Swedbank’s fourth quarter 2010 results8 February 2011

Michael Wolf, CEOErkki Raasuke, CFOGöran Bronner, CRO

Favourable profit trendp

• Net profit of SEK 7.4bn for 2010

• Core Tier 1 ratio of 13.94 per cent

• Proposed dividend: SEK 2 10 per A-shareProposed dividend: SEK 2.10 per A-share, SEK 4.80 per preference share

Net profit performance

2

Q4 09 Q1 10 Q2 10 Q3 10 Q4 10

Priorities 2010

Summing up the year

• Customer satisfaction

g p y

• Lower risk level

• EarningsEarnings

• Liquidity and capitalisation

3

Making progress but still more to do…Priorities 2010 – Customer satisfaction

g p g

• New service concepts in Retail yields result

• Sector focus in LC&I

• Baltic Banking implementing same customer approach as Retail in the branch network

• Enhanced capital markets offering to meet increased demands p g

4

Significantly reduced risk Priorities 2010 – Lower risk level

g y• Continued reduced CEE lending

7 500

Credit impairments, SEKm

• Estonia joined the EMU 1 Jan 2011

5 500

6 500

• Decreased RWA

• Reduced need for senior funding4 500

5 500

g

2 500

3 500

1 500

-500

500

08 09 09 09 09 10 10 10 10

5

Q4

0

Q1

0

Q2

0

Q3

0

Q4

0

Q1

1

Q2

1

Q3

1

Q4

1

Pre-provision earnings starting to improvePriorities 2010 – Earnings

p g g p

• Net profit increased by SEK 18bn due to lower7 000

Net interest income, SEKm

SEK 18bn due to lower credit impairments

• NII troughed in Q2 positive trend6 000

• NII troughed in Q2, positive trend

• Expenses adopted to lower business volumes4 000

5 000

business volumes

3 000

4 000

2 000

* In Q4 NII in Baltic Banking was positively affected by about SEK 200 ib bl h l ifi i f l f

0

1 000

8 9 9 9 9 0 0 0 0

6

SEK 200m attributable to the reclassification of penalty fees and late interest, previously recognised as other income.Q

4 08

Q1

09

Q2

09

Q3

09

Q4

09

Q1

10

Q2

10

Q3

10

Q4

10

Strengthened funding positionPriorities 2010 – Liquidity and capitalisation

g g p

• Average maturity of capital k t f di t d d

SEKbn

market funding extended to 27 months

L f h

500Covered bonds

Central bank and guaranteed funding

• Left the state guarantee programme in April

400

• State guaranteed funding and central bank repos reduced to SEK 156bn (359)

300

SEK 156bn (359)

100

200

0

100

7

0Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10

New capitalisation target and dividend policyp g p y

• Core Tier 1 capital ratio of at least 13 per cent until 2013

• Long-term core Tier 1 capital ratio of at least 10 per cent

• AGM to decide on buy-back programme to manage capitalisationAGM to decide on buy-back programme to manage capitalisation

• New dividend policy from 2011– 50 per cent pay-out ratio50 per cent pay out ratio

8

Growing NIINet interest income

g• Increasing interest rates in SEK

• Deposit margins improving• Deposit margins improving

• Restated Baltic Banking late payment feesRetail LC&I Baltic Russia, Treasury,

4 702

4 023 3 799 3 980

Retail LC&IBanking

Russia, Ukraine

Treasury, Other

253 91 249

1 168

13 159 -59

4 527

3 799

733

1 168

2 752

285

(SE

Km

)

9

-285

Q4 09 Q1 10 Q2 10 Q3 10 Q4 10

Strong commission incomeNet commission income

g• Strong syndicated lending fees

L b k f i Q3• Low brokerage fees in Q3

• Corporate finance picking up

2 361 2 282 2 395 2 310

Retail LC&I Baltic Banking

Russia, Ukraine

Asset mgmt, Other

113 94 -3 1 23 428

2 538

575

383 20

575

1 132

(SE

Km

)

10

Q4 09 Q1 10 Q2 10 Q3 10 Q4 10(Excluding non-recurring items)

