Swedbank investor presentation October 2016 Disclaimer Certain - - PowerPoint PPT Presentation

Swedbank investor presentation

October 2016

2

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

• f, or be relied on in connection with, any contract or investment decision.

3

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

4

■

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%

Executive summary

5

*According to EBA stress test 2016, Swedish FSA’s financial stability report, Jun 2016 and Swedish central bank, Nov 2015

Swedbank Q3 2016 – Strong result Swedbank FY 2015 – Improved market position

■

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 FY 2015 interim report and Fact book Q4 2015 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)

6

• 1. Quarterly financial update

7

Strong result

8

Quarterly financial update - Swedish Banking

Ratios Q3 16 Q2 16 ROE, % 20.5 20.6 C/I ratio 0.41 0.42

• Net interest income

– Higher mortgage margins – Deposit margin pressure – Loan and deposit volume growth

• Net commission income

– Seasonal effect in cards – Stock market improvement

• Strong asset quality

Volumes, SEKbn Q3 16 Q2 16 ▲ QoQ Loans 1 111 1 096 15 Deposits 488 479 9 SEKm Q3 16 Q2 16 ▲ QoQ Net interest income 3 802 3 592 210 Net commission income 1 813 1 718 95 Other income 451 584

• 133

Total income 6 066 5 894 172 Total expenses 2 509 2 461 48 Profit before impairments 3 557 3 433 124 Credit impairments 41

• 35

76

Source: Swedbank 30 Sep, 2016

Increased customer activity

• Net interest income

– Loan and deposit volume growth – Full income effect from acquired loan portfolio in Latvia and Lithuania

• FX effects due to stronger EUR
• Strong asset quality

9

Quarterly financial update - Baltic Banking

Ratios Q3 16 Q2 16 ROE, % 19.2 16.7 C/I ratio 0.37 0.38 Volumes, SEKbn Q3 16 Q2 16 ▲ QoQ Loans 141 136 5 Deposits 166 159 7 SEKm Q3 16 Q2 16 ▲ QoQ Net interest income 1 045 954 91 Net commission income 511 498 13 Other income 185 181 4 Total income 1 741 1 633 108 Total expenses 644 619 25 Profit before impairments 1 097 1 014 83 Credit impairments

• 28

50

• 78

Source: Swedbank 30 Sep, 2016

Stable result

• Stable net interest income
• Lower corporate finance activity
• Increased hedging activity
• Provisions related to oil related

exposures

10

Quarterly financial update - Large Corporates & Institutions

Ratios Q3 16 Q2 16 ROE, % 14.6 10.1 C/I ratio 0.43 0.43 Volumes, SEKbn Q3 16 Q2 16 ▲ QoQ Loans 187 188

• 1

Deposits 123 126

• 3

SEKm Q3 16 Q2 16 ▲ QoQ Net interest income 833 827 6 Net commission income 535 610

• 75

Net gains and losses 590 545 45 Other income 18 21

• 3

Total income 1 976 2 003

• 27

Total expenses 848 860

• 12

Profit before impairments 1 128 1 143

• 15

Credit impairments 188 545

• 357

Source: Swedbank 30 Sep, 2016

Strong result

11

Quarterly financial update - Group results

SEKm Q3 16 Q2 16 ▲QoQ Net interest income 6 062 5 732 330 Net commission income 2 838 2 795 43 Net gains and losses 669 877

• 208

Other income 696 2 466

• 1 770

Total income 10 265 11 870

• 1 605

Total expenses 4 029 4 020 9 Profit before impairments 6 236 7 850

• 1 614

Credit impairments 201 538

• 337

Other impairments 1 1 Tax 1 215 1 037 178 Net profit 4 816 6 270

• 1 454
• Net interest income

− Higher mortgage margins − Loan volume growth

• Asset management and cards support

commission income

• One-off income of SEK 2.1bn related to

VISA sale in Q2

• Total expenses for FY 2016 of

SEK16.4bn mainly due to higher compensation to savings banks

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

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

Quarterly financial update - Expenses

12

Source: Swedbank 30 Sep, 2016

24.1% 23.7% 23.0% 23.8% 21.6% Q4 2015 Q1 2016 Q2 2016 Q3 2016 CET1 capital ratio requirement*

Strong capitalisation – no excess capital

Capital

13

• CET1 capital increased by SEK

1.1bn

− Positive effect from net profit of SEK 1.6bn (excl. dividend) − Negative pension liability (IAS19) effect of SEK 0.6bn

• REA decreased by SEK 9.7bn
• Capital buffer of around 200bp

CET1 capital ratio, %

* 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

Lower REA

• Exposure changes

– Higher mortgage and corporate credit exposures – FX

• Acquired mortgage loan portfolio of

Sparbanken Öresund

• Positive PD migrations
• Increased collateral values
• Exposures migrating to performing

and positive CVA effect

Capital

14

SEKbn

Risk exposure amount

5.5

• 4.8
• 3.8
• 4.5
• 2.1

413.4 403.7 370 375 380 385 390 395 400 405 410 415 420 Q2 2016 Exposure change Sparbanken Öresund portfolio Rating migration (PD) LGD changes Other risk Q3 2016 Increase Decrease

Source: Swedbank 30 Sep, 2016

Solid asset quality

15

Asset quality

Credit impairments, SEKm Q3 16 Q2 16 ▲QoQ Swedish Banking 41

• 35

76 Baltic Banking

• 28

50

• 78

Large Corporates & Institutions 188 545

• 357

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 loans, % 57 58

• Impairments to oil related exposures

Source: Swedbank 30 Sep, 2016

16

• 2. Strategy

17

18

Latvia Population 2.0m Private customers 0.9m Corporate customers 91 000 Branches 41 Cards 1.0m Internet customers 0.9m Internet payments 49 500 Mobile bank customers 0.5m Lithuania Population 2.9m Private customers 1.5m Corporate customers 85 000 Branches 67 Cards 1.7m Internet customers 1.3m Internet payments 42 600 Mobile bank customers 0.5m Estonia Population 1.3m Private customers 0.8m Corporate customers 139 000 Branches 35 Cards 1.1m Internet customers 0.9m Internet payments 52 100 Mobile bank customers 0.4m Sweden Population 9.8m Private customers 4.0m Corporate customers 330 000 Branches 266 Cards 4.1m Internet customers 4.1m Internet payments 119m Mobile bank customers 2.8m

~10%* ~86%*

* Share of loan book

Source: Swedbank Fact book Q3 2016

Swedbank - largest retail bank in our four home markets

Strategy

Loans (private) Loans (corporate) Deposits (private) Deposits (corporate) Payments Mutual funds Loans (private) Loans (corporate) Deposits (private) Deposits (corporate) Payments Loans (private) Loans (corporate) Deposits (private) Deposits (corporate) Payments Loans (private) Loans (corporate) Deposits (private) Deposits (corporate) Payments

