Swedbank investor presentation · 2 Table of contents 1. Quarterly financial update 3 2. Capital...

Swedbank investor presentation July 2015

2

Table of contents 1. Quarterly financial update 3

2. Capital considerations 11

3. Liquidity and funding 17

4. Cover pool data 27

5. Swedish economy 35

6. Swedish housing and mortgage market 39

7. Appendix 46

1. Quarterly financial update

3

Strong result in low interest rate environment

4

Swedish Banking

Ratios Q2 15 Q1 15

ROE, % 18.9 17.9

C/I ratio 0.44 0.46

• Lower deposit margins

• Higher mortgage margins

• Loan and deposit volume growth

• Stable commission income

• Good cost development – Lower staff cost

Volumes, SEKbn Q2 15 Q1 15 ▲ QoQ

Loans 1 050 1 039 11

Deposits 428 400 28

SEKm Q2 15 Q1 15 ▲ QoQ

Net interest income 3 281 3 190 91

Net commission income 1 916 1 781 135

Other income 471 558 -87

Total income 5 668 5 529 139

Total expenses 2 496 2 559 -63

Profit before impairments 3 172 2 970 202

Credit impairments 48 52 -4

Source: Swedbank, 30 Jun, 2015

Stable result

• Loan volume growth

• Strong commission income – Cards and payments

• Solid asset quality

• Extra dividend from Estonia triggers increased tax cost

5

Baltic Banking

Ratios Q2 15 Q1 15

ROE, % (excl. one-off tax) 16.6 15.0

C/I ratio 0.40 0.41


Loans 126 125 1

Deposits 138 135 3


Net interest income 865 831 34

Net commission income 524 469 55


Total income 1 536 1 499 37

Total expenses 611 612 -1

Profit before impairments 925 887 38

Credit impairments -49 -9 -40

Tax 1 064 131 933

Net profit -91 767 -858


Stable result

• Stable NII

• Lower deposit margins

• Volatile markets

• Good asset quality

6

Large Corporates & Institutions

Ratios Q2 15 Q1 15


C/I ratio 0.43 0.44


Loans 182 178 4

Deposits 106 117 -11


Net interest income 862 862 0

Net commission income 491 496 -5

Net gains and losses 576 587 -11

Other income 39 35 4

Total income 1 968 1 980 -12

Total expenses 842 877 -35

Profit before impairments 1 126 1 103 23



Stable result in low interest rate environment

7

Group results

SEKm Q2 15 Q1 15 ▲QoQ

Net interest income 5 704 5 719 -15

Net commission income 2 842 2 744 98

Net gains and losses 82 320 -238


Total income 9 315 9 618 -303

Total expenses 4 047 4 168 -121 Profit before impairments 5 268 5 450 -182


Other impairments 22 15 7

Tax 1 538 1 101 437

Net profit 3 666 4 320 -654

• Stable NII

• Good cost development

• Strong asset quality

• Negative one-off tax effects

Ratios Q2 15 Q1 15

ROE, % 13.4 14.9


Cost/income ratio 0.43 0.43

CET1 capital ratio, % 22.4 20.5


-1.8

-1.7

-3.7

0.0

-3.7

-2.4

-2.2

422.3

406.8

400

405

410

415

420

425

430

Q1 2015 Exposurechange

Ratingmigration

(PD)

LGDchanges

Other creditrisk

CVA risk Market risk Operationalrisk

Q2 2015

Increase Decrease

Positive REA impact from market movements Capital

8

• REA net decrease of SEK 15.6bn

− Interest rates and FX fluctuations impact positively

− VaR model approval – to manage negative interest rate

Risk exposure amount

SEKbn


20.5%

22.4%

19.6%

Q1 2015 Q2 2015 CET1 capital ratiorequirement

Strong capitalisation – no excess capital Capital

9

• CET1 capital positively impacted

− IAS 19 (SEK 3.4bn)

• REA net decrease of SEK 15.6bn

• Continued regulatory uncertainty

CET1 capital ratio, %


Strong asset quality

10

Asset quality

Credit impairments, SEKm Q2 15 Q1 15 ▲QoQ

Swedish Banking 48 52 -4

Baltic Banking -49 -9 -40

Large Corporates & Institutions 7 16 -9

Swedbank Group 6 59 -53

Ratios Q2 15 Q1 15

Credit impairment ratio, % 0.00 0.02 Share of impaired loans, gross % 0.36 0.39

Total provision ratio for impaired loans, % 55 54

Credit impairment ratio %

-0.40

-0.30

-0.20

-0.10

0.00

0.10

0.20

Q210 Q410 Q211 Q411 Q212 Q412 Q213 Q413 Q214 Q414 Q215Source: Swedbank, 30 Jun, 2015

2. Capital considerations

11

14.5%

13.7%

4.5%

3.5%

3.0%

1.0%

2.5%

1.5%

7.0%

2.0%Systemic Risk inPillar 2

25% REA MortgageFloor

Individual Pillar 2charge

Capital ConservationBuffer

CountercyclicalBuffer (1.5%)

Systemic Risk Buffer

Min additional T1and T2 capital

Minimum CET1Requirement

11.0%

11.4%

4.5%

3.0%

1.0%

2.5%

1.1%

5.5%

2.0% Systemic Risk inPillar 2

25% REAMortgage Floor

Individual Pillar 2charge

CapitalConservationBuffer

CountercyclicalBuffer (1.5%)

Systemic RiskBuffer

Minimum CET1Requirement

12

Capital position

19.6%*

Swedbank CET1 Requirements

28.2%*

22.4%*

*Fully loaded CRD IV

25.0%*

Swedbank Total Capital ratio

Source: Swedbank 30 Jun, 2015 – estimated CET1 and Total capital requirement based upon the Swedish FSA’s memorandum (08/09/2014)

