SwedbankSeptember 2008

Jan LiljaHead of Group Treasury

(2)

Home markets, universal banking

SwedenEstoniaLatviaLithuania

Swedbank Group today

Potential home marketsRussia - Banking and leasing in Moscow, Kaliningrad and St PetersburgUkraine – OJSC Swedbank, universal banking

Other markets, niche bankingDenmark – 2 Swedbank branchesFinland - Swedbank branchNorway - Swedbank branch, investment banking through First Securities (51%), EnterCard (50 % owned)USA - Merchant/investment banking in New YorkLuxembourg - banking for Swedish expatriatesChina - Swedbank branch in ShanghaiJapan - Rep. office in TokyoSpain - Rep. office in Marbella

(3)

Geographical reachJune 30, 2008

SwedenPopulation 9.2 mEmployees 8,635Private customers 4.1 mof which Internet customers 2.4 m

Corporate customers 282,000of which Internet customers 223,000

Organizations 117,000Branches 436ATMs 863Cards 3.6 m

EstoniaPopulation 1.3 mEmployees 3,346Private customers 1.2 mof which Internet customers 0.9 m

Corporate customers 91,000Branches 87ATMs 560Cards 1.2 m

LatviaPopulation 2.3 mEmployees 2,659Private customers 0.9 mof which Internet customers 0.7 m

Corporate customers 57,000Branches 74ATMs 332Cards 0.9 m

LithuaniaPopulation 3.4 mEmployees 3,237Private customers 3.0 mof which Internet customers 1.0 m

Corporate customers 80,000Branches 123ATMs 395Cards 1.4 m

RussiaPopulation 142.1 mPrivate customers 2,800Corporate customers 600Employees 474Branches 3ATMs 9

UkrainePopulation 46.2 mEmployees 3,481Privates customers 0.2 mCorporate customers 21,000Branches 190ATMs 164Cards 0.4 m

(4)

Ukraine and RussiaBalticsSweden

Stable base Growth and experience

Future growth and profitability

Share of lending: 80 % Share of lending: 16 % Share of lending: 2 %

Swedbank is the leading bank in Sweden. Profitability is high and stable, risk is low and the bank is consolidating its market shares in important segments in both the private and corporate sectors.

Swedbank is the leading bank in all Baltic countries. Continued convergence means excellent long-term growth for the Baltic region. In the short-term we will closely manage risk and growth.

Swedbank has a small but growing presence in Ukraine and Russia. In the long-term, a significant share of Swedbank’s growth will be generated in these markets.

Stable platform in Sweden acts as engine for growth

(5)

Swedbank, group overview

52%

32%

2%8% 8%

-2%-10%

0%

10%

20%

30%

40%

50%

60%

SwedishBanking

BalticBanking

InternationalBanking

SwedbankMarkets

AssetManagement & Insurance

SharedServices& Group

Staffs

Share of Group net profit 2007

(6)

Market shares

0

5

10

15

20

25

30

35

Lending Mortgage Deposits

%

Private Corporate

0

1020

30

40

5060

70

Lending, corporate

Mortgage,private

Deposits,private

%

Estonia Latvia Lithuania

Market shares, Sweden Market shares, Estonia, Latvia, Lithuania

In Sweden, Swedbank is the market leaderin retail mortgages, retail deposits, mutualfunds and card payments

In Baltics, the bank is the market leader in Estonia and Latvia, with also very strong positions in Lithuania

(7)

Continued solid results

• Continued solid results in all business areas– Net profit for the period Jan-Jun

increased by 8 percent to SEK 6 504m (6 022)

• Conversion to covered bonds on 21 April – decreased spreads, increased liquidity and facilitated funding

• New capital adequacy objective for full Basel 2 – Tier 1 capital ratio is to be 8.5-9.0 percent

• Credit quality remains good and in line with expectations

• The macro environment in the Baltic states has deteriorated compared with expectations in Q1, affected by a weaker European economy

• Net gains and losses on financial items were positively affected by unrealized valuation effects –valuation volatility expected to decrease as from Q3 2008.

