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Debt investor presentation second quarter 2010Jonas Erikson, Head of Group Treasury
2
1. This is Swedbank
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The bank for the many people, households and businesses
4
Our home markets
LatviaPopulation 2.3mEmployees 1 769Private customers 1.0mCorporate customers 62 000Branches 59ATMs 373Cards 0.9m
LithuaniaPopulation 3.4mEmployees 2 307Private customers 3.2mCorporate customers 93 000Branches 98ATMs 451Cards 1.7m
EstoniaPopulation 1.3mEmployees 2 562Private customers 1.2mCorporate customers 100 000Branches 65ATMs 548Cards 1.1m
SwedenPopulation 9.2mEmployees 8 328Private customers 4.1mCorporate customers 283 000Organisations 112 000Branches 362ATMs 772Cards 3.7m
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Home markets, universal banking
Sweden - SwedbankEstonia - SwedbankLatvia - SwedbankLithuania - Swedbank
Swedbank Group today
Other markets
Ukraine - SwedbankRussia - Swedbank in Moscow, Kaliningrad, St Petersburg, rep. office in KrasnodarDenmark - 2 Swedbank branchesFinland - Swedbank branchNorway - Swedbank branch, investment banking through First Securities (51%), EnterCard (50 % owned)USA - Merchant/investment banking and corporate banking in New YorkLuxemburg - Private BankingChina - Swedbank branch in ShanghaiJapan - Rep. office in TokyoSpain - Rep. office in Marbella
Swedbank – a strong retail franchise
• Leading provider of services in many market segments
6
0
10
20
30
40
50
60
Sweden Estonia Latvia Lithuania
Mortgage lendingDeposits
0
5
10
15
20
25
30
35
40
45
50
Sweden Estonia Latvia Lithuania
LendingDeposits
Market shares, private31 May 2010
Market shares, Corporate31 May 2010% %
Source: Swedbank Fact book Q2 2010
Total lending by country, SEK 1 159bn
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* Mainly Norway, Denmark, Finland, Luxemburg and USA
0 200 400 600 800 1000
Other* 4%
Russia 1%
Ukraine 1%
Lithuania 3%
Latvia 4%
Estonia 6%
Sweden 82%
• Lending of SEK 163bn to CEE countries
100%
Q2 performance – by business area
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-2 000
-1 000
0
1 000
2 000
Retail Large Corporates & Institutions
Baltic Banking Russia & Ukraine Asset Management Ektornet
SEKm Profit before impairments
Q1 10Q2 10
-2 000
-1 000
0
1 000
2 000
Retail Large Corporates & Institutions
Baltic Banking Russia & Ukraine Asset Management Ektornet
SEKm Operating result
Q1 10Q2 10
99
Swedbank shareholders
Shareholders, 30 June 2010 %
Number of shareholders: 339 811
Total 100.0
Folksam 7.8Savings banks 7.6Swedbank Robur funds 4.6Svensk Exportkredit AB 3.3AMF Insurance & Funds 3.1Alecta 3.0Savings bank foundations 2.8Skandia Life Insurance 2.5Swedbank profit-sharing funds 1.9AFA Insurance 1.9Nordea Funds 1.5Other international investors 25.9Other Swedish institutions 21.1Swedish general public 13.0
Source: SIS Ägarservice
Savings banks7.6%
Savings bank
foundations2.8%
Swedish general public13.0%
International investors
25.9%
Swedish institutional
investors42.9%
Folksam7.8%
Shareholders, 30 June 2010
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Rating
30 September 2009 Short Long Short Long BFSR *
Swedbank A-1 A P-1 A2 D+
Swedbank Mortgage A-1 P-1 A2
Covered Bonds AAA** Aaa
* Bank Financial Strength Ratings
S&P Moody's
** Swedish covered bond issuers – still on watch list due to criteria review
STABLE outlook for all senior ratings
2. Swedbank, Q2 Update
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Continued progress
• Net profit of SEK 1.6bn
• Improved credit quality
• Term funding YTD higher than full year maturities
• Strengthened capitalisation to 12.7 per cent Core Tier 1 approval to buy back Tier 2 bonds
12
Business achievements – highlights
• Higher mortgage new sales market shares in Sweden
• Increased corporate activity
• Continued strong deposit trend