Swedbank CET1 Capital ratio Swedbank Total Capital Requirements

Res

tric

tive

Mea

sure

s

Cor

rect

ive

Mea

sure

s

MDA Restrictions

Composition of Swedbank’s CET1 and total capital ratio requirements

0

50

100

150

200

250

8% ofliabilities

20% of REA +P1 buffers

2 x Basel 1floor

2 x Leverageratio

SwedbankQ215

Requirement Capital Senior > 1Year

Regulatory uncertainty remains Capital regulation

Swedbank’s current capital position Q2 2015

SEKbn


* Assuming leverage ratio requirement of 3%

13

MREL TLAC

Relevance EU banks under BRRD G-SIBs initially via Basel recommendations

Timing Jan 2016 at the earliest Transition to be specified

Jan 2019 at the earliest Transition to be specified

Amount Set individually, by Riksgälden (National debt office)

Minimum of 16-20% of REA + P1 buffers or 2 x leverage ratio requirement

What qualifies

Capital + Senior >1Y

Capital + "Designated senior" >1Y

Applies to Swedbank

Yes No, not a G-SIB

BRRD proposal: 8% of liabilities or 2 x Basel 1 floor

Swedish household loans(90% mortgages)

Shipping and offshore, TransportationManufacturing

Other corporate lending

Latvian lending

Other property management

Residential properties

Agriculture and forestry

Hotels and restaurants, Retail

63%

14%

4%

3%

8%

Lithuanian lending2%

6%

Estonian lending

Tenant owner associations

Asset portfolios – low risk

14

Source: Swedbank, 30 Jun, 2015 * Loans to the public excl. Credit institutions and SNDO

Asset quality

Group loan book* Q2 2015, total SEK 1 358bn Sweden

Baltic Banking

51%49% PrivateCorporate

64%

36% PrivateCorporate

0

2

4

6

8

10

12

14

16

18

20

SvenskaHandelsbanken

Nordea SEB Swedbank

2013

2014

2015

2016

02468

10121416182022


Nordea SEB Swedbank

2014

2015

2016

2017

02468

10121416182022


Nordea SEB Swedbank

2014

2015

2016

2017

15

Asset quality – stress tests

CET1 - The Riksbank stress test (%)

Source: EBA stress test Oct 2014

CET1 - The EBA stress test (%)

Swedbank’s strong relative risk position confirmed

Source: The Riksbank’s Financial Stability Report 2014:2, chart 4:9 Note: The chart shows the CET1 capital ratios in the third quarter of each year.

CET1 - The Swedish FSA stress test (%)

• SFSA stress test: SEK 45bn

• Riksbank stress test: SEK 45bn

• EBA stress test: SEK 25bn

• ICAAP stress test: SEK 17bn

Total Swedbank loan losses in the different stress tests

Source: SFSA’s risk report Dec 2014

Source: The SFSA Dec 2014, Riksbank Dec 2014, EBA Oct 2014 and Swedbank Apr 2015

3. Liquidity and funding

17

0

200

400

600

800

1 000

1 200

1 400

1 600

1 800

Q2 20150

200

400

600

800

1 000

1 200

1 400

1 600

1 800

Q2 2015

Source: Swedbank 30 Jun, 2015

Core balance sheet* structure Liquidity and funding

Lithuania Latvia

Other corporate lending, Sweden & other Nordic countries

Other private, Sweden

Swedish mortgage loans

Senior unsecured debt

Covered bonds

Deposits

CET1 Suppl. cap

Assets Liabilities SEKbn SEKbn

* Simplified balance sheet

Estonia

18

0

1 000

2 000

3 000

4 000

5 000

6 000

7 000

8 000

9 000

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1980 1990 2000 2005 2010 2012 2013 2014

Other financial assets (LHS) Pension savings and mutual funds (LHS)

Equities (LHS) Deposits and retail bonds (LHS)

Total financial assets (RHS)

19

Covered bond strategy

Source: Swedbank 30 Jun, 2015

Liquidity and funding

Maturity, years

EUR/USD SEK 150-200bn

Other* SEK 50-85bn

Sweden SEK 300-375bn

<5Y 3-7Y >7Y

Swedish households’ financial assets SEKbn

Covered bond strategy

0

20

40

60

2015 2016 2017 2018 2019 2020 2021-


Senior unsecured debt strategy

Source: Swedbank 30 Jun 2015, *nominal amounts

Senior unsecured debt maturity profile

SEKbn*


20

0

50

100

150

200

250

300

0 20 40 60 80 100 120 140 160 180 200 220 240 260 280 300 320 340 3650

10

20

30

40

50

60

70

80

90

100

Q112 Q212 Q312 Q412 Q113 Q213 Q313 Q413 Q114 Q214 Q314 Q414 Q115 Q215 Q315 Q415 Q116

Covered bonds Senior unsecured debt

Conservative funding position • LCR 136% (Swedish FSA definition FFFS 2012:6)

• NSFR 101% (Basel committee)

• Issued SEK 133bn of term-funding YTD 2015 (excl. AT1 transaction in Feb. 2015)

• Increased funding need to support loan growth


Term funding issuance – completed and planned

SEKbn

Source: Swedbank, 30 Jun 2015, nominal amounts

SEKbn

Days forward

Prefunded in excess of 12 months

Survival horizon

21

20

22

24

26

28

30

32

34

36

38

Q414 Q115 Q215

Covered bondfunding

Senior unsecureddebt

Total capital marketfunding

0

10

20

30

40

50

60

70

80

Average 2014 Q115 Q215

Other


Covered bonds

Increased long-term funding activity

• Taking advantage of favourable funding markets

• Extending maturity profile

• Credit rating upgrades

22


Extension of maturity profile

Quarterly long-term funding issuance

SE

Kbn

N

umbe

r of m

onth

s


Private placements – active in both covered bonds and senior unsecured debt • All major currencies

