Swedbank investor presentation October 2014 Table of contents 1. - - PowerPoint PPT Presentation

Swedbank investor presentation

October 2014

2

Table of contents

1. Quarterly financial update 3 2. Capital considerations 9 3. Liquidity and funding 21 4. Cover pool data 31 5. Swedish economy 37 6. Swedish housing and mortgage market 41 7. Appendix 49

• 1. Quarterly financial update

3

Strong result

4

Quarterly update - Group results

SEKm Q3 14 Q2 14 ▲Q/Q ▲Y/Y Net interest income 5 829 5 521 308 430 Net commission income 2 816 2 813 3 889 Net gains and losses 799 773 26 894 Other income 706 1 348

• 642

426 Total income 10 150 10 455

• 305

2 639 Total expenses 4 164 4 919

• 755

1 145 Profit before impairments 5 986 5 536 450 1 494 Credit impairments 235 30 205 73 Other impairments 19 70

• 51
• 328

Tax 1 164 1 063 101 414 Profit from continuing

• perations

4 562 4 369 193 1 330

• Volume growth
• Mixed margins
• Strong commission income
• Treasury income supported by lower

market rates

• Cost
• Meeting cost target 2014
• Ambition to lower total expenses towards

SEK 16bn by 2016

ROE continuing

• perations, %

16.6 16.6 Cost/income ratio 0.41 0.47 CET1 capital ratio, % 20.7 20.9

Source: Swedbank Sep 2014

Strong loan volumes

5

Quarterly update - Swedish Banking

SEKm Q3 14 Q2 14 ▲ Q/Q ▲ Y/Y Net interest income 3 372 3 362 10

• 124

Net commission income 1 746 1 790

• 44

470 Other income 449 1 077

• 628

687 Total income 5 567 6 229

• 662

1 033 Total expenses 2 581 3 192

• 611

1 048 Profit before impairments 2 986 3 037

• 51
• 15

Credit impairments 43 25 18

• 99

ROE, % 25.9 29.7 C/I ratio 0.46 0.51

• Lower deposit margins
• Expanding mortgage margins
• Loan volume growth both in private and

SME segments

• Continued market activity supports

commission income

• Sparbanken Öresund financial result

fully included

Volumes, SEKbn Q3 14 Q2 14 ▲ Q/Q ▲ Y/Y Loans 1 005 987 18 80 Deposits 402 401 1 24

Source: Swedbank Sep 2014

Good underlying development

• Volume growth
• Mixed corporate activity

– Corporate finance and DCM – Lending

• Weaker trading activity
• Single exposure caused credit

impairment

6

Quarterly update - Large Corporates & Institutions

SEKm Q3 14 Q2 14 ▲ Q/Q ▲ Y/Y Net interest income 876 846 30 91 Net commission income 561 496 65 277 Net gains and losses 354 575

• 221

25 Other income 36 28 8

• 18

Total income 1 827 1 945

• 118

375 Total expenses 835 804 31 141 Profit before impairments 992 1 141

• 149

234 Credit impairments 270 21 249 86 ROE, % 13.8 23.1 C/I ratio 0.46 0.41 Volumes, SEKbn Q3 14 Q2 14 ▲ Q/Q ▲ Y/Y Loans 161 157 4 13 Deposits 104 98 6 33

Source: Swedbank Sep 2014

Stable result

• No financial impact from the geopolitical

situation in Russia and Ukraine

• Lower market rates
• Solid credit quality
• Good cost efficiency

7

Quarterly update - Baltic Banking

SEKm Q3 14 Q2 14 ▲ Q/Q ▲ Y/Y Net interest income 865 894

• 29

321 Net commission income 500 522

• 22

172 Other income 148 180

• 32
• 32

Total income 1 513 1 596

• 83

461 Total expenses 615 621

• 6

51 Profit before impairments 898 975

• 77

410 Credit impairments

• 59
• 16
• 43

84 ROE, % 15.7 15.6 C/I ratio 0.41 0.39 Volumes, SEKbn Q3 14 Q2 14 ▲ Q/Q ▲ Y/Y Loans 121 122

• 1

4 Deposits 125 122 3 15

Source: Swedbank Sep 2014

12

• 6.0
• 3.0
• 0.1

406.7 409.6 360 370 380 390 400 410 420 430 Q2 2014 Exposure change Risk grade migration (PD and LGD) Other credit risk CVA and market risk Q3 2014 Increase Decrease

