Swedbank investor presentation February 2014
Executive summary Market position Swedbank (A+/A1/A+) is the largest retail bank in Sweden and the market leader in private mortgages and deposits in all of its home markets. Approximately 86% of its total lending is originated in Sweden, which is one of the healthier economies among the mature markets Income lending and deposits (66%), asset management (11%), and payment/cards (8%) are the main income sources. RoE of 14.7% and C/I ratio of 0.45 (FY 2013) Capitalisation strong capitalisation with CET1 capital ratio of 18.3% (full Basel 3) Asset quality solid quality with credit impairments of 0.5bps (FY 2013). Show resilience in FSA and Riksbank stress tests. Funding structure deposits and covered bonds (AAA/Aaa) make up the primary sources of funding. Given balance sheet structure, limited need for senior unsecured debt. NSFR 89% LCR 142% Pre-funded in excess of 12 months Rare issuer in the senior market 2
This is Swedbank Sweden the dominating home market Total lending to the public amounts to SEK 1,215bn (as per Q4 2013), out of which around 86% is originated in Sweden Estonia makes up 46% of total lending in the Baltics Lending distributed by countries (Q4 2013) Sweden 86.3% SEK 1 049bn Estonia 4.5% Swedish Mortgage loans (private+corp) Latvia 2.4% Lithuania 2.9% Other corporate (incl. LC&I, Sweden) Other Other* 3.9% 0 200 400 600 800 1000 1200 Source: Swedbank Fact book Q4 2013, page 43 * Denmark, Norway, Finland and NY Branch 3
Financial performance Income Income distribution Q4 2013 Treasury, Trading and Capital Markets 2% Asset Management 11% Lithuania 4% Latvia 5% Other 7% Lending and deposits 66% Other 7% Payment, Cards 8% Share of P&L of associates 3% Insurance 3% Estonia 6% Sweden 78% Source: Swedbank Dec 31, 2013 4
Asset quality Stable asset quality Continued high credit quality Credit impairments for FY 2013 of 0.5bps Impaired loans per Q4 2013 of 16bps in Swedish Banking and 38bps in Large Corporates & Institutions Further improvements in Baltic Banking 11 consecutive quarters with net recoveries and reversals (of provisions) 54% provision ratio at Group level (provisions / impaired loans) 5
Capital Strong capitalisation CET1 ratio of 18.3% (full Basel 3) Changes B3 CET1 ratio Q3-Q4 19% 18% 17% 16% 15% 14% 13% 12% 11% 10% 15.45% 18.04% 0,32% Q4 2012 Q3 2013 Profit after anticipated dividend -0,06% 0,06% -0,42% IAS 19 Other CET1 RWA Changes B3 estimate 0,40% 18.34% Q4 2013 Increase Decrease 6
Asset quality stress test The Swedish FSA and Riksbank stress tests Swedbank s strong relative risk position confirmed The Swedish FSA stress test The Swedish Riksbank stress test* 2015 reg. min. CET1 ratio % 20 18 16 14 12 10 8 6 Jun 2013 Dec 2014 Dec 2015 Dec 2016 % 20 18 16 14 12 10 8 6 Q313 2014 2015 2016 4 4 2 2 0 SHB Nordea SEB Swedbank 0 SHB Nordea SEB Swedbank *Main assumption; GDP decline and interest rates increase to stress for higher credit losses Source: The SFSA s Risk Report, Nov 14, 2013 Source: The Riksbank s Financial Stability Report 2013:2, chart 4:9 7
Liquidity and funding Core balance sheet* structure SEKbn 1 400 Assets SEKbn 1 400 Liabilities 1 200 Estonia CEE lending 1 200 Suppl. cap CET1 Government guaranteed debt Senior 1 000 Other corporate lending, Sweden & other Nordic countries 1 000 Deposits 800 Other private, Sweden 800 600 600 400 Swedish mortgage loans 400 Covered bonds 200 200 0 Q4 2013 0 Q4 2013 Source: Swedbank Dec 2013 * Simplified balance sheet 8
