Swedbank investor presentation. July 2015

Transcription

1 Swedbank investor presentation July 215

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

3 1. Quarterly financial update 3

4 Swedish Banking Strong result in low interest rate environment SEKm Q2 15 Q1 15 QoQ Net interest income Net commission income Other income Total income Total expenses Profit before impairments Credit impairments Ratios Q2 15 Q1 15 Lower deposit margins Higher mortgage margins Loan and deposit volume growth Stable commission income Good cost development Lower staff cost ROE, % C/I ratio Volumes, SEKbn Q2 15 Q1 15 QoQ Loans Deposits Source: Swedbank, 3 Jun, 215 4

5 Baltic Banking Stable result SEKm Q2 15 Q1 15 QoQ Net interest income Net commission income Other income Total income Total expenses Profit before impairments Credit impairments Tax Loan volume growth Strong commission income Cards and payments Solid asset quality Extra dividend from Estonia triggers increased tax cost Net profit Ratios Q2 15 Q1 15 ROE, % (excl. one-off tax) C/I ratio.4.41 Volumes, SEKbn Q2 15 Q1 15 QoQ Loans Deposits Source: Swedbank, 3 Jun, 215 5

6 Large Corporates & Institutions Stable result SEKm Q2 15 Q1 15 QoQ Net interest income Net commission income Net gains and losses Other income Total income Total expenses Stable NII Lower deposit margins Volatile markets Good asset quality Profit before impairments Credit impairments Ratios Q2 15 Q1 15 ROE, % (excl. one-off tax) C/I ratio Volumes, SEKbn Q2 15 Q1 15 QoQ Loans Deposits Source: Swedbank, 3 Jun, 215 6

7 Group results Stable result in low interest rate environment SEKm Q2 15 Q1 15 QoQ Net interest income Net commission income Net gains and losses Other income Total income Stable NII Good cost development Strong asset quality Negative one-off tax effects Total expenses Profit before impairments Credit impairments Other impairments Tax Net profit Ratios Q2 15 Q1 15 ROE, % ROE, % (excl. one-off tax) Cost/income ratio CET1 capital ratio, % Source: Swedbank, 3 Jun, 215 7

8 Capital Positive REA impact from market movements Risk exposure amount REA net decrease of SEK 15.6bn SEKbn 43 Interest rates and FX fluctuations impact positively VaR model approval to manage negative interest rate Q1 215 Exposure change Rating migration (PD) LGD changes Other credit risk CVA risk Market risk Operational risk Q2 215 Increase Decrease Source: Swedbank, 3 Jun, 215 8

9 Capital Strong capitalisation no excess capital CET1 capital ratio, % 22.4% 2.5% 19.6% CET1 capital positively impacted IAS 19 (SEK 3.4bn) REA net decrease of SEK 15.6bn Continued regulatory uncertainty Q1 215 Q2 215 CET1 capital ratio requirement Source: Swedbank, 3 Jun, 215 9

10 Asset quality Strong asset quality Credit impairments, SEKm Q2 15 Q1 15 QoQ Swedish Banking Baltic Banking Large Corporates & Institutions Swedbank Group Ratios Q2 15 Q1 15 Credit impairment ratio, %..2 Share of impaired loans, gross % Total provision ratio for impaired loans, % % Credit impairment ratio Source: Swedbank, 3 Jun, Q21 Q41 Q211 Q411 Q212 Q412 Q213 Q413 Q214 Q414 Q215 1

11 2. Capital considerations 11

12 Capital position Composition of Swedbank s CET1 and total capital ratio 28.2%* requirements 25.%* 22.4%* 2.% Systemic Risk in Pillar % Restrictive Measures Corrective Measures MDA Restrictions 19.6%* 2.% Systemic Risk in Pillar 2 5.5% 1.1% 2.5% 1.% 3.% 4.5% 25% REA Mortgage Floor Individual Pillar 2 charge Capital Conservation Buffer Countercyclical Buffer (1.5%) Systemic Risk Buffer Minimum CET1 Requirement 11.4% 11.% 7.% 1.5% 2.5% 1.% 3.% 3.5% 4.5% 25% REA Mortgage Floor Individual Pillar 2 charge Capital Conservation Buffer Countercyclical Buffer (1.5%) Systemic Risk Buffer Min additional T1 and T2 capital Minimum CET1 Requirement 14.5% Swedbank CET1 Requirements Swedbank CET1 Capital ratio Swedbank Total Capital Requirements Swedbank Total Capital ratio *Fully loaded CRD IV Source: Swedbank 3 Jun, 215 estimated CET1 and Total capital requirement based upon the Swedish FSA s memorandum (8/9/214) 12

