Swedbank investor presentation. October 2015

Transcription

1 Swedbank investor presentation October 215

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 48 2

3 Executive summary Swedbank FY 214 Improved market position Sweden s largest retail bank with a leading position in our three Baltic home markets Stable earnings RoE of 15% Strong asset quality low share of impaired loans ratio, gross (41bps) and credit impairments ratio (7bps) 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 21.2% Source: Swedbank FY 214 interim report and Fact book Q4 214 *According to EBA stress test and Swedish central bank and Swedish FSA s financial stability report, Dec 214 Swedbank Q3 215 Stable result in a low interest rate environment ROE: 13.5% (13.4) Cost/income ratio:.42 CET1 capital ratio: 23.% (fully loaded CRD IV) with requirements of 19.6% Credit impairment ratio:.4% Share of impaired loans:.35% Total provision ratio for impaired loans: 58% Liquidity and funding: LCR: 135%, NSFR: 14% Credit ratings: A+(S)/A+(P)/Aa3(S) from S&P/Fitch/Moody s Source: Swedbank Q3 215 Fact book 3

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5 1. Quarterly financial update 5

6 Quarterly financial update - Swedish Banking Successful customer migration southern region SEKm Q3 15 Q2 15 QoQ Net interest income Net commission income Other income Total income Total expenses Profit before impairments Credit impairments Ratios Q3 15 Q2 15 ROE, % C/I ratio Customer migration completed 1 new customers Lower deposit margins Higher mortgage margins Mortgage loan volume growth Weaker income from asset management Solid asset quality Volumes, SEKbn Q3 15 Q2 15 QoQ Loans Deposits Source: Swedbank, 3 Sep, 215 6

7 Quarterly financial update - Baltic Banking Market leader SEKm Q3 15 Q2 15 QoQ Net interest income Net commission income Other income Total income Total expenses Loan volume growth Solid asset quality Acquisition of retail portfolios - around 127 new customers Profit before impairments Credit impairments Tax Net profit Ratios Q3 15 Q2 15 ROE, % (excl. one-off tax in Q2) C/I ratio.39.4 Volumes, SEKbn Q3 15 Q2 15 QoQ Loans Deposits Source: Swedbank, 3 Sep, 215 7

8 Quarterly financial update - Large Corporates & Institutions Weaker result SEKm Q3 15 Q2 15 QoQ Net interest income Net commission income Net gains and losses Other income Total income Total expenses Profit before impairments Credit impairments Lower NGL Lower activity Widening credit spreads Stable NII Lower deposit margins Loan volume growth from Q2 Solid asset quality Ratios Q3 15 Q2 15 ROE, % (excl. one-off tax in Q2) C/I ratio Volumes, SEKbn Q3 15 Q2 15 QoQ Loans Deposits Source: Swedbank, 3 Sep, 215 8

9 Quarterly financial update - Group results Good cost control increased investment needs SEKm Q3 15 Q2 15 QoQ Net interest income Net commission income Net gains and losses Other income Total income Total expenses Profit before impairments Credit impairments Other impairments Tax Net profit Stable NII Mortgage volume growth Mixed margins Lower assets under management Lower NGL Lower activity Widening credit spreads Good cost development Strong asset quality Ratios Q3 15 Q2 15 ROE, % Cost/income ratio CET1 capital ratio, % Source: Swedbank, 3 Sep, 215 9

10 Quarterly financial update - Capital Reduced REA SEKbn Risk exposure amount REA net decrease of SEK 2.6bn Lower market risk FX fluctuations impact negatively Q2 215 Exposure change Rating migration (PD) LGD changes Other credit risk CVA risk Market risk Operational risk Q3 215 Increase Decrease Source: Swedbank, 3 Sep, 215 1

11 Quarterly financial update - Capital Strong capitalisation no excess capital CET1 capital ratio, % CET1 capital ratio improved CET1 capital increase REA decrease SREP result in line with expectations Continued regulatory uncertainty * Swedbank s estimate based on SFSA s announced capital requirements, including fully implemented buffers and Pillar 2 requirements Source: Swedbank, 3 Sep,

