Swedbank Investor presentation

Transcription

1 Swedbank Investor presentation December 2018

2 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. 2

3 Table of contents Executive summary 4 1 Swedbank overview 5 2 Quarterly financial update 11 3 Capital considerations 21 4 Liquidity and funding 27 5 Cover pool data 36 6 Swedish and Baltic economy 43 7 Swedish housing and mortgage market 52 8 Appendix 67 3

4 Executive summary Strong financial position Market leading position in all four home markets Sweden, Estonia, Latvia and Lithuania ROE target of at least 15% Strong asset quality Solid liquidity and funding position survival horizon more than 12 months One of the best capitalised banks in Europe with large buffers to both MDA and Loss absorption trigger levels (According to EBA stress test, Nov 2018) Dividend policy of 75% - for six consecutive years Swedbank (Q2 2018) Strong core revenues ROE: 16.9% (19.2%) Top 10 shareholders 1. Sparbanksgruppen, 10.5% 2. Folksam, 7.0% 3. AMF, 5.5% 4. Swedbank Robur, 4.9% 5. Alecta, 4.9% 6. Sparbanksstiftelser, 3.4% 7. Vanguard, 2.5% 8. BlackRock, 2.5% 9. SEB Fonder, 2.2% 10. Norges Bank, 2.1% Swedish owners, 59.1% Int l owners, 40.9% Sweden Our four home markets Cost/income ratio: 0.36 (0.36) CET1 capital ratio: 24.3% (23.6%) with requirements of 21.5% Leverage ratio: 4.8% (4.5%) Credit impairment ratio: 0.03% (-0.03%) Total credit impairment provision ratio: 0.33% (0.33%) Share of loans in Stage 3, gross: 0.67% (0.67%) Provision ratio for loans in stage 3: 30% (29%) Liquidity and funding: LCR: 148%, NSFR: 110% Credit ratings: AA-(S)/AA-(S)/Aa2(S) from S&P/Fitch/Moody s Estonia Latvia Lithuania 4

5 This is Swedbank 1. Swedbank overview

6 Swedbank creates value Strategy % 30 SEK 14 Return on Equity >15% target YTD 2018 Return on equity (LHS) CET1 capital ratio (LHS) Dividend per share (RHS) % (YTD) Common Equity Tier 1 ratio One of the highest among European banks 24.3% Dividend per share 75% payout ratio for 6 th year in a row SEK

7 Swedbank Low-risk, cost efficient and well capitalised This is Swedbank Large and diversified customer base Leading retail bank in our 4 home markets 7m PRIVATE CUSTOMERS Focus on Mid-corp and SME segments 18% corporate lending market share in Sweden 600k CORPORATE CLIENTS Stable profitability Return on equity target of at least 15% 16.9% Low risk Credit impairment ratio 0.03% Market-leading cost efficiency Cost income ratio 0.36 Solid capitalisation 280bps buffer to regulatory requirement 24.3% 7

8 Market leading position in our home markets This is Swedbank Loans (private)* Loans (corporate)* Deposits (private) Deposits (corporate) Payments** Funds 23% 18% 20% 16% 36% 21% SWEDEN 77% 82% 80% 84% 64% 79% ESTONIA 46% 54% 37% 63% 45% 43% 41% 42% 55% 57% 59% 58% LATVIA 31% 69% 18% 82% 34% 66% 19% 81% 50% 50% 42% 58% LITHUANIA 34% 66% 19% 81% 40% 60% 26% 74% 49% 51% 37% 63% * Excluding the Swedish National Debt Office and repurchase agreements ** BankGiro for Sweden, domestic payment transactions (Estonia, Latvia, Lithuania) = Swedbank 8

9 Strong financial position paving the way for innovation & sustainability This is Swedbank Low risk Stable earnings Market-leading cost efficiency Liquidity and capital ratios (%) Profit before impairments (SEK bn) Total expenses (SEK bn) NSFR LCR* CET1 ratio, CRDIV (RHS) Credit impairment (bps) Return on equity (%) Cost / income ratio (%) -10 Q3 13 Q3 14 Q3 15 Q3 16 Q3 17 Q Q3 13 Q3 14 Q3 15 Q3 16 Q3 17 Q Disposal one-off YTD Acquisition one-off Cap Continuously innovative Positioned to benefit from continued digitalization Large retail customer base and scalable products Adaptive IT-infrastructure & organisation Customer driven availability Digitally focused organisation Digital interactions with our 7.3m private customers (bn) E Source: Swedbank Fact book 9

10 Stable and profitable business mix Retail bank profile This is Swedbank Total income breakdown 5% 9% Other 28% NGL Net interest income 85% of total loans in Sweden 50% Swedish mortgages Baltic banking very profitable 10% of Group lending 20% of Group operating profit, FY % 2017 NCI NII Net Commission Income Sweden s largest fund manager (SEK1.2trn AuM) 5th largest card acquirer & 10th largest card issuer in Europe 2017 Total income Other Income Solid recurring revenue of around SEK 2bn per annum from Net insurance Entercard Savings banks / associates Lending & deposits (63%) Other (13%) Asset Management (11%) Payment, Cards (9%) Treasury, Trading & Capital Markets (4%) Source: Swedbank Fact book

11 Quarterly financial update 2. Quarterly financial update

12 Group financial highlights, TOTAL INCOME SEK 11.2bn Total income, SEKbn Q Q Q Q Continued loan volume growth Strong net commission income from cards and asset management Total expenses, SEKbn TOTAL EXPENSES SEK 4.0bn Underlying expenses in line with FY 2018 guidance 0 Q Q Q Q Credit impairments, SEKm CREDIT IMPAIRMENTS SEK 117m Q Q Q Q Solid asset quality KEY RATIOS ROE C/I ratio Credit impairment ratio CET1 capital ratio NSFR 16.9% % 24.3% 110% 12

13 Group result Higher net interest income Quarterly financial update NII, SEKm Continued loan volume growth Stable margins Lower resolution fund fee One more day in the quarter Less favorable USD funding market Q Loan volumes Margins Resolution fund and deposit guarantee fee Day count FX Treasury & Other 13

14 Group result Strong net commission income Quarterly financial update NCI, SEKm Seasonally higher cards income Asset management income supported by positive asset value development and mutual fund inflows Q Cards & Payments Asset management Lending & guarantees Other 14