13 Capital regulation Regulatory uncertainty remains MREL TLAC Relevance EU banks under BRRD G-SIBs initially via Basel recommendations Timing Jan 216 at the earliest Transition to be specified Jan 219 at the earliest Transition to be specified SEKbn 25 2 Swedbank s current capital position Q2 215 Requirement Capital Senior > 1Year Amount What qualifies Applies to Swedbank Set individually, by Riksgälden (National debt office) BRRD proposal: 8% of liabilities or 2 x Basel 1 floor Capital + Senior >1Y Yes Minimum of 16-2% of REA + P1 buffers or 2 x leverage ratio requirement Capital + "Designated senior" >1Y No, not a G-SIB % of liabilities 2% of REA + P1 buffers 2 x Basel 1 floor * Assuming leverage ratio requirement of 3% 2 x Leverage ratio Swedbank Q215 Source: Swedbank, 3 Jun,

14 Asset quality Asset portfolios low risk Group loan book* Q2 215, total SEK 1 358bn Sweden Hotels and restaurants, Retail Shipping and offshore, Transportation Manufacturing Latvian lending Lithuanian lending 8% 2% 3% Other corporate lending Estonian lending Residential properties Other property management 6% 4% 14% 36% 64% Private Corporate Agriculture and forestry Baltic Banking Swedish household loans (9% mortgages) 63% 49% 51% Private Corporate Tenant owner associations Source: Swedbank, 3 Jun, 215 * Loans to the public excl. Credit institutions and SNDO 14

15 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 Nordea SEB Swedbank CET1 - The Riksbank stress test (%) Svenska Handelsbanken Nordea SEB Swedbank Note: The chart shows the CET1 capital ratios in the third quarter of each year. Source: The Riksbank s Financial Stability Report 214:2, chart 4: CET1 - The EBA stress test (%) Svenska Handelsbanken Source: EBA stress test Oct 214 Nordea SEB Swedbank Total Swedbank loan losses in the different stress tests SFSA stress test: SEK 45bn Riksbank stress test: SEK 45bn EBA stress test: SEK 25bn ICAAP stress test: SEK 17bn Source: The SFSA Dec 214, Riksbank Dec 214, EBA Oct 214 and Swedbank Apr

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17 3. Liquidity and funding 17

18 Liquidity and funding Core balance sheet* structure SEKbn 1 8 Assets SEKbn 1 8 Liabilities Suppl. cap CET Lithuania Latvia Estonia Other corporate lending, Sweden & other Nordic countries Senior unsecured debt Deposits 8 Other private, Sweden Swedish mortgage loans 4 2 Covered bonds Q2 215 * Simplified balance sheet Source: Swedbank 3 Jun, 215 Q

19 Liquidity and funding Covered bond strategy Sweden SEK 3-375bn Covered bond strategy 1% Swedish households financial assets SEKbn 9 9% 8 8% 7 EUR/USD SEK 15-2bn Other* SEK 5-85bn 7% 6% 5% 4% 3% 2% % 1 <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,

20 Liquidity and funding Senior unsecured debt strategy Senior unsecured debt maturity profile SEKbn* 6 Senior unsecured debt Source: Swedbank 3 Jun 215, *nominal amounts 2

21 Liquidity and funding Conservative funding position LCR 136% (Swedish FSA definition FFFS 212:6) NSFR 11% (Basel committee) Issued SEK 133bn of term-funding YTD 215 (excl. AT1 transaction in Feb. 215) Increased funding need to support loan growth Term funding issuance completed and planned Prefunded in excess of 12 months SEKbn Covered bonds Senior unsecured debt SEKbn Survival horizon Q112 Q212 Q312 Q412 Q113 Q213 Q313 Q413 Q114 Q214 Q314 Q414 Q115 Q215 Q315 Q415 Q116 Source: Swedbank, 3 Jun 215, nominal amounts Days forward 21