Source: Swedbank Q3 Fact book

40% 60% 34% 66% 47% 53% 55% 45% 31% 69% 29% 71% 59% 41% 53% 47% 46% 54% 21% 79% 35% 65% 20% 80% 34% 66% 17% 83% 19% 81% 27% 73% 44% 56% 15% 85% 20% 80% 21% 79% 23% 77%

19

Market leading position

Sweden Estonia Latvia Lithuania Source: Swedbank Facts Q3 2016

20

Strategy

Available full- service bank High cost efficiency Low risk Offerings based on customer needs Sustainability and customer value through a responsible core business

Strategy

21 Low risk Market-leading cost efficiency Stable earnings

5 10 15 20 25 20 40 60 80 100 120 140 160 180 2011 2012 2013 2014 2015 Q3 2016 NSFR LCR CET1 capital ratio, CRDIV (RHS) 1 000 2 000 3 000 4 000 5 000 6 000 7 000 8 000 9 000 Q2 11 Q2 12 Q2 13 Q2 14 Q2 15 Q2 16 Profit before impairments One-off related to Visa

Credit impairment ratio Return on Equity Cost / income ratio Liquidity & capital Profit before impairments Total expenses

• 0,20
• 0,10

0,00 0,10 0,20 Q3 11 Q1 12 Q3 12 Q1 13 Q3 13 Q1 14 Q3 14 Q1 15 Q3 15 Q1 16 Q3 16 2 4 6 8 10 12 14 16 18 2011 2012 2013 2014 2015 Q3 2016 12 000 14 000 16 000 18 000 20 000 2011 2012 2013 2014 2015 Target 2016 Acquistion of Sparbanken Öresund 0,30 0,35 0,40 0,45 0,50 0,55 0,60 2011 2012 2013 2014 2015 Q3 2016

Solid financial position

Strategy

22

One ATM operator in a society where only 1% of all payments are in cash One clearing house for mass payments One real-time mobile payment service for private individuals and small businesses One digital identification platform used by banks, businesses and authorities

…customer convenience …customer experience

One credit reference agency providing fast credit quality checks

…customer knowledge

Common Swedish banking infrastructure enables…

Strategy

23

Strategy

Available full- service bank High cost efficiency Low risk Offerings based on customer needs Sustainability and customer value through a responsible core business

Strategy

• Customer behaviour is changing rapidly
• Mobile, instant, transparent
• Customer information is key
• Data, predictive, proactive
• Customer acceptance for new digital

services

• New business models, robo-advice
• Customers wants Omni
• Digital and personal relationship, embedded

24

Retail banking – opportunities and challenges ahead

Strategy

25

• Daily banking is fully digital – 100% self service
• Meet our customers with relevant offerings, in our own or external

channels

• Data and knowledge automation – to foresee needs, provide

proactive offering and advice. This will generate loyalty as well as increased sales

• Have an attractive financial platform for customers and 3rd party

suppliers, providing value-added and competitive edge

• Branches attract new customers - build the brand and increasingly

focus on corporate customers

Our objective

Strategy

26

Robur Insurance EnterCard Mortgage Payments LC&I

Internal product providers External product providers External service providers External distributors

Cash back Card-linked offers Merchant portal with consumer statistics

Service provider and financial aggregator, creating a competitive edge through data driven services

The access point to our customers’ financial needs

Strategy

The preferred financial partner providing a fully digital daily banking offering

• Aggregation of financial services and data
• Digitisation of daily banking products and services
• Digital on-boarding

Available and frictionless omni-channel services

• Service and advice in all channels, e.g. chat, call

back and assisted advisory

• Seamless customer journey between channels
• 24/7 availability

Relevance through personal advice and pro-active digital offerings building relationship and loyalty

• Knowledge based pro-active offerings
• Targeted card-linked cashback offers
• Automated advice

Personal relationship in a digital environment

27

Strategy

Personal relationship increasingly focused on corporates

28

Leveraging our local presence in branches

• Acquire new customers
• Strengthen our brand locally
• Provide advice and support

Strengthen our proposition

• Differentiated service model based on customer

complexity including self-service, client executives to full client team

• Efficient sourcing of sector and product specialists

to SME and Midcorps

• Offer tailored solutions through cooperation to

complex Midcorps and Large Corporates

Increase pace in corporate digitisation

• Simple and efficient credit process
• Streamlined product offering and pricing
• Improved daily banking cash management solution

“I get access to the right competency to support my business” “I do all of my banking during my closing hours”

Strategy

• 3. Capital considerations

29

4.5% 4.5% 3.5% 3.0% 3.0% 1.3% 1.3% 2.5% 11.3% 2.5% 14.8% 2.0% 2.6% 6.3% 7.9% 2.0% 12.5% 2.0% 14.5% Swedbank CET1 Requirements Swedbank CET1 Capital Ratio Swedbank Total Capital Requirements Swedbank Total Capital ratio Systemic Risk in Pillar 2 25% REA Mortgage Floor Individual Pillar 2 charge Capital Conservation Buffer Countercyclical buffer (2.0%)* Systemic Risk Buffer

• Min. Additional T1

and T2 capital Minimum CET1 Requirement 30

Capital position

21.6%* 29.3% 23.8% 27.3%

Source: Swedbank 30 Sep, 2016 – estimated CET1 and Total capital requirement based upon the Swedish FSA’s memorandum (08/09/2014), *On 15 Mar 2016 The Swedish FSA decided to increase the countercyclical buffer from 1.5% to 2.0% from 19 March 2017.

Restrictive Measures Corrective Measures

MDA Restrictions

Composition of Swedbank’s CET1 and total capital ratio requirements – fully loaded CRDIV

220bp* Pillar 1 Pillar 2

20 40 60 80 100 120 140 Loss absorption amount Swedbank total capital Recapitalisation amount Senior unsecured debt >1Y

• Relevance:
• Timing:
• Amount:
• What qualifies:
• Applies to Swedbank:

Regulatory uncertainty remains

Capital regulation

Source: Swedbank, 30 Sep 2016, National Debt Office, 26 Apr 2016

31 ■ EU banks under BRRD ■ Fall 2017 - transition to be specified ■ Set individually by Riksgälden (National Debt Office) Loss Absorption Amount: Total capital requirements less combined buffers in Pillar1 and systemic risk buffer in Pillar2 Recapitalisation Amount: Total capital requirements ■ Capital (LAA) + Senior >1Year (RA) ■ Yes

MREL

SEKbn

MREL requirements

• The National debt office intends to

publish further information on subordination in late 2016 or early 2017

Asset portfolios – low risk

32

Source: Swedbank, 30 Sep, 2016 * Loans to the public excl. Credit institutions and SNDO

Asset quality

Group loan book* Q3 2016, total SEK 1 439bn

2 4 6 8 10 12 14 16 18 20 22 24 26 Svenska Handelsbanken Nordea SEB Swedbank 2015 2016 2017 2018 Source: EBA stress test Jul 2016