• Retail’s tailored service concept well received
• Deleveraging in the Baltic countries levelling off
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14
RetailSolid credit quality, higher customer activity
Large Corporates & InstitutionsGood credit quality, repricing continues, slower trading
Baltic BankingImproving asset quality, stabilised NII, Estonia back to profit
Russia & UkraineStabilising credit quality, continued restructuring in Russia
Asset ManagementStable earnings
EktornetRepossessed properties valued at SEK 1 010m, intake slower than the plan
Result by business area
Q2 performance
-2 000
-1 000
0
1 000
2 000
Retail Large Corporates &
Institutions
Baltic Banking
Russia & Ukraine
Asset Management
Ektornet
SEKm Profit before impairments
Q1 10
Q2 10
-2 000
-1 000
0
1 000
2 000
Retail Large Corporates &
Institutions
Baltic Banking
Russia & Ukraine
Asset Management
Ektornet
SEKmOperating result
Q1 10
Q2 10
Pressure decreasing
15
Net interest income
4 0233 799
-34 4162 -89
-204
0
500
1 000
1 500
2 000
2 500
3 000
3 500
4 000
4 500
5 000
NII Q1 10
Retail LCI Baltic Banking Russia& Ukraine
Group Treasuryand Other
NII Q2 10
SEKm
0 200 400 600 800 1 000 1 200
Other
Corporate finance
Brokerage
Lending & guarantee
Payment processing
Asset management
SEKm
Net commission income by source Q2
0
500
1 000
1 500
2 000
2 500
3 000
Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10
SEKmNet commission income*
Commissions back to pre-crisis levels
• Positive trend from Q1 2009
• Market leader in cards and payments
• Growth driven by Asset Management
16
Net commission income
0 500 1 000 1 500
R&U
AM
BB
LCI
Retail
SEKmNet commission income by
business area Q2
* Excl non-recurring items
• Lower trading results in Fixed Income
• Funding related valuation effects in Group Treasury
SEKm Q2 10 Q1 10 Q2 09
Retail 40 32 29
Large Corporates & Institutions 309 441 900
Baltic Banking 89* 72 237
Russia & Ukraine 23 27 13
Group Treasury and Other 348 75 -469
Swedbank Group 809 647 710
Larger gains supported by valuation effects
17
Net gains/losses on financial items, fair value
* Excluding capital gain of SEK 13m, (MasterCard )
18
Second quarter 2010 results
Income statementSEKm Q2 2010 Q1 2010 ChangeNet interest income 3 799 4 023 -224
Net commission income 2 395 2 282 113
Net gains/losses on financial items, fair value 809 647 162
Other income 753 715 68
Non recurring items 16 0 16
Total income 7 772 7 667 105Staff costs 2 282 2 296 -14
Variable staff costs 141 79 62
Other expenses 2 000 2 016 -16
Total expenses 4 423 4 391 32Profit before impairments 3 349 3 276 73
Impairment of intangible assets 0 14 -14
Impairment of tangible assets 128 36 92
Credit impairments 963 2 210 -1 247
Operating profit 2 258 1 016 1 242Tax expense 672 469 203
Result for the period 1 586 547 1 039
Profit for the period attributable to: Shareholders of Swedbank AB 1 567 536 1 031
Q2 development
• No impact of European sovereign debt crises
• Further stabilisation/improvement in the Baltic countries
• Continued improved risk profiles on both the asset and liability side
• Swedbank’s resilience vastly improved– ICAAP– Internal stress tests– Stress test of the Committee of European Banking Supervisors
19
Asset quality
Volumes – signs of stabilisation
• Sweden – same pattern with better corporate demand
• CEE exposure not a restriction
20
Asset quality
404 393 389
154 104 94 86 52
555 559 566
9784 79 77
47
959 952 955
251188 173 163
99
0
100
200
300
400
500
600
700
800
900
1 000
Q4 09 Q1 10 Q2 10 Q4 08 Q4 09 Q1 10 Q2 10 Q2 10
Sweden
SEKbn
CEE
PrivateCorporate
210%of equity 194% 179% 109%
excl Estonia
Note: CEE lending as % of equity calculated as net lending to the public divided by balance sheet equity
290%
Impaired loans – small increase
• Up SEK 2.4bn in Q2
21
Asset quality
Impaired loans as% of gross lending
Ukraine 64%