22 Liquidity and funding Increased long-term funding activity SEKbn Quarterly long-term funding issuance Other Senior unsecured debt Covered bonds Average 214 Q115 Q215 Taking advantage of favourable funding markets Extending maturity profile Credit rating upgrades Extension of maturity profile Number of months Covered bond funding Senior unsecured debt Total capital market funding 2 Q414 Q115 Q215 Source: Swedbank, 3 Jun,

23 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 23

24 Liquidity and funding Liquidity reserve According to the template defined by the Swedish Bankers' Association SEKm Cash and holdings in central banks Deposits in other banks available overnight 879 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) 74 Other Total Additional liquid assets, Group 2, ) 94% of the securities in the liquidity reserve per Q2 215 are rated AAA. The rating requirement is AA-. 2) 89% of the additional assets fulfill 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. Source: Swedbank 3 Jun

25 This is Swedbank - Credit ratings Rating strategy same level as the best rated Nordic banks 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 June 9, 215, 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 S&P (Stable) Moody's (Stable) Fitch (Positive) 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 Aa Covered bonds - AAA - - Aaa * Standalone Rating Source: Swedbank 3 Jun

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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 799.8bn Geographic distribution Sweden 1% Current OC-level 56.9% Swedbank is a labeled issuer of the ECBC Covered Bond Label Foundation ( ) 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 3% Floating 7% Repayment structure 7 Amortising 55% Interest only 45% 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 Jun, 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.% of w hich Single-family housing 57.5% of w hich Tenant ow ner rights 18.2% of w hich Tenant ow ner association 1.4% of w hich Multi-family housing 5.1% Public 1.% Commercial.5% Forest & Agricultural 7.3% 1.% Geographical distribution, Sweden, per cent 3 Jun 215 North 6.3 Norrbotten county (BD) 1.3 Västerbotten county (AC) 2.4 Västernorrland county (Y) 1.4 Jämtland county (Z) 1.2 Middle (including Stockholm) 44.9 Dalarna county (W) 2.1 Gävleborg county (X) 2.1 Värmland county (S) 2.2 Örebro county (T) 2.5 Västmanland county (U) 2.5 Uppsala county ( C) 4. Södermanland county (D) 2.3 Stockholm county (including Stockholm) (AB) 27.2 South (including Göteborg and Malmö) 48.8 Västra götaland county (Including Göteborg) (O) 17.5 Östergötland county (E) 4. Jönköping county (F) 3.6 Halland county (N) 3.8 Kronoberg county (G) 2.1 Kalmar county (H) 3.1 Skåne county (including Malmö) (M) 12.5 Blekinge county (K) 1.6 Gotland county (I).6 1. Source: Swedbank 3 Jun

30 Swedbank s cover pool Cover pool loan-to-value distribution Weighted average LTV 54% 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 1.% 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 215 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 1 Total all types % 1 excluding public sector loans of 1.% 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 ( ) House price sensitivity of the cover pool Current OC-level of 56.9% Over-collateralisation 6% 5% 4% 3% 2% OC, Q215 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) 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) 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 2.5% 1 (Q1 15 Y/Y),.4% 1 (Q1 Q/Q) CPI/CPIF -.4% /.6% (Jun 15 Y/Y) Unemployment ratio 2 8.% / 7.8% 1 (May 15 Y/Y) Debt to GDP 35% (forecast 215) Key Economic Indicators, F 215F 216F Real GDP (Calendar adjusted) CPI index, average Unempl. Rate (15-74), % of labor force Savings ratio (households),% Real disposable income (households) Source: Swedbank Economic Outlook Apr 215 Source: Statistics Sweden and National Debt Office 2 Calculated for the population between years old GDP, growth Q/Q, % The output of the Swedish economy % 4 Import GDP -1 3 Gross investments Public consumption Private consumption Export -4-5 Data up to and including Q Resources Expenditures 1 Seasonally adjusted Source: Statistics Sweden 26 Jun 215 Source: Statistics Sweden 26 Jun,

