Swedbank investor presentation. July 2016

Transcription

1 Swedbank investor presentation July 216

2 Table of contents Executive summary 3 1. Quarterly financial update 5 2. Capital considerations Liquidity and funding Cover pool data Swedish economy Swedish housing and mortgage market Appendix 46 2

3 Executive summary Swedbank FY 215 Improved market position Sweden s largest retail bank with a leading position in our three Baltic home markets Stable earnings RoE of 13.5% Strong asset quality low share of impaired loans ratio, gross (4bps) and credit impairments ratio (4bps) Solid liquidity and funding position survival horizon more than 12 months One of the best capitalised banks in Europe* with significant buffers to both MDA and Loss absorption trigger levels CET1 capital ratio of 24.1% Source: Swedbank FY 215 interim report and Fact book Q4 215 *According to EBA stress test, Swedish FSA s financial stability report, Dec 214 and Swedish central bank, Nov 215 Swedbank Q2 216 Stable result in a low interest rate environment ROE: 21.% (13.9% excl. Visa) Cost/income ratio:.34 (.41 excl. Visa) CET1 capital ratio: 23.% (fully loaded CRD IV) with requirements of 2.3%* Leverage ratio: 4.2% Credit impairment ratio:.14% Share of impaired loans:.34% Total provision ratio for impaired loans: 58% Liquidity and funding: LCR: 138%, NSFR: 18% Credit ratings: AA-(N)/AA-(S)/Aa3(S) from S&P/Fitch/Moody s Source: Swedbank Q2 216 Fact book (* Including 2% CCyB, On 15 Mar 216 The Swedish FSA decided to increase the countercyclical buffer from 1.5% to 2.% from 19 March 217) 3

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5 1. Quarterly financial update 5

6 Swedish Banking Strong result SEKm Q2 16 Q1 16 QoQ Net interest income Net commission income Other income Total income Total expenses Profit before impairments Credit impairments Ratios Q2 16 Q1 16 Net interest income Higher mortgage margins Deposit margin pressure Loan and deposit volume growth Net commission income improved activity Good cost control Strong asset quality ROE, % C/I ratio Volumes, SEKbn Q2 16 Q1 16 QoQ Loans Deposits Source: Swedbank 3 Jun, 216 6

7 Baltic Banking Stable result SEKm Q2 16 Q1 16 QoQ Net interest income Net commission income Other income Total income Total expenses Profit before impairments Net interest income Mixed margin development Loan volume growth driven by acquired portfolio in Latvia and Lithuania Deposit volume growth Strong asset quality Credit impairments Ratios Q2 16 Q1 16 ROE, % C/I ratio Volumes, SEKbn Q2 16 Q1 16 QoQ Loans Deposits Source: Swedbank 3 Jun, 216 7

8 Large Corporates & Institutions Increased customer activity SEKm Q2 16 Q1 16 QoQ Net interest income Net commission income Net gains and losses Other income Total income Total expenses Profit before impairments Credit impairments Net interest income Higher lending margins Deposit margin pressure Loan volume growth High corporate finance activity Improved trading income Provisions related to oil exposures Ratios Q2 16 Q1 16 ROE, % C/I ratio Volumes, SEKbn Q2 16 Q1 16 QoQ Loans Deposits Source: Swedbank 3 Jun, 216 8

9 Group results Strong result in challenging environment SEKm Q2 16 Q1 16 QoQ Net interest income Net commission income Net gains and losses Other income Total income Total expenses Profit before impairments Credit impairments Net interest income Higher lending margins Loan volume growth Increased customer activity One-off income related to Visa Good cost control Other impairments Tax Net profit Ratios Q2 16 Q1 16 ROE, % ROE, %, excl. Visa Cost/income ratio Cost/income ratio, excl. Visa CET1 capital ratio, % Source: Swedbank 3 Jun, 216 9

10 Capital Increased REA SEKbn Risk exposure amount Higher mortgage and corporate credit exposures Negative PD migrations Increased collateral values Visa increased REA by SEK 4.1bn temporary 37 Q1 216 Exposure change Visa Rating migration (PD) LGD changes Other risk Q2 216 Increase Decrease Source: Swedbank 3 Jun, 216 1

11 Capital Strong capitalisation no excess capital CET1 capital ratio, % CET1 capital increased by SEK.3bn 23.% 24.1% 23.7% 23.% 2.3% Positive effect from net profit of SEK 1.8bn (excl. dividend) Negative pension liability (IAS19) effect of SEK 1.4bn REA increased by SEK 14.6bn Q3 215 Q4 215 Q1 216 Q2 216 CET1 capital ratio * Swedbank s estimate, based on the SFSA s announced capital requirement* requirements, including fully implemented buffers, Pillar 2 requirements and 2 per cent countercyclical buffer CET1 capital buffer around 2bps Funding & liquidity ratios NSFR at 18 (17) per cent LCR at 138 (148) per cent Source: Swedbank 3 Jun,

