Nordics D e n m a r k, N o r w a y, S w e d e n, F i n l a n d. 1Q17 Economic and Financial Report.

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1 Management Solutions All rights reserved Nordics D e n m a r k, N o r w a y, S w e d e n, F i n l a n d 1Q17 Economic and Financial Report R & D

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3 Economic and Financial Report 1Q17 Index 1. Executive summary 4 2. International overview 8 3. Nordics macroeconomic overview Banking sector: general overview Appendix 30

4 1. Executive summary Macroeconomic overview In the first quarter of 2017, all of the Nordic economies registered an acceleration on their GDP y/y growth rates, except for Denmark. Norway experienced the largest increase (0.9 p.p.), while Finland was the country which registered the highest growth rate (2.82%). In terms of inflation, all the Nordic countries experienced higher CPI growth rates, except for Norway, which recorded the highest inflation rate at 2.57%. As for the labor market, Denmark was the only country able to lower its unemployment rate with respect to the previous quarter. Macroeconomic overview During 1Q17, all Nordic countries registered an acceleration on their y/y growth rates with respect to 4Q16, except for Denmark. Norway registered the highest increase (0.9 p.p.), reaching a growth rate of 2.5%, while Finland recorded the largest y/y growth rate at 2.82%. GDP (% year over year growth) CPI (% year over year growth) UNEMPLOYMENT RATE (%) Denmark Norway Sweden Finland Denmark Norway Sweden Finland Denmark Norway Sweden Finland 4 Source: Country s Central Bank Denmark: recorded a 0.23 p.p. slowdown its y/y growth rate due to the lower growth of fixed capital formation. Norway: recorded an acceleration of 0.9 p.p. in its y/y growth rate, led by higher consumption and investment growth. Sweden: Sweden s economy accelerated in 0.32 p.p. on the back of higher consumption and investment growth, and breaking the downward trend which began in 1Q16. Finland: registered a 0.46 p.p. increase, up to a rate of 2.82% in 1Q17. This was due to the acceleration of investment and net exports. Denmark: Denmark s CPI registered an acceleration of 0.57 p.p. with respect to the previous quarter, standing at 0.97%, partly due to the increase in energy prices. Norway: registered the highest CPI among Nordic economies, of 2.57%, which is 1.03 p.p. lower than in 4Q16. The krone s appreciation of last year partly explains this behaviour. Sweden: increasing food and transport prices caused Swedish inflation to accelerate by 0.07 p.p., standing at 1.5% in 1Q17. Finland: The inflation rate increased by 0.2 p.p. to 0.93% after an increase in energy prices during the period. Denmark: It was the only country that registered a reduction in its unemployment rate, of 0.24 p.p., resulting in the second lowest rate among Nordic economies at 6.03%. Norway: recorded the lowest unemployment rate, of 4.5%, despite an increase of 0.1 p.p. with respect to 4Q16. Sweden: unemployment rose by 0.7 p.p. during 1Q17 up to 7.1%, standing as the second highest of the Nordic countries. Finland: the unemployment rate increased by 1.3 p.p. with respect to the previous quarter, standing at 9.33%, which accounted for the highest rate of the Nordic countries.

5 Economic and Financial Report 1Q17 Banking sector During 1Q17, Sweden recorded the highest y/y growth rate of both loans and deposits, which stood at 5.57% and 12.59% respectively, after registering growth increases of 1.66 p.p. for loans and 2.69 p.p. for deposits Apart from Sweden and Norway, the rest of the Nordic countries present negative loan growth rates during this quarter, which were lower than those of 4Q16, while recording positive deposit growth rates. Banking sector All Nordic countries except for Sweden and Norway presented negative growth rates of their loans. As for deposits growth, all countries continued to present positive growth rates in 1Q17. LOANS (% change from the same quarter of the previous year) DEPOSITS (% change from the same quarter of the previous year) Denmark Norway Sweden Finland Denmark Norway Sweden Finland Source: Country s Central Bank. Denmark: during the first quarter of the year, loans y/y growth rate registered a negative value of -3.84%, from -3.1% registered in 4Q16. Norway: the growth rate of total loans increased for the first time three quarters, by 4.3 p.p. from the registered in 4Q16, standing at 4.28%. Sweden: total loans growth rate increased by 1.66 p.p. when compared to 4Q16. In comparison with the other Nordic economies, Swedish loans recorded the highest y/y growth rate of loans of 5.57%. Finland: total loans recorded a decrease in growth during this quarter of 3.44 p.p. when compared to 1Q16, standing at -7.55% in this quarter. Finnish loans have been recording negative growth rate for four consecutive quarters. Denmark: After decreasing during the fourth quarter of 2016 in the growth rate of deposits, Denmark recovered during the first quarter of the year by 0.05 p.p., up to 7.06%. Norway: total deposits growth rate experienced an increase of 6.11 p.p. during 1Q17 when compared to 4Q16, standing at 10.09%. The increase was driven by the performance of financial and non-financial. Sweden: total deposits registered an increase of 2.69 p.p. in growth during 1Q17, standing at 12.59%, the largest among the Nordic economies. This was due to the growth increments in financial and non-financial corporation deposits. Finland: deposits experienced a 1.36 p.p. increase during 1Q17 due to the increments recorded in all segments, except for the household segment. 5