37 Swedish economy Exports key factor for growth Current account balance as % of GDP Germany Denmark Sweden France Exports and imports trend per month, SEKm Current prices Finland United States Canada United Kingdom Italy Data up to and including May 215 Import Export Source: OECD Economic outlook 97, table 51, Jun 215 Exports by important commodity groups, % 1% 7% 9% 1% 8% 11% 7% 14% Energy Minerals 6% Forest 5% 4% 3% 44% Chemical Engineering Other 2% 1% 14% % 12% 1% 8% 6% 4% 2% % Source: Statistics Sweden, 26 June 215 Top 1 export countries, % Source: Statistics Sweden, 26 Jun 215 Source: Statistics Sweden, 26 Jun

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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 7% 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: Boverket, 211 4

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

42 Swedish housing and mortgage market Swedbank - tightened mortgage standards Average LTV in back book is 59%. Average LTV in new lending is 7% Tightened amortisation standards (e.g. min. interest rate of 7% in stress test) 94% of households with LTV > 7% amortise (81% in back-book) 53% of households with LTV 5-7% amortise (52% in back-book) In total 76% of households amortise (61% in back-book) LTV distribution Amortisation level new lending 75% 7% 65% 6% 55% 5% Q1 215 Q % 9% 8% 7% 6% 5% 4% Single-family, back-book Single-family, new Tenant-owner rights, back-book Tenant-owner rights, new -5% 5-7% LTV >7% Total Source: Swedbank, 3 Jun,

43 Swedish housing and mortgage market Shortage of housing Number of units and persons Housing completions in Sweden Apartment buildings Single-family dwellings Population growth 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) Source: Sweden statistics, the Riksbank and Swedbank, Jun 215 Forecast from municipalities to start up projects for 59 units in 215 and 63 units in 216 (according to survey 1 ) 7 Apartment buildings Single-family dwellings Source: 1 Boverket ( Mortgage market survey

44 Swedish housing and mortgage market Affordability withstands higher indebtedness % Total assets excl. collective insurance Real assets (housing) Debt Source: Swedish Riksbank s Financial Stability report 215:1 (chart 2:1) % Swedish household financial assets and liabilities to disposable income Household interest expenditure in Sweden to disposable income Interest-to-income ratio Historical average Source: Swedish Riksbank s Financial Stability report 215:1 (chart A36) 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 United States Finland Denmark F Source: OECD Economic Outlook 97, table 23, Jun

45 Swedish housing and mortgage market Upward pressure on house prices 3 Sweden, total Total Tenant owner rights (apartments) Single-family houses 3 Stockholm Tenant owner rights (apartments) Single-family houses Gothenburg Tenant owner rights (apartments) Single-family houses Malmoe Tenant owner rights (apartments) Single-family houses Source: Valueguard Index (25=1), 3 Jun,

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 62% 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 28bp Conservative funding and liquidity position survival horizon longer than 12 months assuming closed funding markets, NSFR 11% and LCR 136% Baltic operations self-funded Loan-to-Deposit ratio < 1% % Liquidity & capital % H1 215 NSFR LCR CET1 capital ratio, Basel 3 (RHS) 25 %.2 Credit impairment ratio Q21 Q41 Q211 Q411 Q212 Q412 Q213 Q413 Q214 Q414 Q215 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 7 Profit before impairment Q1 1 Q1 11 Q1 12 Q1 13 Q1 14 Q1 15 Source: Swedbank 3 Jun

49 This is Swedbank Swedbank market leading cost efficiency 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 2 Total expenses Acquistion of Sparbanken Öresund.6.55 C/I ratio Ambition 216 Source: Swedbank 3 Jun H

50 This is Swedbank Sweden s largest retail bank Sweden Population 9.6m Private customers 4.1m Corporate customers 268 Organisations 64 Branches 296 ATMs * Cards 3.9m Employees Latvia Population 2.m Private customers.9m 1 Corporate customers 89 Branches 43 ATMs 45 Cards 1.m Employees 1 53 * ATMs are handled in Bankomat AB ( Estonia Population 1.3m Private customers.8m Corporate customers 134 Branches 38 ATMs 442 Cards 1.1m Employees ~86%* ~1%* * Share of loanbook Lithuania Population 3.m Private customers 1.5m 1 Corporate customers 86 Branches 68 ATMs 457 Cards 1.7m Employees Source: Swedbank Fact book Q Definition of private customers changed compared to Q

