Swedbank s second quarter 215 results Michael Wolf (CEO), Göran Bronner (CFO), Anders Karlsson (CRO) Swedbank
Swedish Banking Strong result in low interest rate environment SEKm Q2 15 Q1 15 QoQ Net interest income 3 281 3 19 91 Net commission income 1 916 1 781 135 Other income 471 558-87 Total income 5 668 5 529 139 Total expenses 2 496 2 559-63 Profit before impairments 3 172 2 97 22 Credit impairments 48 52-4 Ratios Q2 15 Q1 15 Lower deposit margins Higher mortgage margins Loan and deposit volume growth Stable commission income Good cost development Lower staff cost ROE, % 18.9 17.9 C/I ratio.44.46 Volumes, SEKbn Q2 15 Q1 15 QoQ Loans 1 5 1 39 11 Deposits 428 4 28 2
Baltic Banking Stable result SEKm Q2 15 Q1 15 QoQ Net interest income 865 831 34 Net commission income 524 469 55 Other income 147 199-52 Total income 1 536 1 499 37 Total expenses 611 612-1 Profit before impairments 925 887 38 Credit impairments -49-9 -4 Tax 1 64 131 933 Loan volume growth Strong commission income Cards and payments Solid asset quality Extra dividend from Estonia triggers increased tax cost Net profit -91 767-858 Ratios Q2 15 Q1 15 ROE, % (excl. one-off tax) 16.6 15. C/I ratio.4.41 Volumes, SEKbn Q2 15 Q1 15 QoQ Loans 126 125 1 Deposits 138 135 3 3
Large Corporates & Institutions Stable result SEKm Q2 15 Q1 15 QoQ Net interest income 862 862 Net commission income 491 496-5 Net gains and losses 576 587-11 Other income 39 35 4 Total income 1 968 1 98-12 Total expenses 842 877-35 Stable NII Lower deposit margins Volatile markets Good asset quality Profit before impairments 1 126 1 13 23 Credit impairments 7 16-9 Ratios Q2 15 Q1 15 ROE, % (excl. one-off tax) 15.6 16.9 C/I ratio.43.44 Volumes, SEKbn Q2 15 Q1 15 QoQ Loans 182 178 4 Deposits 16 117-11 4
Group results Stable result in low interest rate environment SEKm Q2 15 Q1 15 QoQ Net interest income 5 74 5 719-15 Net commission income 2 842 2 744 98 Net gains and losses 82 32-238 Other income 687 835-148 Total income 9 315 9 618-33 Stable NII Good cost development Strong asset quality Negative one-off tax effects Total expenses 4 47 4 168-121 Profit before impairments 5 268 5 45-182 Credit impairments 6 59-53 Other impairments 22 15 7 Tax 1 538 1 11 437 Net profit 3 666 4 32-654 Ratios Q2 15 Q1 15 ROE, % 13.4 14.9 ROE, % (excl. one-off tax) 15. 14.9 Cost/income ratio.43.43 CET1 capital ratio, % 22.4 2.5 5
Capital Positive REA impact from market movements SEKbn 43 Risk exposure amount REA net decrease of SEK 15.6bn Interest rates and FX fluctuations impact positively 425 42 422.3-1.8 VaR model approval to manage negative interest rate 415-3.7-2.4 41-2.2-1.7. 46.8 45-3.7 4 Q1 215 Exposure change Rating migration (PD) LGD changes Other credit risk CVA risk Market risk Operational risk Q2 215 Increase Decrease 6
Capital Strong capitalisation no excess capital CET1 capital ratio, % 22.4% 2.5% 19.6% CET1 capital positively impacted IAS 19 (SEK 3.4bn) REA net decrease of SEK 15.6bn Continued regulatory uncertainty Q1 215 Q2 215 CET1 capital ratio requirement 7
Liquidity and funding Increased long-term funding activity SEKbn 8 7 6 5 4 3 2 1 Quarterly long-term funding issuance Other Senior unsecured debt Covered bonds Average 214 Q115 Q215 Taking advantage of favourable funding markets Extending maturity profile Credit rating upgrades 38 36 Extension of maturity profile Number of months 34 32 3 28 26 24 22 Covered bond funding Senior unsecured debt Total capital market funding 2 Q414 Q115 Q215 8
Asset quality Strong asset quality Credit impairments, SEKm Q2 15 Q1 15 QoQ Swedish Banking 48 52-4 Baltic Banking -49-9 -4 Large Corporates & Institutions 7 16-9 Swedbank Group 6 59-53 Ratios Q2 15 Q1 15 Credit impairment ratio, %..2 Share of impaired loans, gross % Total provision ratio for impaired loans, %.36.39 55 54 %.2.1. -.1 -.2 -.3 Credit impairment ratio -.4 Q21 Q41 Q211 Q411 Q212 Q412 Q213 Q413 Q214 Q414 Q215 9
Q&A Michael Wolf (CEO), Göran Bronner (CFO), Anders Karlsson (CRO)
Appendix 11
This is Swedbank Swedbank a low-risk bank with strong capital base Low risk a Board of Directors strategic priority ensures access to funding markets and low funding costs Retail profile and four home markets a key feature 86% of total loans originated in Sweden - Swedish mortgages account for 62% of total loans 9% of total loans are collateralised (76% real estate and 14% other collateral) Strong capital position Board of Directors decision to maintain a buffer above prevailing SFSA capital requirements to have operational flexibility current buffer 28bp Conservative funding and liquidity position survival horizon longer than 12 months assuming closed funding markets, NSFR 11% and LCR 136% Baltic operations self-funded Loan-to-Deposit ratio < 1% % 16 14 12 1 8 6 4 2 Liquidity & capital % 2 15 1 5 211 212 213 214 H1 215 NSFR LCR CET1 capital ratio, Basel 3 (RHS) 25 %.2 Credit impairment ratio.1. -.1 -.2 -.3 -.4 Q21 Q41 Q211 Q411 Q212 Q412 Q213 Q413 Q214 Q414 Q215 Source: Swedbank 3 Jun 215 12