Increased REA following credit growth

Quarterly update - Capital

8

• REA net increase of SEK 2.9bn during the quarter
• CET1 capital negatively impacted by SEK 0.9bn (IAS19)
• No regulatory excess capital

Swedbank REA development CET1 capital ratio

20.9% 20.7% 10% 12% 14% 16% 18% 20% 22% 24% Q2 2014 Q3 2014 SEKbn

Source: Swedbank Sep 2014

Strong asset quality

• Continued low loan losses in all

business segments

• No asset quality impact from the

geopolitical situation in Russia and Ukraine

• Single exposure caused credit

impairment within LC&I

• Total impaired loans remain low

9

Quarterly update - Asset quality

Credit impairments, SEKm Q3 14 Q2 14 Swedish Banking 43 25 Large Corporates & Institutions 270 21 Baltic Banking

• 59
• 16

Group Functions & Other

• 19

Swedbank Group 235 30

Source: Swedbank Sep 2014

10

• 2. Capital considerations

11

4.5% 3.5% 3.0% 0.6% 2.5% 2.0% 6.3% 2.0% Swedbank Total Capital Requirements Systemic risk in Pillar 2 25% REA Mortgage Floor Individual Pillar 2 charge Capital conservation buffer Countercyclical buffer Systemic risk buffer Min additional T1 and T2 capital Minimum CET1 Requirement

4.5% 3.0% 0.6% 2.5% 1.5% 5.0% 2.0% Swedbank CET1 Requirements Systemic Risk in Pillar 2 25% REA Mortgage Floor Individual Pillar 2 charge Capital Conservation Buffer Countercyclical Buffer Systemic Risk Buffer Minimum CET1 Requirement 10.6% 8.5% Swedbank CET1 Requirements Pillar 2 CET1 Requirements Pillar 1 CET1 Requirements

Composition of Swedbank’s CET1 requirement

12

MDA restrictions

Capital considerations

19.0%

Corrective Measures Restrictive Measures

19.0% Estimated CET1 Capital Requirement based upon the Swedish FSA’s Memorandum (08/09/2014),. This will likely be adjusted in the future, in particular as under the SFSA’s Memorandum the CET1 capital requirement is calculated utilising a standardised 1.5% charge for individual Pillar 2 requirements excluding mortgage and systemic risk, and this will likely vary between the above institutions 24.3%

No automatic sanctions for breaching the Pillar 2 capital requirements

13

• "Third, it ought to be positive for financial stability that a firm has the possibility, using rapid

and resolute measures, as agreed with FI, to restore its capital without the firm necessarily becoming subject to priory 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…"

• “Hence, in such a situation, a firm may freely choose, in the framework of other applicable

regulations and under FI’s review, 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 other and more appropriate ways of restoring the capital sufficiently quickly. (This applies as long as there is no shortfall from the combined buffer requirement under the Pillar 1 rules, i.e. excluding the specific own funds requirement).” Capital considerations

Source: Swedish FSA Memorandum: ”Capital requirements for Swedish banks” – 8 Sep 2014

8.0% 8.0% 8.0% 8.0% 11.0% 9.5% 7.4% 6.7% 1.7% 2.6% 0.6% 0.5% Swedbank Handelsbanken SEB Nordea CET1 Capital Ratio per Q214 Estimated CET1 Capital Requirement Anticipated AT1 Trigger level

Swedbank’s capitalisation ensures a strong buffer for investors (fully loaded Basel III)

14

Swedish banks’ current CET1 capital ratios

Anticipated AT1 Trigger level

Capital considerations

Estimated CET1 Capital Requirement based upon the Swedish FSA’s Memorandum (08/09/2014),. This will likely be adjusted in the future, in particular as under the SFSA’s Memorandum the CET1 capital requirement is calculated utilising a standardised 1.5% charge for individual Pillar 2 requirements excluding mortgage and systemic risk, and this will likely vary between the above institutions

20.7% 20.1%* 16.0%* 15.2%*

* As per Q2 2014

4.5% 4.5% 4.5% 4.5% 6.1% 6.0% 5.8% 5.7% 8.5% 7.1% 5.1% 4.6% Swedbank Handelsbanken SEB Nordea Pillar 2 charge Combined buffer requirement Minimum CET1 Requirement

Swedbank’s capital composition ensures a strong buffer to MDA limitations

15

Capital considerations Buffer to Combined Buffer Requirement based on Regulatory Minimum

19.0% 17.5% 15.4% 14.7% Note: Assumes that AT1 and T2 capital requirements are fulfilled with subordinated capital