15 Group results Stable underlying revenue generation NGL, SEKm 525 Other Income, SEKm 723 Other income Q Q Q Q UC, one-off Q Q Q Q Stable client trading activity Positive valuation effect on derivatives Negative impact from higher covered bond buy-back volumes Negative impact from widening credit and basis swap spreads Positive impact from changed valuation of Visa shares Quarterly financial update Continued good performance in recurring revenue items insurance, Entercard, savings banks/associates 15

16 Underlying expenses in line with FY2018 guidance Total Expenses FY2018 guidance, SEK Original expense guidance of below SEK 17bn -200m Restructuring charge release Main currencies breakdown in cost base 2% 3% USD NOK 19% EUR 76% SEK FX sensitivity comes mainly from EUR +300m +150m FX Pension cost Market-dependent headwinds SEK has depreciated ~10% YoY Index 100= Oct 2, FX impact YTD 2018 vs YTD 2017, SEK Oct 2017 Nov 2017 Dec 2017 Jan 2018 Feb 2018 Mar 2018 USD EUR NOK Trend (EUR) Apr 2018 May 2018 Jun 2018 Jul 2018 Aug 2018 Sep 2018 Oct 2018 Income: 469m Expenses: 189m Income benefit from FX outweighs impact on expenses Bar chart proportions for illustration purposes only 16

17 Group results Strong core revenues Quarterly financial update SEKm Q3 18 Q2 18 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 Continued mortgage and corporate loan volume growth Strong net commission income supported by solid macroeconomic fundamentals Lower Group Treasury income Expenses in line with FY guidance Solid asset quality One-off income of SEK 677m in Q2 (UC) Ratios Q3 18 Q2 18 ROE, % C/I ratio CET1 capital ratio, %

18 Capital Strong capitalisation no excess capital Quarterly financial update CET1 capital ratio, % 23.9% 24.6% 24.8% 23.6% 24.3% 21.5% CET1 capital increased by SEK 1.4bn Positive effect from net profit of SEK 1.0bn excl. dividend Positive IAS19 pension valuation effect of SEK 0.2bn Q Q Q Q CET1 capital ratio requirement REA decreased by SEK 7bn Buffer of around 280bps above minimum requirements 18

19 Capital Decreased Risk Exposure Amount (REA) Quarterly financial update REA, SEKbn REA decreased by SEK 7bn Positive collateral valuation effect -7.3 Positive FX effect Q Credit risk Market risk CVA risk 19

20 Group Solid asset quality Quarterly financial update Credit impairments, SEKm Q3 18 Q2 18 QoQ Swedish Banking Baltic Banking Large Corporates & Institutions Swedbank Group Resilient asset quality in all business segments Ratios Q3 18 Q2 18 Credit impairment ratio, % Share of Stage 3 loans, gross % Total credit impairment provision ratio, %

21 Capital fully loaded CRD IV 3. Capital considerations

22 Pillar 1 Pillar 2 Composition of Swedbank s CET1 and total capital ratio requirements Capital fully loaded CRD IV 280bp 32.1% Automatic MDA Restrictions 21.5% 2.0% 6.8% 1.5% 2.5% 1.3% 3.0% 4.5% 24.3% 13.0% 11.3% + AT1: 0.7% + T2: 0.9% + AT1: 0.2% + T2: 0.3% + AT1: 1.5% + T2: 2.0% 27.2% 2.0% 8.5% 1.9% 2.5% 1.3% 3.0% 8.0% Swedbank CET1 Requirements Swedbank CET1 Capital Ratio Swedbank Total Capital Requirements 17.3% 14.8% Swedbank Total Capital ratio Systemic Risk charge in Pillar 2 25% REA Mortgage Floor Individual Pillar 2 charge Capital Conservation Buffer Countercyclical buffer (2.0%) Systemic Risk Buffer Minimum CET1 Requirement Available Distributable Items Swedbank AB (parent company) FY 2017 Share premium reserve Retained earnings Available distributable items** Change due to IFRS Dividend* Comprehensive income, Q other 277 ADI * paid out in March 2018 ** Based on fully audited numbers The calculation of the ADI is based on the Annual report, why this exercise as per should be seen as an example based on changes during the year. 22

23 Pillar 1 Pillar 2 Swedish FSA to move Pillar 2 risk-weight floor for mortgage loans to Pillar 1 Capital fully loaded CRD IV Automatic MDA Restrictions 14.6% 2.0% 1.0% 2.5% 1.6% 3.0% 4.5% New Proposal CET1 requirements 180bp 16.4% 4.8% 11.6% New Proposal Swedbank CET1 Capital Ratio + AT1: 0.1% + T2: 0.2% + AT1: 1.5% + T2: 2.0% 18.4% 2.0% 1.3% 2.5% 1.6% 3.0% 8.0% New Proposal Total Capital Requirements 21.6% 6.5% 15.1% New Proposal Swedbank Total Capital ratio Systemic Risk charge in Pillar 2 Individual Pillar 2 charge Capital Conservation Buffer Countercyclical buffer (2.0%) Systemic Risk Buffer Minimum CET1 Requirement CET1 capital and CET1 capital requirement in SEK largely unchanged buffer intact MDA buffer reduced to SEK 30bn (SEK 55bn) Continued comfortable distance to loss absorption trigger 23

24 Regulatory uncertainty remains Capital fully loaded CRD IV Basel proposal largely as expected Awaiting final details from EU and then Swedish regulator on new standardised approach Likely long phasing in period potentially until 2027 Comfortable buffers to current capital requirements supported by high capital generation capacity No need to review current dividend policy on the back of the proposal EBA package Revisions of the IRB model framework Swedish FSA expected to clarify impact on capital requirements and timing of implementation Under current time framework banks using IRB models will have to comply by the end 2020 Q

25 MREL needs in line with expectations no imminent issuance plan Capital fully loaded CRD IV Requirements for 2018 set and published by the Swedish National Debt office (NDO) on 20 December 2017 Swedbank MREL requirements, SEKbn* 7.3% based on Total liabilities + Own funds (TLOF) 34.8% based on Risk Exposure Amount (REA) Transition period until 1 Jan, 2022 Already in compliance with current senior unsecured debt outstanding Issuance need to the equivalent of around SEK 91bn in subordinated MREL eligible securities to meet requirement by 1 Jan 2022 Sweden to adopt EU insolvency law Expected by year end 2018 Loss absorption amount Swedbank total capital *Based on numbers, **Nominal amount Recapitalisation amount Senior unsecured debt >1Y** 25