Liquidity and funding Lower funding needs LCR 142% (Swedish FSA definition FFFS 2012:6) NSFR 89% Issued SEK 103bn of term-funding FY 2013 of which SEK 14bn in Q4 FY 2014 funding plan of SEK 120 bn Term funding issuance completed and planned SEKbn 120 Covered bonds Senior unsecured 100 80 60 40 20 0 Source: Swedbank, Dec 31, 2013, nominal amounts 9
Liquidity and funding Liquidity reserve According to the template defined by the Swedish Bankers' Association SEKm Cash and holdings in central banks 59 382 Deposits in other banks available overnight 397 Securities issued or guaranteed by sovereigns, central banks or multilateral development banks 68 054 Securities issued or guaranteed by municipalities or public sector entities Covered bonds 54 002 - Issued by other institutions 54 002 - Own issued Securities issued by non-financial corporates Securities issued by financial corporates (excl. covered bonds) 2 096 Other Total 1 183 931 Additional liquid assets, Group 2, 3 52 510 1 90% of the securities in the liquidity reserve per Q3 2013 are rated AAA 2 82% of the additional liquid assets fulfill the Liquidity Reserve definition by the Swedish Bankers Association except from that they are held outside the Treasury department. 3 80% of the additional assets are rated AAA Source: Swedbank Fact book, Dec 31, 2013 10
Liquidity and funding Prefunded in excess of 12 months SEKbn 250 200 150 100 50 0 0 20 40 60 80 100 120 140 160 180 200 220 240 260 280 300 320 340 360 Days forward Source: Swedbank Dec 31, 2013 11
Credit ratings Rating strategy same level as the best rated Nordic banks On July 19, 2013 S&P changed the outlook for Swedbank AB and Swedbank Mortgage AB from negative to stable. Main reasons are the ability to build capital and withhold a high profitability On June 4, 2013 Moody s upgraded Swedbank AB s and Swedbank Mortgage AB s senior unsecured credit rating to A1, with stable outlook S&P Moody's Fitch Short Long Short Long BFSR* Short Long Swedbank A-1 A+ P-1 A2 A1 C- F1 A+ Swedbank Mortgage A-1 A+ P-1 A2 A1 Covered bonds AAA Aaa * Bank Financial Strength Rating Source: Swedbank Dec 31, 2013 12
Swedish economy Continued strong fiscal position Kingdom of Sweden rated Aaa/AAA/AAA Unemployment 7.5% (Dec 13 Y/Y) GDP growth 0.3% (Q3 13 Y/Y) Debt to GDP 35.2% (Nov 13) CPI/CPIF 0.1% / 0.8% (Dec 13 Y/Y) Source: Statistics Sweden and National Debt Office 100 General government gross public debt as a percentage of nominal GDP* UK 80 60 40 20 France Euro area Germany Finland Denmark Sweden 0 2000 2003 2006 2009 2012 2015F * Maastricht definition Source: OECD Economic outlook 94 table 61, Dec 2013 13
Appendix Swedbank contacts and financial calendar For further information, please contact: Helo Meigas, Head of Group Treasury helo.meigas@swedbank.se +46 8 585 900 25 Gregori Karamouzis, Head of Investor Relations gregori.karamouzis@swedbank.com +46 8 585 930 31 Financial calendar AGM 19 Mar 2014 Q1 Interim report 28 Apr 2014 Q2 Interim report 16 Jul 2014 Q3 Interim report 21 Oct 2014 Bogdan Woronowicz, Debt Investor Relations bogdan.woronowicz@swedbank.com +46 8 585 922 53 Peter Stenborn, Debt Investor Relations peter.stenborn@swedbank.com +46 8 585 909 30 Ulf Jakobsson, Head of Funding ulf.jakobsson@swedbank.se +46 8 700 90 61 Kimmy Samuelsson, Head of Long-Term Funding kimmy.samuelsson@swedbank.se +46 8 700 97 89 Ingela Saarinen-Kindbom, Money Markets and Short-Term Funding Ingela.saarinen-kindbom@swedbank.com +46 8 700 98 10 Contact debt investor relations: debt.ir@swedbank.com www.swedbank.com/investor-relations/debt-investor Postal address: Visitors: Swedbank Group Treasury Regeringsgatan 13 SE-105 34 Stockholm, Sweden 14
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. 15