6 2. International Overview OECD During the first quarter of 2017, developed countries experienced a generalized increase in their y/y GDP growth rates, with France and Japan being the only OECD countries whose GDP decelerated from the previous quarter. This performance was highlighted by the acceleration of China and USA, which achieved growth rates of 6.9% and 2%, respectively. Regarding the inflation rate, all the analysed countries, with the exception of China, recorded increases with respect to the last quarter of Spain recorded the highest inflation rate, of 2.77% in 1Q17, after increasing by 1.77 p.p. with respect to the previous quarter. As for the growth rate of loans, it accelerated in all the surveyed economies, with the exception of China, UK and the USA. Germany, Spain and France were the only countries which registered increments in the growth rate of deposits in 1Q17. Macroeconomic Overview During the first quarter of 2017, the GDP of the developed economies registered an increase in its annual growth rate. This performance resulted from the acceleration in the GDP of all the surveyed countries except for France and Japan. China registered the highest growth rate of 6.9% after accelerating by 0.2 p.p. during the first quarter of Spain stood as the country with the second highest growth rate, 3.05%. This acceleration in the developed economies was mainly due to the growth of the Chinese economy, which resulted in a recovery of both trade and investment. The industrial sector improved due to the increase in manufacturing production and the robustness of domestic demand, while private sector confidence remained at high levels. On the other hand, the upturn in retail sales signaled the resilience of private consumption. Inflation increased with respect to the previous quarter in all the analysed countries, except for China, which recorded a decrease of 0.77 p.p. down to 1.4%. This generalized increase was due to the increase in the prices of energy and commodities. Spain registered the highest inflation rate of the developed economies at 2.77%, after recording an increase of 1.77 p.p. when compared to the previous quarter. Japan, meanwhile, recorded the lowest rate, reaching 0.33%. Regarding the labour market, the unemployment rate declined in all the surveyed developed countries. Only Germany and Spain experienced increases in their unemployment rates, while the US rate remained constant when compared to the last quarter of Japan recorded the lowest rate during the first quarter of 2017 after decreasing by 0.1 p.p. with respect to the previous quarter, standing at 2.8%. 6 Financial Sector During the first quarter of 2017, rating agencies maintained the rating of all countries in relation to the same quarter of the previous year with two exceptions. On one hand, both S&P and Fitch lowered their UK ratings to AA. Meanwhile, Moody's did the same with China, down to A1, as a consequence of its lower growth potential and increased leveraging. During 1Q17, the growth rate of loans recorded an overall increase from the previous quarter, with China, the UK and the US being the only exceptions that recorded a deceleration during this quarter. Spain and France registered the largest increases with respect to the previous quarter, of 1.7 p.p. and 0.9 p.p. respectively. China and UK stood out, recording the highest growth rates in loans at 12.3% and 11.5%, respectively. On the other hand, deposits experienced a contraction in relation to the previous quarter due to the deceleration in the growth rate of deposits of all the developed economies, with the exceptions of Germany, Spain and France. The biggest drop compared to the previous quarter was recorded by Japan, which stood at 6.2% after suffering a decrement of 1.9 p.p.

7 Economic and Financial Report 1Q17 Germany 1.94% Canada 2.32% China 6.9% France 1.09% Spain 3.05% Italy 1.25% Japan 1.45% EMU 1.9% UK 2% USA 2% GDP 1Q17 (% change from the same quarter of the previous year) < 0% 0-2% 2-5% > 5% - - UNEMPLOYMENT RATE 1Q17 (%) INFLATION RATE 1Q17 (%) GER CAN CHI SPA FR ITA JAP EMU UK USA GER CAN CHI SPA FR ITA JAP EMU UK USA LONG TERM RATINGS 1Q17 MOODY'S S&P Fitch Alemania Aaa AAA AAA Canadá Aaa AAA AAA China A1 AA - A + España Baa2 BBB + BBB + Francia Aa2 AA AA Italia Baa2 BBB- BBB + Japón A1 A + A UK Aa1 AA AA USA Aaa AA + AAA Increase from 1Q16 Remains from 1Q16 Decrease from 1Q16 7 Loans LOANS AND DEPOSITS 1Q17 (year-over-year growth rate) Deposits Alemanha Canadá China Espanha Francia Itália Japão UEM Reino Unido EUA * Canada data corresponds to November-2016.

8 2. International Overview LatAm In the first quarter of 2017, the GDP growth rate of the analysed Latin American countries accelerated by 0.46 p.p. with respect to the previous quarter, standing at 0.97%. This behavior was mainly caused by the increase in the growth rates of Argentina, Brazil and Mexico. On the other hand, the average inflation rate of the analyzed countries of LatAm experienced a contraction of 1.13 p.p. with respect to the previous quarter, standing at 7.94%, caused by a generalized reduction in inflation, with the exceptions of Mexico and Peru. Regarding the labour market, the unemployment rate increased by 0.95 p.p. to 8.35%. Both loans and deposits decelerated during 1Q17. Macroeconomic Overview In 1Q17, the analysed Latin American countries grew by 0.46 p.p. with respect to the previous quarter, standing at 0.97%. This behavior was due to the acceleration in the GDP growth rates of Argentina, Brazil and Mexico; while Chile, Colombia and Peru recorded decreases in their respective GDP growth rates. Argentina stood out with a 0.33% growth rate, thereby exiting the recession that began in the second quarter of At the same time, Brazil s activity stabilized, although it continued to register a negative growth rate of -0.41%. The improvement in the growth rates of the analysed countries was supported by a reduction in the uncertainty regarding US trade policy, as well as the expectations of a gradual increase in interest rates by the Federal Reserve. The improvement in global trade and the recovery of commodity markets caused by China's monetary and fiscal stimulus have also contributed to the region's growth. The International Monetary Fund expects Latin American growth to recover during the course of 2017, forecasting a combined GDP growth rate of 1.1%. The relative strength of Latin American currencies, which have regained the levels in which they stood prior to the US elections in November, coupled with weak domestic demand, led to a general decline in inflation rates in the analysed countries. Hence, average inflation was reduced by 1.13 p.p. when compared to the previous quarter, standing at 7.94%. Only Peru and Mexico recorded increases in their inflation rates with respect to the fourth quarter of Regarding the labour market, the unemployment rate in the surveyed Latin American countries increased by 0.95 p.p., standing at 8.35% after a generalised increase in the respective unemployment rates of the analysed countries. Mexico was the only exception, since it reduced its rate by 0.15 p.p. when compared to the previous quarter, reaching an unemployment rate of 3.39% in the first quarter of the year. 8 Financial Sector Overall, the rating agencies kept unchanged the ratings of the surveyed Latin American countries with respect to the same quarter of the previous year, although some exceptions were recorded. In the case of Argentina, the three agencies improved their ratings, while Moody's and Fitch downgraded Brazil's in 1Q17. S&P, on the other hand, lowered Chile s qualification. During the first quarter of the year, the average growth rate of loans recorded a contraction of 1 p.p. when compared to the previous quarter, standing at 8.1%. Only Brazil and Colombia experienced an increase with respect to 4Q16, which resulted in the fall in the growth of loans in the analysed Latin American countries. The biggest decrease was experienced by Argentina, which stood at 24.3% after suffering a deceleration of 8.2 p.p. In the first quarter of 2017, the growth rate of deposits also declined when compared to the previous quarter due to the declines in every country considered, except for Brazil and Peru. The average growth rate of deposits stood at 8.5%, which was 5.2 p.p. lower than the one recorded in the previous quarter. The largest decrease, of 20.1 p.p., corresponded to Argentina, which stood at 23.1% in 1Q17.