12 Quarterly financial update - Asset quality Strong asset quality Credit impairments, SEKm Q3 15 Q2 15 QoQ Swedish Banking Baltic Banking %.2.1 Credit impairment ratio Large Corporates & Institutions Swedbank Group Ratios Q3 15 Q Q31 Q111 Q311 Q112 Q312 Q113 Q313 Q114 Q313 Q115 Q315 Credit impairment ratio, %.4. Share of impaired loans, gross % Total provision ratio for impaired loans, % Source: Swedbank, 3 Sep,

13 2. Capital considerations 13

14 Capital position Composition of Swedbank s CET1 and total capital ratio 28.9%* requirements 24.8%* 23.%* 2.% Systemic Risk in Pillar % Restrictive Measures Corrective Measures MDA Restrictions 19.6%* 2.% Systemic Risk in Pillar 2 5.7%.9% 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 12.% 11.% 7.1% 1.2% 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 Sep, 215 estimated CET1 and Total capital requirement based upon the Swedish FSA s memorandum (8/9/214) 14

15 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 Q3 215 Requirement Capital Senior > 1Year Amount Set individually, by Riksgälden (National debt office) BRRD proposal: 8% of liabilities or 2 x Basel 1 floor Minimum of 16-2% 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 % of liabilities & own funds 2 x Basel 1 floor * Assuming leverage ratio requirement of 3% 2% of REA 2 x Leverage + P1 buffers ratio Swedbank Q315 Source: Swedbank, 3 Sep,

16 Asset quality Asset portfolios low risk Group loan book* Q3 215, total SEK 1 37bn 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 Sep, 215 * 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 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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19 3. Liquidity and funding 19

20 Liquidity and funding Core balance sheet* structure SEKbn 1 8 Assets SEKbn 1 8 Liabilities Lithuania Latvia Estonia Other corporate lending, Sweden & other Nordic countries Suppl. cap CET1 Senior unsecured debt Deposits 8 Other private, Sweden Swedish mortgage loans 4 2 Covered bonds Q3 215 * Simplified balance sheet Source: Swedbank 3 Sep, 215 Q

21 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 Sep,

22 Liquidity and funding Senior unsecured debt strategy Senior unsecured debt maturity profile SEKbn* 6 Senior unsecured debt Source: Swedbank 3 Sep 215, *nominal amounts 22

23 Liquidity and funding Conservative funding position LCR 135% (Swedish FSA definition FFFS 212:6) NSFR 14% (Basel committee) Issued SEK 188bn of term funding YTD 215 Increased funding need to support loan growth Term funding issuance completed and planned Prefunded for more than 12 months SEKbn nominal amounts 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 Sep Days forward 23

24 Liquidity and funding Increased long-term funding activity Quarterly long-term funding issuance Funding per Q3 215, SEK 188bn NSFR at 14 per cent SEKbn Other Senior unsecured debt Covered bonds Average 214 Q115 Q215 Q Net Stable Funding Ratio 14 Per cent Q3 215 Source: Swedbank 3 Sep 215 NSFR 24

25 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 25

26 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 519 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) 754 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 Sep

27 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 Sep

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29 4. Cover pool data Swedbank is a labeled issuer of the ECBC Covered Bond Label Foundation ( ) 29

30 Swedbank s cover pool Cover pool data 1 Rating, S&P / Moody s AAA / Aaa Total pool size SEK 81.4bn Geographic distribution Sweden 1% Current OC-level 61.6% 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) 53% Non-performing loans 5 None Fixed /Floating interest loans 6 Fixed 29% Floating 71% Repayment structure 7 Amortising 56% Interest only 44% Average loan size SEK Number of loans outstanding Number of borrowers Number of properties Dynamic pool Yes 1 As per 3 Sep, Public sector loans not included 3 Index valuation as per 3 Sep, 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 Sep 215 3