Lower gains with higher qualityNet gains/losses on financial items, fair value

• Strong end of the year from LC&I

C ll ti f d it i R i

g g q y

• Cancellation of deposit in Russia

• Treasury valuation effects turned to negative

RetailLC&I

Baltic Banking

Russia, Ukraine

Treasury, Other

647

809

574 38

180 29

77-71 315

EKm

) 223 439

77

-435

(SE

74 -96

-179

11

(Excluding non-recurring items)Q4 09 Q1 10 Q2 10 Q3 10 Q4 10

Expenses seasonally higherExpenses

p y g• Accelerated IT development

Y/Y fl t• Y/Y expenses flat

• FR&R and Ektornet 2010 expenses SEK 714m

B lti Russia Asset mgmt0.54

0.57 0.57 0.55 0.58

4 300 4 391 4 423 4 238

Retail LC&I Baltic Banking

Russia, Ukraine

Asset mgmt,Other

123 152 73 9

211 -5 582

4 590

877

697

2 223

(SE

Km

)

12

Q4 09 Q1 10 Q2 10 Q3 10 Q4 10

SEK 265bn term funding issued in 2010 Liquidity & Capital management

Issued & matured full year 2010 • Full year 2011 maturities of nominal SEK 180bn (nominal SEKbn)

60– Of which SEK 80bn in guaranteed

funding– Of which SEK 86bn in covered bonds

0

20

40

60

• Average maturity of wholesale funding, including short-term funding, 27 months (38 months for covered bonds) -60

-40

-20

(38 months for covered bonds)

Maturity profile full year 2011

-80Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

y p y(nominal SEKbn)

-20

0

-80

-60

-40

13

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Fourth quarter 2010 results

Income statementSEKm Q4 10 Q3 10 QoQ % Q4 09

Income 7 958 7 647 4% 7 982Expenses 4 590 4 238 8% 4 300

Profit before impairments 3 368 3 409 -1% 3 682Impairment of intangible assets 23

Impairment of tangible assets 406 30 352

Credit impairments - 483 120 5 003

Operating profit 3 445 3 236 6% -1 673

Tax expense 693 638 9% 115

Profit attributable to shareholders 2 750 2 591 6% -1 804

Return on equity, % 11.7 11.3 -8.3

Cost-income ratio 0 58 0 55 0 54Cost income ratio 0.58 0.55 0.54

Loan-deposit ratio, % 222 233 240

Core Tier 1 capital ratio, %* 13.94 13.39 11.97

Risk-weighted assets * 541 3 559 7 603 4

14

Risk-weighted assets 541.3 559.7 603.4

* Basel 2

Continued improvementsAsset quality

p

• All indicators in the right directionImpaired loans– Impaired loans

– 60 days overdue– Restructured loans Declining in all countriesRestructured loans– Watch list

RWA d d b SEK 18 4b i Q4• RWA decreased by SEK 18.4bn in Q4– Positive rating migration

C ti d d l i i B lti t i– Continued de-leveraging in Baltic countries

• Recoveries in CEE portfolio

• Further tightened lending criteria in Swedish mortgage market

15

Credit impairments of SEK -483mAsset quality

p

• Net recoveries in Baltic Banking and Russia & Ukraine5 003

6 000SEKm

and Russia & Ukraine

• Minor credit impairments in Retail and LC&I

5 003

4 000

5 000

Retail and LC&I

• Write-down of tangible assets, mainly in Ukraine

3 000

4 000

mainly in Ukraine2 210

963

2 000

120

0

1 000

-483-1 000Q4 09 Q1 10 Q2 10 Q3 10 Q4 10

16

Retail LC&I Baltic Banking Russia & Ukraine Other

Provisions – work-out portfolios slowly decliningAsset quality

p y g

Provision ratios, % Q4 1065 9% 63 5%30 000SEKm

Provision ratios, % Q4 10

Retail 99

LC&I 106

B lti B ki 58

5 135 4 684 4 1043 606

3 297

64.8% 65.9% 63.5%63.9%

62.7%

20 000

25 000

Baltic Banking 58

Russia 57

Ukraine 6523 028

3 297

15 000

20 000

Group 6320 882 21 889 23 028 21 06818 494

2 504 3 311 3 9534 603 5 919

5 000

10 000

2 504

0Q4 2009 Q1 10 Q2 10 Q3 10 Q4 10

Individual provisions Portfolio provisions Write offs gross cum Provision ratio

17

Individual provisions Portfolio provisions Write-offs, gross, cum Provision ratio