9 Economic and Financial Report 1Q17 Argentina 0.33% GDP 4Q16 (% change from the same quarter of the previous year) Brazil -041% Chile 0.13% Colombia 1.11% Mexico 2.55% Peru 2.08% LatAm 0.97% < 0% 0-2% 2-5% > 5% UNEMPLOYMENT RATE 1Q17 (%) INFLATION RATE 1Q17 (%) Argentina Brazil Chile Colombia Mexico Peru LatAm Argentina Brazil Chile Colombia Mexico Peru LatAm ARG BRA CHI COL MÉX PER LatAm LONG TERM RATINGS 1Q17 MOODY'S S&P FITCH Argentina B3 B B Brazil Ba2 BB BB Chile Aa3 A + A + Colombia Baa2 BBB BBB México A3 BBB + BBB + Perú A3 BBB + BBB + Increase from 1Q16 Remains from 1Q16 Decrease from 1Q16 9 Loans LOANS AND DEPOSITS 1Q17 (year-over-year growth rate) Deposits Argentina Chile México Brasil Colombia Peru -2.6

10 3. Macroeconomic overview Denmark In the first quarter of 2017, the Danish economy experienced a deceleration to a y/y growth rate of 2.63%, which represents a 0.23 p.p. decrease over the rate of the previous quarter. This performance was driven by the deceleration of domestic demand, given the deceleration experienced in gross capital formation, as well as the deceleration of exports. However, both government and private consumption registered increases in their y/y growth rate during this period, increasing by 0.39 p.p. and by 0.03 p.p., up to 1.35% and 2.52%, respectively. 10 GDP (% year over year growth) Annual Growth Projection Source: StatBank Denmark. Projections from OECD. GOVERNMENT CONSUMPTION (% year over year growth) Annual Growth Projection Source: StatBank Denmark. Projections from OECD. PRIVATE CONSUMPTION (% year over year growth) Annual Growth Projection Denmark s y/y economic growth rate contracted by 0.23 p.p. during the first quarter of 2017, registering 2.63%. This contraction interrupts the upward trend which started in 3Q16. The deceleration of the Danish economy in this quarter was caused by the performance of domestic demand, motivated by the decrease in the rate of growth of gross capital formation, larger than the increase in the growth rates of both private and government consumption. Exports decelerated during this quarter (-1.34 p.p. to 5.91%), as well as imports (-2.65 p.p. to 4.18%). On an annual basis, projections from the OECD predict an increase in y/y GDP growth rates, up to 1.58% in 2017 and 2.09% in Government consumption experienced an expansion of its y/y growth rate of 0.39 p.p. up to 1.35% in 1Q17, recording the highest rate since 2Q15. Denmark s government is seeking to maintain its public deficit at around 1.8% of GDP during 2017, a deficit ceiling which is below the EU s requirement of 3%. Despite this fact, forecasts from the OECD predict an increase of government consumption growth during 2017 and 2018, anticipating y/y growth rates of 0% in 2017 and 0.9% in In 1Q17, private consumption growth experienced an increase of 0.03 p.p. to 2.52%. This performance was motivated by the recorded decrease of unemployment, rising disposable incomes and low interest rates, even though it was offset by higher inflation during this quarter. The OECD predicts private consumption y/y growth rates of 1.88% in 2017, and 2.14% in Source: StatBank Denmark. Projections from OECD.

11 Macroeconomic Overview - Denmark Economic and Financial Report 1Q17 During the first quarter of 2017, inflation went up by 0.57 p.p., standing at 0.97% at the end of the quarter, following the increasing trend which started in 3Q16. On an annual basis, OECD s projections predict an increase of 1.21% and 1.33% in 2017 and 2018 respectively. Regarding the labour market, the unemployment rate registered a decrease from 6.27% in 4Q16 down to 6.03% in 1Q17. For its part, the y/y growth rate of employment registered a rate of -0.99% in 1Q17, after a decrease of 2.81 p.p. when compared to the previous quarter, which supposes the lowest rate recorded in the historical series started in In the first quarter of 2017, inflation in Denmark registered 0.97%, which is 0.57 p.p. higher than in 4Q16, recording the highest rate since 1Q13. Annual Growth CPI (% year over year growth) Projection The quarterly increase of Danish CPI growth is explained by higher prices in transport (2.27 p.p.), as well as in clothing and footwear (1.97 p.p.), and food and non-alcoholic beverages (1.83 p.p.). When excluding energy prices from the basket, CPI increased by 0.33 p.p. during this quarter Projections from the OECD predict an increase in 2017 of 1.21% and of 1.33% in Increases in inflation expectations have driven private consumption to accelerate. During the first quarter of 2017, the unemployment rate fell by 0.24 p.p. when compared to 4Q16, down to 6.03% at the end of the quarter. Unemployment stands at 175,000 people, which according to the OECD is close to its structural level. The OECD forecasts an increase in the unemployment rate, up to 6.5% in 2017 and 6.52% in The employment y/y growth rate fell by 2.81 p.p. when compared to the previous quarter, standing at a negative rate of 0.99% in the first quarter of 2017, which supposes the lowest rate recorded in the historical series started in StatBank Denmark has warned that a lower response rate in the Labour Force Survey during 1Q16 might alter the representativeness of the survey in this period, requiring additional caution when interpreting the data Source: StatBank. Denmark. Projections from OECD. UNEMPLOYMENT RATE (% civilian labour force) Annual Average Projection Source: StatBank Denmark. Projections from OECD. EMPLOYMENT (% year over year growth) Annual Growth Projection On an annual basis, the OECD expects a decrease of the y/y growth rate of employment to 1.31% in 2017 and to 1.66% in Source: StatBank Denmark. Projections from OECD.