Russia 21%
Lithuania 18%
Latvia 27%
Estonia 8.5%
LCI 0.3%Retail 0.2%
9 736
6 113
4 362 196 2 391
19 921
29 657
35 770
40 132 40 32842 719
0
5 000
10 000
15 000
20 000
25 000
30 000
35 000
40 000
45 000
Q1 09 Q2 09 Q3 09 Q4 09 Q1 10
SEKm
Q2 10
1 863
1 167
5 739
13 916
7 6882 557
9 789
Q2 10
• Sweden very low levels
• Small recoveries in Russia and Ukraine
• Baltic countries – Few new problems– Property prices stabilising/increasing– Insolvency and debt restructuring laws
22
Asset quality
Credit impairments significantly reduced
6 672
6 121
5 003
2 210
963
-1 000
0
1 000
2 000
3 000
4 000
5 000
6 000
7 000
8 000
Q2 09 Q3 09 Q4 09 Q1 10 Q2 10
SEKm
Retail LCI Baltic Banking Russia & Ukraine Other
Provisions• Stability in portfolio provisions
23
Provision ratios Q2 10
Retail 88%
Large Corporates 101%
Baltic Banking 59%
Russia 59%
Ukraine 68%
Group 64%
Asset quality
9 864
15 582
20 882 21 889 23 028
8 914
6 922
5 135 4 684 4 104
6421 600
3 1463 953 4 595
63.3%
62.9%
64.8%65.9% 63.5%
0
5 000
10 000
15 000
20 000
25 000
30 000
Q2 2009 Q3 2009 Q4 2009 Q1 10 Q2 10
SEKm
Individual provisions Portfolio provisions Write-of fs, gross, cum Provision ratio
24
Market situation
• Slight fluctuations in average price influenced by the small transaction volumes
Tallinn Vilnius*
Riga
Real estate prices stabilised
1 762
614
0
300
600
900
1 200
1 500
1 800
0
300
600
900
1 200
1 500
1 800
Q4'06 Q2'07 Q4'07 Q2'08 Q4'08 Q2'09 Q4'09 Q2'10
No
of tr
ansa
ctio
ns
EU
R/m
2
No of deals Average price
1 611
851
0
300
600
900
1 200
1 500
1 800
0
300
600
900
1 200
1 500
1 800
Q4'06 Q2'07 Q4'07 Q2'08 Q4'08 Q2'09 Q4'09 Q2'10
No
of tr
ansa
ctio
ns
EUR
/m2
No of deals Average price
1 731
1 040
0
300
600
900
1 200
1 500
1 800
0
300
600
900
1 200
1 500
1 800
Q4'06 Q2'07 Q4'07 Q2'08 Q4'08 Q2'09 Q4'09 Q2'10
No
of tr
ansa
ctio
ns
EU
R/m
2
No of deals Average price
* Based on preliminary data for Q2 2010
3. Liquidity & Funding
25
Term funding ahead of plan
26
Liquidity & Capital management
* Issued with more than 12 months maturity, government fee of 83bp** Including interbank deposits*** Issued with less than 12 months maturity, government fee of 50bp
• YTD, SEK 150bn in term funding of which around SEK 50bn during the second quarter
• SEK 60bn in remaining term funding maturities to roll or replace in 2010
• YTD around SEK 95bn of central bank repos and guaranteed funding has been redeemed
• Average maturity of wholesale funding further extended to 25 months (38 months for covered bonds)
61
97
116
180
397
28
87
108
174
459
0
112
89
173
456
Total short-term,
guaranteed***
Total short-term, non-
guaranteed**
Central bank repos
Total long-term,
guaranteed*
Total long-term, non-guaranteed
Q2 2010Q1 2010Q4 2009
Outstanding wholesale funding (nom SEKbn )
2010 Funding plan
27
Liquidity & Capital Management
Issued & redeemed Aug 09 – Jun 10, SEKbn
Plans for remainder of 2010– 1-2 further covered benchmark deals in Euro market this year– 1-2 further senior unsecured issues– Further covered bond issuance on tap (domestic), registered
covered bonds and private placements– Short-term funding outstandings to increase
-50
-40
-30
-20
-10
0
10
20
30
40
50
GG CP'sGG BondsDomestic CBEuro CBSenior Unsecured BondsStructured bonds
28
Liquidity & FundingLong-term funding • SEK 60bn in remaining term
funding maturities to roll or replace in 2010
• Government guaranteed debt outstanding, nominal SEK 173bn at average spread of 160bps
• Liquidity risk OK, now focus on smoother maturity structure
28
0
20
40
60
80
100
Q3
10
Q4
10
Q1
11
Q2
11
Q3
11
Q4
11
Q1
12
Q2
12
Q3
12
Q4
12
Q1
13
Q2
13
Q3
13
Q4
13
Q1
14
Q2
14
Q3
14
Q4
14
2015
-
SEKbn, nom
Swedbank, long-term maturity profile(including Swedbank Mortgage)
29
Liquidity & Funding
Funding under the Swedish guarantee programme
• Swedbank exited guarantee programme as per 30 April 2010