12 Asset quality Solid asset quality Credit impairments, SEKm Q2 16 Q1 16 QoQ Swedish Banking Impairments related to oil exposures Baltic Banking Large Corporates & Institutions Swedbank Group Ratios Q2 16 Q1 16 Credit impairment ratio, %.14.1 Share of impaired loans, gross % Total provision ratio for impaired loans, % Source: Swedbank 3 Jun,

13 2. Capital considerations 13

14 Capital position Composition of Swedbank s CET1 and total capital ratio requirements fully loaded CRDIV 27bp* 28.3% Systemic Risk in Pillar 2 23.% 25.6% 2.% 25% REA Mortgage Floor Restrictive Measures Corrective Measures MDA Restrictions 2.3%* 2.% 7.6% 11.7% 6.1% 1.2% 2.5%.9% 1.3% 2.5% 3.% 1.3% 3.% 11.3% 3.5% 4.5% 4.5% 13.5% 14.8% Individual Pillar 2 charge Capital Conservation Buffer Countercyclical buffer (2.%)* Systemic Risk Buffer Min. Additional T1 and T2 capital Minimum CET1 Requirement Swedbank CET1 Requirements Swedbank CET1 Capital Ratio Swedbank Total Capital Requirements Swedbank Total Capital ratio Source: Swedbank 3 Jun, 216 estimated CET1 and Total capital requirement based upon the Swedish FSA s memorandum (8/9/214), *On 15 Mar 216 The Swedish FSA decided to increase the countercyclical buffer from 1.5% to 2.% from 19 March

15 Capital regulation Regulatory uncertainty remains MREL Relevance: EU banks under BRRD Timing: Fall transition to be specified Amount: Set individually by Riksgälden (National Debt Office) Loss Absorption Amount: Total capital requirements less combined buffers in Pillar1 and systemic risk buffer in Pillar2 Recapitalisation Amount: Total capital requirements SEKbn 14 MREL requirements What qualifies: Applies to Swedbank: Capital (LAA) + Senior >1Year (RA) Yes 12 The National debt office intends to publish further information on subordination in early Loss absorption amount Swedbank total capital Recapitalisation amount Senior unsecured debt >1Y Source: Swedbank, 3 Jun 216, National Debt Office, 26 Apr

16 Asset quality Asset portfolios low risk Group loan book* Q2 216, total SEK 1 42bn Sweden Hotels and restaurants, Retail Shipping and offshore, Transportation Manufacturing Latvian lending Lithuanian lending Other corporate lending Estonian lending Residential properties Other property management 7% 2% 3% 6% 4% 15% 33% 67% Private Corporate Agriculture and forestry Baltic Banking Swedish household loans (9% mortgages) 62% 46% 54% Private Corporate Tenant owner associations Source: Swedbank, 3 Jun, 216 * Loans to the public excl. Credit institutions and SNDO 16

17 Asset quality stress tests Swedbank s strong relative risk position confirmed CET1 - The Swedish FSA stress test (%) Svenska Handelsbanken Source: SFSA s risk report Dec 214 Svenska Handelsbanken Source: EBA stress test Oct 214 Nordea SEB Swedbank CET1 - The EBA stress test (%) Nordea SEB Swedbank CET1 - The Riksbank stress test (%) Q Svenska Nordea SEB Swedbank Handelsbanken Note: Capital ratios according to Basel III, initially and in the stress test. Source: The Riksbank s Financial Stability Report 215:2, Nov 215 chart: A74 (appendix) Total Swedbank loan losses in the different stress tests SFSA stress test: SEK 45bn Riksbank stress test: SEK 5bn EBA stress test: SEK 25bn ICAAP stress test: SEK 17bn Source: The SFSA Dec 214, Riksbank Nov 215, EBA Oct 214 and Swedbank Apr

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19 3. Liquidity and funding 19

20 Liquidity and funding Core balance sheet* structure SEKbn 1 8 Assets SEKbn 1 8 Liabilities Suppl. capital CET Senior unsecured debt 1 4 Lithuania Latvia Estonia Other corporate lending, Sweden & other Nordic countries Deposits 8 Other private, Sweden Swedish mortgage loans 4 2 Covered bonds Q2 216 * Simplified balance sheet Source: Swedbank 3 Jun, 216 Q