MDA restriction

Source: Swedbank Sep 2014

18.4 25.0 34.8 6.4 22.2 Pillar 1 min Pillar 1 buffers Pillar 2 requirements Current buffer Pre-provision earnings*

Significant equity buffer to absorb losses

16

MDA restrictions

*YTD Q3 pre-provision earnings annualised

Equity cushion towards MDA restrictions and trigger level (SEK bn) Capital considerations

• Dividend policy
• f 75%

Source: Swedbank Sep 2014

The Group

Swedish household loans (90% mortgages) Shipping and offshore, Transportation Manufacturing Other corporate lending Latvian lending Other property management Residential properties Agriculture and forestry Hotels and restaurants, Retail 64% 13% 4% 3% 7% Lithuanian lending 2% 6% Estonian lending

Asset portfolios – low risk

17

Source: Swedbank, Sep 30, 2014

Asset quality

Tenant owner associations

The Group, total SEK 1 287bn Sweden Baltic Banking

51% 49%

Private Corporate

64% 36%

Private Corporate

2 4 6 8 10 12 14 16 18 20 SHB Nordea SEB Swedbank Q114 2014 2015 2016

2 4 6 8 10 12 14 16 18 20 SHB Nordea SEB Swedbank Jun 2013 Dec 2014 Dec 2015 Dec 2016

The Swedish FSA and Riksbank stress tests

• Swedbank’s strong relative risk position confirmed

18

Asset quality – stress test

Source: The SFSA’s Risk Report, Nov 14, 2013

%

Source: The Riksbank’s Financial Stability Report 2014:1, Jun 14, chart 4:13 and 4:15

%

CET1 - The Swedish FSA stress test CET1 - The Swedish Riksbank stress test* *Main assumption; GDP decline and interest rates increase to stress for

higher credit losses **Note that this relates to SNL Financial's definition of the leverage ratio, which differs from the definition used by the Basel Committee.

1 2 3 4 5 6 SHB Nordea SEB Swedbank Q114 2014 2015 2016

% Leverage ratio - The Swedish Riksbank stress test**

19

Asset quality – ICAAP stress test

Swedbank demonstrates strong resilience to the applied adverse scenario

20 21 22 23 24 25 26 2013 2014 2015 2016 2017 2018

Net interest income (SEKbn)

• 2

2 4 6 8 10 2013 2014 2015 2016 2017 2018

Credit impairments (SEKbn)

400 415 430 445 460 2013 2014 2015 2016 2017 2018

RWA (SEKbn)

17 19 21 23 25 2013 2014 2015 2016 2017 2018

CET 1 capital ratio (%)

Source: Swedbank, Jun 30, 2014

Credit impairments (in total SEK 25bn) REA (SEKbn)

• 15
• 10
• 5

5 10 15 20 25 30 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 Net profit * Credit impairments, Group

Magnitude of historic losses manageable

20

Asset quality – historic performance Historic financial performance Resilient Swedish asset portfolio

SEKbn

Source: Swedbank, Sep 30, 2014 *Net profit 2008-09 including SEK 2.7bn in goodwill wright-down (Ukraine), and 2011 SEK1.9bn (Latvia)

• 0.5%

0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0%

92 94 96 98 00 02 04 06 08 10 12 Q314 Private Credit Impairment, % Of which, Swedbank mortgage Private, %

• 3. Liquidity and funding

21

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

Q3 2014

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

Q3 2014

Source: Swedbank Sep 30, 2014

Core balance sheet* structure

22

Liquidity and funding

Lithuania Latvia Other corporate lending, Sweden &

• ther Nordic countries

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

• Suppl. cap

Assets Liabilities

SEKbn SEKbn * Simplified balance sheet

Estonia

1 000 2 000 3 000 4 000 5 000 6 000 7 000 8 000

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 1980 1990 2000 2005 2010 2012 2013

Deposits and retail bonds (LHS) Equities (LHS) Pension savings and mutual funds Other financial assets (LHS) Total financial assets (RHS) 23

Covered bond strategy

Source: Swedbank Sep 30, 2014

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

20 40 60 2014 2015 2016 2017 2018 2019 2020- Senior unsecured debt 0% 10% 20% 30% 40% 50% 60% 70% 0%