(8)

Accounting and valuation effects

Accounting and valuation effects, SEKmQ2

2008Q1

2008Q4

2007

Swedbank Markets 0 – 187 – 40

Group Treasury, intra-group lending 419 – 253 20

Swedbank Mortgage 29 – 22 66

Group Treasury, liquidity portfolio – 4 53 – 5

(9)

H1 2008 – best half-year so far

1,400

1,600

1,800

2,000

2,200

2,400

Q107

Q2 07

Q307

Q407

Q108

Q208

Profit for the period

SEKm

25

50

75

100

Q107

Q2 07

Q307

Q407

Q108

Q208

Profit for the period

SEKm

050

100150

200250

300350

400450

Q206

Q306

Q406

Q107

Q2 07

Q307

Q407

Q108

Q208

Profit for the period of which First Securities

SEKm

Swedish Banking Baltic Banking International Banking Swedbank Markets

500

1,000

1,500

2,000

Q107

Q2 07

Q307

Q407

Q108

Q208

Profit for the period

SEKmSEKm

(10)

Credit quality, Group

*Loan losses, net = write-offs + provisions - recoveries + change in property taken over

Loan losses, netLoan loss ratio

-200-100

0100200300400500600

Q1-

03Q

2-03

Q3-

03Q

4-03

Q1-

04Q

2-04

Q3-

04Q

4-04

Q1-

05Q

2-05

Q3-

05Q

4-05

Q1-

06Q

2-06

Q3-

06Q

4-06

Q1-

07Q

2-07

Q3-

07Q

4-07

Q1-

08Q

2-08 -0.20

-0.10 0.000.100.200.300.400.500.60

SEKm %

Impaired loans

Share of impaired loans

01,0002,0003,0004,0005,0006,000

Q3-

03Q

4-03

Q1-

04Q

2-04

Q3-

04Q

4-04

Q1-

05Q

2-05

Q3-

05Q

4-05

Q1-

06Q

2-06

Q3-

06Q

4-06

Q1-

07Q

2-07

Q3-

07Q

4-07

Q1-

08Q

2-08

0.000.050.100.150.200.250.300.350.400.450.50

SEKm %

(11)

Swedish Banking• Continued strong corporate lending

growth• Mortgage lending growth has started

to decline• Overall stable lending margins

– Back book mortgage margin stabilizing. New lending shows increasing margin

– Corporate margins are increasing slowly

• Deposit margins decreased as a result of mix effects

• Continued increase in card volumes• Capital gain of SEK 101m from sale of

MasterCard shares• Continued strong credit quality

– Stable low LTV ratio at 43% in Swedbank Mortgage

– Only 1.5% of the lending in Swedbank Mortgage has a LTV ratio over 75%.

0500

1,0001,5002,0002,5003,0003,5004,0004,5005,000

Q107

Q2 07

Q307

Q407

Q108

Q208

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

Income Costs C/I-ratio

C/I-ratioSEKm C/I-ratioSEKm

(12)

A slowing Swedish economy

Real GDP growth

1.0%

1.5%

2.0%

2.5%

3.0%

2007 2008F 2009F

Sweden Euro-zone

CPI growth

0.0%

1.0%

2.0%

3.0%

4.0%

2007 2008F 2009FSweden Euro-zone

• The Swedish economy has performed better than the EU average. However, GDP growth, CPI and other indicators show that the Swedish economy will grow more slowly in the next few quarters

• Higher inflation, rising interest rates and weaker disposable income for households are expected to lead to weakening household consumption and credit growth.

Source: Swedbank, Economic Secretariat

(13)

Baltic Banking Operations

• Strong and stable income• Lending margins decreased as a

result of higher funding costs • Deposit margins affected

negatively by decreasing local interest rates and increased competition

• Capital gain of SEK 66m from the sale of PKK

• Profit based staff costs have been reduced by SEK 185m owing to lower provision requirements.