21 Liquidity and funding Covered bond strategy Sweden SEK 3-375bn Covered bond strategy EUR/USD SEK 15-2bn Other* SEK 5-85bn 1% 9% 8% 7% 6% 5% 4% 3% 2% 1% Swedish households financial assets SEKbn <5Y 3-7Y >7Y Maturity, years % Other financial assets (LHS) Pension savings and mutual funds (LHS) Equities (LHS) Deposits and retail bonds (LHS) Total financial assets (RHS) Source: Swedbank 3 Jun,

22 Liquidity and funding Senior unsecured debt strategy Senior unsecured debt maturity profile SEKbn* 6 Senior unsecured debt Source: Swedbank 3 Jun 216, *nominal amounts 22

23 Liquidity and funding Conservative funding position LCR 138% (Swedish FSA definition FFFS 212:6) NSFR 18% (Basel committee) Issued SEK 14bn of term funding YTD Q2 216 Initial plan to issue around SEK 18bn in 216 most likely lower due to inflow of deposits Term funding issuance completed and planned Prefunded for more than 12 months SEKbn 1 Covered bonds Senior unsecured debt Planned, covered Planned, senior Source: Swedbank 3 Jun 216 SEKbn 7 Survival horizon Days forward 23

24 Liquidity and funding Private placements active in both covered bonds and senior unsecured debt All major currencies Bullet format, FRN or Fixed EUR 1m equivalent minimum size Sweet spots: Senior: 2.5-5Y Covered: 3-8Y Longer tenors also possible 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 Open to larger placements with smaller investor groups Open to tap existing bonds Listing is optional *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 24

25 Liquidity and funding Liquidity reserve According to the template defined by the Swedish Bankers' Association Cash and holdings in central banks Deposits in other banks available overnight 26 Securities issued or guaranteed by sovereigns, central banks or multilateral development banks Securities issued or guaranteed by municipalities or public sector entities Covered bonds Issued by other institutions Own issued Securities issued by non-financial corporates Securities issued by financial corporates (excl. covered bonds) 1 2 Other Total Additional liquid assets, Group SEKm 1) Including loans to the Sw edish Ntional Debt Office 2) 92% of the securities in the liquidity reserve per Q2 216 are rated AAA. The rating requirement is AA-. 2) 96 % of the additional assets are rated AAA. Source: Swedbank 3 Jun

26 Liquidity and funding - Credit ratings Rating May 26, 216, Fitch upgraded the rating from A+ to AA-, with a stable outlook. The main drivers behind the upgrade are: Execution of the low risk strategy including conservative risk-returns and underwriting standards, strong retail franchise and continued strong capitalisation. December 3, 215, S&P raised Swedbank AB to AA-/A-1+ to reflect their view of Sweden's ongoing support of its systemically important banks. As such, S&P removed the negative adjustment notch in place since July, which reflected an expected negative transition due to the potential removal of government support. The outlook on the rating is negative, reflecting S&P s view of heightened economic risk for the Swedish economy June 25, 215, 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, 215, 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 Source: Swedbank 3 Jun 216 Short Long SACP 1 Short Long BCA 1 Short Long VR 1 Swedbank A-1+ AA- a+ P-1 Aa3 a3 F1+ AA- AA- Swedbank Mortgage A-1+ AA- - P-1 Aa Covered bonds - AAA Aaa Standalone Rating 2 Stable outlook S&P (Negative) Moody's (Stable) Fitch (Stable) 26

27 4. Cover pool data Swedbank is a labeled issuer of the ECBC Covered Bond Label Foundation ( ) 27

28 Swedbank s cover pool Cover pool data 1 Rating, S&P / Moody s AAA / Aaa Total pool size SEK 843.8bn Geographic distribution Sweden 1% Current OC-level 59.5% Swedbank is a labeled issuer of the ECBC Covered Bond Label Foundation ( ) Weighted average seasoning 2 66 months Average LTV 3, 4 WA LTV on property level (Max LTV) 52% Non-performing loans 5 None Fixed /Floating interest loans 6 Fixed 29% Floating 71% Repayment structure 7 Amortising 61% Interest only 39% Average loan size SEK Number of loans outstanding Number of borrowers Number of properties Dynamic pool Yes 1 As per 3 Jun, Public sector loans not included 3 Index valuation as per 3 Apr, Maximum LTV: Residential 75%, Commercial 6%, Forest and Agriculture 7% 5 Past due loans > 6 days are not eligible for the cover pool 6 Floating interest loans < 365 days 7 Property level of cover pool Source: Swedbank 3 Jun