• Bullet format, FRN or Fixed

• EUR 10m equivalent minimum size

• Sweet spots: – Senior: 2.5-5Y – Covered: 3-8Y – Longer tenors also possible

• Open to larger placements with smaller investor groups

• Open to tap existing bonds

• Listing is optional

• FRN’s (SEK and EUR) – issued with a “strike adjustment spread”*

• Program formats available: – Senior unsecured debt: MTN, NSV and

potentially USD 144a format – Covered bonds: MTN, RCB and

Norwegian CB program

23


*Spread added to the coupon to avoid negative coupon fixings. Bond issued above par to compensate for this. The above par value reflects the NPV of the adjusted spread

Liquidity reserve According to the template defined by the Swedish Bankers' Association


Source: Swedbank 30 Jun 2015

SEKmCash and holdings in central banks 237 956Deposits in other banks available overnight 879Securities issued or guaranteed by sovereigns, central banks or multilateral development banks 65 783Securities issued or guaranteed by municipalities or public sector entities 3 554Covered bonds 46 480 - Issued by other institutions 46 480 - Own issuedSecurities issued by non-financial corporatesSecurities issued by financial corporates (excl. covered bonds) 740Other

Total1 355 392

Additional liquid assets, Group2, 3 77 401

1) 94% of the securities in the liquidity reserve per Q2 2015 are rated AAA. The rating requirement is AA-.

2) 89% of the additional assets fulf ill the Liquidity Reserve definition by the Sw edish Bankers’ Association except for that they are held outside the Treasury department.

3) 86 % of the additional assets are rated AAA.

24

Rating strategy – same level as the best rated Nordic banks

25


This is Swedbank - Credit ratings

• June 25, 2015, S&P raised Swedbank’s standalone rating to A+. The outlook was changed to stable, from negative. The main drivers are a stable management, strong key ratios in efficiency, and earnings stability.

• June 17, 2015, Moody’s upgraded Swedbank to Aa3 with a stable outlook. The upgrade reflects Moody’s estimation that Swedbank’s strong asset quality and stable earnings generation, underpinned by focused management and established franchise in Sweden and the Baltic countries, position the bank well to manage challenges coming from the low interest-rate environment, developments in mobile banking, and competition in historically more profitable activities

• June 09, 2015, Fitch affirmed the rating, with a positive outlook. Fitch restated they expect to upgrade the rating to AA- provided Swedbank continue to build on the current track record

Short Long SACP* Short Long BCA* Short Long VR*

Swedbank A-1 A+ a+ P-1 Aa3 a3 F1 A+ a+

Swedbank Mortgage A-1 A+ - P-1 Aa3 - - - -

Covered bonds - AAA - - Aaa - - - -

* Standalone Rating

S&P (Stable) Moody's (Stable) Fitch (Positive)

4. Cover pool data

27

Swedbank is a labeled issuer of the ECBC Covered Bond Label Foundation (www.coveredbondlabel.com )

http://www.coveredbondlabel.com/

28

Rating, S&P / Moody’s AAA / Aaa Total pool size SEK 799.8bn Geographic distribution Sweden 100% Current OC-level 56.9%

Weighted average seasoning 2 65 months Average LTV 3, 4 – WA LTV on property level (Max LTV) 54% Non-performing loans 5 None

Fixed /Floating interest loans 6

– Fixed 30% – Floating 70%

Repayment structure 7 – Amortising 55% – Interest only 45%

Average loan size SEK 504 755 Number of loans outstanding 1 585 221 Number of borrowers 1 121 130 Number of properties 747 700 Dynamic pool Yes

1 As per 30 Jun, 2015

2 Public sector loans not included

3 Index valuation as per 30 Jun, 2015 4 Maximum LTV: Residential 75%, Commercial 60%, Forest and Agriculture 70% 5 Past due loans > 60 days are not eligible for the cover pool 6 Floating interest loans < 365 days 7 Property level of cover pool

Cover pool data1


Swedbank’s cover pool



Cover pool data

29




Type of loans

Residentials 91.0% of w hich Single-family housing 57.5% of w hich Tenant ow ner rights 18.2% of w hich Tenant ow ner association 10.4% of w hich Multi-family housing 5.1%Public 1.0%Commercial 0.5%Forest & Agricultural 7.3%

100.0%

Geographical distribution, Sweden, per cent 30 Jun2015

North 6.3Norrbotten county (BD) 1.3Västerbotten county (AC) 2.4Västernorrland county (Y) 1.4Jämtland county (Z) 1.2Middle (including Stockholm) 44.9Dalarna county (W) 2.1Gävleborg county (X) 2.1Värmland county (S) 2.2Örebro county (T) 2.5Västmanland county (U) 2.5Uppsala county ( C) 4.0Södermanland county (D) 2.3Stockholm county (including Stockholm) (AB) 27.2South (including Göteborg and Malmö) 48.8Västra götaland county (Including Göteborg) (O) 17.5Östergötland county (E) 4.0Jönköping county (F) 3.6Halland county (N) 3.8Kronoberg county (G) 2.1Kalmar county (H) 3.1Skåne county (including Malmö) (M) 12.5Blekinge county (K) 1.6Gotland county (I) 0.6

100.0


Cover pool loan-to-value distribution

30



• Weighted average LTV 54%

LTV distribution per property1 LTV distribution by volume1, 2

1 Public loans of 1.0% of the cover pool are excluded as they are either guaranteed by a Swedish municipality or the government and have therefore no LTV assigned to them. 2 LTV distribution as defined by the Association of Swedish Covered Bond Issuers (www.ascb.se)


