Swedbank s third quarter 2018 results

Swedbank s third quarter 2018 results Birgitte Bonnesen (CEO), Anders Karlsson (CFO), Helo Meigas (CRO)

Swedbank in the Baltics

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 283 000 Private customers 0.9m Corporate customers 132 000 46% 37% 55% 43% 59% LATVIA Loans (p) Loans (c) Deposits (p) Deposits (c) Payments Private customers 0.9m Corporate customers 83 000 31% 18% 34% 19% 50% LITHUANIA Loans (p) Loans (c) Deposits (p) Deposits (c) Payments Private customers 1.5m Corporate customers 68 000 34% 19% 40% 26% 49% (p) private (c) corporate Domestic payment transactions (Estonia, Latvia, Lithuania) Source: Baltic central banks, Swedbank Fact book Q3 2018 3

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% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Jun18 0.0% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 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 4

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% 2008 2009 2010 2011 2012 2013 2014 2015 2008 2009 2010 2011 2012 2013 2014 2015 2008 2009 2010 2011 2012 2013 2014 2015 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% 2008 2009 2010 2011 2012 2013 2014 2015 2008 2009 2010 2011 2012 2013 2014 2015 2008 2009 2010 2011 2012 2013 2014 2015 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 5

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 6

We have continuously worked with antimoney laundering Systematic approach to assure detection of suspicious transactions and business activities Systematic approach to KYC and on-boarding process Swedbank s policy is to serve customers with clear local business ties Work closely with authorities, regulators as well as with correspondent banks Zero tolerance AML in all markets where we operate Throughout the years reacted on all signals, from our own channels as well as from external parties. Same governance, systems and processes to detect money laundering on all our markets No ongoing investigations from any of our regulators concerning AML-practices Swedbank acts forcefully on all signals 7

Swedbank third quarter financial results

Group financial highlights, Q3 2018 TOTAL INCOME SEK 11.2bn 12 8 4 0 Total income, SEKbn Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Continued loan volume growth Strong net commission income from cards and asset management Total expenses, SEKbn TOTAL EXPENSES SEK 4.0bn 6 4 2 Underlying expenses in line with FY 2018 guidance 0 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Credit impairments, SEKm CREDIT IMPAIRMENTS SEK 117m 400 300 200 100 0-100 -200 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Solid asset quality KEY RATIOS ROE C/I ratio Credit impairment ratio CET1 capital ratio NSFR 16.9% 0.36 0.03% 24.3% 110% Q3 2018 9

Group result Higher net interest income NII, SEKm Continued loan volume growth 6 275 84 43 36 5-9 -107 6 327 Stable margins Lower resolution fund fee One more day in the quarter Less favorable USD funding market Q2 2018 Loan volumes Margins Resolution fund and deposit guarantee fee Day count FX Treasury & Other Q3 2018 Q3 2018 10

Group result Strong net commission income NCI, SEKm Seasonally higher cards income 3 236 45 54-2 3 3 336 Asset management income supported by positive asset value development and mutual fund inflows Q2 2018 Cards & Payments Asset management Lending & guarantees Other Q3 2018 Q3 2018 11

Group result Stable underlying revenue generation NGL, SEKm 525 Other Income, SEKm 723 Other income 356 959 559 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 UC, one-off 806 976 1 026 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 635 488 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 1 653 Positive impact from changed 677 valuation of Visa shares Continued good performance in recurring revenue items insurance, Entercard, savings banks/associates Q3 2018 12

Group result Underlying expenses in line with FY2018 guidance Total Expenses FY2018 guidance, SEK Main currencies breakdown in cost base Original expense guidance of below SEK 17bn -200m Restructuring charge release 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, 2017 115 FX impact YTD 2018 vs YTD 2017, SEK 110 105 100 95 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 Q3 2018 Bar chart proportions for illustration purposes only 13

Group result Strong core revenues SEKm Q3 18 Q2 18 QoQ Net interest income 6 326 6 273 53 Net commission income 3 336 3 236 100 Net gains and losses 488 635-147 Other income 1 026 1 653-627 Total income 11 176 11 797-621 Total expenses 3 998 4 262-264 Profit before impairments 7 178 7 535-357 Credit impairments 117-135 252 Other impairments 282-282 Tax 1 530 1 369 161 Net profit 5 525 6 014-489 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, % 16.9 19.2 C/I ratio 0.36 0.36 CET1 capital ratio, % 24.3 23.6 Q3 2018 14

Capital Strong capitalisation no excess capital 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 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 CET1 capital ratio requirement REA decreased by SEK 7bn Buffer of around 280bps above minimum requirements Q3 2018 15

Capital Decreased Risk Exposure Amount (REA) REA, SEKbn 434.5 0.2 0.1 427.5 REA decreased by SEK 7bn Positive collateral valuation effect -7.3 Positive FX effect Q2 2018 Credit risk Market risk CVA risk Q3 2018 Q3 2018 16

Group Solid asset quality Credit impairments, SEKm Q3 18 Q2 18 QoQ Swedish Banking 71 84 Baltic Banking 8-87 Resilient asset quality in all business segments Large Corporates & Institutions 37-126 Swedbank Group 117-135 Ratios Q3 18 Q2 18 Credit impairment ratio, % 0.03-0.03 Share of Stage 3 loans, gross % 0.67 0.67 Total credit impairment provision ratio, % 0.33 0.33 Q3 2018 17