29 Swedbank s cover pool Cover pool data Swedbank is a labeled issuer of the ECBC Covered Bond Label Foundation ( ) Type of loans Residentials 91.6% of w hich Single-family housing 57.5% of w hich Tenant ow ner rights 19.3% of w hich Tenant ow ner association 1.4% of w hich Multi-family housing 4.4% Public.9% Commercial.5% Forest & Agricultural 7.% 1.% Geographical distribution, Sweden, per cent 3 Jun 216 North 6.5 Norrbotten county (BD) 1.4 Västerbotten county (AC) 2.4 Västernorrland county (Y) 1.5 Jämtland county (Z) 1.2 Middle (including Stockholm) 44.9 Dalarna county (W) 2.1 Gävleborg county (X) 2.1 Värmland county (S) 2.1 Örebro county (T) 2.5 Västmanland county (U) 2.5 Uppsala county ( C) 4. Södermanland county (D) 2.4 Stockholm county (including Stockholm) (AB) 27.2 South (including Göteborg and Malmö) 48.6 Västra götaland county (Including Göteborg) (O) 17.6 Östergötland county (E) 4.1 Jönköping county (F) 3.5 Halland county (N) 3.8 Kronoberg county (G) 2.1 Kalmar county (H) 2.9 Skåne county (including Malmö) (M) 12.5 Blekinge county (K) 1.5 Gotland county (I).6 1. Source: Swedbank 3 Jun

30 Swedbank s cover pool Cover pool loan-to-value distribution Weighted average LTV on property level 52% Swedbank is a labeled issuer of the ECBC Covered Bond Label Foundation ( ) LTV distribution per property 1 LTV distribution by volume 1, 2 3% 3% 25% 25% 2% 2% 15% 15% 1% 1% 5% 5% % % Public loans of.9% 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 ( Source: Swedbank 3 Jun 216 3

31 Swedbank s cover pool Cover pool loan type and loan-to-value distribution Swedbank is a labeled issuer of the ECBC Covered Bond Label Foundation ( ) WA LTV per property type 1 Percentage of the pool Average LTV per loan type 12% 12% 1% 1% 8% 8% 6% 6% 4% 4% 2% 2% % Single-family homes Tenant ownertenant owner rights associations (apartments) Multi-family housing Commercial Forestry & Agricultural Total all types 1 % 1 excluding public sector loans of.9% Source: Swedbank 3 Jun

32 Swedbank s cover pool Strong resilience to house prices changes Swedbank is a labeled issuer of the ECBC Covered Bond Label Foundation ( ) Over-collateralisation 7% 6% 5% 4% 3% 2% House price sensitivity of the cover pool OC, Q216 Current OC-level of 59.5% Can withstand a severe house price drop and still be able to issue AAA-rated covered bonds 1% % % -5% -1% -15% -2% -25% -3% -35% -4% -45% -5% House price drop Source: Swedbank 3 Jun

33 Swedish covered bond legislation Overview of the Swedish covered bond legislation The Covered Bond Act The Covered Bond Act entered into force on July 1, 24 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 7%, Commercial 6% Maximum 1% commercial loans and 2% supplemental assets in cover pool Loan-to-value ratios and other limitations Regular monitoring of the property values, revaluation of property prices in case of significant drop (generally interpreted as 15% drop) Mandatory over-collateralisation (OC) of 2% (starting as per 21 June, 216) Regional constraint on collateral assets (Mortgage - EEA, Public - OECD) The cover pool value shall always exceed the aggregate value of claims (including derivatives) Matching requirements 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 1% change in the currency Non-performing assets in the cover pool which are more than 6 days overdue must be disregarded for the purposes of the matching tests Benefit of a priority right over the cover pool 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 Administration in event of bankruptcy 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 Source: 33

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35 5. Swedish economy 35

36 Swedish economy Continued strong fiscal position Kingdom of Sweden rated Aaa/AAA/AAA GDP growth 4.2% 1 (Q116 Y/Y),.5% 2 (Q116 Q/Q) CPI/CPIF 1.% / 1.5% (Jun 16 Y/Y) Unemployment ratio 3 7.6% / 7.% 2 (May16 Y/Y) Debt to GDP 44% (Maastricht debt Dec 214) Source: Statistics Sweden and National Debt Office 3 Calculated for the population between years old Key Economic Indicators, F 216F 217F Real GDP (Calendar adjusted) CPI index, average CPIF, average Unempl. Rate (15-74), % of labor force Savings ratio (households),% Real disposable income (households) Source: Swedbank Economic Outlook Apr GDP, growth Q/Q, % 2 7 The output of the Swedish economy % Import GDP Gross investments Data up to and including Q Calendar adjusted, 2 Seasonally adjusted Resources Expenditures Public consumption Private consumption Export Source: Statistics Sweden Jun 216 Source: Statistics Sweden Mar,