0%

5%

10%

15%

20%

25%

30%

00-10 10-20 20-30 30-40 40-50 50-60 60-70 70-750%

5%

10%

15%

20%

25%

30%

00-10 10-20 20-30 30-40 40-50 50-60 60-70 70-75


Cover pool loan type and loan-to-value distribution

31



1excluding public sector loans of 1.0%

WA LTV per property type1

1


0%

20%

40%

60%

80%

100%

120%

0%

20%

40%

60%

80%

100%

120%

Single-familyhomes

Tenant ownerrights

(apartments)

Tenant ownerassociations

Multi-familyhousing

Commercial Forestry &Agricultural

Total alltypes

Percentage of the pool Average LTV per loan type


Strong resilience to house prices changes

• Current OC-level of 56.9%

• Can withstand a severe house price drop and still be able to issue AAA-rated covered bonds

32

Swedbank’s cover pool O

ver-

colla

tera

lisat

ion

House price drop

House price sensitivity of the cover pool



0%

10%

20%

30%

40%

50%

60%

0% -5% -10% -15% -20% -25% -30% -35% -40% -45% -50%

OC, Q215


The Covered Bond Act entered into force on July 1, 2004 and is over-sighted by the Swedish FSA. Its main characteristics are: Dual recourse to the issuer and cover pool Dynamic, regulated pool of assets, frequently monitored by the Swedish FSA via appointment of an

independent inspector Regulated valuation of cover pool assets which remain on the balance sheet

The cover pool may consist of certain mortgage credits, public credits and supplemental assets. There is no requirement to segregate mortgage and public credits.

Maximum LTVs: Residential 75%, Agricultural 70%, Commercial 60%

Maximum 10% commercial loans and 20% supplemental assets in cover pool

Regular monitoring of the property values, revaluation of property prices in case of significant drop (generally interpreted as 15% drop)

No mandatory over-collateralisation (OC)

Regional constraint on collateral assets (Mortgage - EEA, Public - OECD)

The cover pool value shall always exceed the aggregate value of claims (including derivatives)

A sound balance in terms of FX, interest rates and maturities must be achieved. It is deemed to exist when the present value of the cover pool at all times exceed the present value of liabilities (including derivatives), even on a stressed basis. Present value cover must hold even after 1% upward and downward shift in the yield curve and a 10% change in the currency

Non-performing assets in the cover pool which are more than 60 days overdue must be disregarded for the purposes of the matching tests

Holders of covered bonds and relevant derivative counterparties benefit from a priority claim over the cover pool should the institution be declared bankrupt and rank pari passu ahead of unsecured creditors and all other creditors of the institution in respect of assets in the cover pool

The registered assets in the cover pool, the covered bonds and any relevant derivative contracts are required to be maintained as a unit and kept segregated from other assets and liabilities of the bankruptcy estate of the institution. The administrators-in-bankruptcy are then required to procure the continued timely service of payments due under the covered bonds and any relevant derivative contracts

Overview of the Swedish covered bond legislation

33

Swedish covered bond legislation

Loan-to-value ratios and other limitations

Matching requirements

Benefit of a priority right over the cover pool

Administration in event of bankruptcy

The Covered Bond Act

Source: www.ascb.se

http://www.ascb.se/

5. Swedish economy

35

-5

-4

-3

-2

-1

0

1

2

3

4

93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14

Continued strong fiscal position • Kingdom of Sweden rated Aaa/AAA/AAA • GDP growth 2.5%1 (Q1 15 Y/Y), 0.4%1 (Q1 Q/Q) • CPI/CPIF -0.4% / 0.6% (Jun 15 Y/Y) • Unemployment ratio2 8.0% / 7.8%1 (May 15 Y/Y) • Debt to GDP 35% (forecast 2015)

36

Swedish economy

Key Economic Indicators, 2013-2016

Source: Swedbank Economic Outlook Apr 2015

Source: Statistics Sweden and National Debt Office 2 Calculated for the population between 16-74 years old

Source: Statistics Sweden 26 Jun 2015

GDP, growth Q/Q, %1

Data up to and including Q1 2015

1Seasonally adjusted

+0.4%

0

1 000 000

2 000 000

3 000 000

4 000 000

5 000 000

6 000 000

Resources Expenditures

Import

GDP

Gross investments

Public consumption

Private consumption

Export

The output of the Swedish economy 2014

Source: Statistics Sweden 26 Jun, 2015

2013 2014F 2015F 2016FReal GDP (Calendar adjusted) 1.3 2.3 2.6 3.2CPI index, average 0 -0.2 0.2 1.9Unempl. Rate (15-74), % of labor force 8 7.9 7.8 7.6Savings ratio (households),% 15.6 16 15.6 15.7Real disposable income (households) 2.1 2.8 2.8 2.5

-8

-6

-4

-2

0

2

4

6

8

10

Germany

Denmark

Sweden

France

Finland

United States

Canada

United Kingdom

Italy

14%

44%

14%

11%

10%

7%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Energy

Minerals

Forest

Chemical

Engineering

Other

0%

2%

4%

6%

8%

10%

12%

0

20 000

40 000

60 000

80 000

100 000

120 000

-04 -05 -06 -07 -08 -09 -10 -11 -12 -13 -14 -15

Import

Export

Exports – key factor for growth

37

Swedish economy

Source: Statistics Sweden, 26 Jun 2015

Current account balance as % of GDP

Source: OECD – Economic outlook 97, table 51, Jun 2015

Exports by important commodity groups, %

Exports and imports trend per month, SEKm Current prices

Data up to and including May 2015

Top 10 export countries, %

Source: Statistics Sweden, 26 Jun 2015

Source: Statistics Sweden, 26 June 2015

6. Swedish housing and mortgage market

39

Swedish mortgage market • No securitisation (on balance sheet), no sub-prime market, no 3rd party origination, restricted buy-

to-let market

• 70% home ownership1

• Rental market is regulated

• Transparent credit information (credit information agency, www.uc.se) – Publicly available information regarding income, debt, payment track record etc

