Swedbank investor presentation October 2016 Disclaimer Certain - PowerPoint PPT Presentation

Swedbank investor presentation October 2016

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. 2

Table of contents Executive summary 5 1. Quarterly financial update 7 2. Strategy 17 3. Capital considerations 29 4. Liquidity and funding 33 5. Cover pool data 41 6. Swedish and Baltic economy 49 7. Swedish housing and mortgage market 57 8. Appendix 65 3

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Executive summary Swedbank FY 2015 – Improved market position ■ Sweden’s largest retail bank with a leading position in our three Baltic home markets ■ Stable earnings – RoE of 13.5% ■ Strong asset quality – low share of impaired loans ratio, gross (40bps) and credit impairments ratio (4bps) ■ Solid liquidity and funding position – survival horizon more than 12 months ■ One of the best capitalised banks in Europe* with significant buffers to both MDA and Loss absorption trigger levels – CET1 capital ratio of 24.1% *According to EBA stress test 2016, Swedish FSA’s financial stability report, Jun 2016 and Swedish central bank, Nov 2015 Source: Swedbank FY 2015 interim report and Fact book Q4 2015 Swedbank Q3 2016 – Strong result ■ ROE: 15.8% ■ Cost/income ratio: 0.39 ■ CET1 capital ratio: 23.8% (fully loaded CRD IV) – with requirements of 21.6%* ■ Leverage ratio: 4.5% ■ Credit impairment ratio: 0.05% ■ Share of impaired loans: 0.35% ■ Total provision ratio for impaired loans: 57% ■ Liquidity and funding: LCR: 131%, NSFR: 104% ■ Credit ratings: AA-(N)/AA-(S)/Aa3(S) from S&P/Fitch/Moody’s Source: Swedbank Q3 2016 Fact book (* Including 2% CCyB, On 15 Mar 2016 The Swedish FSA decided to increase the countercyclical buffer from 1.5% to 2.0% from 19 March 2017) 5

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1. Quarterly financial update 7

Quarterly financial update - Swedish Banking Strong result • Net interest income ▲ QoQ SEKm Q3 16 Q2 16 – Higher mortgage margins Net interest income 3 802 3 592 210 – Deposit margin pressure Net commission income 1 813 1 718 95 – Loan and deposit volume growth Other income 451 584 -133 Total income 6 066 5 894 172 • Net commission income Total expenses 2 509 2 461 48 – Seasonal effect in cards Profit before impairments 3 557 3 433 124 – Stock market improvement Credit impairments 41 -35 76 • Strong asset quality Ratios Q3 16 Q2 16 ROE, % 20.5 20.6 C/I ratio 0.41 0.42 ▲ QoQ Volumes, SEKbn Q3 16 Q2 16 Loans 1 111 1 096 15 Deposits 488 479 9 Source: Swedbank 30 Sep, 2016 8

Quarterly financial update - Baltic Banking Increased customer activity • Net interest income Q2 16 ▲ QoQ SEKm Q3 16 – Loan and deposit volume growth Net interest income 1 045 954 91 – Full income effect from acquired loan 13 Net commission income 511 498 portfolio in Latvia and Lithuania Other income 185 181 4 Total income 1 741 1 633 108 • FX effects due to stronger EUR 25 Total expenses 644 619 • Strong asset quality Profit before impairments 1 097 1 014 83 Credit impairments -28 50 -78 Ratios Q3 16 Q2 16 ROE, % 19.2 16.7 C/I ratio 0.37 0.38 ▲ QoQ Volumes, SEKbn Q3 16 Q2 16 Loans 141 136 5 Deposits 166 159 7 Source: Swedbank 30 Sep, 2016 9

Quarterly financial update - Large Corporates & Institutions Stable result • Stable net interest income Q2 16 ▲ QoQ SEKm Q3 16 Net interest income 833 827 6 • Lower corporate finance activity Net commission income 535 610 -75 • Increased hedging activity Net gains and losses 590 545 45 18 21 Other income -3 • Provisions related to oil related Total income 1 976 2 003 -27 exposures Total expenses 848 860 -12 Profit before impairments 1 128 1 143 -15 Credit impairments 188 545 -357 Ratios Q3 16 Q2 16 ROE, % 14.6 10.1 C/I ratio 0.43 0.43 ▲ QoQ Volumes, SEKbn Q3 16 Q2 16 Loans 187 188 -1 Deposits 123 126 -3 Source: Swedbank 30 Sep, 2016 10