37 Swedish economy Exports key factor for growth Current account balance as % of GDP Germany Denmark Sweden Italy Finland France United States Canada United Kingdom Exports and imports trend per month, SEKm Current prices Import Export F 17F Source: OECD Economic outlook 99, table 62, Jun 216 Exports by important commodity groups, % 1% 5% 9% 9% 8% 11% 7% 14% Energy Minerals 6% Forest 5% Chemical 4% 47% Engineering 3% Other 12% 1% 8% 6% 4% 2% Source: Statistics Sweden May 215 Top 1 export countries, % 2% 1% % 14% % Source: Statistics Sweden, data as per May 216 Source: Statistics Sweden, data as per May

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39 6. Swedish housing and mortgage market 39

40 Swedish housing and mortgage market Swedish mortgage market No securitisation (on balance sheet), no sub-prime market, no 3 rd party origination, restricted buyto-let market 64% home ownership 1 Rental market is regulated Transparent credit information (credit information agency, 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 1 Source: Statistics Sweden, Apr 216 4

41 Swedish housing and mortgage market Household borrowing growth % Lack of residential housing drives household lending growth Annual percentage change, total Mortgage lending Data up to and including May 216 LTV cap of 85% Mandatory since 21 (SFSA) (Min 15% own equity) Amortisation (1 st June 216) 2% annual amortisation >7% LTV 1% annual amortisation >5% LTV Risk-weight floor of 25% on mortgage loans (Pillar2) Source: Swedbank, Statistics Sweden, data as per May

42 Swedish housing and mortgage market SFSA new amortisation requirements 1 June 216 Average LTV in back book is 56%. Average LTV in new lending is 68% 95% of households with LTV >7% amortise in Q2 (91% in back-book) 86% of households with LTV 5-7% amortise in Q2 (61% in back-book) In total 81% of households amortise in Q2 (64% in back-book) LTV distribution Amortisation level new lending 75% 1% 7% 9% 65% 8% 6% 7% 6% 55% 5% 5% Q1 216 Q2 216 Single-family homes, back-book Single-family homes, new Tenant-owner rights, back-book Tenant-owner rights, new 4% -5% 5-7% >7% Total LTV Source: Swedbank, 3 Jun,

43 Swedish housing and mortgage market Shortage of housing Number of units and persons Housing completions in Sweden Single-family dwellings Apartment buildings Population growth Average annual need * % of the apartments was produced in the three largest areas (Stockholm, Gothenburg and Malmoe) *According to the National board of Housing, Building and Planning (Boverket) - the need for housing is 71 units (average 71 per year) Housing starts in Q1 216 show trend-shift Number of units Q1 215 Q1 216 Source: Statistics Sweden, May 216 Source: Statistics Sweden May

44 Swedish housing and mortgage market Affordability withstands higher indebtedness % % 12 Swedish household financial assets and liabilities to disposable income Total assets (exl. collective pensions) Real assets (housing) Debt Source: Swedish Riksbank s Financial Stability report 216:1 (chart A27) Household interest expenditure in Sweden to disposable income 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. Household saving rates % of disp. income Sweden Germany Norway Interest-to-income ratio Historical average F 17F United States Finland Denmark Source: Swedish Riksbank s Financial Stability report 216:1 (chart A31) Source: OECD Economic Outlook 99, table 26, Jun

45 Swedish housing and mortgage market Upward pressure on house prices Sweden, total Total Tenant owner rights (apartments) Single-family houses 35 Total 3 Stockholm Tenant owner rights (apartments) STOCKHOLM 35 3 Single-family houses Gothenburg Tenant owner rights (apartments) Single-family houses Malmoe Tenant owner rights (apartments) Single-family houses 35 3 GÖTEBORG 3 MALMÖ Source: Valueguard Index (25=1), 14 Jul, 216 (data up to and including Jun 216) 45

46 Appendix 46

47 This is Swedbank Swedbank a low-risk bank with strong capital base 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 58% of total loans 9% 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 around 2bp Conservative funding and liquidity position survival horizon longer than 12 months assuming closed funding markets, NSFR 18% and LCR 138% Baltic operations self-funded loan-to-deposit ratio < 1% % Liquidity & capital % NSFR LCR CET1 capital ratio, CRDIV (RHS) H1 216 %.2 Credit impairment ratio Q2 11 Q4 11 Q2 12 Q4 12 Q2 13 Q4 13 Q2 14 Q4 14 Q2 15 Q4 15 Q2 16 Source: Swedbank 3 Jun

