Nomura Financial Services Conference London, 29 August 2012 Jan Erik Back, CFO
SEB s strategy remains firm Universal bank in Sweden and the Baltics Corporate bank in the Nordics, Germany and internationally Resilience and flexibility: Capital, liquidity and costs 2
SEB has actively reduced its earnings volatility Income volatility, Q2 2008 Q1 2012 (per cent) SEB Peer average 15 10 5 0 Last 16 quarters Last 12 quarters Last 8 quarters Last 4 quarters Source: Nordea Equity Research, June 2012 Strategic actions to reduce income volatility Divestment of non-core businesses Reduced size of investment portfolios Secured funding and liquidity reserves Maintained high asset quality Growth in areas of strength 3
SEB s DNA Customer segments Size Income distribution 2011 ( per cent) Large Corporates Financial Institutions 2,000 customers 700 customers SEB Swedbank SHB SME 400k customers Nordea 0% 10 % 20 % 30 % 40 % 50 % 60 % 70 % 80 % 90 % 100 % Private 4m customers Large Corporates & Institutions Retail Life Wealth 4
For the first time SEB named Best Bank for Large Corporates and Institutions in the Nordics 2011 Voice of the customer: SEB is the #1 wholesale bank in the Nordics +20% SEB SEB SEB #2 #3 SEB SEB Note: Net change between 2010 and 2011 (left-hand graph). Country scores 2011 (right-hand graph) The result is based on 62 surveys across the Nordics. Source: Prospera Large Corporates & Institutions Surveys 2011 5
Large corporate Nordic and German expansion Platform now in place Operating profit growth (SEK bn) +20% +29% 1.0 0.8 H1 2011 H1 2012 H1 2011 H1 2012 +22% -1% 0.4 0.6 H1 2011 H1 2012 H1 2011 H1 2012 Note: Germany excludes centralised Treasury operations and wind-down portfolio of real estate assets Expansion KPIs from start 2010 +254 +SEK 126bn new large cap clients new loans and commitments 6
Swedish SMEs: Market share steadily increases with 1 per cent per annum Increased number of customers* 140,000 120,000 100,000 80,000 60,000 40,000 20,000 0 2005 2006 2007 2008 2009 2010 2011 H1 2012 Note: Active cash management corporate customers Standardised solutions Solutions, not products Directly covers 70 per cent of the customers need +20.600 SME credit portfolio (SEK bn) 180 160 140 120 100 80 60 40 20 0 Tailored solutions Advisory International/FX More complex financing Insurance +35bn 2008 2009 2010 2011 H1 2012 Occupational insurance (corporate paid) 7
Enhanced Retail franchise in Sweden continuous growth among private customers Growth private market Full service customers (thousands) Increased market shares Mortgage market share* 500 +28,000 15.1% 15.5% 400 13.0% 13.3% 13.5% 300 200 100 0 2008 2009 2010 2011 H1 2012 2008 2009 2010 2011 Q2 2012 Household deposit market share* 11.6% 11.3% 11.6% 11.8% 12.0% 2008 2009 2010 2011 Q2 2012 Source: Swedish statistics 8
Swedish mortgage portfolio: Low LTVs and strict lending criteria Mortgage lending based on affordability Credit scoring and assessment 7% interest rate test and 60 years amortisation in cash flow calculation 85% regulatory first lien mortgage cap &minimum 15% of own equity required If LTV >75% requirement to amortise Max loan amount 5x total gross household income irrespective of LTV Sell first and buy later recommendation Low LTVs by regional and global standards Loan-to-value Share of portfolio >85% 2% 51-85% 18% 0-50% 80% Transparent interest rate discussion Individual pricing based on; Household disposable income Collateral Size of other assets Total mortgage amount vs. property value Funding cost transparent and updated daily Customer margin SEB s Liquidity cost Stibor 90 days Funding cost for 3 month fixed mortgage rate 9
Highlights Q2 2012 Franchise and income growth Continued cost efficiency Balance sheet strengthened further 10
Profit and loss trend Profit and loss development Q2 2010 Q2 2012 (SEK bn) 9.9 5.7 Q2-10 Q2-11 Q2-12 Q2-10 Q2-11 Q2-12 Q2-10 Q2-11 Q2-12 Operating income Operating expenses Net credit losses -0.3 Pre-provision profit and operating profit (SEK bn) Operating profit Pre-provision 4.2 Q2-10 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Q2-12 11
Net interest income development Net interest income Q2 2010 Q2 2012 (SEK bn) 5 4 3 2 1 0 Q2-10 Q3 Q4 Q1-11 Q2 Q3 Q4 Q1-12 Q2 Net interest income by income type Q2 2010 Q2 2012 (SEK bn) 3.1 0.8 0.6 Q2-10 Q2-11 Q2-12 Q2-10 Q2-11 Q2-12 Lending Deposits Q2-10 Q2-11 Q2-12 Funding & other 12
