Swedbank June 2013 Table of contents 1. Financial performance 3 - PowerPoint PPT Presentation

Swedbank June 2013

Table of contents 1. Financial performance 3 2. Liquidity and funding 15 3. Cover pool data 27 4. Swedish economy 33 5. Swedish housing and mortgage market 39 6. Appendix 47 2

1. Financial performance 3

Financial performance - Group results Robust earnings • Stable NII Q1 12 Q4 12 Q1 13 ▲ Q/Q ▲ Y/Y SEKm – Repricing Net interest income 4 895 5 346 5 353 7 458 – Funding costs Net commission income 2 398 2 502 2 388 -114 -10 – Lower deposit margins Net gains and losses 979 830 557 -273 -422 Total income 9 072 9 437 9 082 -355 10 • Net gains and losses Total expenses 4 327 4 142 4 043 -99 -284 one-off gain in Q4 12 Profit before impairments 4 745 5 295 5 039 -256 294 • Lower costs Impairment of tangible assets 40 141 85 -56 45 Credit impairments -96 -76 60 136 -156 • Continued good asset quality Tax 1 108 786 976 190 -132 Profit from continued ops. 3 693 4 427 3 918 -509 225 • Ukraine and Russia discontinued Profit from discontinued ops. -279 -174 -390 -216 -111 operations Profit for the period 3 410 4 252 3 525 -727 115 Return on equity, % 14.1 16.9 13.8 ROE continuing operations, % 15.3 17.5 15.3 Cost/income ratio 0.48 0.44 0.45 Source: Swedbank Mar 31, 2013 4

Financial performance - Retail Stable results • Stable NII Q1 13 ▲ Q/Q ▲ Y/Y SEKm Q1 12 Q4 12 Net interest income 3 371 3 353 3 332 -21 -39 • Solid asset quality Net commissions 1 538 1 554 1 589 35 51 • New organisation Total income 5 346 5 255 5 377 122 31 Total expenses 2 429 2 474 2 406 -68 -23 Profit before 2 917 2 781 2 971 190 54 impairments Credit impairments 21 91 55 -36 34 ROE, % 28.4 28.0 27.9 C/I ratio 0.45 0.47 0.45 Source: Swedbank Mar 31, 2013 5

Financial performance - Large Corporates & Institutions Good return • Stable NII Q1 13 ▲ Q/Q ▲ Y/Y SEKm Q1 12 Q4 12 Net interest income 728 795 783 -12 55 • Low activity in Corporate Finance Net commissions 485 536 419 -117 -66 • Structural challenges in Equities 1 814 Total income 2 071 1 857 -43 -257 Expenses excl variable 661 668 646 -22 -15 • Solid credit quality staff costs Variable staff costs 105 75 88 13 -17 Profit before 1 080 1 305 1 114 -34 -225 impairments Credit impairments 17 162 74 -88 57 ROE, % 18.9 18.3 16.7 C/I ratio 0.37 0.40 0.40 Source: Swedbank Mar 31, 2013 6

Financial performance - Baltic Banking Focus on costs • Stable NII in local currency Q1 13 ▲ Q/Q ▲ Y/Y SEKm Q1 12 Q4 12 Net interest income 910 760 742 -18 -168 Increased customer activity • Net commissions 386 366 388 22 2 • Recoveries - 187 Total income 1 468 1 289 1 281 -8 - 43 Total expenses 629 633 586 -47 • Increased efficiency in focus Profit before - 144 839 656 695 39 impairments Credit impairments -134 -329 -70 -259 -64 ROE, % 14.6 13.3 12.6 C/I ratio 0.43 0.49 0.46 Source: Swedbank Mar 31, 2013 7

Financial performance – Income Income distribution Q1 2013 Treasury, Trading and Asset Capital Management Markets 11% Other 8% 6% Payment, Lithuania Cards 4% 8% Latvia 4% Share of P&L of associates Estonia 5% 2% Insurance 3% Other Lending and 6% deposits 64% Sweden 79% Source: Swedbank Mar 31, 2013 8

Financial performance - Capital situation Continued strengthening capital position • 13-15% CET1 Common Tier 1 capital ratio 17.3 Basel 2* Basel 3 16.7 16.4 CRD/CRR IV – less impact 15.4 • * As of 2012 incl. IAS 19 • IRB Advanced • Waiting for regulatory clarity 2007 2008 2009 2010 2011 2012 Q1 13 Changes in B3 CET1 ratio Q4-Q1 0.55% 16.38% -0.13 0.24% 0.14% 0.14% 15.45% Q4 2012 Profit Q1 IAS 19 RWA SME & Other Q1 2013 change Q1 CVA Basel 3 (Basel 3) changes Increase Decrease 9

Financial performance - Capital situation Swedish capital requirement proposal • Delayed, earliest implementation end of 2013 20% 18% 15.5-18% Supplemental capital (Equity, AT1 and/or T2), 1.5% + 2.0% 13.5-16% 16% 14% Countercyclical buffer (Equity), 0-2.5% 12% 12% Capital conservation buffer (Equity 10% 10% can be used in stressed scenario), 2.5% 8% Swedish SiFi buffer (Equity), 6% 3% (2013), 5% (2015) 4% Min. requirement (Equity), 4.5% 2% 0% Proposal 2013 Proposal 2015 Proposed 2013 Proposed 2015 Source: The Ministry of Finance, the Riksbank and the Swedish FSA 10