European peer comparison core Tier 1 ratiosCapital management

16%

Core Tier 1 ratios (Basel 2) European banks*

p p p

13.9

12.2 12.112%

14%

10.3

8%

10%

4%

6%

0%

2%

S k B a B e R t C S s k e k d P a P s n r r o A o a S l n k a k o P k r t

UB

S

Sw

edba

nk

SE

B

Dex

ia

SH

B

N. B

. Of G

reec

e

DnB

NO

R

Sta

n C

hart

HS

BC

RB

S

Nor

dea

Bar

clay

s

Dan

ske

Ban

k

Cre

dit S

uiss

e

EFG

Eur

oBan

k

Ban

k of

Irel

and

BN

P

Pop

ular

Esp

ana

BN

P

Lloy

ds

Soc

Gen

San

tand

er

Ban

co P

asto

r

Ban

esto

BB

VA

Uni

Cre

dito

Inte

sa

MP

S

Ban

co S

abad

el

Mar

fi n

Pira

eus

Ban

k

UB

I Ban

ca

Ers

te B

ank

pola

re d

i Mila

no

BC

P

Aar

eal B

ank

Ban

k In

ter

Rai

ffei

sen

Int

B. P

B. P

o

18

*Source: Deutsche Bank Research, Q4 10 estimates (Swedbank, SEB and Nordea actual Q4 figures)

Assets – significantly reduced risk level since Q4 08Capital management

g y

• Estonia joined the EMU, 1 Jan 20111 400(SEKbn)

• RWA reduced from SEK 697bn to SEK 541bn

1 200

CEE lending-108

• Reduced need for unsecured funding of about SEK 150bn

1 000

Other corporatelending, Sweden & other Nordic

Estonia

+67600

800 other Nordic

Other private, Sweden

-57

+67

400 Swedishmortgage loans

200

19

0Q4 08 Q4 10

Liabilities – significantly reduced risk level since Q4 08Capital management

g y

• Increased use of stable and1 400(SEKbn)

Increased use of stable and efficient funding sources

• Issued SEK 365bn since1 200 Central banks +

Government guaranteed-182 • Issued SEK 365bn since second rights issue

• Maturity extended significantly

1 000

Senior unsecured

Covered bonds

-46

• Maturity extended significantly

• Liquidity buffer established 600

800 +140

+26

• Limited, if any, need for unsecured funding400

Deposits

+26

200

Supplementary capitalCore Tier 1 capital+11

20

0Q4 08 Q4 10

Co e e cap ta+11

Capitalisation – solid to meet risk profile and uncertaintiesCapital management – Core Tier 1

p p

• CT1-ratio to stay above 13 per cent until 201313.0%Excess capital (SEK 4.9bn)

13.9%

13 per cent until 2013– Perception– Unclear regulatory framework

Extra buffer due to prevailing circumstances(SEK 16.2bn)

– Uncertain macro economic environmentRisk appetite

(ICAAP buffer,SEK 16 2bn)

10.0%

SEK 16.2bn)

7.0% • Long-term CT1-ratio of at least 10 per cent

Regulatory requirement(SEK 37 9bn)

– CT1-ratio to stay above regulatory minimum in ICAAP (stressed) scenario(SEK 37.9bn) ( )

21

Excess capital – no need to increase capital furtherCapital management

p p

• Large capital buffer in relation to current risk level

I i fit ti• Increasing profit generation

• RWA growth expected to be moderate

• Continued focus on capital efficiency

22

ProposalCapital management

p

• AGM to decide on buy-back programme to manage capitalisationU t 10 t f t t di h (i l i iti f– Up to 10 per cent of outstanding shares (incl. acquisition of own shares through the securities operations)

Gradual buy backs during the permit period– Gradual buy-backs during the permit period