12 Macroeconomic Overview - Denmark 12 TREASURY YIELD CURVES RATES (%) M 2M 3M 6M 1Y 2Y 3Y 5Y 8Y 10Y 30Y Source: National Banken 1Q15 1Q16 1Q17 EXCHANGE RATE ( DKK / $ ) Annual evolution Quarterly evolution During the first quarter of 2017, a generalized decrease in Denmark s bond yields was recorded with respect to 1Q16, except for 30- year bonds which registered an increase of 0.05 p.p., standing at 1.14%, For its part, the 2-year, 3-year and 5-year bonds were the bonds which registered highest decreases during the first quarter of the year with respect to 1Q16, experiencing decreases of 0.27 p.p., 0.22 p.p. and 0.22 p.p. respectively, standing at -0.57%, -0.44% and -0.2%. This generalized decrease is a result of the efforts of the central bank to fight against low inflation rates, thus establishing a lending rate and a certificates of deposit rate of 0.05% and -0.65% respectively. During the first quarter of 2017, the Danish krone depreciated against the dollar, increasing by 0.08 DKK/$ from the exchange rate recorded in the previous quarter. This supposes a depreciation of 1.24% Source: National Banken In this quarter, the increase in the interest rates by the FED and the growth expectations in the US economy were the main drivers of the krone s depreciation against the dollar. The performance of the Danish krone against the dollar thus mimics that of the euro, with which Denmark maintains a fixed exchange rate policy.

13 Economic and Financial Report 1Q17 Norway Norway In the first quarter of 2017, the Norwegian economy accelerated to a 2.5% y/y growth rate, up 0.9 p.p. from that of 4Q16. This performance was motivated by the acceleration of domestic demand, due to increases of private consumption (1 p.p.) and gross capital formation (5.4 p.p.). In contrast, government consumption offset this performance, decelerating to 2.2%, down by 0.3 p.p. from the rate of 4Q16. GDP (%) Annual Growth Projection Source: Statistics Sentralbyra. Projections from OECD. GOVERNMENT CONSUMPTION (%) Annual Growth Projection Source: Statistics Sentralbyra. Projections from OECD. PRIVATE CONSUMPTION (%) Annual Growth Projection The y/y growth rate of Norwegian GDP increased to 2.5% in 1Q17, expanding by 0.9 p.p. over the rate of the previous quarter. The acceleration of the Norwegian economy in this quarter was caused by the acceleration of domestic demand, motivated by the increments in the growth rates of private consumption (1 p.p. to 2.1%) and gross capital formation (5.4 p.p. to 11.8%). GDP s performance was offset by government consumption and the external sector. Exports accelerated by 2.8 p.p. during 1Q17 to a rate of 1%, recovering from the setback that followed the krone s appreciation during This performance was offset by that of imports, which registered an acceleration of 6.8 p.p. compared to 4Q16, up to a y/y growth rate of 8.2%. Projections from the OECD predict a stabilisation in GDP s y/y growth rate in 2017 and 2018, around 1.28% and 1.47% respectively. Government consumption experienced a contraction of its y/y growth rate of 0.3 p.p., down to 1.9% in 1Q17, thereby continuing the downward trend which started last quarter. OECD s projections place the growth rate of government spending at 2.06% in 2017 and 1.65% in In 1Q17, private consumption growth experienced an acceleration to a y/y growth rate of 2.1%, up by 1 p.p. from the rate of 4Q16. Forecasts from the OECD predict y/y growth rates of 2% in 2017 and 2.17% in 2018, which are 0.5 p.p. and 0.67 p.p. higher than the annual growth recorded during Source: Statistics Sentralbyra. Projections from OECD.

14 Macroeconomic Overview - Norway In the first quarter of 2017, inflation recorded a 2.57% rate, after decreasing by 1.03 p.p. when compared to the previous quarter, registering the lowest rate since 4Q15. Regarding the labour market, the unemployment rate experienced an increase of 0.1 p.p. during the quarter, standing at 4.5% in 1Q17. For its part, the y/y growth rate of employment registered a negative rate of -0.53%, which is 0.08 p.p. lower than the rate registered in 4Q In the first quarter of 2017, inflation in Norway registered 2.57%, which is 1.03 p.p. lower than in the fourth quarter of CPI growth has followed a downward trend since 4Q16, in spite of higher GDP growth during these quarters. The krone s appreciation during the course of last year partly explains this behaviour. Regarding CPI s components, the quarterly decrease of Norwegian CPI growth was explained by lower prices in most consumption groups, especially in clothing and footwear, household maintenance and water, electricity and gas, which registered decreases of 4.23 p.p., 2.63 p.p., and 1.7 p.p. respectively. Projections from the OECD predict decelerations of CPI in 2017, of 1.88%, and in 2018, of 1.84%. During the first quarter of 2017, the unemployment rate increased by 0.1 p.p. up to 4.5% at the end of the quarter. In absolute terms, the number of unemployed people amounted to 124,000 during 1Q17, which is 4,000 persons more than in the previous quarter. The OECD forecasts decreases in unemployment rates, down to 4.44% in 2017 and 4.25% in Employment y/y growth rate fell by 0.08 p.p. when compared to the previous quarter, standing at -0.53% in the first quarter of the year. In absolute terms, the number of employed people amounted to 2,628,000 during 1Q17, in comparison with 2,635,000 during the previous quarter. On an annual basis, the OECD expects acceleration to a y/y growth rate of employment to 0.74% in 2017 and to 1.13% in CPI (% year over year change) Annual Growth Projection Source: Statistics Sentralbyra. Projections from OECD. UNEMPLOYMENT RATE (% civilian labour force) Annual Average Projection Quarterly Value Source: Statistics Sentralbyra. Projections from OECD. EMPLOYMENT (%) Annual Growth Projection Source: Statistics Sentralbyra. Projections from OECD.

15 Macroeconomic Overview - Norway Economic and Financial Report 1Q17 TREASURY YIELD CURVES RATES (%) 3,00 2,50 2,00 1,50 1,00 0,50 0,00 3M 6M 9M 1Y 3Y 5Y 10Y Source: Norges Bank. 1Q15 1Q16 1Q17 EXCHANGE RATE ( NOK / $ ) Annual evolution Quarterly evolution Source: Norges Bank. During the first quarter of the year, the Norwegian treasury yield curve registered an increase for the 3-year, 5-year and 10-year bonds when compared to 1Q16, while the rest of maturities registered decreases. Moreover, bond yields continued to register positive rates for all maturities in 1Q17. The highest increases were recorded in 10-year bonds (0.34 p.p.), 5-year bonds (0.29 p.p.) and 3-year bonds (0.22 p.p.). On the other hand, the most remarkable reductions were registered in 3-month and 6-month bonds, which registered decreases of 0.11 p.p. and 0.05 p.p. respectively. For its part, when compared to 1Q15, Norwegian bonds interest rates registered a reduction in all maturities, except for 3-year, 5- year bonds and 10-year bonds. Regarding the exchange rate, the Norwegian krone depreciated against the dollar and registered a 8.44 NOK/$ exchange rate, which is 0.06 NOK/$ higher (0.7%) than the rate recorded in 4Q16. This performance is motivated by the drop in oil prices during 1Q17. For 2017, Danske Bank expects a moderate appreciation fueled by higher oil prices and interest rates. 15