26 Asset portfolios low risk Group loan book*, total SEK 1 574bn Hotels and restaurants, Retail Shipping and offshore, Transportation Manufacturing 8% 30% 25% EBA Stress test 2018 CET1 capital ratio, restated year severe scenario Asset quality Other corporate lending Other property management Residential properties Agriculture and forestry 7% 15% 20% 15% 10% % Household loans (90% mortgages) 70% 0% Handelsbanken SEB Nordea Swedbank Loan distribution Sweden Baltic banking 31% 69% Private 45% Corporate 55% Private Corporate Tenant ow ner associations * Loans to the public excl. loans to credit institutions and SNDO 26

27 Liquidity and funding 4. Liquidity and funding

28 Core balance sheet structure SEKbn Assets SEKbn Lithuania Latvia Estonia Liabilities CET1 Suppl. capital Senior unsecured debt Simplified balance sheet Liquidity and funding Other corporate lending, Sweden & other Nordic countries Deposits 800 Other private, Sweden Swedish mortgage loans Covered bonds

29 Covered bond strategy Liquidity and funding Covered bond strategy Sweden SEK bn 100% 90% Swedish households financial assets SEKbn % % % EUR/USD SEK bn 50% 40% 30% Other 20% 10% SEK 20-50bn 0% <5Y 3-7Y >7Y Maturity, years Deposits, cash and retail bonds (LHS) Pension savings and mutual funds (LHS) Total financial assets (RHS) Equities (LHS) Other financial assets (LHS) 29

30 Senior unsecured debt strategy Liquidity and funding SEKbn* 60 Senior unsecured debt maturity profile Senior unsecured debt *Nominal amount 30

31 Conservative funding position LCR 148% (EU 2015/61) Liquidity and funding NSFR 110% (Basel committee) Issued around SEK 104bn YTD (in addition, around SEK 8bn in Tier 2) Initial plan to issue around SEK 145bn in 2018 has been revised down due to deposit inflow Term funding issuance completed and planned Prefunded for more than 12 months SEKbn SEKbn Covered bonds Senior unsecured debt 800 Planned, covered bonds Planned, senior unsecured debt 700 Survival horizon Tier Days forward 31

32 Long-term funding maturity profile Liquidity and funding Long-term funding maturity profile, by funding source SEKbn Senior unsecured debt Covered bonds 200 Long-term funding maturity profile, by currency SEKbn Other GBP USD EUR SEK

33 Private placements active in both covered bonds and senior unsecured debt Liquidity and funding All major currencies Bullet format, FRN or Fixed EUR 20m equivalent minimum size Sweet spots: Senior: 2.5-5Y Covered: 3-8Y Longer tenors also possible Open for larger private placements Open to tap existing bonds Listing is optional FRN s (SEK and EUR) issued with a strike adjustment spread * Program formats available: Senior unsecured debt: MTN, NSV and potentially USD 144a format Covered bonds: MTN, RCB and Norwegian CB program *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 33

34 Liquidity reserve According to the template defined by the Swedish Bankers' Association Liquidity and funding Cash and holdings in central banks Deposits in other banks available overnight 200 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 222 Securities issued by financial corporates (excl. covered bonds) 215 Other Total * According to the template defined by the Swedish Bankers' Association SEKm 1) Including loans to the Sw edish Ntional Debt Office 2) 95% of the securities in the liquidity reserve per are rated AAA. The rating requirement is AA-. 34

35 Rating Liquidity and funding On September 27, 2018, Moody s downgraded Swedbank s high-trigger Additional Tier 1 (AT1) rating to Ba1 (Baa3) following the Swedish FSA's decision to move the risk-weight floor for Swedish mortgages from pillar II to pillar I. At the same time Swedbank s long-term deposit and senior unsecured debt ratings were affirmed at Aa2, reflecting Moody's expectations of the bank's issuance of additional loss-absorbing debt in response to bank-specific MREL (Minimum Requirements for own funds and Eligible Liabilities) requirements set by the Swedish resolution authority. November 24, 2017, S&P affirmed the rating of Swedbank at AA-/A-1+, and revised the outlook to stable. The rating reflect Swedbank s strong business position, given the market-leading retail position, strong revenue performance, and efficiency, as well as prudent management and strategy. S&P also assess the capital and earnings as strong, reflecting the strong earnings capacity. The stable outlook on Swedbank resilient earnings and capital as Sweden's economy benefits from improvements in Europe's economic environment and the domestic housing market adjusts to higher volumes and stricter amortization requirements. May 26, 2016, Fitch upgraded the rating to AA- from A+, 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. Short Long SACP 1 Short Long BCA 1 Short Long VR 1 Swedbank A-1+ AA- a+ P-1 Aa2 a3 F1+ AA- AA- Swedbank Mortgage A-1+ AA- - P-1 Aa Covered bonds - AAA Aaa Standalone Rating S&P (Stable) Moody's (Stable) Fitch (Stable) 35

36 Swedbank is a labeled issuer of the ECBC Covered Bond Label Foundation ( ) 5. Cover pool data

37 Cover pool data 1 Rating, S&P / Moody s Total pool size AAA / Aaa SEK 959.8bn Geographic distribution Sweden 100% Current OC-level 98.6% Weighted average seasoning 2 67 months Average LTV 3, 4 WA LTV on property level (Max LTV) 51% Non-performing loans 5 None Repayment structure 7 Amortising 70% Interest only 30% Average loan size SEK Number of loans outstanding Number of borrowers Number of properties Swedbank is a labeled issuer of the ECBC Covered Bond Label Foundation ( ) Fixed /Floating interest loans 6 Fixed 29.5% Floating 70.5% Dynamic pool 1 As per 30 Sep, sector loans not included 3 Index valuation as per June, Maximum LTV: Residential 75%, Commercial 60%, Forest and Agriculture 70% 5 Past due loans > 60 days are not eligible for the cover pool 6 Floating interest loans < 365 days 7 Property level of cover pool Yes 37