CET1 - The EBA stress test, 2016 (%) Sweden

54% 46%

Private Corporate

67% 33%

Private Corporate

Baltic banking

Hotels & restaurants, Retail, Shipping and offshore, Transportation, Manufacturing Other corporate lending Baltic lending Residential properties Other property management Agriculture and forestry Swedish household loans (90% mortgages) Tenant owner associations

7% 6% 10% 14% 62%

• 4. Liquidity and funding

33

200 400 600 800 1 000 1 200 1 400 1 600 1 800

Q3 2016

200 400 600 800 1 000 1 200 1 400 1 600 1 800

Q3 2016

Source: Swedbank 30 Sep, 2016

Core balance sheet* structure

Liquidity and funding

Lithuania Latvia Other corporate lending, Sweden &

• ther Nordic countries

Other private, Sweden Swedish mortgage loans Senior unsecured debt Covered bonds Deposits CET1

• Suppl. capital

Assets Liabilities

SEKbn SEKbn * Simplified balance sheet

Estonia

34

1 000 2 000 3 000 4 000 5 000 6 000 7 000 8 000 9 000 10 000 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 1980 1990 2000 2005 2010 2015 Other financial assets (LHS) Pension savings and mutual funds (LHS) Equities (LHS) Deposits and retail bonds (LHS) Total financial assets (RHS)

35

Covered bond strategy

Liquidity and funding

Maturity, years

EUR/USD SEK 150-200bn Other* SEK 50-85bn Sweden SEK 300-375bn <5Y 3-7Y >7Y

Swedish households’ financial assets

SEKbn

Covered bond strategy

Source: Swedbank 30 Sep, 2016

20 40 60 2016 2017 2018 2019 2020 2021 2022- Senior unsecured debt

Senior unsecured debt strategy

Source: Swedbank 30 Sep 2016, *nominal amounts

Senior unsecured debt maturity profile

SEKbn*

Liquidity and funding

36

100 200 300 400 500 600 20 40 60 80 100 120 140 160 180 200 220 240 260 280 300 320 340 365

10 20 30 40 50 60 70 80 90 100 Covered bonds Senior unsecured debt

Conservative funding position

• LCR 131% (Swedish FSA definition FFFS 2012:6)
• NSFR 104% (Basel committee)
• Issued SEK 116bn of term funding YTD Q3 2016
• Initial plan adjusted down to issue around SEK 140bn in 2016

37

Liquidity and funding Term funding issuance – completed

SEKbn Source: Swedbank 30 Sep 2016 SEKbn

Prefunded for more than 12 months Survival horizon

Days forward

Private placements – active in both covered bonds and senior unsecured debt

• All major currencies
• Bullet format, FRN or Fixed
• EUR 10m equivalent minimum size
• Sweet spots:

– Senior: 2.5-5Y – Covered: 3-8Y – Longer tenors also possible

• Open to larger placements with smaller

investor groups

• Open to tap existing bonds
• Listing is optional
• FRN’s (SEK and EUR) – issued with a

“strike adjustment spread”*

• Program formats available:

– Senior unsecured debt: MTN, NSV and potentially USD 144a format – Covered bonds: MTN, RCB and Norwegian CB program

38

Liquidity and funding

*Spread added to the coupon to avoid negative coupon fixings. Bond issued above par to compensate for this. The above par value reflects the NPV of the adjusted spread

Liquidity reserve

According to the template defined by the Swedish Bankers' Association

Liquidity and funding

Source: Swedbank 30 Sep 2016

39 SEKm

Cash and holdings in central banks1 269 671 Deposits in other banks available overnight 131 Securities issued or guaranteed by sovereigns, central banks or multilateral development banks 81 066 Securities issued or guaranteed by municipalities or public sector entities 8 006 Covered bonds 126 568

• Issued by other institutions

111 879

• Own issued

14 689 Securities issued by non-financial corporates 82 Securities issued by financial corporates (excl. covered bonds) 1 171 Other Total2 486 695

1) Including loans to the Sw edish Ntional Debt Office 2) 96% of the securities in the liquidity reserve per Q3 2016 are rated AAA. The rating requirement is AA-. Assets included in the liquidity reserve should comply w ith the follow ing:

• assets shall be under the control of the Treasury function in the bank
• assets can not be encumbered
• market values are used for the assets
• only unencumbered securities receiving 0-20% risk w eight under the standardised approach to credit risk of the Basel II framew ork can be included
• securities received in reverse repo transactions shall be included in the liquidity reserve and securities used as collateral for repo transactions shall be excluded

Rating

40

Source: Swedbank 30 Jun 2016

Liquidity and funding - Credit ratings

• May 26, 2016, Fitch upgraded the rating from A+ to AA-, with a stable outlook. The main drivers behind the

upgrade are: Execution of the low risk strategy including conservative risk-returns and underwriting standards, strong retail franchise and continued strong capitalisation.

• December 3, 2015, S&P raised Swedbank AB to AA-/A-1+ to reflect their view of Sweden's ongoing support of

its systemically important banks. As such, S&P removed the negative adjustment notch in place since July, which reflected an expected negative transition due to the potential removal of government support. The outlook on the rating is negative, reflecting S&P’s view of heightened economic risk for the Swedish economy

• June 17, 2015, Moody’s upgraded Swedbank to Aa3 with a stable outlook. The upgrade reflects Moody’s

estimation that Swedbank’s strong asset quality and stable earnings generation, underpinned by focused management and established franchise in Sweden and the Baltic countries, position the bank well to manage challenges coming from the low interest-rate environment, developments in mobile banking, and competition in historically more profitable activities

Short Long SACP1 Short Long BCA1 Short Long VR1 Swedbank A-1+ AA- a+ P-1 Aa3 a3 F1+ AA- AA- Swedbank Mortgage A-1+ AA-

• P-1

Aa3

• Covered bonds
• AAA2
• Aaa
• 1 Standalone Rating

2 Stable outlook

S&P (Negative) Moody's (Stable) Fitch (Stable)

• 5. Cover pool data

41 Swedbank is a labeled issuer of the ECBC Covered Bond Label Foundation (www.coveredbondlabel.com )

42

Rating, S&P / Moody’s AAA / Aaa Total pool size SEK 856.3bn Geographic distribution Sweden 100% Current OC-level 63.1% Weighted average seasoning 2 66 months Average LTV 3, 4 – WA LTV on property level (Max LTV) 51% Non-performing loans 5 None Fixed /Floating interest loans 6 – Fixed 28% – Floating 72% Repayment structure 7 – Amortising 62% – Interest only 38% Average loan size SEK 540 454 Number of loans outstanding 1 584 410 Number of borrowers 1 110 669 Number of properties 742 981 Dynamic pool Yes

1 As per 30 Sep, 2016 2 Public sector loans not included

3 Index valuation as per 30 Aug, 2016 4 Maximum LTV: Residential 75%, Commercial 60%, Forest and Agriculture 70% 5 Past due loans > 60 days are not eligible for the cover pool 6 Floating interest loans < 365 days 7 Property level of cover pool