16 Sweden Sweden In 1Q17, the Swedish economy experienced an acceleration to a y/y growth rate of 2.24%, which represents a 0.32 p.p. increase over the rate of the previous quarter. This performance is driven by the acceleration experienced in gross capital formation and private consumption, which is offset by the deceleration experienced in external demand and government consumption during this period. Private consumption registered an increase in its y/y growth rate of 0.09 p.p., up to 1.53%, while government consumption decelerated by 1.13 p.p. to a y/y growth rate of 0.58 in 1Q GDP (%) Annual Growth Projection Source: Statistics Sweden. Projections from OECD. GOVERNMENT CONSUMPTION (%) Annual Growth Projection Source: Statistics Sweden. Projections from OECD. PRIVATE CONSUMPTION (%) Annual Growth Projection Sweden s y/y economic growth rate increased by 0.32 p.p. during the first quarter of 2017, registering a 2.24% growth rate in 1Q17. This rate interrupts the downward trend initiated in the first quarter of During this quarter, the performance of the Swedish economy was driven by the acceleration of domestic demand, caused by higher growth in gross fixed capital formation with respect to 4Q16, (4.37 p.p. to 7.48%), as well as in private consumption. Government consumption and external demand decelerated during this quarter, due to both an increase in the growth rate of imports and a lower growth rate of exports. GDP growth is expected to decrease to its potential, down to 2.68% in 2017 and 2.27% in Government consumption experienced a contraction of its y/y growth rate of 1.13 p.p. down to 0.58% in 1Q17, which is the lowest growth rate recorded since According to the European Commission, the significant drop in the number of asylum seekers since the immigration wave of 2015 has led to substantial decline in government consumption growth. Forecasts from the OECD predict an increase in the growth rate of government consumption during 2017 and 2018, anticipating y/y growth rates of 2.68% and 2.54%, respectively. In 1Q17, private consumption growth experienced an acceleration of 0.09 p.p., standing at 1.53%. This growth rate is the lowest since 1Q13. The OECD predicts higher private consumption y/y growth rates, to 2.19 in both 2017 and 2018, supported by rising real disposable incomes and strong employment. Source: Statistics Sweden. Projections from OECD.

17 Macroeconomic Overview - Sweden Economic and Financial Report 1Q17 During the first quarter of 2017, inflation index continued its upward trend initiated in 4Q15, thus increasing by 0.07 p.p. up to 1.5% registered in 1Q17, which is below the 2% inflation target set by the central bank. This performance was mainly driven by the Swedish Central Bank s measures, which include unconventional policies such as bondbuying program and negative policy rates. Regarding unemployment rate, it recorded 7.1% in the first quarter of 2017, which is 0.7 p.p. higher than the rate registered in the previous quarter. Employment growth experienced an increase of 0.83 p.p. from the y/y growth rate registered in the fourth quarter of In the first quarter of 2017, inflation in Sweden registered 1.5%, which is 0.07 p.p. higher than in the fourth quarter of The quarterly increase of Swedish CPI growth is explained by higher prices in food and nonalcoholic beverages (+1.25 p.p.) and transport (+1.2 p.p.), as well as in housing, water, electricity and fuels (+1.18 p.p.). In addition, inflation accelerated as a result of rising cost pressures due to high capacity utilisation rates and tighter labour market conditions. Projections from the OECD predict further accelerations of CPI in 2017, of 1.64%, and in 2018, of 1.8%, as the Central Bank continues with the extension of its asset purchase program in 2017, and postpones the interest rate normalization until During the first quarter of 2017, the unemployment rate increased by 0.7 p.p. up to 7.1% at the end of the quarter. According to the European Commission, Swedish firms have reported skills shortages, in particular in the public and construction sectors. In addition, the unemployment rate of non-eu born and low-skilled people is expected to remain even more elevated. The OECD forecasts further decreases in unemployment rates, down to 6.54% in 2017 and 6.42 % in Employment y/y growth rate increased by 0.83 p.p. when compared to the previous quarter, standing at 2.35% in the first quarter of This growth rate is the highest recorded in our historical series initiated in the first quarter of Sweden has one of the highest employment rates in the EU (81.2% in 2016). On an annual basis, the OECD expects an acceleration of employment to a y/y growth rate of 2.1% in 2017, followed by a deceleration in 2018 to a y/y growth rate of 1.08%. Annual Growth Projection Source: Statistics Sweden. Projections from OECD. Annual Average CPI (% year over year change) Source: Statistics Sweden. Projections from OECD. Annual Growth UNEMPLOYMENT RATE (% civilian labour force) Projection EMPLOYMENT (%) Projection Quarterly Value T16 2T16 3T16 4T16 1T17 17 Source: Statistics Sweden. Projections from OECD.

18 Macroeconomic Overview - Sweden TREASURY YIELD CURVES RATES (%) M 3M 6M 2Y 5Y 7Y 10Y Source: Riksbank. 1Q15 1Q16 1Q17 In the first quarter of 2017, the interest rates of Swedish bonds registered a decrease for all maturities when compared to the same quarter of the previous year, except for 5-year bonds and 7-year bonds. In 1Q17, 7-year bonds and 10-year bonds were the only bonds that recorded positive yields, standing at 0.24% and 0.67% respectively, while 5-year bonds recorded 0%. In 1Q17, the most significant changes when compared to the same quarter of the previous year were recorded in 1-month bonds and 10- year bonds, whose interest rates decreased by 0.21 p.p. and 0.2 p.p. respectively. 18 EXCHANGE RATE (SEK/$ ) Annual evolution Quarterly evolution These decreases are mainly driven by the expansionary monetary policy adopted by Swedish central bank in order to stimulate the economy and to reach the 2% inflation target. Regarding the exchange rate, Swedish krona appreciated against the dollar, thus decreasing 0.12 SEK/$ from the rate registered in 4Q16, to an exchange rate of 8.92 SEK/$ in 1Q17. This appreciation was driven by the Riskbank s decision of postponing the interest rate normalization until Source: Riksbank. This exchange rate is 0.46 SEK/$ higher than the recorded in the same quarter of the previous year.