48 This is Swedbank Swedbank strong and stable earnings capacity 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 9 8 Profit before impairment Profit before impairment One-off related to Visa Q2 11 Q2 12 Q2 13 Q2 14 Q2 15 Q2 16 Source: Swedbank 3 Jun

49 This is Swedbank Swedbank market leader in cost efficiency Best-in-class cost efficiency an executive management strategic priority Executive management strongly focused on cost and change management Integrated in corporate culture Focus on straight-through-processing Evolving household banking model digitisation trend Retail profile a key feature Four home markets Sweden, Estonia, Latvia and Lithuania reduce complexity Largest private and SME customer base High degree of digitisation in home markets SEKm 2 Total expenses Acquistion of Sparbanken Öresund.6 C/I ratio Ambition 216 Source: Swedbank 3 Jun H

50 This is Swedbank Sweden s largest retail bank Sweden Population 9.8m Private customers 4.m Corporate customers 264 Organisations 64 Branches 266 ATMs * Cards 4.1m Employees 7 71 Latvia Population 2.m Private customers.9m Corporate customers 91 Branches 41 ATMs 411 Cards 1.m Employees * ATMs are handled in Bankomat AB ( Estonia Population 1.3m Private customers.8m Corporate customers 139 Branches 35 ATMs 419 Cards 1.1m Employees ~86%* ~9%* * Share of loanbook Lithuania Population 2.9m Private customers 1.5m Corporate customers 85 Branches 67 ATMs 417 Cards 1.7m Employees 2 38 Source: Swedbank Fact book Q

51 This is Swedbank Market leading retail franchise in all home markets Largest retail bank and fund manager in Sweden Market shares, Deposits % % Deposits Private Deposits Corporate Market shares, Lending Mortgage lending Corporate lending Sweden Estonia Latvia** Lithuania*** Sweden Estonia Latvia** Lithuania*** Source: Source Sweden: Statistics Sweden (SCB) as per May 216 Source Estonia: Estonian Central Bank, as per May 216 Sources Latvia: Association of Commercial Banks of Latvia (ACBL) & The Financial and Capital Market Commission (FCMC), ** Mortgage lending as per Mar 216 Source Lithuania: Association of Lithuanian Banks (LBA), *** As per Mar

52 This is Swedbank Strong earnings capacity retail bank profile 45 4 FY Total Income evolution, SEKbn Other Net Gains & Losses on financial items Net Commission Income, other Net Commission Income, Retail FY 215 Total income geographic distribution Latvia 5% Estonia 7% Other 3% Lithuania 5% Lending and deposits 67% Sweden 8% And distribution by business area Treasury, Trading and Capital Markets 2% Asset Management 12% Other 5% Payment, Cards 9% Share of P&L of associates 2% Insurance 3% Source: Swedbank 31 Dec

53 This is Swedbank Sweden the dominating home market Total lending to the public amounts to SEK 1 42bn (as per Q2 216), out of which around 86% is originated in Sweden Estonia makes up 46% of total lending in the Baltics Lending distributed by countries (Q2 216) Sweden 86.1% SEK 1 222bn Estonia 4.4% Swedish Mortgage loans (private+corp) Latvia 2.2% Other corporate (incl. LC&I, Sweden) Lithuania 3.% Other* 4.4% Source: Swedbank 3 Jun 216 * Denmark, Norway, Finland and NY Branch 53

54 Asset quality Provisions in oil related sectors Loan portfolio negatively impacted by lower oil price, SEK 18.4bn 1.3% of the total loan book Derivative exposures of SEK 2.6bn Provisions of SEK 572m in Q2 Negative rating migrations Increased REA by SEK 3.7bn Restructuring continues Shipping & Offshore, loans, SEK 31bn Risk migration in oil-related exposures by internal risk grade*, SEKbn Def * 21 represents the lowest risk and the highest risk 6% of the portfolio is negatively impacted by lower oil price 54

55 Asset quality Conservative PD assumptions Five consecutive years with higher estimated losses compared to realised losses Realised losses were higher than expected losses only during the Baltic crisis in 29 Swedbank Safety margins high in all exposure classes, PD % % Corporate % Retail mortgage % Retail other F-IRB A-IRB Estimated loss Realised loss Source: Swedbank Pillar 3 report 55

56 Capital requirements No automatic sanctions for breaching the Pillar 2 capital requirements 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. 2.3%* 9.% 11.3% Swedbank CET1 requirements *Fully loaded CRD IV Corrective Measures Restrictive Measures MDA Restrictions Pillar 2 CET1 requirements Pillar 1 CET1 requirements Source: Swedish FSA Memorandum: Capital requirements for Swedish banks 8 Sep 214 and Swedbank 56