Cover pool data1

Source: Swedbank 30 Sep 2016

Swedbank’s cover pool

Swedbank is a labeled issuer of the ECBC Covered Bond Label Foundation (www.coveredbondlabel.com )

Cover pool data

43

Swedbank’s cover pool

Source: Swedbank 30 Sep 2016

Swedbank is a labeled issuer of the ECBC Covered Bond Label Foundation (www.coveredbondlabel.com ) Type of loans

Residentials 91.7%

• f w hich Single-family housing

57.4%

• f w hich Tenant ow ner rights

19.6%

• f w hich Tenant ow ner association

10.3%

• f w hich Multi-family housing

4.4% Public 0.8% Commercial 0.6% Forest & Agricultural 6.9% 100.0% Geographical distribution, Sweden, per cent 30 Sep 2016 North 6.5 Norrbotten county (BD) 1.4 Västerbotten county (AC) 2.4 Västernorrland county (Y) 1.5 Jämtland county (Z) 1.2 Middle (including Stockholm) 44.8 Dalarna county (W) 2.1 Gävleborg county (X) 2.1 Värmland county (S) 2.1 Örebro county (T) 2.5 Västmanland county (U) 2.5 Uppsala county ( C) 4.0 Södermanland county (D) 2.3 Stockholm county (including Stockholm) (AB) 27.2 South (including Göteborg and Malmö) 48.7 Västra götaland county (Including Göteborg) (O) 17.7 Östergötland county (E) 4.1 Jönköping county (F) 3.5 Halland county (N) 3.8 Kronoberg county (G) 2.1 Kalmar county (H) 2.9 Skåne county (including Malmö) (M) 12.5 Blekinge county (K) 1.5 Gotland county (I) 0.6 100.0

Cover pool loan-to-value distribution

44

Swedbank’s cover pool

Source: Swedbank 30 Sep 2016

• Weighted average LTV on property level 51%

LTV distribution per property1 LTV distribution by volume1, 2

1 Public loans of 0.8% of the cover pool are excluded as they are either guaranteed by a Swedish municipality or the government and have therefore no

LTV assigned to them. 2 LTV distribution as defined by the Association of Swedish Covered Bond Issuers (www.ascb.se) Swedbank is a labeled issuer of the ECBC Covered Bond Label Foundation (www.coveredbondlabel.com ) 0% 5% 10% 15% 20% 25% 30% 00-10 10-20 20-30 30-40 40-50 50-60 60-70 70-75 0% 5% 10% 15% 20% 25% 30% 00-10 10-20 20-30 30-40 40-50 50-60 60-70 70-75

0% 20% 40% 60% 80% 100% 120% 0% 20% 40% 60% 80% 100% 120%

Single-family homes Tenant owner rights (apartments) Tenant owner associations Multi-family housing Commercial Forestry & Agricultural Total all types

Percentage of the pool Average LTV per loan type

Cover pool loan type and loan-to-value distribution

45

Swedbank’s cover pool

Source: Swedbank 30 Sep 2016

1excluding public sector loans of 0.8%

WA LTV per property type1

1

Swedbank is a labeled issuer of the ECBC Covered Bond Label Foundation (www.coveredbondlabel.com )

0% 10% 20% 30% 40% 50% 60% 70% 0%

• 5% -10% -15% -20% -25% -30% -35% -40% -45% -50%

OC, Q316

Strong resilience to house prices changes

• Current OC-level of 64.6%
• Can withstand a severe house price

drop and still be able to issue AAA-rated covered bonds

46

Swedbank’s cover pool

Over-collateralisation House price drop

House price sensitivity of the cover pool

Source: Swedbank 30 Sep 2016

Swedbank is a labeled issuer of the ECBC Covered Bond Label Foundation (www.coveredbondlabel.com )

 The Covered Bond Act entered into force on July 1, 2004 and is over-sighted by the Swedish FSA. Its main characteristics are:



Dual recourse to the issuer and cover pool



Dynamic, regulated pool of assets, frequently monitored by the Swedish FSA via appointment of an independent inspector



Regulated valuation of cover pool assets which remain on the balance sheet  The cover pool may consist of certain mortgage credits, public credits and supplemental assets. There is no requirement to segregate mortgage and public credits.  Maximum LTVs: Residential 75%, Agricultural 70%, Commercial 60%  Maximum 10% commercial loans and 20% supplemental assets in cover pool  Regular monitoring of the property values, revaluation of property prices in case of significant drop (generally interpreted as 15% drop)  The S.O. Act amended, effective as of 21 June 2016, requires that the nominal value of the cover pool shall, at all times, be at least two per cent. higher than the aggregate nominal value of the liabilities relating to the covered bonds..  Regional constraint on collateral assets (Mortgage - EEA, Public - OECD)  The cover pool value shall always exceed the aggregate value of claims (including derivatives)  A sound balance in terms of FX, interest rates and maturities must be achieved. It is deemed to exist when the present value of the cover pool at all times exceed the present value of liabilities (including derivatives), even on a stressed basis. Present value cover must hold even after 1% upward and downward shift in the yield curve and a 10% change in the currency  Non-performing assets in the cover pool which are more than 60 days overdue must be disregarded for the purposes of the matching tests  Holders of covered bonds and relevant derivative counterparties benefit from a priority claim over the cover pool should the institution be declared bankrupt and rank pari passu ahead of unsecured creditors and all other creditors

• f the institution in respect of assets in the cover pool

 The registered assets in the cover pool, the covered bonds and any relevant derivative contracts are required to be maintained as a unit and kept segregated from other assets and liabilities of the bankruptcy estate of the institution. The administrators-in-bankruptcy are then required to procure the continued timely service of payments due under the covered bonds and any relevant derivative contracts

Overview of the Swedish covered bond legislation

47

Swedish covered bond legislation

Loan-to-value ratios and

• ther limitations

Matching requirements Benefit of a priority right

• ver the cover pool

Administration in event

• f bankruptcy

The Covered Bond Act

Source: www.ascb.se

48

• 6. Swedish and Baltic economies

49

1 % growth rate unless indicated otherwise, Y/Y growth for the most recent data 2 seasonally adjusted and smoothed

• 5
• 4
• 3
• 2
• 1

1 2 3 06 07 08 09 10 11 12 13 14 15 16

Strong fiscal position

50

Swedish and Baltic economy Key economic indicators1, 2015-2018

Source: Swedbank Economic Outlook Aug 2016 Source: Statistics Sweden Sep 2016

Real GDP growth, Q/Q s.a., %

Data up to and including Q2 2016

+0.5%

Employment and 15-74 population growth, Y/Y %

Source: Statistics Sweden Sep 2016

Most recent 2015 2016F 2017F 2018F Real GDP (calendar adjusted) 3.4 (Q2) 3.9 3.1 2.5 2.1 CPI growth, average 1.0 (Aug) 0.0 1.1 1.8 2.6 CPIF growth, average 1.4 (Aug) 0.9 1.5 1.7 1.9 Unemployment rate (15-74), % of labor force 7.0 (Aug)2 7.4 6.8 6.3 6.3 Savings ratio (households),% 15.7 15.6 15.8 15.6 Real disposable income (households) 2.7 2.6 2.1 1.4