19 Economic and Financial Report 1Q17 Finland Finland In the first quarter of 2017, the Finnish economy experienced an acceleration of 0.46 p.p. with respect to the previous quarter of the year, standing at 2.82%. This growth in GDP was sustained by growth in investment and in net exports. Regarding government consumption, it faced a 0.77% growth rate in 1T17, which represents a 2.51 p.p. decrease since 4Q16. Private consumption, on the other hand, stood at 1.18% after decreasing by 0.84 p.p. with respect to the last quarter of Annual Growth Projection GDP (%) Source: Statistics Finland. Projections from the OECD Finnish s y/y economic growth rate accelerated by 0.46 p.p. during the first quarter of 2017, registering 2.82% in 1Q17. Finnish economic growth during this quarter was sustained by higher investment growth (2.56 p.p. to 7.93%) and net export growth, as the acceleration of exports (9.9 p.p. to 11.1%) exceeded that of imports (1.3 p.p. to 4.06%). Domestic demand registered a deceleration during this quarter, hindered by lower growth in both government and private consumption. Projections from the OECD predict an increase in y/y GDP growth rates, up to 1.96% in 2017, and a slowdown to 1.47% in GOVERNMENT CONSUMPTION (%) Annual Growth Projection Source: Statistics Finland. Projections from the OECD. PRIVATE CONSUMPTION (%) Annual Growth Projection Source: Statistics Finland. Projections from the OECD. The sharp deceleration in government consumption expenditure from its historical maximum growth reached in 4Q16 explains the deceleration of domestic demand during this period. Government consumption experienced a contraction of its y/y growth rate of 2.51 p.p., down to 0.77% in 1Q17. The general government s fiscal plan for contemplates expenditure cuts, as well as a reduction of public sector employees holiday bonuses. As a consequence, forecasts from the OECD predict a decrease in growth during 2017 to 0.05%. In 1Q17, the y/y growth rate of consumption in the private sector registered a deceleration of 0.84 p.p., standing at 1.18%. By type of goods, the lower growth rate is explained by a decrease in the growth of consumption of non-durable and semidurable goods (-1.05 p.p. and p.p. respectively, to 1.13% and 0.2%). In contrast, consumption of durables and services accelerated during this quarter, by 3.21 p.p. and 0.61 p.p. respectively, up to growth rates of 7.14% and 2.76%. The OECD predicts private consumption y/y growth rates of 1.14% in 2017, and 1% in

20 Macroeconomic Overview - Finland During the first quarter of 2017, inflation continued the upward trend initiated in 4Q15, thus registering a y/y growth rate of 0.93% at the end of the quarter. Regarding the labor market, the unemployment rate increased to 9.33% in 1Q17, which supposes a rebound of 1.3 p.p. when compared to the previous quarter. For its part, the y/y growth rate of employment registered a deceleration of 0.13 p.p., standing at 0.46% in 1Q17. In the first quarter of 2017, inflation in Finland registered a 0.93% rate, which is 0.2 p.p. higher than in the fourth quarter of the previous year. The quarterly increase of Finnish CPI growth is explained by higher growth of the prices of transport, alcoholic beverages and tobacco, and clothing. Electricity, gas and other fuels also experienced an increase, of 3.79 p.p. to a growth rate of 6.59%. Projections from the OECD predict further accelerations of CPI, forecasting an inflation rate of 1.2% in 2017 and 1.49% in CPI (%) Annual Growth Projection Source: Statistics Finland. Projections from the OECD. 20 During the first quarter of 2017, the unemployment rate increased by 1.3 p.p. up to 9.33% at the end of the quarter. Although the Competitiveness Pact is expected to improve employment prospects, its effect on the unemployment rate will be partly offset by the decline in working age population, as the baby boom cohorts reach the retirement age. The OECD forecasts further decreases in unemployment rates, down to 8.47% in 2017 and 8.19% in Employment y/y growth rate decreased by 0.13 p.p. when compared to the previous quarter, standing at 0.46% in the first quarter of 2017, as a result of a shrinkage in the working-age population. Regarding the foreseeable future, the OECD expects growth to continue on the same trend on the back of increases in investment and exports to y/y growth rates of 0.57% in 2017 and of 0.45% in UNEMPLOYMENT RATE (% civilian labour force) Annual Average Projection Quarterly Value Source: Statistics Finland. Projections from the OECD. EMPLOYMENT (%) Annual Growth Projection Source: Statistics Finland. Projections from the OECD.

21 Macroeconomic Overview - Finland Economic and Financial Report 1Q17 TREASURY YIELD CURVES RATES (%) Y 3Y 4Y 5Y 6Y 8Y 10Y 15Y Source: Suomen Pankki. 1Q15 1Q16 1Q17 EXCHANGE RATE ($/ ) Annual Growth Projection Quarterly Evolution Q15 4Q15 1Q16 2Q16 3Q16 Source: Data and projections from the European Central Bank. During the first quarter of the year, treasury bond yields registered generalized reductions from those observed in 1Q16 for all maturity types considered. The main driver of this decrease was the expansionary monetary policy of the ECB which, through a combination of low reference rates and its asset purchasing program, is increasing the demand for assets and bonds. In comparison to the first quarter of 2015, however, the bond yield curve of 1Q17 crosses that of 1Q15 at 10-year maturities, registering higher interest rates for 15-year bonds. The euro depreciated by $0.02 with respect to the dollar in the first quarter of 2017, recording an exchange rate of 1.06 $/. This behavior is explained by the different monetary policies being implemented by US and the Eurozone s Central Banks. The Fed s interest rate hikes adopted in December and March, as well as the continuation of the ECB s asset purchase program are the main drivers of this depreciation. According to the ECB, an appreciation of the euro is expected for 2017, reaching an exchange rate of 1.08 $/. This situation is expected to extend to 2018, when the ECB projects an exchange rate of 1.09 $/. 21

