity duration, presents new challenges for asset allocators in aligning portfolio decisions with macro indicators [2]

Core Insights - The real estate sector has significantly underperformed compared to the S&P 500 over the past decade, with a $1,000 investment in the Vanguard Real Estate ETF (VNQ) growing to approximately $1,770, while the same investment in the Vanguard S&P 500 ETF (VOO) would have grown to $3,900 [1][2] Performance Comparison - The S&P 500 has experienced an impressive bull run, achieving annualized total returns of about 14.6% over the last ten years, making it challenging for the real estate sector to keep pace [4] - The real estate sector's performance is notably affected by interest rates, as it is one of the most rate-sensitive sectors in the market [5] Interest Rate Sensitivity - The Federal Reserve has implemented two extended periods of rate increases over the past decade, with the benchmark federal funds rate now over 400 basis points higher than it was ten years ago [5] - Real estate investment trusts (REITs) typically outperform in falling or zero-rate environments but struggle when interest rates are high or rising [5][6] Economic Implications - Rising interest rates increase borrowing costs for REITs, which often rely heavily on debt for growth, similar to how individuals use mortgages to purchase homes [6] - Higher rates can negatively impact commercial real estate property values, which generally have an inverse relationship with risk-free interest rates, leading to potential declines in the value of properties owned by REITs [6][7]

Real Estate Investment Analysis - Real estate is more sensitive to interest rates than inflation [1][2] - In the current environment, real estate is likely to decrease in real terms [2] - Real estate is a fixed asset, making it easily taxable [1][2] - The fixed nature of real estate limits diversification [2] - Real estate's immobility hinders the movement of money [2][3] Ray Dalio's Perspective - Ray Dalio considers real estate a poor investment [1][3]

Financial Performance Highlights - Net interest income increased to $467 million in 2Q 2025, which included $29.1 million in contractual accretion income and $13.1 million from accelerated loan payoffs[54] - Noninterest income rose to $222.2 million in 2Q 2025, driven by strong fund services income, higher card purchase volume, and increased 12b-1 fees, including a $37.7 million gain on investment securities[54] - Operating PTPP (Pre-Tax, Pre-Provision) income reached $309.2 million, or $4.06 per diluted share[54] - Average total deposits grew to $55.649 billion in 2Q 2025, with average noninterest-bearing deposits (DDA) increasing by $975 million to $14.403 billion[55] - The FTE Net Interest Margin was 3.10%, which included a $42.2 million benefit from purchase accounting accretion; excluding PAA, the core NIM was 2.83%[55] Balance Sheet and Credit Quality - Average loans increased to $36.407 billion in 2Q 2025, led by C&I growth, followed by owner-occupied and investment CRE[55] - The allowance for credit losses on total loans was 1.06%[55] - Net charge-offs were 0.17% of average loans, with legacy UMB NCOs at 0.13%[55] HTLF Acquisition Impact - $42.2 million in net interest income accretion was recognized in 2Q 2025 related to the HTLF acquisition[44] - Core deposit intangible amortization related to the HTLF acquisition was $(21.6) million in 2Q 2025[45] Business Segment Performance - Commercial & Personal Banking Services revenue was $514.9 million in 2Q 2025, with average deposits of $39 billion[8] - Institutional Banking Services revenue was $174.3 million in 2Q 2025, with average deposits of $16.6 billion and $600.6 billion in AUA[10]