• Kingdom of Sweden rated

Aaa/AAA/AAA

• 3
• 2
• 1

1 2 3 4 06 07 08 09 10 11 12 13 14 15 16 Employment Population

2 4 6 8 10 12

7M 15 7M 16

20 40 60 80 100 120 04 05 06 07 08 09 10 11 12 13 14 15 16

Imports Exports

14 46 14 11 9 6 20 40 60 80 100

Energy Minerals Wood and paper Chemical Engineering Other

• f which:
• Industr. machinery- 16

Electronics - 11 Road vehicles - 13

• 8
• 6
• 4
• 2

2 4 6 8 10 08 09 10 11 12 13 14 15 16F 17F

Germany Denmark Sweden Italy Finland France US UK

Exports – key factor for growth

51

Swedish and Baltic economy

Source: Statistics Sweden, data for Jan-Jul 2016

Current account balance, % of GDP

Source: OECD – Economic outlook, Sep 2016, table 62

Exports by important commodity groups, % Export and import trend, SEKbn (current prices) Top 10 export countries, %

Source: Statistics Sweden, data for jan-Jul 2016 Source: Statistics Sweden, data up to Aug 2016

Interest rates will stay low for a long time

52

Swedish and Baltic economy Sweden, money and credit rates, % Interbank rates (3M fixings), %

Source: Macrobond

• 2

2 4 6 8 10 12 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015

Repo rate 3M STIBOR Government yields, 10 yr Mortgage rate, new loans (3M)

• 2

2 4 6 8 10 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015

Sweden, STIBOR Euro Area, EURIBOR US, LIBOR

Most recent 2015 2016F 2017F 2018F Real GDP Estonia 0.8 (Q2) 1.2 1.5 2.5 2.7 Latvia 2.1 (Q2) 2.7 2.1 3.0 3.3 Lithuania 1.9 (Q2) 1.6 2.5 3.0 2.5 CPI growth, average Estonia 0.3 (Aug)

• 0.5
• 0.1

2.5 2.0 Latvia 0.0 (Aug) 0.2 0.0 2.5 2.0 Lithuania 0.8 (Aug)

• 0.9

1.2 3.0 2.5 Unemployment rate (15-74), % of labor force Estonia 6.5 (Q2) 6.2 6.2 6.6 6.7 Latvia 9.5 (Q2) 9.9 9.5 8.7 8.0 Lithuania 6.5 (Q2) 9.1 8.0 7.4 7.2

Slower convergence, but more resilient economies

53

Swedish and Baltic economies Key economic indicators1, 2015-2018

Source: Macrobond

Annual real GDP growth, % Gross wage growth, Y/Y %

Source: Macrobond Source: Swedbank Economic Outlook Aug 2016, national statistics

1 % growth rate unless indicated otherwise, Y/Y growth for the most recent data

• 20
• 15
• 10
• 5

5 10 15 20 2000 2002 2004 2006 2008 2010 2012 2014 2016

Estonia Latvia Lithuania

• 15
• 10
• 5

5 10 15 20 25 30 35 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Estonia Latvia Lithuania

Exports – key factor for growth

54

Swedish and Baltic economies Current account balance, as % of GDP* Export volume growth, Y/Y*, % Top export countries (1H 2016), %

* 4 quarter average * 4 quarter average

• 25
• 20
• 15
• 10
• 5

5 10 15 2000 2002 2004 2006 2008 2010 2012 2014 2016

Estonia Latvia Lithuania

• 30
• 20
• 10

10 20 30 40 2000 2002 2004 2006 2008 2010 2012 2014 2016

Estonia Latvia Lithuania

Sweden 20 Lithuania 19 Russia 13 Finland 16 Estonia 13 Poland 10 Latvia 9 Germany 7 Latvia 10 Lithuania 6 Russia 7 Germany 8 Russia 6 Sweden 6 Estonia 5 Germany 6 UK 6 Sweden 5 Norway 4 Poland 5 UK 4 Denmark 3 Denmark 5 Belarus 4 US 3 Netherlands 2 Netherlands 3 Estonia Latvia Lithuania

9 17 18 8 11 18 13 21 5 7 9 5 40 26 21 7 5 13 16 11 19 10 20 30 40 50 60 70 80 90 100 Estonia Latvia Lithuania Other Energy Chemicals Metals Machinery, electronics Wood & paper Food & beverages

Exports by commodity groups (1H 2016), %

Source: Macrobond, Export data includ re-exports

62 18 21

• 58

58

• 90
• 45

45 90 135 180 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 1H 16 Private consumption Government consumption Investments* Exports Imports 45 26 25

• 40

44

• 90
• 45

45 90 135 180 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 1H 16 Private consumption Government consumption Investments* Exports Imports 53 20 24

• 76

79

• 90
• 45

45 90 135 180 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 1H 16 Private consumption Government consumption Investments* Exports Imports 65 18 17

• 74

75

• 90
• 45

45 90 135 180 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 1H 16 Private consumption Government consumption Investments* Exports Imports

Open and rather diversified economies

Swedish and Baltic economies

55

Sweden: output, % of GDP Estonia: output, % of GDP Latvia: output, % of GDP

Source: Macrobond

Lithuania: output, % of GDP

* Gross capital formation (including inventories). Includes also statistical discrepancy

56

• 7. Swedish housing and mortgage market

57

Swedish mortgage market

• No securitisation (on balance sheet), no sub-prime market, no 3rd party origination, restricted buy-

to-let market

• 64% home ownership1
• Rental market is regulated
• Transparent credit information (credit information agency, www.uc.se)

– Publicly available information regarding income, debt, payment track record etc

• Consumer credit legislation requires affordability calculations including stress test of higher interest

rate and conservative cost of living

• Very limited debt forgiveness possibilities (full recourse)
• Strong social security and generous unemployment benefit system

58

Swedish housing and mortgage market

1 Source: Statistics Sweden, Apr 2016

2 4 6 8 10 12 14 16 18 05 06 07 08 09 10 11 12 13 14 15 16 Annual % change, total lending (s.a.) Annual % change, mortgage lending (s.a.)

