Swedbank Christer Trägårdh

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1 Swedbank Christer Trägårdh

2 Background Strong financial position Sweden s largest retail bank with a leading position in our three Baltic home markets 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 significant buffers to both MDA and Loss absorption trigger levels Dividend policy of 75% - for five consecutive years *According to EBA stress test 2016 Swedbank Q (Q2 2017) Stable result ROE: 15.0% (15.6%) Top 10 shareholders 1. Sparbanksgruppen, 10.3% 2. Folksam, 7.1% 3. AMF, 5.2% 4. Alecta, 4.5% 5. Sparbanksstiftelser, 4.1% 6. Swedbank Robur, 4.0% 7. SEB IM, 2.0% 8. Norges Bank, 2.0% 9. JPM, 1.9% 10. Swedbank, 1.6% Swedish owners, 58.6% Int l owners, 41.4% Sweden Our four home markets Cost/income ratio: 0.37 (0.38) CET1 capital ratio: 23.9% (24.6%) with requirements of 21.6% (fully loaded CRD IV) Leverage ratio: 4.7% (4.8%) Credit impairment ratio: 0.06% (0.10%) Share of impaired loans: 0.55% (0.53%) Total provision ratio for impaired loans: 45% (45%) Liquidity and funding: LCR: 145%, NSFR: 109% Credit ratings: AA-(N)/AA-(S)/Aa3(S) from S&P/Fitch/Moody s Estonia Latvia Lithuania Sep

3 Swedish Banking 4 million Private customers Corporate customers FTEs 220 branches Savings bank cooperation ~2 million customers ~220 branches Loans SEK billion Swedish Banking Q Deposits 519 SEK billion Op. profit YTD 12 SEK billion Market shares Sweden (September 2017) Private Loans 23 % Corporate Loans 18 % Other Mutual funds 21 % Share of Swedbank total Share of Swedbank total Share of Swedbank total Deposits Deposits Payments 76% 57% 64% 21 % 20 % 35 % 3

4 Percent YoY Index, MoM Fundamental support remains A welcome deceleration in property price growth supported by low rates Property price development MoM (index 100=2005) and YoY,% 2015-Oct 2017 LTV cap. 85% RW floor 15% RW floor 10% Amortisations Source: Valueguard and a strong labour market. 4

5 and underlying demand is still strong Housing completions (thousand units / year) 2016:+144th. Source: Statistics Sweden (SCB) 5

6 Broad and low risk Swedish real estate portfolio Total loan portfolio - Sweden Private mortgage Highly resilient portfolio 99% with LTV < 75% Property Mgmt Tenant Owner Associations (TOA) Robust and low leveraged 100% with LTV < 75% Property Management High repayment capability 99% with LTV < 75% 6

7 Proactive in prudent banking Continuously updating lending criteria to maintain low risk profile Lending criteria updates Swedbank vs SFSA Private mortgage Tenant Owner Associations Property Management 7% interest rate floor in stress test Tighter amortisation requirement Implementation of DTIcap 500% Changes in steering Changes in steering Analysis model, focus on NOI: - DST & LTV - Amortisation Affordability test incorporates higher living costs New analysis tools focusing on long term cash flow in balance WRT future maintenance More cautious of new customers who are at the limits of criteria Active promotion of amortisation Stress TOA fees New guidelines for new construction - Cash flow - Amortisation Reviews of RTL & KRI Up-dated 10Y cash flow model Stress test min 7% DTI-cap = 500% Amortization LTV >70% = 2% LTV >50% = 1% 2015 May June Sept 2016 Amortization June 2018 Mar? LTV >70% = 2% LTV >50% = 1% DTI >450% = 1% 7

8 Strong position in private mortgage Growing in line with the market Market shares Monthly growth Volume development Swedbank 24%

9 Diversified portfolio Both geography and type of loans Geography Type of loans 9

10 Limited exposure to construction, SEK ~20bn mainly to larger established firms Large construction firms - [xx] Established and strong Large corporates with a long business history and strong balance sheets, many of them listed companies, which Swedbank have long-term relations with Diversified business mitigates the risk; construction in other segments, property management, geographical Conservative gearing/leverage Mid-sized developers - Several new developers Large focus on exclusive tenant owner rights and many of them with Stockholm and other growing areas as their main focus High share of pre-sold apartments before projects are started More aggressive gearing/leverage using the capital market as funding source Smaller construction firms - Many local players Many local/regional developers (about customers) with in general very good market knowledge Mix of companies; new vs. established and specialised vs. diversified Typically fewer projects and smaller balance sheets 10

11 Conclusions Fundamental support remains and underlying demand is still strong Broad and low risk real estate portfolio Continuously updating lending criteria to maintain low risk profile Strong position in private mortgage Growing in line with the market Diversified portfolio Both geography and type of loans Limited exposure to construction, SEK ~20bn mainly to larger established firms 11

12 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. 12