22 4. Banking sector: general overview Denmark - Loans During the first quarter of the year, loans to non-financial increased their share by 0.77 p.p. when compared to 4Q16, concentrating 27% of total loans in 1Q17. In contrast, loans to financial and loans to households decreased their shares by 0.6 p.p. and 0.17 p.p., respectively. Regarding growth rates, total loans y/y growth rate decreased by 0.74 p.p. when compared to 4Q16, registering -3.84% in 1Q17. By segments, loans granted to financial and loans granted to households registered lower growth rates when compared to the previous quarter. Regarding the distribution of loans during the first quarter, loans to non-financial increased their share by 0.77 p.p. up to 27%. On the other hand, loans to households and financial decreased their share by 0.17 p.p. and 0.6 p.p. respectively when compared to 4Q16. Loans to households continue registering the highest share at 46.75% of total loans in 1Q17. During the first quarter of 2017, total loans registered a decrease of 0.74 p.p. in their y/y growth rate, standing at -3.84% in 1Q17. By type of institution, all segments registered lower y/y growth rates than the ones observed in the previous quarter, except for non-financial. Thus, financial and households recorded decreases of 1.95 p.p. and 0.72 p.p. respectively when compared to the previous quarter, standing at % and -0.94% in 1Q % Source: Danmarks Nationalbank. LOANS DISTRIBUTION (%) 26.26% 27.00% Non-financial Financial Households In contrast, loans to non-financial recorded a 5.8% y/y growth rate in the first quarter of 2017, which is 0.88 p.p. higher than the rate registered in the previous quarter. 22 LOANS AND LEASES (% change from the same quarter of the previous year) Total Institutions Non-financial Financial Households Source: Danmarks Nationalbank. Note: total institutions include all domestic sectors

23 Economic and Financial Report 1Q17 Denmark - Deposits During the first quarter of 2017, total deposits increased their y/y growth rate by 0.05 p.p. up to 7.06% at the end of the quarter. This performance was driven by non-financial deposits and household deposits, whose y/y growth rates increased by 3.36 p.p. and 1.5 p.p. respectively when compared to 4Q16. Regarding deposits distribution by type of institution, household deposits accounted for 63.5% of total deposits, while financial deposits and non-financial corporation deposits accounted for 20.93% and 15.57% respectively. DEPOSITS DISTRIBUTION (%) In 1Q17, total deposits y/y growth rate continued to grow at a rate of 7.06%, which represents an increase of 0.05 p.p. when compared to the previous quarter % 20.93% 63.50% Source: Danmarks Nationalbank. Non-financial Financial Households This quarterly increase in total deposit growth was driven by deposits to non-financial and household deposits. Thus, their y/y growth rates stood at 7.73% and 6.57% in 1Q17 respectively, which supposes increments of 3.36 p.p. and 1.05 p.p. when compared to 4Q16. For its part, deposits to financial registered a y/y growth rate of 8.74% in 1Q17, which is 9.31 p.p. lower than the one registered in the previous quarter. Regarding the distribution of deposits, in 1Q17 household deposits concentrated 63.5% of total deposits. When compared to the previous quarter, financial increased their share by 1.11 p.p. while deposits from households and non-financial decreased their share by 0.49 p.p. and 0.62 p.p. respectively. DEPOSITS (% change from the same quarter of the previous year) 23 Total Institutions Non-financial Financial Households Source: Danmarks Nationalbank. Note: total institutions include all domestic sectors.

24 Norway - Loans During the first quarter of the year, loans distribution registered changes when compared to the fourth quarter of Household loans represented 49.05% of total loans, the highest share within the Norwegian loans system. For its part, the y/y growth rate of total loans increased by 4.3 p.p. when compared to the previous quarter, registering 4.28% in 1Q17. During the first quarter of 2017, changes in loans distribution were observed when compared to the previous quarter. Thus, loans granted to financial experienced a reduction of their share of 0.63 p.p., concentrating 11.28% of total loans in 1Q17. In contrast, loans granted to non-financial and loans granted to households concentrate 39.67% and 49.05% of total loans, which supposes rises of 0.59 p.p. and 0.04 p.p. respectively when compared to the previous quarter. During the first quarter of the year, total Norwegian loans y/y growth rate registered a rebound from the previous quarter, increasing by 4.3 p.p. and recording 4.28% in 1Q17. This performance was driven by the increases in the growth of all segments, except for loans granted to financial. Thus, loans granted to non-financial and loans granted to households increased their y/y growth rates by 1.28 p.p. and 1.29 p.p. when compared to 4Q16, registering 2.56% and 6.56% in 1Q % Source: Statistics Norway LOANS DISTRIBUTION (%) 39.67% 11.28% Non-financial Financial Households On the other hand, loans granted to financial reduced their y/y growth rate by p.p. when compared to the previous quarter, standing at 7.93% in 1Q17. However, loans granted to financial registered the highest y/y growth rate within Norwegian loans system in the first quarter of LOANS AND LEASES (% change from the same quarter of the previous year) Total Institutions Non-financial Financial Households Source: Statistics Norway.

25 Economic and Financial Report 1Q17 Norway - Deposits Regarding the distribution of Norwegian deposits, those of non-financial and households concentrated 35.31% and 55.89% respectively of total deposits in 1Q17, from 34.33% and 57.46% in 4Q16. Regarding total deposits growth, it stood at 10.09% in the first quarter of 2017, which is 6.11 p.p. higher than in the previous quarter % Source: Statistics Norway. DEPOSITS DISTRIBUTION (%) 35.31% 8.80% Non-financial Financial Households During the first quarter of 2017, the distribution of deposits experienced changes when compared to the fourth quarter of the Thus, deposits granted to households reduced their share by 1.56 p.p., accounting for 55.89% of total loans. On the other hand, financial and non-financial registered rises of their shares of 0.59 p.p. and 0.98 p.p. up to 8.8% and 35.31% of total deposits respectively. In the first quarter of 2017, total deposits in the Norwegian financial system experienced an increase. Thus, the y/y growth rate recorded in 1Q17 was 10.09%, which was 6.11 p.p. higher than the one recorded in the previous quarter. The increase in total deposits growth rate was driven by non-financial and financial segments, which registered rates of 15.12% and 0,35% respectively, supposing increases of 7.88 p.p. and 3.15 p.p. from the rates registered in 4Q16 respectively. On the other hand, households continued decreasing its rate, 0.6 p.p. less than the previous quarter, reaching a rate of 4.44% in 1Q17. DEPOSITS (% change from the same quarter of the previous year) 25 Total Institutions Non-financial Financial Households Source: Statistics Norway.