51 This is Swedbank Market leading retail franchise in all home markets Largest retail bank and fund manager in Sweden Market shares, Deposits % % 6 6 Deposits Private 5 5 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 215 Source Estonia: Estonian Central Bank, as per May 215 Sources Latvia: Association of Commercial Banks of Latvia (ACBL) & The Financial and Capital Market Commission (FCMC), *as per Dec 214 Source Lithuania: Association of Lithuanian Banks (LBA), **as per Mar

52 This is Swedbank Strong earnings capacity retail bank profile FY Total Income evolution, SEKbn Other Net Gains & Losses on financial items Net Commission Income, other Net Commission Income, Retail Net Interest Income FY 214 Total income geographic distribution Latvia 4% Estonia 6% Lithuania 4% Other 8% Treasury, Trading and Capital Markets 5% Swedish Banking + Large Corporates & Institutions 78% And distribution by business area Asset Management 11% Lending and deposits 64% Other 7% Payment, Cards 8% Share of P&L of associates 3% Insurance 2% Source: Swedbank 31 Dec

53 This is Swedbank Sweden the dominating home market Total lending to the public amounts to SEK 1 358bn (as per Q2 215), out of which around 86% is originated in Sweden Estonia makes up 46% of total lending in the Baltics Lending distributed by countries (Q2 215) Sweden 86.4% SEK 1 174bn Estonia 4.3% Swedish Mortgage loans (private+corp) Latvia 2.1% Other corporate (incl. LC&I, Sweden) Lithuania 2.9% Other* 4.3% Source: Swedbank 31 Mar 215 * Denmark, Norway, Finland and NY Branch 53

54 Asset quality Shipping and Offshore Total lending of SEK 29.5bn (3bn, 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 SEKm Shipping and Offshore Loans net, SEKm Negatively impacted by lower oil prices Source: Swedbank 3 Jun

55 Capital regulation New insolvency order for banks gone concern capital protects depositors and the government Regulatory capital CET1 capital Additional Tier 1 capital 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 2% of RWA or 8% of total liabilities have contributed to loss absorption Fund Size: SEK 53,16bn (28 Feb 15) Swedbank CET1: 2.5% (Q115) Defined exclusions Private loss absorbency Tier 2 capital Other subordinated debt Secured liabilities (incl. covered bonds) Client assets and some liabilities Other liabilities Senior bonds (unsecured) Uninsured non-preferred deposits Other liabilities Exclusions Staff (ex bonus)/tax/ Trade liabilities/dgs contributions Some payment & settlement liabilities Preferred classes (possible if above not sufficient) Uninsured deposits (natural persons + micro + SEM s) DGS (in lieu of insured depositors) Covered deposits Some interbank liabilities Industry loss absorbency (subject to State aid rules) Taxpayer loss absorbency (subject to State aid rules) (Resolution fund) Fiscal backstop Derivatives Discretionary exclusions Uninsured retail, micro & SME deposits 3 rd country debt issued prior to

56 AT1 capital transaction 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. 19.6%* 8.6% 11.% Corrective Measures Restrictive Measures Swedbank CET1 Capital ratio Requirements *Fully loaded CRD IV Pillar 2 CET1 Requirements Pillar 1 CET1 Requirements MDA Restrictions 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 in central bank deposits Q % of wholesale funding < 12 months, SEK 238bn in central bank deposits 1% 9% SEK 673bn 2% SEK 838bn 9% Average maturity profile of outstanding market funding 8% 34% Months 7% 45 6% 57% 5 years % 4% 3% 2% 1% 35% 29% 15% 19% 1-5 years 3-12 months -3 months % 27 Q2 215 Q112 Q212 Q312 Q412 Q113 Q213 Q313 Q413 Q114 Q214 Q314 Q414 Q115 Q215 Total capital market funding Covered bond funding Source: Swedbank, 3 Jun