• Consumer credit legislation requires affordability calculations including stress test of higher interest rate and conservative cost of living

• Very limited debt forgiveness possibilities (full recourse)

• Strong social security and generous unemployment benefit system

40

Swedish housing and mortgage market

1 Source: Boverket, 2011

0

2

4

6

8

10

12

14

16

18

02 03 04 05 06 07 08 09 10 11 12 13 14 15

Annual percentage change, total Mortgage lending

Household borrowing growth

41

Lack of residential housing drives lending growth

Source: Swedbank, Statistics Sweden, data as per Jun 2015

%


• LTV cap of 85% – Mandatory since 2010 – (Min 15% own equity)

• Amortisation – Mandatory amortisation >70% LTV – Individual amortisation plan >50%

LTV

• Risk-weight floor of 25% on mortgage loans

Data up to and including May 2015

Swedbank - tightened mortgage standards

• Average LTV in back book is 59%. Average LTV in new lending is 70%

• Tightened amortisation standards (e.g. min. interest rate of 7% in stress test)

• 94% of households with LTV > 70% amortise (81% in back-book)

• 53% of households with LTV 50-70% amortise (52% in back-book)

• In total 76% of households amortise (61% in back-book)

42

50%

55%

60%

65%

70%

75%

2009 2010 2011 2012 2013 2014 Q1 2015 Q2 2015

LTV distribution

Single-family, back-book Single-family, new

Tenant-owner rights, back-book Tenant-owner rights, new LTV


40%

50%

60%

70%

80%

90%

100%

0-50% 50-70% >70% Total

Amortisation level – new lending


0

20 000

40 000

60 000

80 000

100 000

120 000

75 78 81 84 87 90 93 96 99 02 05 08 11 14

Apartment buildings Single-family dwellingsPopulation growth

Shortage of housing Swedish housing and mortgage market

Housing completions in Sweden

Num

ber o

f un

its a

nd p

erso

ns

• 58% of the apartments was produced in the three largest areas (Stockholm, Gothenburg and Malmoe)

• 55% of the single-family dwellings was produced outside of the largest cities

• 52% was rental apartments (35% in Larger Stockholm and 65% outside the three larger areas)

• Forecast from municipalities to start up projects for 59 000 units in 2015 and 63 000 units in 2016 (according to survey1) Source: Sweden statistics , the Riksbank and Swedbank, Jun 2015

0

10 000

20 000

30 000

40 000

50 000

60 000

70 000

2015 2016

Apartment buildings Single-family dwellings

Source: 1 Boverket (www.boverket.se) ’Mortgage market survey 2015’

43

0

100

200

300

400

500

600

700

75 78 81 84 87 90 93 96 99 02 05 08 11 14Total assets excl. collective insurance Real assets (housing) Debt

0

2

4

6

8

10

12

75 78 81 84 87 90 93 96 99 02 05 08 11 14

Interest-to-income ratio Historical average

Affordability withstands higher indebtedness • Low interest rate environment • Disposable income

– Increase in salaries

– Tax cuts (income + property tax etc.)

• Higher indebtedness – Higher share of home ownership

– Rapid population growth (immigrations)

– Urbanisation trend

• Wealth – Increased house prices

– Mutual funds, pension savings etc.


Swedish household financial assets and liabilities to disposable income

Household interest expenditure in Sweden to disposable income

Source: OECD Economic Outlook 97, table 23, Jun 2015

Source: Swedish Riksbank’s Financial Stability report 2015:1 (chart 2:10)

%

%

-10

-5

0

5

10

15

20

98 00 02 04 06 08 10 12 14 16F

Sweden

Germany

Norway

United States

Finland

Denmark

Source: Swedish Riksbank’s Financial Stability report 2015:1 (chart A36)

44

Household saving rates % of disp. income

0

50

100

150

200

250

300

05 06 07 08 09 10 11 12 13 14 15

Total Tenant owner rights (apartments) Single-family houses

0

50

100

150

200

250

300

05 06 07 08 09 10 11 12 13 14 15

Tenant owner rights (apartments) Single-family houses

0

50

100

150

200

250

300

05 06 07 08 09 10 11 12 13 14 15


0

50

100

150

200

250

05 06 07 08 09 10 11 12 13 14 15


Upward pressure on house prices Swedish housing and mortgage market

Sweden, total

Source: Valueguard Index (2005=100), 30 Jun, 2015

Stockholm

Gothenburg Malmoe

45

Appendix

46

0

5

10

15

20

25

0

20

40

60

80

100

120

140

160

2011 2012 2013 2014 H1 2015

NSFR LCR CET1 capital ratio, Basel 3 (RHS)

Swedbank – a low-risk bank with strong capital base

47

• Low risk – a Board of Directors’ strategic priority – ensures access to funding markets and low funding costs

• Retail profile and four home markets a key feature – 86% of total loans originated in Sweden - Swedish mortgages account for 62% of total loans – 90% of total loans are collateralised (76% real estate and 14% other collateral)

• Strong capital position – Board of Directors’ decision to maintain a buffer above prevailing SFSA capital requirements to have operational flexibility – current buffer 280bp

• Conservative funding and liquidity position – survival horizon longer than 12 months assuming closed funding markets, NSFR 101% and LCR 136%

• Baltic operations self-funded – Loan-to-Deposit ratio < 100%

%

This is Swedbank

Liquidity & capital %


Credit impairment ratio

-0.40

-0.30

-0.20

-0.10

0.00

0.10

0.20

Q210 Q410 Q211 Q411 Q212 Q412 Q213 Q413 Q214 Q414 Q215

%

Swedbank – strong and stable earnings capacity

48

• Four home markets – Sweden, Estonia, Latvia and Lithuania – Strong and stable economies – Market leading position in all home markets – Largest customer base in all home markets