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

OC, Q314

Senior unsecured debt strategy

24

Source: Swedbank Sep, 2014, *Nominal amounts

Senior unsecured debt maturity profile

SEKbn* Over-collateralisation House price drop

House price sensitivity of the cover pool Liquidity and funding

10 20 30 40 50 60 70 80 90 100

Q112 Q212 Q312 Q412 Q113 Q213 Q313 Q413 Q114 Q214 Q314 Q414 Q115 Q215 Q315 Q415

Covered bonds Senior unsecured

Lower funding needs

• LCR 132% (Swedish FSA definition FFFS 2012:6)
• NSFR 102% (Basel committee)
• Issued SEK 89bn of term-funding YTD 2014, of which SEK 21bn in Q2.
• FY 2014 funding plan of SEK 120bn

25

Liquidity and funding Term funding issuance – completed and planned

SEKbn Source: Swedbank, Sep 30, 2014, nominal amounts

Liquidity reserve

26

According to the template defined by the Swedish Bankers' Association

Liquidity and funding

Source: Swedbank Fact book, Sep 30, 2014

Cash and holdings in central banks 158 181 Deposits in other banks available overnight 675 Securities issued or guaranteed by sovereigns, central banks or multilateral development banks 47 702 Securities issued or guaranteed by municipalities or public sector entities 786 Covered bonds 53 787

• Issued by other institutions

53 787

• Own issued

Securities issued by non-financial corporates Securities issued by financial corporates (excl. covered bonds) 2 305 Other Total1 263 436 Additional liquid assets, Group2, 3 62 820

1) 90% of the securities in the liquidity reserve per Q3 2014 are rated AAA. The rating requirement is AA-. 2) 89% of the additional assets fulfill the Liquidity Reserve definition by the Sw edish Bankers’ Association except for that they are held outside the Treasury department. 3) 88 % of the additional assets are rated AAA.

Prefunded in excess of 12 months

27

Liquidity and funding

SEKbn

Source: Swedbank, Sep 30, 2014

Days forward

1 As defined by the Swedish Bankers’ Association

1) Repoed securities on balance sheet. 5) Reversed repos are included. 2) Collateral posted under CSA agreements, gross (3-year, SEKm, 6) All type of securities, including securities non pledgeable at central banks, High: 21 572, Low : 6 582, Average: 12 776).

• f w hich 74% are rated AAA, 2% are rated below A- and 13% are not rated.

3) Of w hich accrued interest of assets in the cover pool, 7) Of w hich accrued interest of assets in the cover pool overcollateralisation, SEK 1 588m as of 30 Sep 2014 SEK 984m as of 30 Sep 2014 4) Collateral pledged in securities lending activities and w ith exchanges

Asset encumbrance

28

Liquidity and funding

Source: Swedbank Facts Sep 30, 2014

Encumbered assets - distribution by type of liability (row) and asset (column) SEKm Government debt instruments Central banks and supranational debt instruments Covered bonds Debt instruments issued by credit institutions Securities issued by corporate and

• ther issuers

ABS Mortgage loans Cash Total Central bank funding Intraday settlement 9 590 1 768 7 768 19 126 Repurchase agreements 1) 19 843 11 236 31 079 Derivative 2) 1 566 1 229 11 691 14 486 Covered bonds 3) 475 693 475 693 Other 4) 73 1 229 175 1 477 Total 30 999 20 233 1 229 475 693 11 866 541 861 Financial assets pledged for insurance policy holders 131 227 Unencumbered assets - additional assets available for secured funding SEKm Government debt instruments Central banks and supranational debt instruments Covered bonds Debt instruments issued by credit institutions Securities issued by corporate and

• ther issuers

ABS Mortgage loans Cash Total Securities 5, 6) 40 305 32 321 91 433 16 960 11 369 600 192 988 Cover pool over collateralisation 7) 292 142 292 142 Cover pool eligible assets Total 40 305 32 321 91 433 16 960 11 369 600 292 142 485 130 Total assets (BS) SEK 2 078 803

Rating strategy – same level as the best rated Nordic banks

29

Source: Swedbank Sep, 2014

This is Swedbank - Credit ratings

• On June 24, 2014 Fitch revised its outlook for Swedbank from ’stable’ to ’positive’. The change is a direct action

due to Swedbank’s strong asset quality, stable earnings and strong capitalisation.

• On May 29, 2014 Moody's announced the rating action due to the implementation of BRRD and SRM. All in all

105 European banks were included and 82 of these had the rating outlook changed to negative. This mean that most major banks in Europe now have negative outlooks due to diminishing support.

• On April 29, 2014 S&P increased stand alone rating (SACP) to ’a’ from ’a-’ (increased assessment of ’capital and

earnings to ’strong’ from ’adequate’). No rating uplift due to simultaneously fall in support* to ’+1’ from ’+2’ (technicality in S&P’s rating methodology).