This is Swedbank Swedbank strong and stable earnings capacity 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 is first line of defence supporting low risk profile and strong capital position SEKm 7 Profit before impairment 6 5 4 3 2 1 Q1 1 Q1 11 Q1 12 Q1 13 Q1 14 Q1 15 Source: Swedbank 3 Jun 215 13
This is Swedbank Swedbank market leading cost efficiency Best in-class cost efficiency an executive management strategic priority Strong dedication from executive management on cost and change management Integrated in corporate culture Focus on straight-through-processing Evolving household banking model digitalisation trend Retail profile a key feature Four home markets Sweden, Estonia, Latvia and Lithuania reducing complexity Largest private and SME customer base High degree of digitalisation in home markets SEKm 2 Total expenses Acquistion of Sparbanken Öresund.6.55 C/I ratio 18.5 16.45 14.4.35 12 21 211 212 213 214 Ambition 216 Source: Swedbank 3 Jun 215.3 21 211 212 213 214 H1 215 14
Asset quality Shipping and Offshore Total lending of SEK 29.5bn (3bn, Q1) Market activity slowed down in Q2 compared to Q1 15 and Q4 14 Decreased origination Individual client action plans in place Clients now adapting to the lower oil price by cutting costs, postponing orders and setting up new financial structures SEKm 1 9 8 7 6 5 4 3 2 1 Shipping and Offshore Loans net, SEKm Negatively impacted by lower oil prices Source: Swedbank 3 Jun 215 15
Liquidity and funding Conservative funding position LCR 136% (Swedish FSA definition FFFS 212:6) NSFR 11% (Basel committee) Issued SEK 133bn of term funding YTD 215 Increased funding need to support loan growth Term funding issuance completed and planned Prefunded for more than 12 months SEKbn nominal amounts 1 9 8 Covered bonds Senior unsecured debt SEKbn 3 25 Survival horizon 7 6 2 5 15 4 3 1 2 1 Q112 Q212 Q312 Q412 Q113 Q213 Q313 Q413 Q114 Q214 Q314 Q414 Q115 Q215 Q315 Q415 Q116 Source: Swedbank 3 Jun 215 5 2 4 6 8 1 12 14 16 18 2 22 24 26 28 3 32 34 365 Days forward 16
Liquidity and funding Long-term funding maturity profile Benchmark transactions YTD 215 USD 75m, Perp. NC5 (22), AT1, 5.5% - equity conversion USD 1bn 144a Senior, 5Y (22), T+77bp (+ USD 4m 3Y (218) T+65bp) EUR 1bn CB, 7Y (222), Fixed MS-5bp GBP 5m CB, 3Y (218 FRN, 3m L+2bp GBP 3m Senior, 4Y (219), Fixed G+8bp SEK 3bn, Senior 5Y (22), Fixed/FRN, 3m Stibor + 5bp USD 1bn, RegS. CB 5Y (22), Fixed, 3m $L + 37bp EUR 75m Senior 7Y (222), Fixed, MS+45bp Long-term funding maturity profile, by funding source Long-term funding maturity profile, by currency SEKbn SEKbn 2 15 1 Senior unsecured debt Covered bonds 2 15 1 Other CHF USD EUR 5 5 SEK 215 216 217 218 219 22 221-215 216 217 218 219 22 221- Source: Swedbank 3 Jun 215 17
Swedish housing and mortgage market Real estate prices Sweden 12 months development Single-family homes 1 Tenant-owner rights 2 Combined 3 12M Δ 12M Δ 12M Δ Jul/14 9% 14% 11% Aug/14 9% 14% 11% Sep/14 9% 15% 11% Oct/14 8% 15% 11% Nov/14 13% 15% 14% Dec/14 15% 15% 15% Jan/15 11% 15% 12% Feb/15 12% 17% 14% Mar/15 13% 19% 15% Apr/15 13% 2% 16% 22 2 18 16 14 House price index, Sweden 3 25=1 Single-family homes May/15 13% 18% 15% 12 Jun/15 12% 19% 14% 1 5 6 7 8 9 1 11 12 13 14 15 Source: Valuegard www.valuegard.se (Based on data from Mäklarstatistik), 1 HOXHOUSESWE, 2 HOXFLATSWE, 3 HOXSWE 18
Real estate prices Baltic countries EUR/m 2 /No. of transactions 1 8 Tallinn 1 6 1 4 1 2 1 8 6 4 2 Jun-5 Dec-5 Jun-6 Dec-6 Jun-7 Dec-7 Jun-8 Dec-8 Jun-9 Dec-9 Jun-1 Dec-1 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 EUR/m 2 /No. of transactions 1 8 Riga 1 6 1 4 1 2 1 8 6 4 2 Jun-5 Dec-5 Jun-6 Dec-6 Jun-7 Dec-7 Jun-8 Dec-8 Jun-9 Dec-9 Jun-1 Dec-1 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 No. of transactions EUR/m2 EUR/m 2 /No. of transactions 1 8 Vilnius 1 6 1 4 1 2 1 8 6 4 2 Jun-5 Dec-5 Jun-6 Dec-6 Jun-7 Dec-7 Jun-8 Dec-8 Jun-9 Dec-9 Jun-1 Dec-1 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 No. of transactions EUR/m2 No. of transactions EUR/m2 Source: Swedbank 3 Jun 215 19