• Retail profile ensures stable earnings with low volatility

• High cost efficiency – a strategic priority – ensures good profitability

• Stable earnings is first line of defence supporting low risk profile and strong capital position

SEKm

This is Swedbank

0

1 000

2 000

3 000

4 000

5 000

6 000

7 000

Q1 10 Q1 11 Q1 12 Q1 13 Q1 14 Q1 15


Profit before impairment

12 000

14 000

16 000

18 000

20 000

2010 2011 2012 2013 2014 Ambition2016

Acquistion of Sparbanken Öresund

Swedbank – market leading cost efficiency

49

• Best in-class cost efficiency – an executive management strategic priority • Strong dedication from executive management on cost and change management

− Integrated in corporate culture − Focus on straight-through-processing − Evolving household banking model – digitalisation trend

• Retail profile a key feature − Four home markets – Sweden, Estonia, Latvia and Lithuania – reducing complexity − Largest private and SME customer base − High degree of digitalisation in home markets

SEKm Total expenses

This is Swedbank


0.30

0.35

0.40

0.45

0.50

0.55

0.60

2010 2011 2012 2013 2014 H1 2015

C/I ratio

Sweden’s largest retail bank

50

Latvia Population 2.0m Private customers 0.9m1 Corporate customers 89 000 Branches 43 ATMs 405 Cards 1.0m Employees 1 503

Lithuania Population 3.0m Private customers 1.5m1 Corporate customers 86 000 Branches 68 ATMs 457 Cards 1.7m Employees 1 886

Estonia Population 1.3m Private customers 0.8m Corporate customers 134 000 Branches 38 ATMs 442 Cards 1.1m Employees 2 332

Sweden Population 9.6m Private customers 4.1m Corporate customers 268 000 Organisations 64 000 Branches 296 ATMs * Cards 3.9m Employees 7 957

This is Swedbank

~10%* ~86%*

* Share of loanbook

* ATMs are handled in Bankomat AB (www.bankomat.se)

Source: Swedbank Fact book Q2 2015 1Definition of private customers changed compared to Q4 2014

0

10

20

30

40

50

60

Sweden Estonia Latvia* Lithuania**

Mortgage lendingCorporate lending

0

10

20

30

40

50

60

Sweden Estonia Latvia* Lithuania**

Deposits Private

Deposits Corporate

Market leading retail franchise in all home markets

51

% %

Source: Source Sweden: Statistics Sweden (SCB) as per May 2015 Source Estonia: Estonian Central Bank, as per May 2015 Sources Latvia: Association of Commercial Banks of Latvia (ACBL) & The Financial and Capital Market Commission (FCMC), *as per Dec 2014 Source Lithuania: Association of Lithuanian Banks (LBA), **as per Mar 2015

This is Swedbank

Market shares, Deposits

• Largest retail bank and fund manager in Sweden

Market shares, Lending

Swedish Banking +

Large Corporates

& Institutions

78%

Estonia 6%

Latvia 4%

Lithuania 4%

Other 8%

Lending and deposits

64%

Treasury, Trading and

Capital Markets5%

Asset Management

11%

Payment, Cards

8%

Insurance2%

Share of P&L of associates

3%

Other7%

Strong earnings capacity – retail bank profile

52

This is Swedbank

FY Total Income evolution, SEKbn

…And distribution by business area

FY 2014 Total income geographic distribution…

Source: Swedbank 31 Dec 2014

0

5

10

15

20

25

30

35

40

45

2010 2011 2012 2013 2014

OtherNet Gains & Losses on financial itemsNet Commission Income, otherNet Commission Income, RetailNet Interest Income

0 200 400 600 800 1000 1200

Other* 4.3%

Lithuania 2.9%

Latvia 2.1%

Estonia 4.3%

Sweden 86.4%

Swedish Mortgage loans (private+corp)

Other corporate (incl. LC&I, Sweden)

Sweden – the dominating home market • Total lending to the public amounts to SEK 1 358bn (as per Q2 2015), out of which

around 86% is originated in Sweden

• Estonia makes up 46% of total lending in the Baltics

53

Source: Swedbank 31 Mar 2015

This is Swedbank

* Denmark, Norway, Finland and NY Branch

Lending distributed by countries (Q2 2015)

SEK 1 174bn

01 0002 0003 0004 0005 0006 0007 0008 0009 000

10 000

Loans net, SEKm

Shipping and Offshore

• Total lending of SEK 29.5bn (30bn, Q1) – Market activity slowed down in Q2

compared to Q1 15 and Q4 14 – Decreased origination

• Individual client action plans in place

• Clients now adapting to the lower oil price by cutting costs, postponing orders and setting up new financial structures

Asset quality

Shipping and Offshore

Negatively impacted by lower oil prices


SEKm

54

New insolvency order for banks – gone concern capital protects depositors and the government

55

Capital regulation

CET1 capital

Additional Tier 1 capital

Tier 2 capital

Other subordinated debt

Senior bonds

(unsecured)

Uninsured deposits (natural persons + micro + SEM’s)

DGS (in lieu of insured depositors)

(Resolution fund)

Fiscal backstop

Uninsured non-preferred

deposits

Other liabilities

Other liabilities

Regulatory capital

Preferred classes (possible if above

not sufficient)

Private loss absorbency

Industry loss absorbency (subject to State aid rules)

Taxpayer loss absorbency (subject to State aid rules)

Secured liabilities (incl. covered bonds)

Client assets and some liabilities

Staff (ex bonus)/Tax/ Trade liabilities/DGS

contributions

Covered deposits Some interbank liabilities

Some payment & settlement liabilities

Defined exclusions

Discretionary exclusions

Derivatives Uninsured retail,

micro & SME deposits

3rd country debt issued

prior to 2013

Exclusions

Swedish Stability Fund Under Article 44 8(a) of BRRD the Swedish Stability fund would be able to contribute to cover losses that have not been absorbed after either 20% of RWA or 8% of total liabilities have contributed to loss absorption Fund Size: SEK 53,016bn (28 Feb 15) Swedbank CET1: 20.5% (Q115)

11.0%

8.6%

Swedbank CET1 Capital ratio Requirements

Pillar 2 CET1Requirements

Pillar 1 CET1Requirements

56

● “It is particularly important that FI has the possibility of giving due consideration to the specific situation…in which a firm in financial stress finds itself… For example, certain risks included in the assessment of the Pillar 2 basic requirement might have materialized, which might mean there are no longer grounds for requiring the firm to hold capital for them”.