Household borrowing growth

59

Lack of residential housing drives household lending growth

Source: Swedbank, Statistics Sweden, data as per Aug 2016 %

Swedish housing and mortgage market

• LTV cap of 85%

– Mandatory since 2010 (SFSA) – (Min 15% own equity)

• Amortisation (1st June 2016)

– 2% annual amortisation >70% LTV – 1% annual amortisation >50% LTV

• Risk-weight floor of 25% on

mortgage loans (Pillar2)

Data up to and including Aug 2016

SFSA – new amortisation requirements 1 June 2016

• Average LTV in back book is 54%. Average LTV in new lending is 69%
• 98% of households with LTV >70% amortise in Q3 (94% in back-book)
• 94% of households with LTV 50-70% amortise in Q3 (69% in back-book)
• In total 85% of households amortise in Q3 (65% in back-book)

60

50% 55% 60% 65% 70% 75% 2009 2010 2011 2012 2013 2014 2015 Q1 2016 Q2 2016 Q3 2016 Single-family homes, back-book Single-family homes, new Tenant-owner rights, back-book Tenant-owner rights, new LTV

Swedish housing and mortgage market Amortisation level – new lending2)

1) Due to a one-off adjustment by our supplier of external valuations in September the LTV-change is larger in the third quarter than normal relating to tenant-owner rights (apartments) Source: Swedbank, 30 Sep, 2016 40% 50% 60% 70% 80% 90% 100% 110% 0-50% 50-70% >70% Total

98% 85% 94% 55%

LTV distribution1)

2) The amortisation rates are based on amortisation on property level (i.e. amortisation YES or NO) and should not be mixed up with the share of households compliant with SFSA’s new amortisation requirement

20 40 60 80 100 120 75 78 81 84 87 90 93 96 99 02 05 08 11 14 Apartment buildings Single-family dwellings Population growth (thousand persons) Average for the period Average annual need 2016-2025 5 10 15 20 25 00 02 04 06 08 10 12 14 16 Single-family dwellings Apartment buildings

Shortage of housing

Swedish housing and mortgage market Housing completions (thousand units)

• In 2015 59% of the apartments was produced in the three largest areas (Stockholm,

Gothenburg and Malmoe)

• According to the National board of Housing, Building and Planning (Boverket) the

need for housing in 2016-2025 is 710 000 units (average 71 000 per year)

• Housing starts YTD 2016 show a trend-shift

Source: Statistics Sweden, May 2016, Riksbank Source: Statistics Sweden Aug 2016

61

Housing starts (thousand units)

100 200 300 400 500 600 700 80 85 90 95 00 05 10 15 Total assets (exl. collective pensions) Real assets (housing) Debt

Solid affordability

• Low interest rate environment
• Disposable income:

– Increase in salaries – Tax cuts (income + property tax etc.)

• Higher indebtedness

– Higher share of home ownership – Rapid population growth (immigration) – Urbanisation

• Wealth

– Increase in house prices – Mutual funds, pension savings, etc.

Swedish housing and mortgage market

Swedish household financial assets and liabilities, % of disposable income

Source: OECD Economic Outlook, Sep 2016, table 26 Source: Swedish Riksbank’s Financial Stability report 2016:1 (chart A27)

62

Household saving rates, % of disposable income

• 10
• 5

5 10 15 20 07 08 09 10 11 12 13 14 15 16F 17F Sweden Germany Norway United States Finland Denmark

Boindex (the housing affordability index) is 100 when a household* uses 30% of their disposable income for housing costs. The higher the number, the greater the affordability. * 2 adults and 2 children with median disposable income paying for a 135 sqm house or a 95 sqm apartment. Market rates for new lending (a mix of fixed and variable rates) are used. 80 100 120 140 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Single houses Tenant owner rights Total greater affordability 2 4 6 8 10 12 71 74 77 80 83 86 89 92 95 98 01 04 07 10 13 16 Interest ratio Historical average

Solid affordability

• Low interest rate environment
• Disposable income:

– Increase in salaries – Tax cuts (income + property tax etc.)

• Higher indebtedness

– Higher share of home ownership – Rapid population growth (immigration) – Urbanisation

• Wealth

– Increase in house prices – Mutual funds, pension savings, etc.

Swedish housing and mortgage market

Swedbank boindex

Source: Swedbank Research

63

Household interest expenditure in Sweden, % of disposable income

Source: Swedish Riksbank’s Financial Stability report 2016:1 (chart A31)

Swedbank Boindex, 2Q 2016

Single houses Co-ops Stockholm 100 87 Gotheburg 97 88 Malmoe 93 101

50 100 150 200 250 300 350 05 06 07 08 09 10 11 12 13 14 15 16

Tenant owner rights (apartments) Single-family houses

50 100 150 200 250 300 350 05 06 07 08 09 10 11 12 13 14 15 16

Tenant owner rights (apartments) Single-family houses

50 100 150 200 250 300 350 05 06 07 08 09 10 11 12 13 14 15 16

Total Tenant owner rights (apartments) Single-family houses

50 100 150 200 250 300 350 05 06 07 08 09 10 11 12 13 14 15 16

Tenant owner rights (apartments) Single-family houses

Upward pressure on house prices

Swedish housing and mortgage market Sweden, total

Source: Valueguard Index (2005=100), 14 Sep, 2016 (data up to and including Aug 2016)

Stockholm Gothenburg

Malmoe

64

Appendix

65

5 10 15 20 25 20 40 60 80 100 120 140 160 180 2011 2012 2013 2014 2015 Q3 2016 NSFR LCR CET1 capital ratio, CRDIV (RHS)

• 0.20
• 0.10

0.00 0.10 0.20 Q3 11 Q1 12 Q3 12 Q1 13 Q3 13 Q1 14 Q3 14 Q1 15 Q3 15 Q1 16 Q3 16

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 58% of total loans – 90% 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 around 200bp

• Conservative funding and liquidity position – survival horizon longer than 12 months assuming closed

funding markets, NSFR 104% and LCR 131%

• Baltic operations self-funded – loan-to-deposit ratio < 100%

%

This is Swedbank Liquidity & capital

%

Source: Swedbank 30 Sep 2016

Credit impairment ratio

% 66

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

This is Swedbank

Source: Swedbank 30 Sep 2016

Profit before impairment

67

1 000 2 000 3 000 4 000 5 000 6 000 7 000 8 000 9 000 Q2 11 Q2 12 Q2 13 Q2 14 Q2 15 Q2 16 Profit before impairments One-off related to Visa

0.30 0.35 0.40 0.45 0.50 0.55 0.60 2010 2011 2012 2013 2014 2015 Q3 2016 12 000 14 000 16 000 18 000 20 000 2010 2011 2012 2013 2014 2015 Target 2016 Acquistion of Sparbanken Öresund

Swedbank – market leader in cost efficiency

• Best-in-class cost efficiency – an executive management strategic priority
• Executive management strongly focused on cost and change management

− Integrated in corporate culture − Focus on straight-through-processing − Evolving household banking model – digitisation trend

• Retail profile a key feature

− Four home markets – Sweden, Estonia, Latvia and Lithuania – reduce complexity − Largest private and SME customer base − High degree of digitisation in home markets

SEKm

Total expenses This is Swedbank

Source: Swedbank 30 Sep 2016

C/I ratio

68

Value creation

69

This is Swedbank

Source: Swedbank Year-end reports

2 4 6 8 10 12 5 10 15 20 25 30 2011 2012 2013 2014 2015 SEK % Return on Equity (LH scale) CET1 capital ratio (LH scale) Dividend per share (RH scale)

Sweden 80% Estonia 7% Latvia 5% Lithuania 5% Other 3% Lending and deposits 67% Treasury, Trading and Capital Markets 2% Asset Management 12% Payment, Cards 9% Insurance 3% Share of P&L of associates 2% Other 5%