Financial performance - Capital situation Risk weights – do they matter? • Transparency • Regulatory requirement • Tool for ranking risk No steering tool – emphasis on stress tests instead • ─ Internal capital allocation process s Average risk weight corporate exposure class Loan loss ratio corporate portfolio 80% 0,25% 70% 0,20% 60% 50% 0,15% 40% 30% 0,10% 20% 0,05% 10% 0% 0,00% Swedbank Sweden Handelsbanken Swedbank Sweden Handelsbanken 2009 2010 2011 2012 total IRB total IRB corporate IRB corporate IRB ,Sweden 2009 2010 2011 2012 Swedbank, Sweden Handelsbanken 11

Financial performance – Asset quality Strong credit quality • Continued high credit quality in Sweden Credit impairments, SEKm Q1 12 Q4 12 Q1 13 Retail 21 91 55 • Slower net recoveries in Baltic Banking Large Corporates & Institutions 17 162 74 Baltic Banking -134 -329 -70 • Exiting Russia and Ukraine Estonia -78 -242 -54 Latvia -21 86 4 Lithuania -35 -173 -20 Swedbank Group -96 -76 60 Impaired loans SEKbn 35 31.7 30 25 20 15 10.3 10 5 0 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Q3 12 Q4 12 Q1 13* * Russia and Ukraine reported as discontinued operations. 12

Financial performance – Asset quality Asset portfolios – low risk Hotels and restaurants, Retail 8% Shipping and offshore, Transportation Manufacturing 2% Latvian lending Lithuanian lending 3% Other corporate lending 6% Estonian 4% Other property management 12% Residential properties Agriculture and forestry Swedish household loans 64% (90% mortgages) Tenant owner associations Source: Swedbank, Mar 31 2013 13

Financial performance – Credit ratings Rating strategy – same level as the best rated Nordic banks S&P Moody's Fitch Short Long Short Long BFSR* Short Long Swedbank A-1 A+ P-1 A2 C- F1 A+ Swedbank Mortgage A-1 A+ P-1 A2 Covered bonds AAA Aaa * Bank Financial Strength Rating Source: Swedbank Mar 31, 2013 14

2. Liquidity and funding 15

Liquidity and funding Core balance sheet* structure Assets Liabilities SEKbn SEKbn 1 400 1 400 Suppl. cap CET1 Government guaranteed debt 1 200 1 200 Senior Estonia CEE lending 1 000 1 000 Other corporate lending, Sweden & Deposits other Nordic countries 800 800 Other private, Sweden 600 600 Swedish mortgage loans 400 400 Covered bonds 200 200 0 0 Q1 2013 Q1 2013 * Simplified balance sheet Source: Swedbank, Mar 31, 2013 16

Liquidity and funding Wholesale funding strategy • Main internal liquidity measure is survival horizon (accumulated cash-flows) • Covered bonds less volatile than senior unsecured debt • Secure presence in senior unsecured debt markets – OC level – Liquidity reserve – Structural subordination Source: Swedbank, Dec 31, 2012 17

Liquidity and funding Covered bond strategy Swedish households’ financial assets Sweden SEK 300-375bn SEKbn 100% 7 000 90% 6 000 80% 5 000 70% EUR/USD SEK 150-200bn 60% 4 000 50% 3 000 40% Other* SEK 50-85bn 30% 2 000 20% 1 000 10% 0% 0 3-7Y >7Y 1980 1990 2000 2005 2010 2012 <5Y Maturity, years Deposits and retail bonds (LHS) Equities (LHS) Pension savings and mutual funds (LHS) Other financial assets (LHS) Total financial assets (RHS) Source: Statistics Sweden “ Hushållens ställning “, Mar 2013 18

Liquidity and funding Senior unsecured debt strategy • Limited need given Swedbank’s balance sheet structure • Secure OC • Fund liquidity reserves House price sensitivity of the cover pool Senior unsecured debt maturity profile 40% Senior unsecured debt SEKbn 60 30% OC, Q113 20% 40 Over-collateralisation 10% 0% 20 -10% -20% 0 0% -5% -10% -15% -20% -25% -30% -35% -40% -45% -50% 2013 2014 2015 2016 2017 2018 2019- House price drop Source: Swedbank, Mar 31, 2013, nominal amounts 19

Liquidity and funding Lower funding needs • LCR 139% (Swedish FSA definition FFFS 2012:6) • NSFR 93% • SEK 120bn in funding plan 2013 to meet total maturing debt FY 2013 of SEK 86bn of which SEK 46bn for the remainder of 2013 Term funding issuance – completed and planned Covered bonds Senior unsecured SEKbn 120 100 80 60 40 20 0 Source: Swedbank, Mar 31, 2013, nominal amounts 20

Liquidity and funding Conservative funding plan Issued SEK 40bn of term-funding in Q1 • • Term funding plan in 2013 of SEK 120bn, full-year maturities of SEK 86bn Long-term debt issued Outstanding short-term debt SEKm SEKm 70 000 60 000 60 000 50 000 50 000 40 000 40 000 FY 2012 Q4 12 30 000 Q1 13 30 000 Q1 13 20 000 20 000 10 000 10 000 0 0 Domestic CP ECP/CD USCP Yankee CD French CD Domestic Euro CB USD CB Other CB Senior CB (144A) unsecured Source: Swedbank, Mar 31, 2013, nominal amounts 21