38 Cover pool data Swedbank is a labeled issuer of the ECBC Covered Bond Label Foundation ( ) Type of loans 30 Jun (based on loan volume) 2018 Residentials 92.3% of w hich Single-family housing 57.1% of w hich Tenant ow ner rights 21.0% of w hich Tenant ow ner association 9.3% of w hich Multi-family housing 4.9% 0.6% Commercial 0.8% Forest & Agricultural 6.3% 100.0% Population 31 Dec (thousands) 2017 Sw eden Stockholm, county Västra Götaland, county (incl. Gothenburg) Skåne, county (incl. Malmoe) Geographical distribution, Sw eden, per cent 30 Sep (based on loan volume) 2018 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) 44.0 Dalarna county (W) 2.0 Gävleborg county (X) 2.1 Värmland county (S) 2.0 Örebro county (T) 2.6 Västmanland county (U) 2.4 Uppsala county ( C) 4.1 Södermanland county (D) 2.1 Stockholm county (including Stockholm) (AB) 26.7 South (including Göteborg and Malmö) 49.5 Västra götaland county (Including Göteborg) (O) 17.9 Östergötland county (E) 4.3 Jönköping county (F) 3.5 Halland county (N) 4.2 Kronoberg county (G) 2.1 Kalmar county (H) 2.9 Skåne county (including Malmö) (M) 12.5 Blekinge county (K) 1.4 Gotland county (I)

39 Cover pool loan-to-value distribution Weighted average LTV on property level 51% Swedbank is a labeled issuer of the ECBC Covered Bond Label Foundation ( ) LTV distribution per property 1 LTV distribution by volume 1, 2 30% 30% 25% 25% 20% 20% 15% 15% 10% 10% 5% 5% 0% % loans of 0.6% 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 ( 39

40 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 120% 120% 100% 100% 80% 80% 60% 60% 40% 40% 20% 20% 0% Single-family homes Tenant owner rights (apartments) Tenant owner associations Multi-family housing Commercial Forestry & Agricultural Total all types 1 0% 1 excluding public sector loans of 0.6% 40

41 Over-collateralisation Strong resilience to house price changes 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% House price sensitivity of the cover pool OC, Q318 Min req. 2% Current OC-level of 98.6% 2% legal minimum requirement Swedbank is a labeled issuer of the ECBC Covered Bond Label Foundation ( ) Can withstand a severe house price drop and still be able to issue AAA-rated covered bonds 0% 0% -5% -10% -15% -20% -25% -30% -35% -40% -45% -50% House price drop 41

42 Overview of the Swedish covered bond legislation The Covered Bond Act The Covered Bond Act entered into force on July 1, 2004 and is over-sighted by the Swedish FSA. Its main characteristics are: Dual recourse to the issuer and cover pool Dynamic, regulated pool of assets, frequently monitored by the Swedish FSA via appointment of an independent inspector Regulated valuation of cover pool assets which remain on the balance sheet The cover pool may consist of certain mortgage credits, public credits and supplemental assets. There is no requirement to segregate mortgage and public credits. Maximum LTVs: Residential 75%, Agricultural 70%, Commercial 60% Loan-to-value ratios and other limitations Maximum 10% commercial loans and 20% supplemental assets in cover pool Regular monitoring of the property values, revaluation of property prices in case of significant drop (generally interpreted as 15% drop) The S.O. Act amended, effective as of 21 June 2016, requires that the nominal value of the cover pool shall, at all times, be at least two per cent. higher than the aggregate nominal value of the liabilities relating to the covered bonds.. Regional constraint on collateral assets (Mortgage - EEA, - OECD) Matching requirements Benefit of a priority right over the cover pool Administration in event of bankruptcy The cover pool value shall always exceed the aggregate value of claims (including derivatives) A sound balance in terms of FX, interest rates and maturities must be achieved. It is deemed to exist when the present value of the cover pool at all times exceed the present value of liabilities (including derivatives), even on a stressed basis. Present value cover must hold even after 1% upward and downward shift in the yield curve and a 10% change in the currency Non-performing assets in the cover pool which are more than 60 days overdue must be disregarded for the purposes of the matching tests Holders of covered bonds and relevant derivative counterparties benefit from a priority claim over the cover pool should the institution be declared bankrupt and rank pari passu ahead of unsecured creditors and all other creditors of the institution in respect of assets in the cover pool The registered assets in the cover pool, the covered bonds and any relevant derivative contracts are required to be maintained as a unit and kept segregated from other assets and liabilities of the bankruptcy estate of the institution. The administrators-in-bankruptcy are then required to procure the continued timely service of payments due under the covered bonds and any relevant derivative contracts Source: 42

43 Swedish and Baltic macro 6. Swedish and Baltic economies

44 Sweden - Strong growth gradually slowing Key economic indicators 1, Most recent F 2019F 2020F Real GDP (calendar adjusted) 2.5 (Q2) CPI growth, average 2.3 (Sep) CPIF growth, average 2.5 (Sep) Unemployment rate (15-74), % of labor force 6.5 (Sep) Savings ratio (households),% Real disposable income (households) Kingdom of Sweden rated Aaa/AAA/AAA Swedish and Baltic macro Sources: Statistics Sweden & Swedbank Research 1 Annual percentage growth in percent unless indicated otherwise. 2 Seasonally adjusted and smoothed Domestic demand has driven growth Sentiments remain elevated 44

45 The Swedish economy Households remain cautious Growth slowdown due to weaker domestic demand Swedish and Baltic macro Overall investments are trending higher Volatile export demand 45

46 The Swedish economy, cont. Strong labour market developments Solid public finances Swedish and Baltic macro Inflation resumes Weak krona 46

47 The Swedish credit market Lending to households slows Interest rates remain low; while margins are stable Swedish and Baltic macro A gradual tightening of monetary policy Quantitative easing formally ended in

48 Baltics continued growth albeit at slower rates Key economic indicators 1, Most recent F 2019F 2020F Real GDP Estonia 3.7 (Q2) Latvia 5.3 (Q2) Lithuania 3.8 (Q2) CPI growth, average Estonia 3.7 (Sep) Latvia 3.2 (Sep) Lithuania 2.4 (Sep) Unemployment rate (15-74), Estonia 5.1 (Q2) % of labor force Latvia 7.7 (Q2) Lithuania 5.9 (Q2) Ratings Republic of Estonia: A1/AA-/A+ Republic of Latvia: A3/ A-/A- Republic of Lithuania: A3/ A-/A- Swedish and Baltic macro 1 % growth rate unless indicated otherwise, Y/Y growth for the most recent data Real economic growth remains strong Unemployment is declining 48