Strong earnings capacity – retail bank profile

70

This is Swedbank FY Total Income evolution, SEKbn …And distribution by business area FY 2015 Total income geographic distribution…

Source: Swedbank 31 Dec 2015

5 10 15 20 25 30 35 40 45 2011 2012 2013 2014 2015 Other Net Gains & Losses on financial items Net Commission Income, other Net Commission Income, Retail

200 400 600 800 1000 1200 Other* 4.2% Lithuania 3.1% Latvia 2.2% Estonia 4.5% Sweden 86.0% Swedish Mortgage loans (private+corp) Other corporate (incl. LC&I, Sweden)

Sweden – the dominating home market

• Total lending to the public amounts to SEK 1 439bn (as per Q3 2016), out of which

around 86% is originated in Sweden

• Estonia makes up 46% of total lending in the Baltics

71

Source: Swedbank 30 Sep 2016

This is Swedbank

* Denmark, Norway, Finland and NY Branch

Lending distributed by countries

SEK 1 237bn

1 2 3 4 5 6 7 8 9 10 2015-12-31 2016-09-30

2 4 6 8 10 12 14 Def 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 2014-12-31 2015-12-31 2016-09-30

Risk migration in oil-related exposure by internal risk grade**, SEKbn

Oil related sector under stress

72

Asset quality

Shipping & Offshore, loans, SEK 30bn

• Loan portfolio negatively impacted

by lower oil prices, SEK 17.8bn*

– 1.2% of the total loan book – Derivative exposures of SEK 2.3bn (incl. collateral)

• Provisions of SEK 192m in Q3

59% of the portfolio is negatively impacted by lower oil prices

* During Q3 2016 a reclassification of one sector within the Shipping and offshore portfolio was made. Offshore wind vessels (earlier included in Drilling exploration) is no longer deemed oil-price sensitive i.e. total volume is more or less unchanged.

** 21 represents the lowest risk and 0 the highest risk

0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 2011 2012 2013 2014 2015 0.00 0.02 0.04 0.06 0.08 0.10 0.12 0.14 2011 2012 2013 2014 2015 0.0 0.3 0.6 0.9 1.2 1.5 2011 2012 2013 2014 2015 Estimated losses Realised losses

Conservative PD assumptions

73

Asset quality

• Five consecutive years with higher estimated losses compared to realised losses
• Realised losses were higher than expected losses only during the Baltic crisis in

2009

F-IRB A-IRB

Corporate Retail mortgage Retail other

% % %

Swedbank – Safety margins high in all exposure classes, PD %

Source: Swedbank Pillar 3 report

11.3% 10.3% Swedbank CET1 requirements Pillar 2 CET1 requirements Pillar 1 CET1 requirements 74

• “It is particularly important that FI has the possibility of giving due

consideration to the specific situation…in which a firm in financial stress finds itself… For example, certain risks included in the assessment of the Pillar 2 basic requirement might have materialized, which might mean there are no longer grounds for requiring the firm to hold capital for them”.

• “It ought to be positive for financial stability that a firm has the

possibility… to restore its capital without the firm necessarily becoming subject to priorly specified and automatic legal

• restrictions. In other words, firms are hence given the

possibility of re-establishing their capital in a strained situation without automatic restrictions on distributions or, depending on the size of the capital shortage, a formal resolution phase being activated."

• “Hence…a firm may freely choose…the most suitable way of

restoring the capital in that specific situation. For example, the firm is not obliged to halt or limit dividends or interest payments on Tier 1 capital contributions, if the firm can identify

• ther and more appropriate ways of restoring the capital sufficiently

quickly.”

Source: Swedbank 30 Sep 2016 and Swedish FSA Memorandum: ”Capital requirements for Swedish banks” – 8 Sep 2014 and Swedbank

Capital requirements

Corrective Measures Restrictive Measures

*Fully loaded CRD IV

21.6%*

No automatic sanctions for breaching the Pillar 2 capital requirements

MDA Restrictions

5 10 15 20 25 30 35 40 45 Total capital market funding Covered bond funding 29% 15% 35% 18% 34% 59% 2% 8% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2007 Q3 2016 5 years + 1-5 years 3-12 months 0-3 months

Fundamental change of maturity profile

75

Average maturity profile of outstanding market funding

Source: Swedbank, 30 Sep 2016

Months

SEK 673bn SEK 890bn

• 2007 – 64% of wholesale funding < 12 months, SEK 13bn placed with central banks
• Q3 2016 – 33% of wholesale funding < 12 months, SEK 263bn placed with central bank

Liquidity and funding

76

Long-term funding maturity profile

Long-term funding maturity profile, by funding source

Source: Swedbank 30 Sep 2016

Liquidity and funding

SEKbn SEKbn

Long-term funding maturity profile, by currency

50 100 150 200 2016 2017 2018 2019 2020 2021 2022-

Senior unsecured debt Covered bonds

50 100 150 200 2016 2017 2018 2019 2020 2021 2022- Other GBP USD EUR SEK

77

Benchmark transactions FY 2015 – YTD Q1 2016

Source: Swedbank 30 Jun 2016

Liquidity and funding

ISIN Product Tenor Currency Amount Type Spread Value date Maturity date

XS1190655776 AT1 Perpetual USD 750 NC5 5.50% February 19, 2015 Perpetual XS1197350769 SU 144a 5Y USD 1 000 Fixed T+77 March 4, 2015 March 4, 2020 XS1197833996 SU 144a 3Y USD 400 Fixed T+65 March 4, 2015 March 2, 2018 XS1200837836 CB 7Y EUR 1 000 Fixed MS-5 March 11, 2015 March 11, 2022 XS1211586638 CB 3Y GBP 500 FRN 3m£+20 April 2, 2015 April 2, 2018 XS1218319538 SU 4Y GBP 300 Fixed G+80 April 15, 2015 April 15, 2019 XS1230342955 SU 5Y SEK 1 500 FRN 3mStib+100 May 11, 2015 May 11, 2020 XS1230340157 SU 5Y SEK 1 500 Fixed MS+50 May 11, 2015 May 11, 2020 XS1231116481 CB RegS 5Y USD 1 000 Fixed MS+37 May 12, 2015 May 12, 2020 XS1239401216 SU 7Y EUR 750 Fixed MS+45 June 1, 2015 June 1, 2022 XS1277337678 SU 5Y EUR 500 FRN 3m€+50 August 18, 2015 August 18, 2020 XS1296948588 CB 5Y EUR 1 250 Fixed MS+7 September 29, 2015 September 29, 2020 XS1312135905 CB 3Y GBP 350 FRN 3m£+38 October 29, 2015 October 29, 2018 AU3FN0029385 SU 3Y AUD 325 FRN 3mBBSW+115 November 5, 2015 November 5, 2018 AU3CB0233773 SU 10Y AUD 107 Fixed MS+145 November 5, 2015 November 5, 2025 XS1328699878 SU 5Y1M EUR 750 Fixed MS+53 December 4, 2015 January 4, 2021 XS1361548693 CB 5Y EUR 1 250 Fixed MS+14 February 10, 2016 February 10, 2021 XS1377855363 SU 5Y USD 1 250 Fixed T+135 March 10, 2016 March 10, 2021 XS1377258436 SU 3Y EUR 500 FRN 3m€+45 March 11, 2016 March 11, 2019 XS1431464137 SU 1Y GBP 525 FRN 3m£+32 June 2, 2016 July 4, 2017