• On April 29, 2014 S&P change outlook to ‘negative’ from ‘stable’ – driven by implementation of BRRD

government support - that support will diminish for all European banks going forward. This is part of an European wide review of S&P’s support assumptions – outcome at the latest, year-end 2015.

* SHB, Nordea and Swedbank +1, SEB +2

Short Long Short Long Short Long Swedbank A-1 A+ P-1 A1 F1 A+ Swedbank Mortgage A-1 A+ P-1 A1 Covered bonds AAA Aaa Fitch S&P Moody's

30

• 4. Cover pool data

31

32

Rating, S&P / Moody’s AAA / Aaa Total pool size SEK 765.3bn Geographic distribution Sweden 100% Current OC-level 61.4% Weighted average seasoning 2 66 months Average LTV 3, 4 – WA LTV on property level (Max LTV) 56% Non-performing loans 5 None Fixed /Floating interest loans 6 – Fixed 33% – Floating 67% Repayment structure 7 – Amortising 50% – Interest only 50% Average loan size SEK 487 679 Number of loans outstanding 1 569 194 Number of borrowers 1 122 001 Number of properties 746 066 Dynamic pool Yes

1 As per Sep 30, 2014 2 Public sector loans not included

3 Index valuation as per Sep 30, 2014 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 Facts, Sep 30, 2014

Swedbank’s cover pool

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

Cover pool data

33

Swedbank’s cover pool

Source: Swedbank, Facts, Sep 30, 2014

Geographical distribution, Sweden, per cent 30 Sep 2014 North 6.7 Norrbotten county (BD) 1.4 Västerbotten county (AC) 2.5 Västernorrland county (Y) 1.6 Jämtland county (Z) 1.2 Middle (including Stockholm) 44.7 Dalarna county (W) 2.2 Gävleborg county (X) 2.1 Värmland county (S) 2.2 Örebro county (T) 2.5 Västmanland county (U) 2.5 Uppsala county ( C) 4.0 Södermanland county (D) 2.4 Stockholm county (including Stockholm) (AB) 26.8 South (including Göteborg and Malmö) 48.6 Västra götaland county (Including Göteborg) (O) 17.4 Östergötland county (E) 4.1 Jönköping county (F) 3.6 Halland county (N) 3.8 Kronoberg county (G) 2.2 Kalmar county (H) 3.2 Skåne county (including Malmö) (M) 12.1 Blekinge county (K) 1.6 Gotland county (I) 0.6 100.0

Type of loans

Residentials 90.9%

• f w hich Single-family housing

57.6%

• f w hich Tenant ow ner rights

17.2%

• f w hich Tenant ow ner association

10.5%

• f w hich Multi-family housing

5.4% Public 1.4% Commercial 0.6% Forest & Agricultural 7.3% 100.0%

Cover pool loan-to-value distribution

34

Swedbank’s cover pool

Source: Swedbank, Sep 30, 2014

• Weighted average LTV 58%

LTV distribution per property1 LTV distribution by volume1, 2

1 Public loans of 1.3% 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) 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

Cover pool loan type and loan-to-value distribution

35

Swedbank’s cover pool

Source: Swedbank, Sep 30, 2014 (1excluding public sector loans 1.4%)

WA LTV per property type1

1

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

 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)  No mandatory over-collateralisation (OC)  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

• ther creditors of 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

36

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 of bankruptcy The Covered Bond Act

Source: www.ascb.se

• 5. Swedish economy

37

20 000 40 000 60 000 80 000 100 000 120 000 04 05 06 07 08 09 10 11 12 13 14 Import Export

Continued strong fiscal position

• Kingdom of Sweden rated Aaa/AAA/AAA
• GDP growth 1.9% (Q2 14 Y/Y)
• CPI/CPIF -0.4% / 0.3% (Sep 14 Y/Y)
• Unemployment 7.4% (Aug 14 Y/Y)
• Debt to GDP 36% (forecast 2014)

38

Swedish economy Key Economic Indicators, 2013-2016

Source: Swedbank Economic Outlook Aug 2014

Exports and imports trend per month, SEKm

Current prices

Data up to and including Aug 2014

2013 2014F 2015F 2016F Real GDP (Calendar adjusted) 1.6 2.1 2.3 2.5 CPI index, average 0.1 1.4 2.1

• Unempl. Rate (15-74), % of labor force

8 8 7.6 7 Savings ratio (households),% 12.2 12.1 11.1 11.1 Real disposable income (households) 2.5 2.7 1.5 2.1