0200400600800

1,0001,2001,4001,6001,8002,0002,2002,400

Q107

Q2 07

Q307

Q407

Q108

Q208

0.0

0.1

0.2

0.3

0.4

0.5

Income Costs C/I-ratio

SEKm C/I-ratio

C/I-ratio excluding one-offs

(14)

Baltic macro development weaker than expected

Real GDP growth

0%2%4%6%8%

10%12%14%

2005 2006 2007 2008F 2009FEst Lat Lit

CPI growth

2%4%6%8%

10%12%14%16%

2005 2006 2007 2008F 2009FEst Lat Lit

• Economic slowdown in Estonia continues: GDP growth will slow to about 2% in 2008 and recover to 4% in 2009 if global economic developments improve and price growth slows

• In Latvia growth will slow to about 1.3% in 2008 and 2009, the bottom of the cycle is expected to be in winter 2008/2009

• The slowdown in Lithuania is expected to be modest: growth of about 6.5% is expected in 2008 and about 5.5% in 2009

• Export growth remains relatively strong, while weak domestic demand dampens imports. Trade and current account deficits are falling. The CPI has started to show signs of a slowdown, but external risks are high (oil, food).

Source: Hansabank Markets

(15)

Baltic banking overdues vs market

Estonia - overdue over 60 days / current portfolio

0.0%

0.5%

1.0%

1.5%

2.0%

31.1

2.05

30.0

6.06

31.1

2.06

30.0

6.07

31.1

2.07

30.0

4.08

Rest of the market HB Bank

Estonia - overdue over 30 days / current portfolio

0.0%0.5%1.0%1.5%2.0%2.5%3.0%

31.1

2.05

30.0

6.06

31.1

2.06

30.0

6.07

31.1

2.07

30.0

4.08

Rest of the market HB Bank

Latvia - overdue over 30 days / current portfolio

0%

1%

2%

3%

4%

5%

31.1

2.04

30.0

6.05

31.1

2.05

30.0

6.06

31.1

2.06

30.0

6.07

31.1

2.07

Rest of the market HBA Bank

Latvia - overdue over 90 days / current portfolio

0,0%0,5%1,0%1,5%2,0%2,5%3,0%

31.1

2.04

30.0

6.05

31.1

2.05

30.0

6.06

31.1

2.06

30.0

6.07

31.1

2.07

Rest of the market HBA Bank

Source: Swedbank, Bank of Estonia, and Financial and Capital Market Commission (Latvia)

(16)

Credit quality, Baltic Banking

0.54%

0.30%0.73%0.55%Q2 08

0.39%

0.25%0.53%0.38%Q1 08

0.47%

0.28%0.64%0.48%H1 08

-0.18%Group level provision adjustment0.28%Baltic Banking

0.10%Lithuania0.63%Latvia0.58%EstoniaQ4 07

*Loan loss ratio, net = (changes in provisions + net write-offs) / credit portfolio at the beginning of the period

Loan loss ratio, net*

Overdue ratio (more than 60 days)*

0.86%0.92%0.79%Q1 08

1.20%1.11%1.24%Q2 08

0.71%Baltic Banking0.75%Private0.65%CorporateQ4 07

*Overdue ratio (more than 60 days) = volume of loans more than 60 days overdue /12 month-old credit portfolio

(17)

International Banking

• Annika Wijkström new head of International Banking

• Strong net interest income development• Continued strong economic growth in

Ukraine and Russia but with high inflation• Ukrainian Banking operations

– Continued high lending growth– Higher costs due to operational excellence

projects and profit-based staff costs• Russian Banking

– Ownership transferred from Hansabank to Swedbank

– Raimo Valo new CEO– Recovered tax on lease assets of SEK 19m

• Strong lending growth in the Nordic branches.