49 Estonia: Growth to slow after peak Economic growth expanded in the fastest pace in five years in 2017 Swedish and Baltic macro Domestic demand and export the main drivers Export and manufacturing output drive growth 49

50 Latvia: Solid growth to continue Supported by strong confidence, pro-cyclical fiscal policy, rapid wage growth, global tailwinds Swedish and Baltic macro Sharp cyclical pick up in growth to moderate Sentiments remain strong 50

51 Lithuania: GDP growth will revert to potential Weaker household consumption and export growth, but investments to pick up Swedish and Baltic macro Growth has peaked and start to ease Capacity constrains will limit export growth 51

52 Swedish housing and mortgage market 7. Swedish housing and mortgage market

53 Housing prices have stabilised during 2018 Price decline last year followed strong price increases due to high demand and limited supply Supply grew on the back of a surge in housing investments Market is searching for new balance after stricter borrowing criteria Home prices (annual change) and macroprudential measures Swedish housing and mortgage market

54 Price developments vary across the country and by type of housing Swedish housing and mortgage market Price volatility has been most pronounced in the Stockholm area Prices of apartments vary most; single-family houses are holding up better Housing prices stabilised during 2018; seasonally adjusted prices slightly up in October Price developments flats and single family houses 1) Trends and average house prices, October ) 1 month 3 months 12 months SEK/sqm 2) Tenant owner rights Sweden total -0.4% 0.2% -2.9% Greater Stockholm -0.5% 0.5% -2.6% (87667) Greater Gothenburg -0.5% -0.2% -3.8% (59 485) Greater Malmoe 1.3% 1.5% 0.6% (30 734) Single-family homes Sweden total -1.2% 1.0% -0.5% Greater Stockholm -0.7% 0.1% -4.2% Greater Gothenburg -0.3% 3.5% -0.8% Greater Malmoe 1.1% 3.9% 4.3% Total Housing Index Sweden -0.9% 0.7% -1.5% 1) Source: Valueguard (HOX index) 2) Source: Mäklarstatistik, monthly average transaction prices (central city area) 54

55 Housing market activity is stabilising in 2018 New amortisation requirement caused temporary market distortions Housing transactions normalised Housing prices stabilised in first ten months 2018 Swedish housing and mortgage market Housing transactions normalised after amortisation requirement Housing prices stabilised in first ten months

56 Household borrowing dampens while financing costs remain low Mortgage volume growth is driven by new housing supply and higher mortgage amounts by existing borrowers Housing interest costs remain at low levels, but amortisation amount increases Reasonable to expect some slowdown from last year s 7.4% market growth; Aug growth was 6.3% Swedish housing and mortgage market Mortgage loan growth, housing prices and interest rate Household interest expenses (as % of disp. income) 56

57 Solid structural foundation for the housing and mortgage market Swedish housing and mortgage market Full recourse (very limited debt forgiveness possibilities) No securitisation (on balance sheet), no sub-prime market, no 3 rd party origination Restricted buy-to-let market limited speculation 64% home ownership Rental market is regulated Transparent credit information (credit information agency, ly 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 Strong social security and generous unemployment benefit system Swedbank s underwriting criteria In the repayment ability calculation, the interest rate used is the equivalence to the Mortgage company s 5 year fixed interest rate + 3 percentage points, with a minimum of at least 7 %. Amortisation rate requirement according to SFSA: For LTV 70 %, then 1 % is used as rate. For LTV > 70 %, then 2 % is used as rate. For DTI > 450 %, then the amortisation rate is one percentage more. For underwriting credits to tenant owner rights, the tenant owner association s financials are examined, and based the interest rate sensitivity of the association and price per square meter an add-on to the tenants fee is applied in the repayment ability calculation. 57

58 Household fundamentals support the housing market Solid labour market Swedish housing and mortgage market Population growth and urbanisation trends continue Solid labour market developments Solid balance sheets among households Construction lags population growth Strong household balance sheets 58

59 Swedbank s exposure to the Swedish residential property market Swedish housing and mortgage market Swedbank has a low risk residential property portfolio Origination discipline and profitability have been prioritised over volume Engagement in low risk projects with well-known residential property developers will continue 59

60 Swedbank has a low-risk residential property portfolio Swedish housing and mortgage market Real estate lending, net loans in Sweden, SEKbn Total real estate portfolio 18 Of which: Residential property development Private mortgages: SEK 788bn, average LTV 56% Tenant owner associations ( TOA ): SEK 109bn SEK 97bn existing TOA, average LTV 39% SEK 12bn TOA under construction Property management: SEK 197bn SEK 69bn in residential property management (rental apartment properties) SEK 128bn in other property management Construction SEK 17bn SEK 6bn residential property development SEK 11bn infrastructure, groundwork, craftsmen Swedbank has pursued a low risk strategy by tightening origination standards, and prioritising price and risk over volume growth Bulk of assets in low risk segments Average LTVs in lower ranges Residential property developer exposures of SEK 18bn 60

61 1% 4% 7% 10% 13% 16% 19% 22% 25% 28% 31% 34% 37% 40% 43% 46% 49% 52% 55% 58% 61% 64% 67% 70% 73% 76% 79% 82% 85% 88% 91% 94% 97% 100% Private mortgages a low risk portfolio Low average LTVs (56% in back book, Sept 2018) Low historic losses (0.02% on average during the last 25 years) About 72% of total loans to single family homes Swedbank has grown for several years, but at a slower rate than the market Swedish housing and mortgage market Growth YoY lower or at the market Loan growth in % Loan growth Swedbank Annualised YTD Loan growth market High diversification Loans net 1) by geography 26% 27% SEK 788bn Stockholm region Malmö region < inhabitants 7% 28% 12% Gothenburg region > inhabitants Only ~1% above 75% LTV Loans 1) to Private Mortgage by (sliced ) LTV-bucket SEKbn 85% with LTV 50% 99% with LTV 75% 1) As of 30 September