• Outstanding guaranteed funding decreased during the second quarter by SEK 28bn to nominal SEK 173bn
• Strive to buy back longest maturities of guaranteed funding when liquidity rules are clearer
29
(total outstanding as per 30 June, nom SEK 173bn)
Currency distribution
Maturity distribution
JPY 2%
CHF 4%
SEK 23%
USD 30%
EUR 41%
< 12 M 33%
1-2Y 42%
2-3Y 10%
3-4Y 15%
Cover pool and new issuance of covered bonds YTD 2010• YTD three euro covered bonds in primary
market – Euro MTN CB 3Y, ms+39bp
EUR 1bn, issued Jan 2010– Euro MTN CB 7Y, ms+57bp
EUR 1bn, issued Mar 2010– Euro MTN CB 5Y, ms+52bp
EUR 1bn, issued Jun 2010
• Also continued good demand for domestic covered bond issuance through tap system
• Registered CBs
• Private placements
• YTD SEK 129bn issued in domestic and international markets
30
Total pool size SEK 618bnAverage loan size SEK 401 082Number of loans outstanding 1 504 480
Types of loans– Residential mortgages 90.7%– Public 2.4%– Commercial 0.1%– Forest and Agriculture 6.8%
Fixed /Floating interest loans 1
– Fixed 48%– Floating 2 52%Remaining fixing period – Fixed 32%– Floating 2 68%
Average LTV 4, 5
– WA LTV on loan level 3 43%– WA LTV on property level 57%
Average seasoning 56 monthsNon-performing loans 6 NoneGeographic distribution Sweden 100%Dynamic pool Yes
1 Distribution by origination2 Floating interest loans < 365 days 3 LTV: by volume4 Index valuation as per 31 May 20105 Maximum LTV: Residential 75%, Commercial 60%, Forest and
Agriculture 70%6 Past due loans > 60 days are not eligible for the cover pool
Deposits
• Post Lehman bankruptcy deposits decreased by around SEK 13bn• Deposits are of a highly strategic importance• Deposits market shares stable on all markets
– Considerable deposit volume increase last 12 months
• Swedbank has the highest private stock market share in all our home markets
31
Liquidity & Funding
Savings and investments, Swedbank Group Deposits from the public excluding repos
420
430
440
450
460
470
480
490
500
510
Q1 2008
Q2 2008
Q3 2008
Q4 2008
Q1 2009
Q2 2009
Q3 2009
Q4 2009
Q1 2010
Q2 2010
700
505
29
617
464
29
613
466
33
0
100
200
300
400
500
600
700
800
Asset mgmt Deposits f rom the public, excl. repos
Retail bonds
Q2 2010
Q2 2009
Q2 2008
32
4. Swedish macro economics’ and housing market
33
Sovereign CDS spreads
• Sweden has shown recilience through turbulent times
34
0
50
100
150
200
250
300
350
400
450
08-07-28 08-11-05 09-02-13 09-05-24 09-09-01 09-12-10 10-03-20 10-06-28
5yr Sovereign CDS
SWEDEN
GERMANY
UK
PORTUGAL
IRELAND
ITALY
SPAIN
USA
FRANCE
Swedish Repo rate with uncertainty bands• On 7 July Swedish
Riksbank started to hike the repo rate by 0.25% to 0.5%
• In accordance to the Riksbank’s forecast – the hike is expected to continue in a slow and steady pace
35
Source: Swedish Riksbank
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
99 99 00 00 01 01 02 02 03 03 04 04 05 05 06 06 07 07 08 08 09 09 10 10 11 11 12 12 13 13
Repo rate (red) with Riksbank’s forecast (blue)%
• Swedish public debt to GDP on stable, low level
• Estonian debt to GDP best in class within EMU
36
0
10
20
30
40
50
60
70
80
90
2004 2005 2006 2007 2008 2009 2010F 2011F
Sweden
Estonia
Latvia
Lithuania
Denmark
Finland
Norway
EU27
0
10,000
20,000
30,000
40,000
50,000
60,000
Sweden Estonia Latvia Lithuania Denmark Finland Norway
Government debt to GDP, %
GDP per capita (PPP), USD Government debt to GDP, %
Source: Sweden statistics and Swedbank estimates
0
2 000
4 000
6 000
8 000
10 000
12 000
14 000
16 000
18 000
75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09
New built Multi-family dwellings and Single-family houses
37
Housing Investments at a conservative level
• Swedish housing investments as a percentage of GDP, since 1995, 1/3 of European average
Housing investments as a percentage of GDP
New built Multi-family dwellings and Single-family houses in Sweden (third quarter every year)
Perc
ent
Year