0

25

50

75

100

Q107

Q2 07

Q307

Q407

Q108

Q208

International Banking, profit for the periodof which Russian Bankingof which Ukrainian Banking Operations

SEKm

(18)

Swedbank Markets

• Magnus Geeber new head of Swedbank Markets

• Good development in fixed income and FX trading despite difficult conditions at times

• Stable market share in equity trading and structured products but lower market activity

• Increased activity in Project and Corporate Finance compared with Q1

• Good performance in First Securities after a slow start to the year.

050

100150

200250

300350

400450

Q206

Q306

Q406

Q107

Q2 07

Q307

Q407

Q108

Q208

of which First Securities

Profit for the period attributable to shareholders of Swedbank

SEKm

(19)

Prof it for the period, SEKm

0

500

1 000

1 500

2 000

2 500

3 000

3 500

4 000

Q2-2008

Q1-2008

Q4-2007

Q3-2007

Q2-2007

Return on equity, %

0.0

5.0

10.0

15.0

20.0

25.0

Q2-2008

Q1-2008

Q4-2007

Q3-2007

Q2-2007

Earnings per share, SEK

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

Q2-2008

Q1-2008

Q4-2007

Q3-2007

Q2-2007

Tier 1 capital rat io, %

0.01.02.03.04.05.06.07.08.09.010.0

Q2-2008

Q1-2008

Q4-2007

Q3-2007

Q2-2007

(20)

Income statement, Group

SEKmQ2

2008Q1

2008 %Q2

2007 %Net interest income 5,295 5,241 1 4,591 15Net commission income 2,374 2,180 9 2,552 – 7Net gains/losses on financial items at fair value 1,141 75 579 97Other income 623 950 – 34 504 24Total income 9,433 8,446 12 8,226 15Staff costs 2,268 2,311 – 2 2,016 13Profit-based staff costs 185 268 – 31 409 – 55Other expenses 1,977 1,861 6 1,699 16Total expenses 4,430 4,440 – 0 4,124 7Profit before loan losses 5,003 4,006 25 4,102 22Loan losses, net 423 288 47 102 Operating profit 4,580 3,718 23 4,000 15Tax 935 805 16 856 9Profit for the period 3,645 2,913 25 3,144 16Attributable to shareholders of Swedbank 3,604 2,900 24 3,112 16

(21)

Net interest income Q2-08 (Q1-08)

5,241 5,295

15111 44 1

72

187 2

4,600

4,800

5,000

5,200

5,400

5,600N

et in

tere

st in

com

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1-08

Sw

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anki

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Bal

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anki

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Bal

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anki

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Inve

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ent

Inte

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anki

ng

Sw

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Mar

kets

Ass

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Q2-

08

SEKm

(22)

Swedish Banking, change in net interest income

SEKmQ2 2008

vs Q1 2008Q2 2008

vs Q2 2007Net interest income Q1 2008 2,982Net interest income Q2 2007 2,905

Changes:Higher lending volumes 54 227Unchanged lending margins 0.0Decreased lending margins – 244Higher deposit volumes 34 140Decreased deposit margins – 44Higher deposit margins 79Other changes – 55 – 136Total change – 11 66Net interest income Q2 2008 2,971 2,971

(23)

Baltic Banking, change in net interest income

SEKmQ2 2008

vs Q1 2008Q2 2008

vs Q2 2007Net interest income Q1 2008 1,575Net interest income Q2 2007 1,377

Changes:Higher lending volumes 33 214Decreased lending margins -92 -108FX-effects, lending -5 11Higher deposit volumes 14 78Decreased deposit margins -76 -127FX-effects, deposits -3 8Other changes 85 78Total change – 44 154Net interest income Q2 2008 1,531 1,531

(24)

Net commission income, Group

SEKmQ2

2008Q1

2008 %Q2

2007 %Payments 839 793 6 743 13Lending 199 136 46 178 12Brokerage 188 213 – 12 242 – 22Asset management 945 950 – 1 1,126 – 16Insurance 71 68 5 80 – 11Corporate finance 177 19 172 3Other – 45 1 11 Total net commissions 2,374 2,180 9 2,552 – 7

(25)