31 Swedbank s cover pool Cover pool data Swedbank is a labeled issuer of the ECBC Covered Bond Label Foundation ( ) Type of loans Residentials 91.3% of w hich Single-family housing 57.7% of w hich Tenant ow ner rights 18.5% of w hich Tenant ow ner association 1.2% of w hich Multi-family housing 4.9% Public.9% Commercial.6% Forest & Agricultural 7.2% 1.% Geographical distribution, Sweden, per cent 3 Sep 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) 44.8 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) 27.1 South (including Göteborg and Malmö) 48.9 Västra götaland county (Including Göteborg) (O) 17.5 Östergötland county (E) 4.1 Jönköping county (F) 3.6 Halland county (N) 3.8 Kronoberg county (G) 2.1 Kalmar county (H) 3. Skåne county (including Malmö) (M) 12.6 Blekinge county (K) 1.6 Gotland county (I).6 1. Source: Swedbank 3 Sep

32 Swedbank s cover pool Cover pool loan-to-value distribution Weighted average LTV 53% 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.8% 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 Sep

33 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.9% Source: Swedbank 3 Sep

34 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 61.6% Over-collateralisation 7% 6% 5% 4% 3% 2% OC, Q315 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 Sep

35 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: 35

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37 5. Swedish economy 37

38 Swedish economy Continued strong fiscal position Kingdom of Sweden rated Aaa/AAA/AAA GDP growth 3.3% 1 (Q215 Y/Y), 1.1% 2 (Q215 Q/Q) CPI/CPIF.1% / 1.% (Sep 15 Y/Y) Unemployment ratio 3 6.4% / 7.2% 2 (Aug 15 Y/Y) Debt to GDP 35% (forecast 215) Key Economic Indicators, F 216F 217F 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 Aug 215 Source: Statistics Sweden and National Debt Office 3 Calculated for the population between years old 4 3 GDP, growth Q/Q, % 2 6 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 Calendar adjusted, 2 Seasonally adjusted Source: Statistics Sweden Aug 215 Source: Statistics Sweden 26 Jun,

39 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 6 4 Import Export -8 2 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 Aug 215 Top 1 export countries, % Source: Statistics Sweden, Aug 215 Source: Statistics Sweden, Aug

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41 6. Swedish housing and mortgage market 41

42 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,

43 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 (SFSA) (Min 15% own equity) Amortisation (FSA proposal) 2% annual amortisation >7% LTV 1% annual amortisation >5% LTV Data up to and including August Risk-weight floor of 25% on mortgage loans Source: Swedbank, Statistics Sweden, data as per Aug

44 Swedish housing and mortgage market Swedbank - tightened mortgage standards Average LTV in back book is 57%. Average LTV in new lending is 69% Tightened amortisation standards (e.g. gross Debt-to-Income cap of 5%) 95% of households with LTV >7% amortise in Q3 (86% in back-book) 64% of households with LTV 5-7% amortise in Q3 (54% in back-book) In total 76% of households amortise in Q3 (62% in back-book) 75% LTV distribution 1% Amortisation level new lending 7% 9% 65% 6% 8% 7% 6% 55% 5% 5% Q1 215 Q2 215 Single-family, back-book Single-family, new Tenant-owner rights, back-book Source: Swedbank, 3 Sep, 215 Tenant-owner rights, new Q % LTV -5% 5-7% >7% Total 44

45 Swedish housing and mortgage market Shortage of housing Number of units and persons Housing completions in Sweden Apartment buildings Single-family dwellings Population growth % 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 Housing starts in H1 215 might show trendshift 5 4 Number of units H115 Source: Sweden statistics Aug

46 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

47 Swedish housing and mortgage market Upward pressure on house prices Sweden, total Stockholm 3 Total Tenant owner rights (apartments) Single-family houses 3 Tenant owner rights (apartments) STOCKHOLM Single-family houses Total Gothenburg Tenant owner rights (apartments) Single-family houses Malmoe Tenant owner rights (apartments) Single-family houses 25 3 GÖTEBORG 2 MALMÖ Source: Valueguard Index (25=1), 3 Sep,