● “It ought to be positive for financial stability that a firm has the possibility… to restore its capital without the firm necessarily becoming subject to priorly specified and automatic legal restrictions. In other words, firms are hence given the possibility of re-establishing their capital in a strained situation without automatic restrictions on distributions or, depending on the size of the capital shortage, a formal resolution phase being activated."

● “Hence…a firm may freely choose…the most suitable way of restoring the capital in that specific situation. For example, the firm is not obliged to halt or limit dividends or interest payments on Tier 1 capital contributions, if the firm can identify other and more appropriate ways of restoring the capital sufficiently quickly.”

Source: Swedish FSA Memorandum: ”Capital requirements for Swedish banks” – 8 Sep 2014 and Swedbank

AT1 capital transaction

Corrective M

easures R

estrictive Measures

*Fully loaded CRD IV

19.6%*

No automatic sanctions for breaching the Pillar 2 capital requirements

MDA Restrictions

0

5

10

15

20

25

30

35

40

45

Q112 Q212 Q312 Q412 Q113 Q213 Q313 Q413 Q114 Q214 Q314 Q414 Q115 Q215

Total capital market funding Covered bond funding

29%19%

35%

15%

34%

57%

2%9%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2007 Q2 2015

5 years +

1-5 years

3-12 months

0-3 months

Fundamental change of maturity profile

57

Average maturity profile of outstanding market funding

Source: Swedbank, 30 Jun 2015

Months

SEK 673bn

SEK 838bn

• 2007 – 64% of wholesale funding < 12 months, SEK 13bn in central bank deposits

• Q2 2015 – 34% of wholesale funding < 12 months, SEK 238bn in central bank deposits


0

50

100

150

200

2015 2016 2017 2018 2019 2020 2021-

Senior unsecureddebt

Covered bonds

Long-term funding maturity profile

Long-term funding maturity profile, by funding source



SEKbn SEKbn

Long-term funding maturity profile, by currency

Benchmark transactions YTD 2015 ● USD 750m, Perp. NC5 (2020), AT1, 5.50% - equity conversion

● USD 1bn 144a Senior, 5Y (2020), T+77bp (+ USD 400m 3Y (2018) T+65bp)

● EUR 1bn CB, 7Y (2022), Fixed MS-5bp

● GBP 500m CB, 3Y (2018 FRN, 3m £L+20bp

● GBP 300m Senior, 4Y (2019), Fixed G+80bp

● SEK 3bn, Senior 5Y (2020), Fixed/FRN, 3m Stibor + 50bp

● USD 1bn, RegS. CB 5Y (2020), Fixed, 3m $L + 37bp

● EUR 750m Senior 7Y (2022), Fixed, MS+45bp

0

50

100

150

200

2015 2016 2017 2018 2019 2020 2021-

Other

CHF

USD

EUR

SEK

58

Asset encumbrance

59


Source: Swedbank Facts 30 June 2015 – All amounts according to Swedbank consolidated situation

Information on importance of encumbrance-Outside of mortgage loans, used for Sw edbanks main funding source covered bonds, small volumes derives from derivatives and repos-Outside of mortgage loans, originated out of the 100% ow ned subsidiary Sw edbank Mortgage AB, the absolute main part belongs to Sw edbank AB (less than 1% from other subsidiaries w ithin the Group)-Unencumbered assets under 'other assets' include assets not eligible for pledging in central banks (e.g. intangible assets)

Type of assets (Balance Sheet items)

SEKmCarrying amount of

encumbered assetsFair value of encumbered

assetsCarrying amount of

unencumbered assetsFair value of

unencumbered assets

Assets of the reporting institution 551 066 1 592 612 Loans on demand 237 422 Equity instruments 10 333 10 333 Debt securities 26 029 26 156 184 321 185 222 Loans and advances other than loans on demand 525 037 1 034 701 of w hich mortgage loans 501 540 452 118 Other assets 125 835

Type of assets (Off-balance sheet items)

SEKm

Fair value of encumbered collateral received or ow n

debt securities issued

Fair value of collateral received or ow n debt securities issued

available for encumbrance

Nominal amount of collateral received or ow n debt

securities issued not available for encumbrance

Collateral received by the reporting institution 21 172 81 402 3 907

Unencumbered

Purpose for encumbrance (On- and off-balance sheet items)

SEKmMatching liabilities, contingent

liabilities or securities lent

Assets, collateral received and ow n debt securities issued

other than covered bonds and ABSs encumbered

Carrying amount of selected f inancial liabilities 565 274 566 294 Derivatives 21 799 22 819 Deposits 41 935 41 935 Debt securities issued 501 540 501 540Other sources of encumbrance 5 944 5 944Total 571 218 572 238

Funding sources

60

Swedbank AB Swedbank Mortgage AB*

* 100% guaranteed by parent company - Irrevocable - Unconditional - Timely ** Limited by cover pool size

100% owned


Source: Swedbank, 30 Jun 2015

Program LimitLong Term

Domestic Benchmark CB Unlimited**EMTN CB EUR 25bnUSD Covered bonds (144a / Reg.S) USD 15bnDomestic MTN CB SEK 150bnNorwegian Benchmark CB Unlimited**

Registered CB (stand alone doc.)