Expenses

SEKmQ2

2008Q1

2008 %Q2

2007 %Swedish Banking 2,239 2,255 – 1 2,330 – 4Baltic Banking 795 899 – 12 851 – 7International Banking 349 309 13 113 of which Ukrainian Banking 197 150 31 Swedbank Markets 585 456 28 499 17Asset Management & Insurance 206 253 – 19 239 – 14Other 256 268 – 4 92 Total expenses 4,430 4,440 – 0 4,124 7of which staff costs in: Swedish Banking 1,017 1,099 – 7 1,084 – 6Baltic Banking 343 522 – 34 495 – 31International Banking 177 157 13 64 Swedbank Markets 390 258 51 318 23Asset Management & Insurance 98 110 – 11 102 – 4

* Baltic Banking profit based staff costs have been reduced by SEK 185m owing to lower provision requirements.

*

(26)

Business areas

Q2 08 vs Q2 07SEKm Q2 08 % Q2 08 % Q2 08 % Q2 08 % Q2 08 %Net interest income 2,971 2 1,531 11 441 476 61 27 13Net commission income 1,057 -5 478 0 55 38 352 – 8 432 – 15Other income 425 12 405 18 132 138 – 29 68 33Total income 4,453 1 2,414 10 628 966 11 527 – 10

Staff costs 1,017 – 6 343 – 31 177 390 23 98 – 4Other expenses 1,222 – 2 452 27 172 198 8 108 – 21Total expenses 2,239 – 4 795 – 7 349 585 17 206 – 14

Profit before loan losses 2,214 7 1,619 20 279 381 2 321 – 7Loan losses 85 245 93 0 0Operating profit 2,129 4 1,374 8 186 381 3 321 -7

Net shareholders' profit 1,601 8 1,272 10 147 235 0 244 – 6

Return on allocated equity, % 22.1 34.8 7.8 23.3 44.7

SwedishBanking

BalticBanking

InternationalBanking

SwedbankMarkets

AssetMgmt

(27)

Key figures

Jan-Jun2008

Jan-Jun2007

Return on equity, % 18.7 19.5Earnings per share, SEK 12.62 11.68Equity per share, SEK 135.81 120.23C/I ratio before loan losses 0.50 0.50Loan loss ratio, net, % 0.12 0.03Share of impaired loans, % 0.20 0.08Tier 1 capital ratio, new rules, % 8.8 9.0Tier 1 capital ratio, transition rules, % 6.7 6.7 Capital adequacy ratio, new rules, % 12.6 13.4

(28)

Swedbank lending and funding

Swedbank Treasury (excluding Mortgage)

• Large deposits

• Liquidity reserves

• Net lender in the interbank market

• Liquidity limits – conservative view

Swedbank Mortgage constitutes a larger part of Swedbank Group’s balance sheet than other financial institutions

Distribution of Net Funding Need

Swedbank Mortgage

Lending to the public, SEK 1,169bn

Swedbank Group, excl. Swedbank MortgageSEK 596bn

Swedbank MortgageSEK 573bn- Exclusively Swedish mortgage lending

Funding12%

Equity8%

Deposits80%

Covered Bonds73%

Equity5%

Commercial Papers

22%

Ukraine1%

Russia 1%

Lithuania5%

Latvia5%

Estonia 7%

SwedbankMortgage

49%

Sweden 30%

Nordic; 3%

(29)

New capital adequacy target – mid-term

• New target:The capital ratios will at least meet the level that at any given time is considered appropriate to maintain sustainable financial stability and develop operations. Considering full effect of Basel 2, the Tier 1 capital ratio is to be 8.5-9.0%.

• Swedbank is currently well capitalized given the current risk profile and the risk development under an adverse scenario

• Swedbank is currently capitalized in line with European peers in full Basel 2• In relative terms Swedbank has a low risk business model with a

predominance of Swedish mortgage business and low counterparty risks, which indicates a lower than average Tier 1 capital ratio. Growing presence in Eastern Europe indicates higher Tier 1 capital ratio