Num
ber
Year
Source: Reuters EcoWin
91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 091
2
3
4
5
6
7
8
9
10
Sweden
UK
DenmarkEurozone
Spain
U.S
Source: Reuters Ecowin and Sweden statistics
Household balance sheet• Swedish households save more money
in equities, mutual funds and individual pensions compared to many other countries
• Wealth due to higher house prices has increased significantly since early 90’s
38
Swedish household savings SEKm
0
500
1 000
1 500
2 000
2 500
Cash / depo's / bonds Equities / mutual funds / individual pensions
Source: Sweden statistics and Swedbank
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
Household property stock, total Total household debt
Swedish household property value vs. total debt SEKm
Appendix
39
40
Balance sheetSwedbank Group SEKm Jun 10 Dec 09 %
Loans to credit institutions 204 327 92 131 122%
Loans to the public 1 239 104 1 290 667 -4%
Interest-bearing securities 215 569 170 615 26%
Fund shares for which customers bear the investment risk 85 181 78 194 9%
Shares and participating interests 12 716 12 245 4%
Derivatives 89 199 72 969 22%
Other assets 58 492 77 866 -25%
Total assets 1 904 588 1 794 687 6%
Amounts owed to credit institutions 243 947 231 687 5%
Deposits and borrowings from the public 529 048 504 424 5%
Debt securities in issue 710 509 703 258 1%
Financial liabilities for which customers bear the investment risk 85 471 80 132 7%
Derivatives 76 950 72 172 7%
Other liabilities and provisions 134 766 75 057 80%
Subordinated liabilities 32 630 37 983 -14%
Equity 91 267 89 974 1%
- Non-controlling interest 260 304 -14%
- Equity attributable to shareholders 91 007 89 670 1%
Total liabilities and equity 1 904 588 1 794 687 6%
Swedbank Mortgage, 30 Jun 2010, total loan portfolioSEK 681bn• 100% lending – Swedish properties
• 90% residential lending
• Average LTV of 45% (loan level) 61% (property level). Cover pool 43% / 57%
• 79% of the total lending book within a loan-to-value ratio below 50%
41
Lending distributed by collateral
Cooparativeapartments
15%
Commercialproperties
0.2%Municipalities
2%Multi -family
houses15%
Forest &Agriculture
7%Single -familyhomes60%0
10
20
30
40
50
60
70
80
90
>0-1
0%
>10-
20%
>20-
30%
>30-
40%
>40-
50%
>50-
60%
>60-
70%
>70-
80%
>80-
90%
>90%
SEKbn
Single-family homes Cooperative apartments Multi-family houses (incl housing coop. ass.)
Repossessed assets
42
Asset quality
0
500
1 000
1 500
2 000
2 500
Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010
SEKm
Real Estate Residential Real Estate Commercial Passenger & Commercial Transport Shares Other
43
Swedbank – Contacts and Financial Calendar
Jonas Erikson, Head of Group Treasury
[email protected] +46 767 6550 88
Gregory Karamouzis, Head of Debt Investor Relations
[email protected] +46 8 585 930 31
Peter Stenborn, Debt Investor Relations
[email protected] +46 8 585 911 04
Cecilia Mattsson, Debt Investor Relations
[email protected] +46 8 585 907 43
Martin Rydin, Head of Long-Term Funding
[email protected] +46 8 585 935 27
Ingela Saarinen-Kindbom, Head of Money Markets and Short-Term Funding
[email protected] +46 8 700 98 10
Q3 Interim report, 21 October 2010
www.swedbank.com/investor-relations
Swedbank Group Treasury Regeringsgatan 13
SE-106 11 Stockholm, Sweden
Investor relations on the Internet:
For further information, please contact: Financial calendar
Postal address: Visitors:
44
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 differmaterially 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, officersor 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 inconnection therewith.
• This presentation does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any securities of Swedbank AB, nor shall it or any part of it nor the fact of its distribution form the basis of, or be relied on in connection with, any contract or investment decision.