Quarterly financial update - Group results Strong result • Net interest income ▲ QoQ SEKm Q3 16 Q2 16 − Higher mortgage margins Net interest income 6 062 5 732 330 Net commission income 43 2 838 2 795 − Loan volume growth Net gains and losses -208 669 877 • Asset management and cards support Other income 696 2 466 -1 770 commission income Total income -1 605 10 265 11 870 • One-off income of SEK 2.1bn related to Total expenses 9 4 029 4 020 VISA sale in Q2 Profit before impairments -1 614 6 236 7 850 Credit impairments -337 201 538 • Total expenses for FY 2016 of Other impairments 1 1 SEK16.4bn mainly due to higher Tax 1 215 1 037 178 compensation to savings banks Net profit -1 454 4 816 6 270 Ratios Q3 16 Q2 16 Q2 16* ROE, % 15.8 21.0 13.9 Cost/income ratio 0.39 0.34 0.41 CET1 capital ratio, % 23.8 23.0 * Excluding VISA sale Source: Swedbank 30 Sep, 2016 11

Quarterly financial update - Expenses Accelerating investments • Cost efficiency – continued key priority • Total expenses of SEK16.7bn for FY 2017 – Compensation to savings banks • Digital banking and customer data management initiatives • Acceleration of digitisation of the lending process • Investments into indirect and direct pension sales • RoE target of 15% remains Source: Swedbank 30 Sep, 2016 12

Capital Strong capitalisation – no excess capital CET1 capital ratio, % • CET1 capital increased by SEK 1.1bn 24.1% 23.7% 23.8% 23.0% − Positive effect from net profit of SEK 21.6% 1.6bn (excl. dividend) − Negative pension liability (IAS19) effect of SEK 0.6bn • REA decreased by SEK 9.7bn • Capital buffer of around 200bp Q4 2015 Q1 2016 Q2 2016 Q3 2016 CET1 capital ratio requirement* * Swedbank’s estimate, based on the SFSA’s announced capital requirements, including fully implemented buffers, Pillar 2 requirements and 2 per cent countercyclical buffer Source: Swedbank 30 Sep, 2016 13

Capital Lower REA Risk exposure amount • Exposure changes – Higher mortgage and corporate SEKbn credit exposures 5.5 420 – FX 415 413.4 -3.8 410 • Acquired mortgage loan portfolio of -4.5 -2.1 403.7 405 Sparbanken Öresund -4.8 400 • Positive PD migrations 395 390 • Increased collateral values 385 • Exposures migrating to performing 380 and positive CVA effect 375 370 Q2 2016 Exposure Sparbanken Rating LGD Other risk Q3 2016 change Öresund migration changes portfolio (PD) Increase Decrease Source: Swedbank 30 Sep, 2016 14

Asset quality Solid asset quality • Impairments to oil related exposures ▲ QoQ Credit impairments, SEKm Q3 16 Q2 16 Swedish Banking 41 -35 76 Baltic Banking -28 50 -78 Large Corporates & 188 545 -357 Institutions Swedbank Group 201 538 -337 Ratios Q3 16 Q2 16 Credit impairment ratio, % 0.05 0.14 Share of impaired loans, gross 0.35 0.34 % Total provision ratio for impaired 57 58 loans, % Source: Swedbank 30 Sep, 2016 15

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2. Strategy 17

Strategy Swedbank - largest retail bank in our four home markets Latvia Sweden Population 2.0m Population 9.8m Private customers 0.9m Private customers 4.0m Corporate customers 91 000 Corporate customers 330 000 Branches 41 Branches 266 Cards 1.0m Cards 4.1m Internet customers 0.9m Internet customers 4.1m Internet payments 49 500 Internet payments 119m Mobile bank customers 0.5m Mobile bank customers 2.8m Lithuania Estonia Population 2.9m Population 1.3m Private customers 1.5m ~86%* Private customers 0.8m Corporate customers 85 000 Corporate customers 139 000 ~10%* Branches 67 Branches 35 Cards 1.7m Cards 1.1m * Share of loan book Internet customers 1.3m Internet customers 0.9m Internet payments 42 600 Internet payments 52 100 Mobile bank customers 0.5m Mobile bank customers 0.4m Source: Swedbank Fact book Q3 2016 18