Funding sources

78

Swedbank AB Swedbank Mortgage AB*

* 100% guaranteed by parent company

• Irrevocable
• Unconditional
• Timely

** Combined limit for unsecured- and covered bonds *** Limited by cover pool size

100% owned

Liquidity and funding

Source: Swedbank, 30 Jun 2016

Program Limit Long Term Global MTN USD 40bn Domestic MTN SEK 60bn USD Senior (144a / Reg.S) USD 15bn AUD Senior** AUD 10bn NSV (stand alone doc.) Short Term Domestic CP SEK 80bn European CP/CD EUR 6bn US CP USD 20bn Yankee CD USD 20bn Finnish CD EUR 4bn Program Limit Long Term Domestic Benchmark CB Unlimited*** EMTN CB EUR 25bn USD Covered bonds (144a / Reg.S) USD 15bn Domestic MTN CB SEK 150bn Norwegian Benchmark CB Unlimited*** AUD Covered bonds** AUD 10bn Registered CB (stand alone doc.) Short Term Domestic CP SEK 50bn

70% of the domestic covered bonds held by Sweden

Liquidity and funding

Owners of Swedish covered bonds, SEKbn

Source: Swedish Central banks Financial Stability Report 2016:1, chart A71

Owners of Swedish covered bonds, 31 Dec 2015, %

79

100 200 300 400 500 600 700 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 Foreign investors Swedish insurance companies Swedish banks Swedish investment funds Public sector,

• incl. AP funds

18% 14% 28% 6% 34% Swedish banks Swedish investment funds Swedish insurance companies Public sector, incl. AP funds Foreign investors

Asset encumbrance

80

Liquidity and funding

Source: Swedbank Facts 30 Sep 2016 – All amounts according to Swedbank consolidated situation (See Fact book page 72-73 for more info www.swedbank.com/investor-relations/)

• Total balance sheet, SEK 2 394bn
• Asset encumbrance ratio of around

24%

Type of assets (Balance Sheet items) SEKm Carry Amount Fair Value Carry Amount Fair Value Assets of the reporting institution 571 192 1 666 204 Loans on demand 267 285 Equity instruments 24 120 24 120 Debt securities 20 007 20 268 162 894 164 019 Loans and advances other than loans on demand 551 185 1 085 966

• f w hich mortgage loans

537 647 565 797 Other assets 125 939 Encumbered assets Unencumbered assets, additional assets available for secured funding Type of assets (Off-balance sheet items) SEKm Encumbered received collateral Unencumbered received collateral available for secured funding Fair value Fair value Collateral received by the reporting institution 9 020 79 911 Loans on demand Equity instruments 2 674 Debt securities 9 020 59 989 Loans and advances other than loans on demand 15 563 Other collateral received 1 685 Ow n debt securities issued other than ow n covered bonds or ABSs Purpose for encumbrance (On- and off-balance sheet ite SEKm 30 Sep 30 Jun 31 Mar 31 Dec 2016 2016 2016 2015 Carrying amount of selected financial liabilities 559 845 572 737 575 433 542 070

• f w hich Derivatives

16 328 15 860 20 537 18 911

• f w hich Deposits

22 660 32 882 22 015 8 127

• f w hich Debt securities issued

520 857 523 995 532 881 515 031 Other sources of encumbrance 20 367 20 065 3 997 3 696 Total 580 212 592 802 579 430 545 766 Encumbered Assets

10 20 30 40 50 10 20 30 40 50 0-25 25-50 50-70 70-85 Above 85 Loan-to-value 2011 2012 2013 2014 2015

Swedish FSA’s mortgage market report 2016

• Average LTV: 65% (67)
• Amortise, LTV70-85%: 85% (83)
• Amortise, LTV 50-70%: 51% (43)
• Debt to disp. Income*: 406% (366)
• Around 7%(5) of households (with

amortisations) will have a deficit if interest rates increase by 5%-points

81

Swedish housing and mortgage market

Source: Swedish FSA’s memorandum “The Swedish Mortgage Market 2015, published 14th April 2016 and Swedbank

Loan-to-value distribution – new lending, % Stress test – share of households with deficit post interest rate hike, % New lending 2015(2014)

Share of households

2 4 6 8 2 4 6 8 1 2 3 4 5 Interest rate increase, per centage points Not amortising Amortising 2014 (no amortisation)

*Mortgage- and other unsecured loans

100 120 140 160 180 200 220 240

05 06 07 08 09 10 11 12 13 14 15 16

Real estate price performance – Sweden, 12 month

82

Swedish housing and mortgage market

Single-family homes1 Tenant-owner rights2 Combined3 12M Δ 12M Δ 12M Δ

Oct 15 18% 19% 18% Nov 15 13% 18% 15% Dec 15 12% 17% 14% Jan 16 14% 16% 15% Feb 16 13% 14% 13% Mar 16 12% 12% 12% Apr 16 12% 10% 11% May 16 11% 9% 11% Jun 16 11% 7% 10% Jul 16 10% 7% 8% Aug 16 9% 6% 8% Sep 16 9% 6% 8%

Source: Valuegard www.valuegard.se (Based on data from Mäklarstatistik), 1 HOXHOUSESWE, 2 HOXFLATSWE (apartments), 3 HOXSWE

House price index, Sweden3

2005=100

83

Swedbank – contacts and financial calendar

Tomas Hedberg, Head of Group Treasury tomas.hedberg@swedbank.se +46 706 4397 11 Gregori Karamouzis, Head of Investor Relations gregori.karamouzis@swedbank.com +46 8 585 930 31 Peter Stenborn, Debt Investor Relations peter.stenborn@swedbank.com +46 8 585 909 30 Niklas Lindkvist, Debt Investor Relations niklas.lindkvist@swedbank.com +46 8 585 902 76 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 Joakim Henriks, Money Markets and Short-Term Funding joakim.henriks@swedbank.se +46 8 700 90 62

Q4 Year-end report 2 Feb 2017 Annual report 2016 23 Feb 2017 Annual General Meeting 30 Mar 2017 Q1 Interim report 25 Apr 2017 Q2 Interim report 19 Jul 2017 Q3 Interim report 24 Oct 2017

debt.ir@swedbank.com www.swedbank.com/investor-relations/debt-investor Swedbank Group Treasury Landsvägen 40, SE-105 34 Stockholm, Sweden Sundbyberg

Contact debt investor relations: For further information, please contact: Financial calendar Postal address: Visitors:

Appendix