48 Appendix 48

49 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 34bp Conservative funding and liquidity position survival horizon longer than 12 months assuming closed funding markets, NSFR 14% and LCR 135% Baltic operations self-funded Loan-to-Deposit ratio < 1% % Liquidity & capital % Q3 215 NSFR LCR CET1 capital ratio, Basel 3 (RHS) Source: Swedbank 3 Sep 215 % Credit impairment ratio Q31 Q111 Q311 Q112 Q312 Q113 Q313 Q114 Q313 Q115 Q315 49

50 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 Q3 1 Q3 11 Q3 12 Q3 13 Q3 13 Q3 15 Source: Swedbank 3 Sep 215 5

51 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 Sep YTD

52 This is Swedbank Sweden s largest retail bank Sweden Population 9.6m Private customers 4.1m Corporate customers 267 Organisations 63 Branches 291 ATMs * Cards 4.m Employees Latvia Population 2.m Private customers.9m Corporate customers 89 Branches 42 ATMs 42 Cards 1.m Employees 1 51 * ATMs are handled in Bankomat AB ( Estonia Population 1.3m Private customers.8m Corporate customers 133 Branches 37 ATMs 437 Cards 1.1m Employees ~86%* ~1%* * Share of loanbook Lithuania Population 3.m Private customers 1.5m Corporate customers 83 Branches 68 ATMs 458 Cards 1.7m Employees Source: Swedbank Fact book Q

53 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 Aug 215 Source Estonia: Estonian Central Bank, as per Aug 215 Sources Latvia: Association of Commercial Banks of Latvia (ACBL) & The Financial and Capital Market Commission (FCMC), *as per Jun 215 Source Lithuania: Association of Lithuanian Banks (LBA), **as per Jun

54 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

55 This is Swedbank Sweden the dominating home market Total lending to the public amounts to SEK 1 37bn (as per Q3 215), out of which around 86% is originated in Sweden Estonia makes up 47% of total lending in the Baltics Lending distributed by countries (Q3 215) Sweden 86.4% SEK 1 184bn Estonia 4.4% Swedish Mortgage loans (private+corp) Latvia 2.1% Other corporate (incl. LC&I, Sweden) Lithuania 2.8% Other* 4.2% Source: Swedbank 3 Sep 215 * Denmark, Norway, Finland and NY Branch 55

56 Asset quality Shipping and Offshore Total lending of SEK 28.3bn Market activity slowed down 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 Sep

57 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

58 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 58

59 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 269bn placed with central bank 1% 9% SEK 673bn 2% SEK 954bn 8% Average maturity profile of outstanding market funding 8% 34% Months 7% 45 6% 55% 5 years % 4% 35% 1-5 years 3-12 months -3 months % 15% 15 2% 1 1% 29% 23% 5 Q112Q212Q312Q412Q113Q213Q313Q413Q114Q214Q314Q414Q115Q215Q315 % 27 Q3 215 Total capital market funding Covered bond funding Source: Swedbank, 3 Sep

60 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 EUR 5m Senior 5Y (22), FRN, 3m +4bp EUR 1.25bn CB, 5Y (22), Fixed MS+7bp 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 Sep 215 6

61 Liquidity and funding Asset encumbrance Type of assets (Balance Sheet items) SEKm Encumbered assets Unencumbered assets, additional assets available for secured funding 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 Encumbered received collateral Unencumbered received collateral available for secured funding 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) SEKm Encumbered assets Carrying amount of selected financial liabilities of w hich Derivatives of w hich Deposits of w hich Debt securities issued 5 5 Other sources of encumbrance Total Source: Swedbank Facts 3 Sep 215 All amounts according to Swedbank consolidated situation 61

62 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 Sep

63 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 63

64 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 (apartments), 3 HOXSWE 64

65 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 Source: Swedbank, 3 Jun 215 No. of deals EUR/m2 65

66 Appendix Swedbank contacts and financial calendar For further information, please contact: Helo Meigas, Head of Group Treasury Gregori Karamouzis, Head of Investor Relations Financial calendar Q4 Interim report 2 Feb 216 Annual Report Feb 216 AGM 5 Apr 216 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

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