Source: Statistics Sweden, Sep 2014 Source: Statistics Sweden and National Debt Office

13% 43% 13% 11% 10% 9% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Energy Minerals Forest Chemical Engineering Other

• 6
• 4
• 2

2 4 6 8 10 12 2007 2008 2009 2010 2011 2012 2013 2014F 2015F

Germany Denmark Sweden Italy Finland France United States United Kingdom Canada

Exports – key factor for growth

39

Swedish economy

Source: *Statistics Sweden, Sep 30, 2014

Top 10 export countries, July 2014, %* Current account balance as % of GDP

Source: OECD – Economic outlook 95, table 51, May, 2014

Export of important goods*

0% 2% 4% 6% 8% 10% 12%

86% 51% 44% 8% 14% 7% 5% 2% 200 400 600 800 1 000 1 200 1 400 Able-bodied adults Workforce Employed Unemployed

Foreign* Sweden*

81% 59% 56% 3% 19% 13% 11% 2% 1 000 2 000 3 000 4 000 5 000 6 000 7 000 8 000 Able-bodied adults Workforce Employed Unemployed

Foreign* Sweden*

Unemployment

• Unemployment ratio of 7.4% of total workforce (age 15-74years)

– Of which 16% of the foreign born workforce adults and 6% of the domestic born workforce adults

• Youth unemployment ratio of 17% of workforce (age 15-24years)

– Of which 34% of the foreign born workforce youths and 15% of the domestic born workforce youths

40

Swedish economy

Able-bodied adults and workforce, age 15-74 years

Number of people, thousands

* Place of birth, **adjusted for seasonal changes

Source: Statistics Sweden AKU, data as per Aug 2014

Able-bodied adults and workforce, age 15-24 years

100% 58% 49% 10%

Number of people, thousands

100% 72% 67% 5%

7.4% 17%

• 6. Swedish housing and mortgage market

41

Swedish mortgage market

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

to-let market

• 70% 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

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

42

Swedish housing and mortgage market

1 Source: Boverket, 2011

2 4 6 8 10 12 14 02 03 04 05 06 07 08 09 10 11 12 13 14 Annual percentage change

Abated credit growth

43

Household borrowing growth

Source: Swedbank, Statistics Sweden, data as per Aug 2014

%

Swedish housing and mortgage market

• LTV cap of 85%
• Amortisation
• Risk-weight floor of up to 25% on

mortgage loans

• Capital and liquidity requirements

200 400 600 800 1 000 1 200 90 92 94 96 98 00 02 04 06 08 10 12 Acc increase in housing completions

10 000 20 000 30 000 40 000 50 000 60 000 70 000 80 000 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 Apartment buildings Single-family dwellings

Shortage of housing…

Swedish housing and mortgage market

44

Housing completions in Sweden

Number of apartments

Population- and housing growth

Number of homes / persons, thousands

Source: Sweden statistics and Swedbank, May 2014

…Limits economic growth

45

Swedish housing and mortgage market

90 95 100 105 110 115 05 06 07 08 09 10 11 12 Number of employed Housing stock

Stockholm County, index 2005=100

Source: Statistics Sweden

100 200 300 400 500 600 700 71 74 77 80 83 86 89 92 95 98 01 04 07 10 13 Total assets excl. collective insurance Real assets (housing) Debt

50 100 150 200 250

Sweden Denmark Finland Norway Germany UK France Netherlands

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Affordability withstands higher indebtedness

• Low interest rate environment
• Disposable income
• Wealth
• Amortisation – savings
• Tax

Swedish housing and mortgage market

46

Swedish household financial assets and liabilities to disposable income

% Source: Swedish Riksbank’s Financial Stability report 2013:2 and Eurostat

Household liabilities of disposable income*

Sweden adjusted

*Adjusted for differences in social security (paid through tax or post tax) when looking at disposable income

Sweden unadjusted

47

Savings

Swedish housing and mortgage market

Source: OECD Economic Outlook 95, table 23, May 2014

Household saving rates % of disposable income

• 10
• 5

5 10 15 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014F 2015F Sweden Germany Norway United States Finland Denmark

STOCKHOLM Total MALMÖ GÖTEBORG 50 100 150 200 250 05 06 07 08 09 10 11 12 13 14 Total Tenant owner rights (apartments) Single-family houses 50 100 150 200 250 05 06 07 08 09 10 11 12 13 14 Tenant owner rights (apartments) Single-family houses 50 100 150 200 250 05 06 07 08 09 10 11 12 13 14 Tenant owner rights (apartments) Single-family houses 50 100 150 200 250 05 06 07 08 09 10 11 12 13 14 Tenant owner rights (apartments) Single-family houses