57 Liquidity and funding Fundamental change of maturity profile 27 64% of wholesale funding < 12 months, SEK 13bn placed with central banks Q % of wholesale funding < 12 months, SEK 41bn placed with central bank 1% 9% SEK 673bn 2% SEK 91bn 1% Average maturity profile of outstanding market funding 8% 34% 7% Months 45 6% 5% 35% 58% 5 years years 3-12 months % -3 months 25 3% 2% 1% 29% 13% 19% % 27 Q2 216 Source: Swedbank, 3 Jun 216 Total capital market funding Covered bond funding 57

58 Liquidity and funding Long-term funding maturity profile Long-term funding maturity profile, by funding source Long-term funding maturity profile, by currency SEKbn SEKbn 2 Senior unsecured debt Covered bonds Other GBP USD EUR SEK Source: Swedbank 3 Jun

59 Liquidity and funding Benchmark transactions FY 215 YTD Q1 216 ISIN Product Tenor Currency Amount Type Spread Value date Maturity date XS AT1 Perpetual USD 75 NC5 5.5% February 19, 215 Perpetual XS SU 144a 5Y USD 1 Fixed T+77 March 4, 215 March 4, 22 XS SU 144a 3Y USD 4 Fixed T+65 March 4, 215 March 2, 218 XS CB 7Y EUR 1 Fixed MS-5 March 11, 215 March 11, 222 XS CB 3Y GBP 5 FRN 3m +2 April 2, 215 April 2, 218 XS SU 4Y GBP 3 Fixed G+8 April 15, 215 April 15, 219 XS SU 5Y SEK 1 5 FRN 3mStib+1 May 11, 215 May 11, 22 XS SU 5Y SEK 1 5 Fixed MS+5 May 11, 215 May 11, 22 XS CB RegS 5Y USD 1 Fixed MS+37 May 12, 215 May 12, 22 XS SU 7Y EUR 75 Fixed MS+45 June 1, 215 June 1, 222 XS SU 5Y EUR 5 FRN 3m +5 August 18, 215 August 18, 22 XS CB 5Y EUR 1 25 Fixed MS+7 September 29, 215 September 29, 22 XS CB 3Y GBP 35 FRN 3m +38 October 29, 215 October 29, 218 AU3FN29385 SU 3Y AUD 325 FRN 3mBBSW+115 November 5, 215 November 5, 218 AU3CB SU 1Y AUD 17 Fixed MS+145 November 5, 215 November 5, 225 XS SU 5Y1M EUR 75 Fixed MS+53 December 4, 215 January 4, 221 XS CB 5Y EUR 1 25 Fixed MS+14 February 1, 216 February 1, 221 XS SU 5Y USD 1 25 Fixed T+135 March 1, 216 March 1, 221 XS SU 3Y EUR 4 FRN 3m +45 March 11, 216 March 11, 219 XS SU 1Y GBP 525 FRN 3m +32 June 2, 216 July 4, 217 Source: Swedbank 3 Jun

60 Liquidity and funding Funding sources Swedbank AB 1% owned Swedbank Mortgage AB* Program Long Term Global MTN Domestic MTN USD Senior (144a / Reg.S) AUD Senior** NSV (stand alone doc.) Short Term Domestic CP European CP/CD US CP Yankee CD Finnish CD Limit USD 4bn SEK 6bn USD 15bn AUD 1bn SEK 8bn EUR 6bn USD 2bn USD 2bn EUR 4bn Program Long Term Domestic Benchmark CB EMTN CB USD Covered bonds (144a / Reg.S) Domestic MTN CB Norwegian Benchmark CB AUD Covered bonds** Registered CB (stand alone doc.) Short Term Domestic CP * 1% guaranteed by parent company - Irrevocable - Unconditional - Timely ** Combined limit for unsecured- and covered bonds *** Limited by cover pool size Limit Unlimited*** EUR 25bn USD 15bn SEK 15bn Unlimited*** AUD 1bn SEK 5bn Source: Swedbank, 3 Jun 216 6

61 Liquidity and funding 7% of the domestic covered bonds held by Sweden 7 Owners of Swedish covered bonds, SEKbn Owners of Swedish covered bonds, 31 Dec 215, % Foreign investors Swedish insurance companies Swedish banks Swedish investment funds Public sector, incl. AP funds 34% 6% 28% 18% 14% Swedish banks Swedish investment funds Swedish insurance companies Public sector, incl. AP funds Foreign investors Source: Swedish Central banks Financial Stability Report 216:1, chart A71 61