58 Liquidity and funding Long-term funding maturity profile Benchmark transactions YTD 215 USD 75m, Perp. NC5 (22), AT1, 5.5% - equity conversion USD 1bn 144a Senior, 5Y (22), T+77bp (+ USD 4m 3Y (218) T+65bp) EUR 1bn CB, 7Y (222), Fixed MS-5bp GBP 5m CB, 3Y (218 FRN, 3m L+2bp GBP 3m Senior, 4Y (219), Fixed G+8bp SEK 3bn, Senior 5Y (22), Fixed/FRN, 3m Stibor + 5bp USD 1bn, RegS. CB 5Y (22), Fixed, 3m $L + 37bp EUR 75m Senior 7Y (222), Fixed, MS+45bp Long-term funding maturity profile, by funding source Long-term funding maturity profile, by currency SEKbn SEKbn Senior unsecured debt Covered bonds Other CHF USD EUR 5 5 SEK Source: Swedbank 3 Jun

59 Liquidity and funding Asset encumbrance Type of assets (Balance Sheet items) SEKm Carrying amount of encumbered assets Fair value of encumbered assets Carrying amount of unencumbered assets Fair value of unencumbered assets 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 Type of assets (Off-balance sheet items) SEKm Fair value of encumbered collateral received or ow n debt securities issued 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 1% 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) Source: Swedbank Facts 3 June 215 All amounts according to Swedbank consolidated situation Nominal amount of collateral Fair value of collateral received received or ow n debt or ow n debt securities issued securities issued not available available for encumbrance for encumbrance Collateral received by the reporting institution Purpose for encumbrance (On- and off-balance sheet items) SEKm Matching liabilities, contingent liabilities or securities lent Unencumbered Assets, collateral received and ow n debt securities issued other than covered bonds and ABSs encumbered Carrying amount of selected financial liabilities Derivatives Deposits Debt securities issued Other sources of encumbrance Total

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) NSV (stand alone doc.) Short Term Domestic CP European CP/CD US CP Yankee CD Finnish CD Limit USD 4bn SEK 6bn USD 15bn 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 Registered CB (stand alone doc.) Short Term Domestic CP * 1% guaranteed by parent company - Irrevocable - Unconditional - Timely ** Limited by cover pool size Limit Unlimited** EUR 25bn USD 15bn SEK 15bn Unlimited** SEK 5bn Source: Swedbank, 3 Jun 215 6

61 Swedish housing and mortgage market Swedish FSA s mortgage market report Loan-to-value distribution new lending, % 5 New lending Average LTV: 67% Share of households Amortise, LTV>7%: 9% Amortise, LTV 5-7%: 4% Debt to disp. Income*: 366% over 85 5 *Mortgage loans only LTV Stress test share of households with deficit post interest rate hike, % 8 6 Around 5% of households (with amortisations) will have a deficit if interest rates increase by 5%-points Increased interest rate, percentage points Not amortising Amortising 213 (not amortising) Source: Swedish FSA s memorandum The Swedish Mortgage Market 215, published 14 th April 215 and Swedbank 61

62 Swedish housing and mortgage market Real estate prices Sweden 12 months development Single-family homes 1 Tenant-owner rights 2 Combined 3 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% 2% 16% House price index, Sweden 3 25=1 Single-family homes May/15 13% 18% 15% 12 Jun/15 12% 19% 14% Source: Valuegard (Based on data from Mäklarstatistik), 1 HOXHOUSESWE, 2 HOXFLATSWE, 3 HOXSWE 62

63 Real estate prices Baltic countries EUR/m 2 /No. of deals 1 8 Tallinn Jun-5 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 EUR/m 2 /No. of deals 1 8 Riga Jun-5 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 No. of deals EUR/m2 EUR/m 2 /No. of deals 1 8 Vilnius Jun-5 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 No. of deals EUR/m2 No. of deals EUR/m2 63

64 Appendix Swedbank contacts and financial calendar For further information, please contact: Helo Meigas, Head of Group Treasury Financial calendar Q3 Interim report 2 Oct 215 Q4 Interim report 2 Feb 216 Gregori Karamouzis, Head of Investor Relations gregori.karamouzis@swedbank.com Bogdan Woronowicz, Debt Investor Relations bogdan.woronowicz@swedbank.com Peter Stenborn, Debt Investor Relations peter.stenborn@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

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. 65