Upward pressure on house prices

Swedish housing and mortgage market

48

Sweden, total

Source: Valueguard Index (2005=100), Sep 30, 2014

Stockholm Gothenburg

Malmoe

Appendix

49

The Bank for the many people, households and businesses

50

Latvia Population 2.0m Private customers 1.0m Corporate customers 86 000 Branches 51 ATMs 410 Cards 1.0m Employees 1 524 Lithuania Population 3.0m Private customers 2.0m Corporate customers 88 000 Branches 69 ATMs 475 Cards 1.7m Employees 1 907 Estonia Population 1.3m Private customers 1.0m Corporate customers 128 000 Branches 50 ATMs 469 Cards 1.1m Employees 2 271 Sweden Population 9.6m Private customers 4.1m Corporate customers 268 000 Organisations 65 000 Branches 318 ATMs * Cards 3.9m Employees 8 560

This is Swedbank

Source: Swedbank Sep, 2014 * ATMs are handled in Bankomat AB (www.bankomat.se)

~10%* ~86%*

* Share of loanbook

Sweden 73% Estonia 6% Latvia 4% Lithuania 4% Other 13% Lending and deposits 63% Treasury, Trading and Capital Markets 8% Asset Management 11% Payment, Cards 8% Insurance 2% Share of P&L of associates 2% Other 6%

Income distribution Q3 2014

51

Financial performance – Income

Source: Swedbank Sep 30, 2014

Business area distribution Geographic distribution

10 20 30 40 50 60 Sweden Estonia Latvia Lithuania Mortgage lending Corporate lending 10 20 30 40 50 60 Sweden Estonia Latvia Lithuania Deposits Private Deposits Corporate

Market leading retail franchise in all home markets

52

% %

Source: Source Sweden: Statistics Sweden (SCB) Source Estonia: Estonian Central Bank Sources Latvia: Association of Commercial Banks of Latvia (ACBL) & The Financial and Capital Market Commission (FCMC), 2as per Jun 2014, 3as per Sep 2013 Source Lithuania: Association of Lithuanian Banks (LBA), 1as per Jun 2014

This is Swedbank Market shares, Deposits

May 2014

• Largest retail bank and fund manager in Sweden

Market shares, Lending

May 2014

2 1 2 3 1 1 1

200 400 600 800 1000 1200 Other* 4.3% Lithuania 2.8% Latvia 2.3% Estonia 4.4% Sweden 86.3% 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 287bn (as per Q3 2014), out of which

around 86% is originated in Sweden

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

53

Source: Swedbank Sep 30, 2014

This is Swedbank

* Denmark, Norway, Finland and NY Branch

Lending distributed by countries (Q3 2014)

SEK 1 111bn

Long-term financial impact of Sparbanken Öresund

• P&L impact 2016-2017

– Estimated net profit contribution of SEK 350-450m – Incremental RoE to reach group target 2016

• Long term

– Estimated net profit contribution of at least SEK 500m – Incremental RoE >25 per cent

54

Sparbanken Öresund

2014 ICAAP U scenario

55

Asset quality - ICAAP and stress tests

88 90 92 94 96 98 100 2013 2014 2015 2016 2017 2018

GDP Index (%)

Sweden Estonia Latvia Lithuania 6 8 10 12 14 16 18 2013 2014 2015 2016 2017 2018

Unemployment (%)

Sweden Estonia Latvia Lithuania 75 80 85 90 95 100 2013 2014 2015 2016 2017 2018

Real estate price index (%)

Sweden Estonia Latvia Lithuania

• 0.5

0.0 0.5 1.0 1.5 2.0 2013 2014 2015 2016 2017 2018

Interest rates, 3M (%)

Euro rate Swedish gov rate Lithuanian market rate

Conservative provision ratio

56

Asset quality

Since Q1 2013 Russia and Ukraine are reported as discontinued operations SEKm Source: Swedbank, Sep 30, 2014 Provision ratio, % Q3 14 Swedish Banking 62 LC&I 65 Baltic Banking 50 Group 55 10 951 9 934 7 077 4 429 4 047 3 570 2 818 2 514 2 343 2549 2 040 1 774 1 545 1 420 1 398 1 325 1 256 1 238 1 211 1145 64% 65% 62% 57% 54% 53% 54% 60% 56% 55% 5 000 10 000 15 000 20 000 Q212 Q312 Q412 Q113 Q213 Q313 Q413 Q114 Q214 Q314 Individual provisions Portfolio provisions Provision ratio