62 1% 5% 9% 13% 17% 21% 25% 29% 33% 37% 41% 45% 49% 53% 57% 61% 65% 69% 73% 77% 81% 85% 89% 93% 97% >100% Tenant Owner Associations low leverage Total loan portfolio SEK 109bn, of which SEK 12bn is construction loan for new development: 50-80% of the tenant owner rights needs to be pre-sold before start, and 100% before final financing When the construction is finalised about 60% of construction loans will be repaid through equity from the TOA members Low historic losses (average 0.17% over the last 25 years). Losses of which to an absolute majority occurred during the 1990 s Swedish housing and mortgage market Loan growth has slowed down Loan growth in % Loan growth Swedbank Loan growth market Annulised YTD Portfolio reflects market Loans net 1) by geography 30% 13% 10% Stockholm region Malmö region < inhabitants SEK 109bn 11% 36% Gothenburg region > inhabitants Average LTV of only 39% Loans 2) to Tenant Owner Associations by LTV-bucket 4 SEKbn 95% with 99.8% with LTV 50% LTV 75% ) As of 30 September

63 Residential property developers - low exposure Total loan portfolio of SEK 18bn, mainly to the larger listed construction firms, with which Swedbank has long-term relations SEK 12bn of the loans are related to tenant-owner rights projects SEK 6bn of the loans are related to construction activities 90% of these projects will be finalised in 2018 and 2019 Swedish housing and mortgage market Tenant-owner rights related construction loans 1) the risk is highly mitigated 6% By geography 1) 18% 14% 5% SEK 12bn Stockholm region Malmö region < inhabitants 57% Gothenburg region > inhabitants Finalisation year 2) 9% 39% 52% Average % pre-sold by finalisation year2) ) As of 63 2) Share of exposure

64 1% 4% 7% 10% 13% 16% 19% 22% 25% 28% 31% 34% 37% 40% 43% 46% 49% 52% 55% 58% 61% 64% 67% 70% 73% 76% 79% 82% 85% 88% 91% 94% 97% 100% Residential property management stable cash-flow generation Swedish housing and mortgage market Total loans of SEK 69bn towards residential property management companies Financing of rental apartment properties Well-known companies with solid finances and high collateralisation Strong and stable cash-flow generation, no speculation and low vintage risk Growth 2018 in selected customers Loan growth in % % Loan growth Swedbank Annualised YTD Regional cities dominate Loans net¹ by geography % 27% 41% Stockholm region Malmö region < inhabitants SEK 69bn 17% 8% 7% Gothenburg region > inhabitants Average LTV of 55% Loans 1 to Residential properties by LTV-bucket 1.4 SEKbn 86% with 99,7% with 1.2 LTV 50% LTV 75% ) As of 30 September

65 1% 4% 7% 10% 13% 16% 19% 22% 25% 28% 31% 34% 37% 40% 43% 46% 49% 52% 55% 58% 61% 64% 67% 70% 73% 76% 79% 82% 85% 88% 91% 94% 97% 100% Commercial properties mainly office properties Swedish housing and mortgage market Total loans of SEK 64bn towards commercial property management, mainly office properties in the larger cities or in regional centers with growing population Only a minor part, about SEK 4bn, is to retail real estate Well-known companies with solid finances, diversified portfolios and high collateralisation Strong and stable cash-flow generation, no speculation and low vintage risk Bond market reduced volumes Loan growth Swedbank in % 4 2 Portfolio reflecting the market Loans net 1) by geography 12% Average LTV of 56 % Loans 1) to commercial properties by LTV-bucket SEKbn 86% with LTV 50% 99,6% with LTV 75% % SEK 64bn 41% Annualised Loan growth Swedbank YTD 9% Stockholm region Malmö region < inhabitants 9% Gothenburg region > inhabitants ) As of 30 September

66 1% 4% 7% 10% 13% 16% 19% 22% 25% 28% 31% 34% 37% 40% 43% 46% 49% 52% 55% 58% 61% 64% 67% 70% 73% 76% 79% 82% 85% 88% 91% 94% 97% 100% Industrial & Warehouse properties increasing share of logistic properties Swedish housing and mortgage market Total loans of SEK 40bn towards industrial & warehouse property management SEK 30bn of the loans are industrial properties SEK 10bn of the loans are warehouse properties Industrial, both in property management and owned by the user Warehouse and logistic properties strategic located outside larger cities or at logistic nodes New warehouses drives growth Loan growth Swedbank % annualised Loan growth Swedbank YTD Industries in smaller cities Loans net 1) by geography 30% 15% SEK 40bn 9% Stockholm region Malmö region < inhabitants 31% 15% Gothenburg region > inhabitants Average LTV of 57% Loans 1) to Industrial properties by (sliced ) LTV-bucket SEKbn 88% with LTV 50% 99.6% with LTV 75% 1) As of 30 September

67 Appendix

68 Swedbank largest retail bank in our four home markets This is Swedbank Sweden Population 10.1m Private customers 4.1m Corporate customers Organisations Branches 191 Cards 4.3m Number of card purchases* 983m Digitally active customers** 2.9m Latvia Population 2.0m Private customers 0.9m Corporate customers Branches 33 Cards 1.0m Number of card purchases*125.0m Digitally active customers** 0.5m Estonia Population 1.3m Private customers 0.9m Corporate customers Branches 33 Cards 1.1m Number of card purchases*159.4m Digitally active customers** 0.5m ~85%* * Share of loan book ~10%* Lithuania Population 2.9m Private customers 1.5m Corporate customers Branches 59 Cards 1.7m Number of card purchases*121.3m Digitally active customers** 0.7m Source: Swedbank Factbook *YTD 2018, ** Number of customers that have made a payment, transfer, application, investments or lending activity in the last month 68

69 Swedbank low-risk bank with strong capital base Low risk a Board of Directors strategic priority ensures access to funding markets and low funding cost Retail profile and four home markets a key feature Around 85% of total loans originated in Sweden - Swedish mortgages account for around 60% of total loans 90% of total loans are collateralised (77.1% real estate and 12.9% 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 280bps Conservative funding and liquidity position survival horizon longer than 12 months assuming closed funding markets, NSFR 110% and LCR 148%* Baltic operations self-funded loan-to-deposit ratio < 100% * From Q the Liquidity Coverage Ratio (LCR) is calculated in accordance with the Commission Delegated Regulation (EU 2015/61) of 10 October 2014 (also, see Fact book, page 57) NSFR LCR* CET1 ratio, CRDIV (RHS) Liquidity & capital, % This is Swedbank Credit impairment ratio, bps Q3 13 Q3 14 Q3 15 Q3 16 Q3 17 Q