Appendix

Group results Strong core revenues SEKm Q3 18 Q2 18 QoQ Q3 17 YoY Net interest income 6 326 6 273 53 6 208 118 Net commission income 3 336 3 236 100 2 962 374 Net gains and losses 488 635-147 525-37 Other income 1 026 1 653-627 723 303 Total income 11 176 11 797-621 10 418 758 Total expenses 3 998 4 262-264 3 883 115 Profit before impairments 7 178 7 535-357 6 535 643 Credit impairments 117-135 252 235-118 Other impairments 282-282 107-107 Tax 1 530 1 369 161 1 444 86 Net profit 5 525 6 014-489 4 743 782 Ratios Q3 18 Q2 18 Q3 17 ROE, % 16.9 19.2 15.0 C/I ratio 0.36 0.36 0.37 CET1 capital ratio, % 24.3 23.6 23.9 Q3 2018 19

Continued volume growth Loans +11bn Deposits +2bn * Swedish mortgage loans +8bn Baltic Banking +0bn Corporate excl. Baltic Banking +4bn Private +8bn Corporate -6bn Of which FX -2 Of which FX -1 Of which FX -2 Q3 2018 *excl. Group functions and other (Group Treasury) 20

Swedbank has a low-risk residential property portfolio Swedish housing and mortgage market Real estate lending, net loans in Sweden, SEKbn 1 111 788 109 69 128 17 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 Q3 2018 21

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 By geography 1) 5% 24% 57% 4% 10% Stockholm region Gothenburg region Malmö region >50 000 inhabitants <50 000 inhabitants Finalisation year 2) 38% 10% SEK 10bn 2018 2019 2020-52% 100 90 80 70 60 50 40 30 20 10 0 Average % pre-sold by finalisation year 2) 2018 2019 2020-1) As of 30 September 2018 2) Share of exposure 22

Swedbank low-risk bank with strong capital base This is Swedbank 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% NSFR LCR* CET1 ratio, CRDIV (RHS) 200 30 150 20 100 10 50 0 0 2013 2014 2015 2016 2017 Q3 2018 40 30 20 10 0 Liquidity & capital, % Credit impairment ratio, bps * From Q1 2018 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) -10 Q3 13 Q3 14 Q3 15 Q3 16 Q3 17 Q3 18 Q3 2018 23

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 Disposal, one-off 8 6 4 2 0 Q3 13 Q3 14 Q3 15 Q3 16 Q3 17 Q3 18 Q3 2018 24

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 markets 20 18 16 14 12 60 55 50 45 40 35 30 Total expenses, SEKbn Acquisition, one-off 2012 2013 2014 2015 2016 2017 2018 Cap C/I ratio, % 2012 2013 2014 2015 2016 2017 Q3 2018 25

Focus on sustainable business Improved sustainability scores Dow Jones Sustainability Index Green mortgage launch Green mortgage 2011 2012 2013 2014 2015 2016 2017 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 457 309 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. 26

Swedbank creates value Strategy % 30 SEK 14 Return on Equity >15% target 25 20 15 10 5 0 2013 2014 2015 2016 2017 YTD 2018 Return on equity (LHS) CET1 capital ratio (LHS) Dividend per share (RHS) 12 10 8 6 4 2 0 17.0% (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 13.00 Q3 2018 27

Conservative funding position LCR 148% (EU 2015/61) Liquidity and funding NSFR 110% (Basel committee) Issued around SEK 104bn YTD Q3 2018 (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 100 90 80 70 60 50 40 30 20 10 0 Covered bonds Senior unsecured debt 800 Planned, covered bonds Planned, senior unsecured debt 700 Survival horizon Tier 2 600 500 400 300 200 100 0 0 20 40 60 80 100120140160180200220240260280300320340365 Days forward Q3 2018 28

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 200 150 100 50 150 100 50 Other GBP USD EUR SEK 0 2018 2019 2020 2021 2022 2023 2024-0 2018 2019 2020 2021 2022 2023 2024- Q3 2018 29

Real-estate price performance Sweden, 12 month Swedish housing and mortgage market Single-family homes 1 Tenant-owner rights 2 Combined 3 12M Δ 12M Δ 12M Δ Oct 17 4% 1% 3% Nov 17 1% -3% 0% Dec 17 0% -6% -2% Jan 18 0% -6% -2% Feb 18-1% -8% -4% Mar 18-2% -9% -4% Apr 18-2 -7-4 May 18-2 -7-4 350 300 250 House price index, Sweden 2005=100 Total Tenant-owner rights (apartments) Single-family houses Jun 18-2 -7-4 Jul 18-3 -7-5 Aug 18-3 -7-5 Sep 18-3 -5-4 0 Source: Valuegard www.valuegard.se (Based on data from Mäklarstatistik), 1 HOXHOUSESWE, 2 HOXFLATSWE (apartments), 3 HOXSWE 05 06 07 08 09 10 11 12 13 14 15 16 17 18 Q3 2018 30 200 150 100 50