16 5 4 26 25 26 25 26 26 10 20 30 Q2-13 Q3-13 Q4-13 Q1-14 Q2-14 Q3-14 SEKbn

Offshore Tanker Other

Shipping and offshore

57

Credit portfolio – Large Corporates & Institutions

• Lending exposure to shipping & offshore sector of

SEK 25.8bn

• Portfolio duration 3.78 years (weighted on

commitments)

• Average fleet age 7 years
• Strong employment profiles

Shipping and offshore portfolio by currency, SEKbn Shipping and offshore portfolio by subsegment, SEKbn

Source: Swedbank, Sep 30, 2014

Shipping and offshore

5 10 15 20 25 SEK EUR USD NOK JPY Q3-14 Q2-14 0.5 8.5 1.5 3.6 1.3 1.8 0.5 2.3 0.8 2.8 0.0 0.5 1.5 5 10 Cruise Drilling & exploration Oil service Supply Accommodation Floating production Chemical Product Crude oil Gas (LNG/LPG) Dry bulk Container RORO

Q3-14 Q2-14

5 10 15 20 25 30 35 40 45 50 Total capital market funding Covered bond funding 29% 21% 35% 23% 34% 50% 2% 6% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2007 Q3 2014 5 years + 1-5 years 3-12 months 0-3 months

Fundamental change of maturity profile

58

Average maturity profile of outstanding market funding

Source: Swedbank, Sep 30, 2014

Months

SEK 673bn SEK 793bn

• 2007 – 64% of wholesale funding < 12 months, SEK 13bn in central bank deposits
• Q2 2014 – 44% of wholesale funding < 12 months, SEK 158bn in central bank deposits

Liquidity and funding

50 100 150 200 2014 2015 2016 2017 2018 2019 2020-

Senior unsecured debt Covered bonds

59

Long-term funding maturity profile

• Funding plan of SEK 120bn to meet next 12 months’ nominal SEK 126bn maturities

Long-term funding maturity profile, by funding source

Source: Swedbank Sep 30, 2014

Liquidity and funding

SEKbn SEKbn

Long-term funding maturity profile, by currency

50 100 150 200 2014 2015 2016 2017 2018 2019 2020- Other CHF USD EUR SEK

Funding sources

60

Swedbank AB Swedbank Mortgage AB*

* 100% guaranteed by parent company

• Irrevocable
• Unconditional
• Timely

** Limited by cover pool size 100% owned

Liquidity and funding

Source: Swedbank, Sep 30, 2014

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** Registered CB (stand alone doc.) Short Term Domestic CP SEK 50bn Program Limit Long Term Global MTN USD 40bn Domestic MTN SEK 60bn USD Senior (144a / Reg.S) USD 15bn NSV (stand alone doc.) Short Term Domestic CP SEK 80bn European CP/CD EUR 6bn US CP USD 15bn Yankee CD USD 15bn Finnish CD EUR 4bn

Real estate prices – Sweden 12 months development

61

Swedish housing and mortgage market

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

Oct/13 6% 11% 8% Nov/13 4% 13% 7% Dec/13 4% 13% 7% Jan/14 7% 13% 9% Feb/14 7% 13% 9% Mar/14 7% 13% 9% Apr/14 8% 12% 9% May/14 8% 12% 9% Jun/14 8% 11% 9% Jul/14 9% 14% 11% Aug/14 9% 14% 11% Sep/14 9% 15% 11%

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

200 400 600 800 1 000 1 200 1 400 1 600 1 800 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14

Vilnius

• No. of deals

EUR/m2

Baltic countries

Real estate prices

62 EUR/m2 /No. of deals EUR/m2 /No. of deals EUR/m2 /No. of deals

200 400 600 800 1 000 1 200 1 400 1 600 1 800 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14

Tallinn

• No. of deals

EUR/m2 200 400 600 800 1 000 1 200 1 400 1 600 1 800 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14

Riga

• No. of deals

EUR/m2

63

Swedbank – contacts and financial calendar

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 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 Joakim Henriks, Money Markets and Short-Term Funding joakim.henriks@swedbank.se +46 8 700 90 62

Q4 Year-end report 2014 3 Feb 2015 Q1 Interim report 28 Apr 2015 Q2 Interim report 16 Jul 2015 Q3 Interim report 20 Oct 2015

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

63

64

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.