Short Term

Domestic CP SEK 50bn

Program LimitLong Term

Global MTN USD 40bnDomestic MTN SEK 60bnUSD Senior (144a / Reg.S) USD 15bn

NSV (stand alone doc.)

Short TermDomestic CP SEK 80bnEuropean CP/CD EUR 6bnUS CP USD 20bnYankee CD USD 20bnFinnish CD EUR 4bn

Swedish FSA’s mortgage market report 2015

• Average LTV: 67%

• Amortise, LTV>70%: 90%

• Amortise, LTV 50-70%: 40%

• Debt to disp. Income*: 366%

• Around 5% of households (with amortisations) will have a deficit if interest rates increase by 5%-points

61


*Mortgage loans only

Source: Swedish FSA’s memorandum “The Swedish Mortgage Market 2015, published 14th April 2015 and Swedbank

Loan-to-value distribution – new lending, %

0

5

10

15

20

25

30

35

40

45

50

0

5

10

15

20

25

30

35

40

45

50

0-25 25-50 50-70 70-85 over 85

2011 2012 2013 2014

0

2

4

6

8

0

2

4

6

8

0 1 2 3 4 5Not amortising Amortising 2013 (not amortising)

Stress test – share of households with deficit post interest rate hike, %

Increased interest rate, percentage points

New lending

Sha

re o

f hou

seho

lds

LTV

100

120

140

160

180

200

220

05 06 07 08 09 10 11 12 13 14 15

Single-family homes

Real estate prices – Sweden 12 months development

62


Single-family homes1 Tenant-owner rights2 Combined3

12M Δ

12M Δ

12M Δ

Jul/14 9% 14% 11%

Aug/14 9% 14% 11%

Sep/14 9% 15% 11%

Oct/14 8% 15% 11%

Nov/14 13% 15% 14%

Dec/14 15% 15% 15%

Jan/15 11% 15% 12%

Feb/15 12% 17% 14%

Mar/15 13% 19% 15%

Apr/15 13% 20% 16%

May/15 13% 18% 15%

Jun/15 12% 19% 14%

Source: Valuegard www.valuegard.se (Based on data from Mäklarstatistik), 1 HOXHOUSESWE, 2 HOXFLATSWE, 3 HOXSWE

House price index, Sweden3

2005=100

http://www.valuegard.se/

0200400600800

1 0001 2001 4001 6001 800

Jun-

05D

ec-0

5Ju

n-06

Dec

-06

Jun-

07D

ec-0

7Ju

n-08

Dec

-08

Jun-

09D

ec-0

9Ju

n-10

Dec

-10

Jun-

11D

ec-1

1Ju

n-12

Dec

-12

Jun-

13D

ec-1

3Ju

n-14

Dec

-14

Jun-

15

Vilnius

No. of deals EUR/m2

0200400600800

1 0001 2001 4001 6001 800

Jun-

05D

ec-0

5Ju

n-06

Dec

-06

Jun-

07D

ec-0

7Ju

n-08

Dec

-08

Jun-

09D

ec-0

9Ju

n-10

Dec

-10

Jun-

11D

ec-1

1Ju

n-12

Dec

-12

Jun-

13D

ec-1

3Ju

n-14

Dec

-14

Jun-

15

Riga

No. of deals EUR/m2

0200400600800

1 0001 2001 4001 6001 800

Jun-

05D

ec-0

5Ju

n-06

Dec

-06

Jun-

07D

ec-0

7Ju

n-08

Dec

-08

Jun-

09D

ec-0

9Ju

n-10

Dec

-10

Jun-

11D

ec-1

1Ju

n-12

Dec

-12

Jun-

13D

ec-1

3Ju

n-14

Dec

-14

Jun-

15

Tallinn

No. of deals EUR/m2

Baltic countries Real estate prices

63

EUR/m2 /No. of deals EUR/m2 /No. of deals

EUR/m2 /No. of deals

64

Swedbank – contacts and financial calendar

Helo Meigas, Head of Group Treasury

[email protected] +46 8 585 900 25

Gregori Karamouzis, Head of Investor Relations


Bogdan Woronowicz, Debt Investor Relations


Peter Stenborn, Debt Investor Relations


Ulf Jakobsson, Head of Funding


Kimmy Samuelsson, Head of Long-Term Funding


Joakim Henriks, Money Markets and Short-Term Funding


Q3 Interim report 20 Oct 2015

Q4 Interim report 2 Feb 2016

[email protected]

www.swedbank.com/investor-relations/debt-investor

Swedbank Group Treasury Landsvägen 40,

SE-105 34 Stockholm, Sweden Sundbyberg

Contact debt investor relations:

For further information, please contact: Financial calendar

Postal address: Visitors:

Appendix

mailto:[email protected]








http://www.swedbank.com/investor-relations/debt-investor





65

Disclaimer

Certain statements made in this presentation are forward looking statements. Such statements are based on current expectations and are subject to a number of risks and uncertainties that could cause actual results and performance to differ materially from any expected future results or performance, express or implied, by the forward looking statements. Factors that might cause forward looking statements to differ materially from actual results include, among other things, regulatory and economic factors. Swedbank AB assumes no responsibility to update any of the forward looking statements contained herein.

No representation or warranty, express or implied, is made or given by or on behalf of Swedbank AB or its directors, officers or employees or any other person as to the accuracy, completeness or fairness of the information or opinions contained in this presentation. None of Swedbank AB or any of its directors, officers or employees nor any other person accepts any liability whatsoever for any loss howsoever arising from any use of this presentation or its contents or otherwise arising in connection therewith.

This presentation does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any securities of Swedbank AB, nor shall it or any part of it nor the fact of its distribution form the basis of, or be relied on in connection with, any contract or investment decision.

Swedbank investor presentation · 2 Table of contents 1. Quarterly financial update 3 2. Capital...

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