26 Sweden - Loans During this quarter, financial were the only entities that registered a higher share over total loans with respect to the previous quarter. For its part, non-financial remained as the leader in loans share reaching 53.02% of total loans during 1Q17. The Swedish financial system recorded an acceleration of 1.66 p.p. in its growth rate, which increased to 5.57%. This performance was due to the increase experienced in the growth rate of loans to non-financial and households. During the first quarter of 2017, the segment of financial registered a higher share over total loans when compared to the previous quarter, reaching 11.58% after an increase of 0.83 p.p. On the other hand, nonfinancial and household decreased their shares from 4Q16 by 0.3 p.p. and 0.53 p.p. respectively. During 1Q17, nonfinancial continued recording the highest share, standing at 53.02%. Respect to the fourth quarter of 2016, all loan segments registered increases in their y/y growth rate except for financial, whose y/y growth rate decreased by 4.68 p.p. down to 5.35% in 1Q17. Loans granted to non-financial and households registered increases in their y/y growth rates of 5.01 p.p. and 0.05 p.p. respectively respect to 4Q16. These increases boosted the y/y growth rate of total loans, which rose by 1.66 p.p. to 5.57% in the first quarter of the year. Source: Statistics Sweden % 11.58% LOANS DISTRIBUTION (%) 53.02% Nonfinancial Financial Households In addition to the quarterly increase of the y/y growth rate of total loans in Sweden, the first quarter rate is 1.42 p.p. higher than the rate registered in the same quarter of the previous year. 26 LOANS AND LEASES (% change from the same quarter of the previous year) Total Institutions Non-financial Financial Households Source: Statistics Sweden.

27 Economic and Financial Report 1Q17 Sweden - Deposits Deposits from households in Sweden represented 54.8% of total deposits during 1Q17, which is 2.91 p.p. lower than the rate recorded in the previous quarter. Regarding total domestic deposits, they recorded an acceleration from a rate of 9.9% in 4Q16 to 12.59% in the first quarter of This performance was driven by the increases recorded in deposits of financial and non-financial, whose y/y growth rates rose by 6.03 p.p. and 7.89 p.p., up to 24.65% and 18.09% respectively in 1Q % Source: Statistics Sweden. DEPOSITS DISTRIBUTION (%) 31.81% 13.38% Nonfinancial Financial Households During 1Q17, all considered segments within the Swedish deposit system recorded higher shares from the previous quarter, except for households, which registered a decrease of 2.91 p.p. Despite this, households remained the segment with the highest share at 54.8%, followed by non-financial at 31.81% and financial at 13.38% in the first quarter of the year. Regarding quarterly changes, total institutions experienced an increase of in their y/y growth rate of 2.69 p.p., registering 12.59% in the first quarter of the year. This increase was boosted by deposits to financial and non-financial, whose y/y growth rates increased by 6.03 p.p. and 7.89 p.p., up to 24.65% and 18.09% respectively in 1Q17. On the other hand, the y/y growth rate of deposits of households decreased by 1.09 p.p., standing at 7.16% at the end of the first quarter. DEPOSITS (% change from the same quarter of the previous year) 27 Total Institutions Non-financial Financial Households Source: Statistics Sweden.

28 Finland - Loans In 1Q17, financial held the largest share of total loans at 40.3%, which is 2.55 p.p. lower than the share experienced in the fourth quarter of Total loans year-over-year growth rate recorded a decrease during the first quarter of the year, driven by the decline in the growth rate of loans to financial. On the other hand, both non-financial and households registered an increase in their respective y/y growth rate from 4Q16. In the first quarter of the year, financial continued to register the highest share of granted loans over total loans, standing at 40.3%. Nevertheless, this share is 2.55 p.p. lower than the one registered in the previous quarter. For its part, non-financial and households stood at 34.12% and 25.57%, which are 1.79 p.p. and 0.76 p.p. higher than in 4Q16. During this quarter, the growth rate of loans decreased 3.44 p.p. when compared to the previous quarter, registering a growth rate of -7.55% in 1Q17 from -4.11% in 4Q16. Loans have thus been decelerating for four consecutive quarters % LOANS DISTRIBUTION (%) 40.30% Source: Statistics Finland % Non-financial Financial Households Regarding loan segments, the deceleration in the growth rate of financial was the main driver of the performance experienced by total institutions. In this quarter, their y/y growth rate registered a decrease of 9.23 p.p. with respect to the previous quarter, standing at % during 1Q17. On the other hand, loans granted to non-financial and households experienced increments in their growth rates. Hence, they stood at -2.64% and 3.65%, respectively, during the first quarter of the year. However, non-financial registered negative levels of growth for the fourth consecutive quarter, dating back to the second quarter of LOANS AND LEASES (% change from the same quarter of the previous year) Total Institutions Non-financial Financial Households Source: Statistics Finland.

29 Economic and Financial Report 1Q17 Finland - Deposits During 1Q17, financial registered a share of 67.22% of total deposits, followed by households deposits (22.44%) and non-financial (10.33%). Moreover, the former was the only segment that registered an increase in its share from the previous quarter. Regarding y/y changes, the increase recorded for all institutions was driven by the acceleration of non-financial and households when compared to the previous quarter. 22,44% 67,22% Source: Statistics Finland. DEPOSITS DISTRIBUTION (%) 10,33% Non-financial Financial Households Regarding the distribution of deposits during the first quarter of 2017, financial was the only segment that increased its share over total deposits from the previous quarter, standing at 67.22% in 1Q17 from 56.32% in 4Q16. For its part, non-financial and households registered decrements from 4Q16 of 4.07 p.p. and 6.83 p.p. respectively, standing at 10.33% and 22.44%. In 1Q17, total deposits y/y growth rate registered an acceleration of 1.36 p.p. from 4Q16. This performance was mainly driven by the increases registered in the growth rate of deposits of the financial (13.82 p.p.) and non-financial (0.82 p.p.). Moreover, non-financial deposits registered the lowest y/y growth rate within the Finnish deposit system, standing at -8.07% in 1Q17, and continued being the only segment registering negative growth. On the other hand, households during 1Q17 registered a deceleration of 0.19 p.p. from the fourth quarter of the previous year. In this quarter, households recorded a growth rate of 3.75%. DEPOSITS (% change from the same quarter of the previous year) 29 Total Institutions Non-financial Financial Households Source: Statistics Finland.