70 Swedbank strong and stable earnings capacity This is Swedbank 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 support a low risk profile and a strong capital position Profit before impairments, SEKbn 10 8 Disposal one-off Q3 13 Q3 14 Q3 15 Q3 16 Q3 17 Q

71 Swedbank market leader in cost efficiency This is Swedbank 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 market Total expenses, SEKbn Acquisition one-off Cap C/I ratio, %

72 Innovative culture Swedbank continuously innovative 98% digital customer interactions Large retail customer base and scalable products High digital readiness in home markets Leverage to improve customer experience, sales and efficiency ONLINE EQUITY TRADE INTRODUCED ONLINE BANKING IS INTRODUCED NEXT GENERATION INTERNET BANK FIRST APP LAUNCHED FIRST APIs 2 ND GENERATION APPS INCLUDING TABLETS LAUNCH OF YOUTH AND CORPORATE APPS 2014 FIRST PFM AND AGGREGATION OF TRANSACTIONS VIRTUAL ASSISTANT ON.SE FIRST THIRD PARTY INTEGRATION VIRTUAL ASSISTANT IN MOBILE OPEN BANKING SITE LAUNCHED 51% digitally active customers Adaptive IT-infrastructure & organisation Modular architecture refurbished into a flexible core platform IT and business development integrated Customer driven availability Broadening omni-channel capabilities Branches, telephone 24/7, mobile, desktop and 3 rd party platforms COLLABORATING WITH FINTECHS 51% of sales* are completed digitally Digitally focused organisation Board directors with tech industry experience Heads of Digital Banking, IT and CVM** part of Group executive management team 80% digital customer satisfaction * Agreements entered into between customers and the bank ** Customer Value Management 72

73 Our 2018 and 2019 priorities will further increase customer satisfaction, revenue and cost efficiency Strategy 1 Offers based on customer data N 3 Digital payment and commerce offerings 5 Improved savings and pension offerings 7 Distribution of relevant products in 3 rd party channels 9 Channel transformation W E S Excellent digital experience Digital lending process Corporate selfservice and cash management offer Leverage on automation 73

74 In 2018 we have held a series of events showcasing initiatives to ensure future competitiveness Our infrastructure is a flexible core platform enabling us to change with customer behaviour supported by our innovation culture and increasing use of intelligent automation tools Improving customer experience, relevance and sales by leveraging our trust, customer data, digitalisation and products through specialised units while scaling up current business model and capture potential Delivering on a effective channel transformation Improve customer experience and sales through customer data and digitalisation in savings and lending products. Scale up current business model and capture growth potential THEME DAY IV 74

75 Focus on sustainable business Improved sustainability scores Dow Jones Sustainability Index Green mortgage launch Green mortgage To encourage a sustainable choice of housing Swedbank launched the Green mortgage loan for private customers. Swedbank s ambition is to offer and constantly develop products and services that help both private and corporate customers to make long-term sustainable choices. Stronger Environmental Management System (EMS) ISO Swedbank is included in The Sustainability Yearbook 2018 The Sustainability Yearbook Swedbank s upgraded Environmental Management System was certified with the new and more rigorous standard ISO14001:2015. The Sustainability Yearbook lists the world s most sustainable companies in each industry as determined by their score in RobecoSAM s annual Corporate Sustainability Assessment Swedbank Robur launches unique SDG equity fund Swedbank Robur s new sustainability equity fund, Global Impact, invests in companies that through their products, services and activities, contribute to reaching the UN s SDGs. The fund allows our customers to earn capital returns while contributing to a better, more sustainable world. The fund was among the 10 most popular funds in the quarter. Swedbank s first Green Bond Impact Report released In accordance with Swedbank s Green Bond Framework established last year the Green Bond Impact Report for 2017 has now been released. It shows that resulting investment in eligible green assets reduced CO2 emissions by tonnes (annualised). Top rank for gender equality Swedbank top ranked in Allbright s annual review of gender equality in listed companies. Landmark green bond investment The World Bank has issued green bonds to finance water treatment projects and projects to conserve the marine environment. Swedbank Robur has acted as key investor and invested SEK 550m in the transaction. 75

76 Stage 1 loans Stage 2 loans Stage 3 loans IFRS 9 main characteristics of the different loan stages Asset quality Initial recognition, or no significant increase of credit risk Impairment amounting to 12-month expected credit losses Significant increase in credit risk Impairment amounting to lifetime expected credit losses Watchlist Evidence of impairment Impairment amounting to lifetime expected credit losses Probability of default = days past due days past due 90 days past due 76

77 Stage 1 loans Stage 2 loans Stage 3 loans IFRS 9 Distribution of loans Asset quality Loans to the public distribution, % (total, SEK 1 574bn) Credit impairment provisions distribution, % (total, SEK 5 646m) 92.8% 60.4% 30.6% 8.9% 6.7% 0.5% 77

78 IFRS 9 implementation, 1 Jan 2018 Asset quality Stage 3 loans - transition from IAS 39 into IFRS 9, SEKm Impaired loans Q IFRS 9 implementation effect 1 Jan, Change in Stage 3 loans Stage 3 loans Q Change in Stage 3 loans Stage 3 loans Low impact Fully implemented no transition rules CET1 capital negatively impacted by SEK 0.4bn REA reduced by SEK 0.7bn CET1 capital ratio negatively impacted by 6bps 78

79 Sweden the dominating home market Total lending to the public amounts to SEK 1 574bn (as per ), out of which around 85% is originated in Sweden Estonia makes up 47% of total lending in the Baltics This is Swedbank Lending distributed by countries Sweden 85.1% SEK 1 339bn Estonia 5.0% Swedish Mortgage loans (private+corp) Latvia 2.2% Other corporate (incl. LC&I, Sweden) Lithuania 3.4% Other* 4.3% * Mostly Norway and Finland 79

80 No automatic sanctions for breaching the Pillar 2 capital requirements Capital fully loaded CRD IV 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. 21.5% 10.2% 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 priory 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. Automatic MDA Restrictions 11.3% Swedbank CET1 Requirements Pillar 2 CET requirement Pillar 1 CET1 requirement 80

81 Wholesale funding profile Liquidity and funding 33% or SEK 303bn of wholesale funding < 12 months, SEK 297bn placed with central banks Average maturity for covered bonds, 44 months Average maturity for senior unsecured debt, 30 months Outstanding wholesale funding, SEK 922bn Q Maturity profile of outstanding wholesale funding 7% 23% M M % >1-5Y >5Y Covered bonds Senior unsecured Structured retail bonds Short-term programmes 59% 81