Lending and deposit volumes Corporates and households Jun 2012 (SEK bn) Customer centric strategy 1,500 1,200 Financial crisis +150 Sov debt crisis +80 +19 Supporting core customers in times of need Deposit patterns show flight to quality in turbulent times 900 +95 +145 +85 Lending (6.5% CAGR) 600 300 Deposits (6.3% CAGR) 0 Dec- 00 Dec- 01 Dec- 02 Dec- 03 Dec- 04 Dec- 05 Dec- 06 Dec- 07 Dec- 08 Dec- 09 Dec- 10 Dec- 11 Excluding divested businesses 13
Net fee and commission income development Net fee and commissions Q2 2010 Q2 2012 (SEK bn) 5 4 3 2 1 0 Q2-10 Q3 Q4 Q1-11 Q2 Q3 Q4 Q1-12 Q2 Gross fee and commissions by income type Q2 2010 Q2 2012 (SEK bn) 2.4 1.7 0.6 Q2-10 Q2-11 Q2 Advisory, secondary markets and derivatives Q2-10 Q2-11 Q2 Custody and mutual funds Q2-10 Q2-11 Q2 Payments, cards, lending, deposits and guarantees 14
Net financial income development Net financial income Q2 2010 Q2 2012 (SEK bn) 4 3 2 1 0 Excl. GIIPS de-risking Q2-10 Q3 Q4 Q1-11 Q2 Q3 Q4 Q1-12 Q2 Net financial income development (SEK bn) NFI Divisions NFI Treasury & Other GIIPS 1.2 1.2 1.2 1.1 1.2 1.3 0.0-0.2-0.2 0.0-0.2 0.0 Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Q2-12 Drivers of net financial income Stability from customer-driven flows in divisions Limited impact from volatility on MTM liquidity portfolio Highest quality sovereign and covered bonds with full central bank eligibility 15
Operating leverage through cost efficiency Average quarterly income (SEK bn) Average quarterly expenses (SEK bn) 9.2 9.4 9.8 5.9 5.8 5.7 Avg 2010 Avg 2011 Avg 2012 Operating leverage Avg 2010 Avg 2011 Avg 2012 Average quarterly profit before credit losses (SEK bn) 3.2 3.6 4.1 Avg 2010 Avg 2011 Avg 2012 16
Continued high asset quality Distribution of loan portfolio and credit losses Q2 2010 Q2 2012 (SEK bn) Nordics 73% Group credit loss level 0.07% Baltics 9% -0.3 Other 3% Germany 15% Q2-10 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Q2-12 NPLs by region Q2 2010 Q2 2012 (SEK bn) Nordics Germany Baltics 11.2 3.3 1.8 Q2-10 Q2-11 Q2-12 Q2-10 Q2-11 Q2-12 Q2-10 Q2-11 Q2-12 17
~90 per cent of 2012 maturities re-financed Long-term funding activities (SEK bn) Senior unsecured and covered bonds (SEK bn) 140 Issued Covered Bonds Matured Covered Bonds Issued Senior Unsecured Matured Senior Unsecured Instrument 2011 H1 2012 Maturing 2012 120 Senior unsecured SEB AB 32 21 31 100 Covered bonds SEB AB 95 39 35 80 Covered bonds SEB AG 0 1 4 60 Total 126 61 70 40 20 0 2009 2010 2011 2012 2013 2014 2015 18
Higher Core Tier 1 ratio through generated capital and efficient risk management Basel II Core Tier 1 ratio (%) 15.3 Illustrative 13.7 Regulatory target range ~ +2.1 RWA real estate model 15.3 15.3 8.7 13.7 Higher quality Business volumes Generated capital ~ -0.5 Q2-08 Q4-08 Q2-09 Q4-09 Q2-10 Q4-10 Q2-11 Q4-11 Q2-12 19
SEB is well capitalised across all metrics 30 June, 2012 SEB Nordea Swedbank SHB 18% 16% --------------------------------------------------- Core/common equity tier 1 ratios --------------------------------------------------- 14% 12% 10% 8% 6% 4% 2% 0% Equity/Assets Basel I Basel II transition rules Basel II Basel III post IAS 19 Basel III post IAS 19, RWA mitigation and 15% mortgage risk weight floor Source: SEBEnskilda 20
Still missing pieces in Swedish finish on regulation Capital Liquidity Common Equity Tier 1 Ratio > 10% by 2013 Liquidity Coverage Ratio > 100% by 2013 Common Equity Tier 1 Ratio > 12% by 2015 Countercyclical buffer 0-2.5% by 2013 [TBD] Mortgage risk-weights? [TBD] Net Stable Funding Ratio [TBD] > 100% by 2018/19 21
Recent economic development in Sweden Swedish economy so far rather resilient to the Euro crises Strong Q2 GDP development driven by retails sales, rebound to be expected in H2 But sub-par growth also 2013 Krona strengthening accelerated vs. EUR and USD EUR/SEK +10 per cent during the summer Limited impact so far, but more focus on long-term impact Swedish Central Bank repo rate in focus Two cuts anticipated before early -13 to stimulate growth House price worries abating Soft landing anticipated Swedish economic indicators GDP, YoY, per cent 10 5 0-5 -10 2005 2007 2009 2011 2013 12 11 10 9 SEK/EUR 8 7 2005 2007 2009 2011 2013 Riksbanks repo rate House prices index 5 150 4 3 100 2 1 50 0 0 2005 2007 2009 2011 2013 2005 2007 2009 2011 22
Outlook Slow pace of recovery to continue Flight to quality to benefit strong banks Need for continued resilience and flexibility 23
The Relationship bank in our part of the world 24