62 Liquidity and funding Asset encumbrance Type of assets (Balance Sheet items) SEKm Encumbered assets Unencumbered assets, additional assets available for secured funding Carry Amount Fair Value Carry Amount Fair Value Assets of the reporting institution Loans on demand Equity instruments Debt securities Loans and advances other than loans on demand of w hich mortgage loans Other assets Total balance sheet, SEK 2 476bn Asset encumbrance ratio of around 24% Type of assets (Off-balance sheet items) SEKm Unencumbered Encumbered received collateral received available for collateral secured funding Fair value Fair value Collateral received by the reporting institution Loans on demand Equity instruments Debt securities Loans and advances other than loans on demand Other collateral received Ow n debt securities issued other than ow n covered bonds or ABSs Purpose for encumbrance (On- and off-balance sheet items) Encumbered Assets SEKm 3 Jun 31 Mar 31 Dec 3 Sep Carrying amount of selected financial liabilities of w hich Derivatives of w hich Deposits of w hich Debt securities issued Other sources of encumbrance Total Source: Swedbank Facts 3 Jun 216 All amounts according to Swedbank consolidated situation 62

63 Swedish housing and mortgage market Swedish FSA s mortgage market report 216 Share of households Loan-to-value distribution new lending, % New lending 215(214) Average LTV: 65% (67) Amortise, LTV7-85%: 85% (83) Amortise, LTV 5-7%: 51% (43) Debt to disp. Income*: 46% (366) Above 85 Loan-to-value *Mortgage- and other unsecured loans Stress test share of households with deficit post interest rate hike, % 8 6 Around 7%(5) of households (with amortisations) will have a deficit if interest rates increase by 5%-points Interest rate increase, per centage points Not amortising Amortising 214 (no amortisation) Source: Swedish FSA s memorandum The Swedish Mortgage Market 215, published 14 th April 216 and Swedbank 63

64 Swedish housing and mortgage market Real estate price performance Sweden, 12 month Single-family homes 1 Tenant-owner rights 2 Combined 3 12M Δ 12M Δ 12M Δ Jul 15 14% 18% 15% Aug 15 13% 19% 15% Sep 15 14% 2% 16% Oct 15 18% 19% 18% Nov 15 13% 18% 15% Dec 15 12% 17% 14% Jan 16 14% 16% 15% House price index, Sweden 3 25=1 Feb 16 13% 14% 13% Mar 16 12% 12% 12% Apr 16 12% 1% 11% May 16 11% 9% 11% Jun 16 11% 7% 1% Source: Valuegard (Based on data from Mäklarstatistik), 1 HOXHOUSESWE, 2 HOXFLATSWE (apartments), 3 HOXSWE 64

65 Real estate prices Baltic countries EUR/m 2 /No. of deals 1 8 Tallinn EUR/m 2 /No. of deals 1 8 Riga EUR/m 2 /No. of deals 1 8 Vilnius Dec-5 Jun-6 Dec-6 Jun-7 Dec-7 Jun-8 Dec-8 Jun-9 Dec-9 Jun-1 Dec-1 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Jun-16 Dec-5 Jun-6 Dec-6 Jun-7 Dec-7 Jun-8 Dec-8 Jun-9 Dec-9 Jun-1 Dec-1 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Jun-16 Dec-5 Jun-6 Dec-6 Jun-7 Dec-7 Jun-8 Dec-8 Jun-9 Dec-9 Jun-1 Dec-1 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Jun-16 No. of deals EUR/m2 No. of deals EUR/m2 No. of deals EUR/m2 65

66 Appendix Swedbank contacts and financial calendar For further information, please contact: Tomas Hedberg, Head of Group Treasury Financial calendar Q3 Interim report 25 Oct 216 Q4 Year-end report 2 Feb 217 Gregori Karamouzis, Head of Investor Relations gregori.karamouzis@swedbank.com Peter Stenborn, Debt Investor Relations peter.stenborn@swedbank.com Niklas Lindkvist, Debt Investor Relations niklas.lindkvist@swedbank.com Ulf Jakobsson, Head of Funding ulf.jakobsson@swedbank.se Kimmy Samuelsson, Head of Long-Term Funding kimmy.samuelsson@swedbank.se Joakim Henriks, Money Markets and Short-Term Funding Contact debt investor relations: debt.ir@swedbank.com Postal address: Visitors: Swedbank Group Treasury Landsvägen 4, SE Stockholm, Sweden Sundbyberg joakim.henriks@swedbank.se

67 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. 67