82 Funding programmes Liquidity and funding Swedbank AB 100% owned Swedbank Mortgage AB Program Long Term Limit Program Long Term Limit 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 USD 40bn SEK 60bn USD 15bn AUD 10bn SEK 80bn EUR 6bn USD 20bn USD 20bn EUR 4bn 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 Unlimited*** EUR 25bn USD 15bn SEK 150bn Unlimited*** AUD 10bn SEK 50bn ** Combined limit for unsecured- and covered bonds *** Limited by cover pool size 82

83 Asset encumbrance Type of assets (Balance Sheet items) SEKm 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 Type of assets (Off-balance sheet items) Encumbered assets Encumbered received collateral Unencumbered received collateral available for secured funding SEKm 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 Unencumbered assets, additional assets available for secured funding Liquidity and funding Asset encumbrance ratio of around 22% based on median values Purpose for encumbrance (On- and off-balance sheet items) Encumbered Assets SEKm 30 Jun 31 Mar 31 Dec 30 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 All amounts are according to Sw edbank consolidated situation and represented as median values. 83

84 Benchmark transactions, 2016 YTD 2018 Liquidity and funding ISIN Product Tenor Currency Amount,mn Type Spread Value date Maturity date XS CB 5Y EUR Fixed MS+14 February 10, 2016 February 10, 2021 XS SU 144a 5Y USD Fixed T+135 March 10, 2016 March 10, 2021 XS SU 3Y EUR 500 FRN 3m +45 March 11, 2016 March 11, 2019 XS CB 5Y GBP 250 Fixed G+65 December 7, 2016 December 7, 2021 XS AT1 Perpetual USD 500 NC5 6.00% December 16, 2016 Perpetual XS CB 5Y6M EUR Fixed MS -3 January 16, 2017 July 18, 2022 AU3CB SU 5Y AUD 100 Fixed MS+118 February 17, 2017 February 17, 2022 AU3FN SU 5Y AUD 350 FRN 3mBBSW+118 February 17, 2017 February 17, 2022 XS SU 5Y6M EUR 750 Fixed MS+18 March 6, 2017 September 6, 2022 XS SU 144a 5Y USD 500 FRN 3m$L+70 March 14, 2017 March 14, 2022 XS SU 144a 5Y USD Fixed T+80 March 14, 2017 March 14, 2022 XS CB 7Y EUR Fixed MS-6 May 8, 2017 May 8, 2024 XS T2 10.5NC5.5 EUR 650 Fixed MS+82 May 15, 2017 November 22, 2027 XS SU 4Y3M GBP 500 Fixed G+76 September 29, 2017 December 29, 2021 XS CB 4Y2M GBP 250 Fixed G+57 October 2, 2017 December 7, 2021 XS SU Green 5Y EUR 500 Fixed MS+7 November 7, 2017 November 7, 2022 XS CB 5.5Y EUR 1000 Fixed MS-10 February 23, 2018 August 23, 2023 XS SU Green 5Y SEK 500 FRN 3mStib+47 March 29, 2018 March 29, 2023 XS SU Green 5Y SEK 1500 Fixed MS+47 March 29, 2018 March 29, 2023 XS SU 4.5Y GBP 400 Fixed G+80 June 28, 2018 December 28, 2022 XS SU 5Y EUR 500 Fixed MS+18 Aug 29, 2018 August 29, 2023 XS T2 10NC5 EUR 500 Fixed MS+128 September 18, 2018 September 18, 2028 The table excludes issuance volumes in the Swedish domestic covered bond market (on tap)* *

85 Swedbank in the Baltics

86 Swedbank s customers in the Baltics Market leader with a strong focus on domestic customers TOTAL BALTICS ESTONIA Loans (p) Loans (c) Deposits (p) Deposits (c) Payments Private customers 3.2m Corporate customers Private customers 0.9m Corporate customers % 37% 55% 43% 59% LATVIA Loans (p) Loans (c) Deposits (p) Deposits (c) Payments Private customers 0.9m Corporate customers % 18% 34% 19% 50% LITHUANIA Loans (p) Loans (c) Deposits (p) Deposits (c) Payments Private customers 1.5m Corporate customers % 19% 40% 26% 49% (p) private (c) corporate Domestic payment transactions (Estonia, Latvia, Lithuania) Source: Baltic central banks, Swedbank Fact book 86

87 The low number of Swedbank non-resident customers are mainly EU private individuals NON-RESIDENT SHARE OF TOTAL SWEDBANK BALTIC BANKING CUSTOMERS NON-RESIDENT SHARE OF TOTAL SWEDBANK ESTONIAN CUSTOMERS 3.0% 2.5% 2.0% Very low share of corporates outside EU 3.0% 2.5% 2.0% 1.5% 1.5% 1.0% 1.0% 0.5% 0.5% 0.0% Jun18 0.0% Total Non-residents non-resident Corporate Non-residents Non-residents Total non-resident Corporate Non-residents Corporate Non-residents outside EU Private Non-residents inside EU Corporate Non-residents outside EU Private Non-residents inside EU Source: Swedbank 87

88 Swedbank s payments market share shows a business model built on a domestic customer base MARKET SHARES BASED ON TOTAL ASSETS AND VOLUME OF OUTGOING CROSS BORDER PAYMENTS, ESTONIA, % DANSKE BANK VERSOBANK SEB 50% 50% 50% 40% 40% 40% 30% 30% 30% 20% 20% 20% 10% 10% 10% 0% 0% 0% Market share by balance sheet size Market share by outgoing cross border payments Market share by balance sheet size Market share by outgoing cross border payments Market share by balance sheet size Market share by outgoing cross border payments SWEDBANK NORDEA OTHER BANKS 50% 50% 50% 40% 40% 40% 30% 30% 30% 20% 20% 20% 10% 10% 10% 0% 0% 0% Market share by balance sheet size Market share by outgoing cross border payments Market share by balance sheet size Market share by outgoing cross border payments Market share by balance sheet size Market share by outgoing cross border payments Source: Bank of Estonia 88

89 Swedbank s cross border payments have grown in line with economy OUTGOING CROSS BORDER PAYMENTS, ESTONIA EURbn Market dynamics influenced by non-resident business models Market, EURbn Swedbank, EURbn Source: Bank of Estonia 89