– Full flexibility to chose between A and preference shares

23

Priorities 2011

• Customer focus

• Growth in selective segments

• Quality and effectiveness

• Robust and low-risk balance sheet

24

Welcome to Swedbank’s Capital markets dayp y23 February 2011

Registration at www.swedbank.com/ir

Appendix

26

Loan to deposit ratio improvedp p

SEKbn 2010 2009 Δ

Retail - loans 873 854 19Retail loans 873 854 19Retail - deposits 347 318 29

LC&I - loans 130 150 -20LC&I - deposits 74 69 5

BB - loans 130 170 -40BB - deposits 93 103 -10

R&U - loans 13 18 -5R&U - deposits 3 7 -4

Group - loans 1 146 1 192 -46Group - deposits 517 497 20

27

Business area performancep

Profit before impairments Q4 10 Q3 09 Δ 8Q developmentp p

Retail 2 126 1 881 245

Large corporates &Large corporates & Institutions 895 664 231

Baltic Banking 935 937 -2

Asset management 188 179 9

Russia & Ukraine 116 55 61Russia & Ukraine -116 -55 -61

Other -660 -197 -463

Group 3 368 3 409 -41Q4 10Q1 09

28

Impaired loans decreasingp g

• Excl. FX effect down SEK 3bn in Q4

• Underlying decreases in all business areas in Q4

4 362 196 2 391-4 088

3 85335 770

40 132 40 32842 719

38 63140 000

45 000SEKm

Impaired loans as %

6 113

-3 853

29 657

38 631

34 778

25 000

30 000

35 000

1 939

7 957 Ukraine 62%

Russia 22%

of gross lending

29 65715 000

20 000

11 259

6 529 Lithuania 17%

Latvia 26%

0

5 000

10 000

1 602770

4 722 Estonia 7.7%LC&I 0.25%Retail 0.18%

29

Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10 Q4 10

Loans past due 60 days – performance Q/Qp y p

200

250

EURm

50

100

150

00

-50

0

50

-150

-100

Q4

09

Q1

10

Q2

10

Q3

10

Q4

10

Q4

09

Q1

10

Q2

10

Q3

10

Q4

10

Q4

09

Q1

10

Q2

10

Q3

10

Q4

10

Q4

09

Q1

10

Q2

10

Q3

10

Q4

10

Q4

09

Q1

10

Q2

10

Q3

10

Q4

10

Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q

Estonia Latvia Lithuania RussiaUkraine

30

Repossessed assetsAsset qualtiy

p

4 000

SEKm

3 000

3 500

2 000

2 500

1 000

1 500

2 000

500

1 000

0Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10

Real Estate Residential Real Estate Commercial Passenger & Commercial Transport Shares Other

31

Real estate pricesTallinn

p

16161 500

1 800

1 500

1 800 2 000 2 000

Riga*

813

669600

900

1 200

1 500

EU

R/m

2

600

900

1 200

1 500

No

of tr

ansa

ctio

ns

617

500

1 000

1 500

oftra

nsac

tions

500

1 000

1 500

EU

R/m

2

S S db k

0

300

Q4 06 Q2 07 Q4 07 Q2 08 Q4 08 Q2 09 Q4 09 Q2 10 Q4 100

300

N

No of deals Average price

0

500

Q4 02 Q4 03 Q4 04 Q4 05 Q4 06 Q4 07 Q4 08 Q4 09 Q4 10

No.

o

0

500

No of transactions (Riga) Average price EUR/m2

1 500

1 800

1 500

1 800Vilnius

Source: Swedbank, Estonian Land BoardSource: Swedbank

1 731

No. of transactions (Riga) Average price, EUR/m2

600

900

1 200

1 500

EUR

/m2

600

900

1 200

1 500

o of

tran

sact

ions

1 070

0

300

Q1.05 Q4.05 Q3.06 Q2.07 Q1.08 Q4.08 Q3.09 Q2.100

300

No

N f d l A iNo of deals Average price

32

Source: Swedbank, State Enterprise Centre of Registers

Long-term funding Liquidity & funding

g g• Continued focus on covered bonds with full-year issuance of SEK 238bn• SEK 23bn in senior unsecured issuance • 4 EUR-denominated covered bond benchmark deals, each in the size of EUR 1bn • 1 EUR-denominated senior unsecured benchmark deal of EUR 1bn • Total term funding maturities in 2011 of SEK 180bn• Total term funding maturities in 2011 of SEK 180bn

11 11 11 11 12 12 12 12 13 13 13 13 14 14 14 14 15 15 15 15

Long-term funding maturity profile, SEKbn

-10

0

Q1

20

Q2

20

Q3

20

Q4

20

Q1

20

Q2

20

Q3

20

Q4

20

Q1

20

Q2

20

Q3

20

Q4

20

Q1

20

Q2

20

Q3

20

Q4

20

Q1

20

Q2

20

Q3

20

Q4

20

2016

-

-40

-30

-20

80

-70

-60

-50

3333

-90

-80

Other NON-SEK Covered Bonds SEK Covered Bonds

Remaining government guaranteed debt Liquidity & funding

g g g• Exited the programme on April 30, 2010

• No issuance under the programme since summer 2009No issuance under the programme since summer 2009

• SEK 75bn of government guaranteed debt matured during 2010

• Maturities of nominal SEK 80bn in 2011• Maturities of nominal SEK 80bn in 2011

Maturity profile, SEKbny p ,

-20

0 USDSEKEURCHFHKD

-60

-40HKDJPY

-100

-80

3434

1002011 2012 2013 2014