ubs nordic financials sept 2008

UBS Nordic Financial Services

Conference

Magnus Carlsson

4 September2008

Outline

An overall business update

The Merchant Banking division

Germany

The Baltic countries

Concluding remarks

10%13%

42%

35%

RetailBanking

WealthManagement

Life

Merchant Banking

SEB – An activity based bankShare of operating profit Jan – Jun 2008

48%

20%

14%

18%

Sweden

Nordics

Germany

Baltic countries

Geography - Adjusted for OtherDivisions - Adjusted for Other

Highlights Q2 2008

Income regained strength – second best quarter ever– High business activity– Limited bond portfolio losses

Higher costs due to continued investments and sales activities

Accelerated slowdown in Estonia and Latvia increases credit losses

Strong capitalisation and liquidity

Key figuresSEB Group

Q2 Q1 Q2SEKm 2008 2008 2007

Income 10,403 18% -3%Expenses 6,445 7% 10%Operating profit 3,507 46% -23%

Return on Equity, % 15.2 9.6 20.7Cost / income ratio 0.62 0.69 0.55Credit loss level, % 0.17 0.13 0.12Basel II, Tier 1 ratio, % 8.64 8.85 8.45

Change

High business activity – long-term savings

12.0 10.7 9.712.0 13.3 11.9

Q1-07 Q2 Q3 Q4 Q1-08 Q2

4.95.8

3.52.62.9

4.1

Q12007

Q2 Q3 Q4 Q12008

Q2

Swedish mutual funds: net inflowsJan-Jun, SEKbn

-7.2 -8.5

-3.0

-13.3

3.8

Robur SHB Nordea SEB Others

Life – Total salesSEKbn

Private Banking – Net salesSEKbn

Business Activity

High business activity – Retail Sweden

Cash management customers (thousands)

50

60

70

80

90

2005 2006 2007 2008

Retail Sweden, SME segment

Incomegrowth

173 176 183 189 196 201 207

Q4 06 Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08

Retail Sweden household mortgagesLending, SEKbn

Growth rates

+3.5% +2.3% +3.6% +3.1% +3.9% +2.3%

+6%

+ 5,200

Business Activity

*

*

Cost management program 2007 - 2009

SEK -748m SEK 1.5 – 2.0bn

2007 2009

Achieved Target

2008 2010

~4% total cost growth due to acquisitions, pensions and One IT Roadmap

SEK 202m in efficiency gains achieved in H1

Cost Management

Cost development

0.000.100.200.300.400.500.600.700.80

2003 2004 2005 2006 2007 Q12008*

Q22008*

Germany Baltics Nordics SEB Group

Level of Net Credit Losses, %(incl. change in collective provisions)

* Annualised

Estonia 1.68Latvia 0.48Lithuania 0.17Baltics 0.73

Non-Baltic39%

Lithuania6% Latvia

10%Estonia

45%

SEB Group Net credit losses

Jan – Jun 2008 SEK 820m

Asset Quality

Credit exposure – on and off balanceSEK 1,631bn

24%

11%

65%

German

Nordic

14%

38%

14%

6%

28%

Property management

Public administration

BanksCorporate

Baltic

Households

By geography By sector

Asset Quality

Risk-weighted assets (Basel I)Q4 2006 - Q2 2008, SEKbn

0

200

400

600

800

1,000

1,200

Group

+18%

Volume growth supported by strong capital

Tier 1 capital ratiosPer cent

6

7

8

9

10

11

Q12007

Q22007

Q32007

Q42007

Q12008

Q22008

Basel II (no floors)Basel II (transition rules)Basel I

Capital

Net liquidity position across maturities30 June, SEKbn

-50

0

50

100

150

200

250

1 week

2 weeks

4 weeks

2 months

3 months

4 months

5 months

6 months

9 months

12 months

SEB is match-funded approx.

one year

Examples of transactions:April: Euro covered bond at spread of 17 bps

May/June: Euro floating rate notes at spread of 48 bps

SEK 113bn in long-term funding raised in H1 2008

Liquidity



Germany


Concluding remarks

A leading franchise

● #1 Nordic stock broker

● #1 Nordic and Baltic corporate finance

● #1 Nordic and Baltic cash manager

● #1 Custody Nordic and Baltic markets

● #1 Scandinavian currencies

Client Relationship Management

SGUSLUUKDEFINODK FR

BRCN

SE

LVLTEE PL RU

Organisation

IN

FX Capital Markets

Commercial Real Estate

SEB Enskilda Corporate Finance

Structured Finance

CashManagement, Trade Finance

& SecuritiesServices

SEB Enskilda Equities

CPM(Investment portfolio)

TCM Corporate Banking GTS

Global product organisation – local specialists

Highlights last 12 months

>300 new clients

Top rankings in investment banking, research, trade finance custody and cash management

SEB Way on track (productivity gains 20% ahead of target)

MTM losses on investment portfolio and Capital markets

Clientacquisition

Customer satisfaction

MTM losses

Operational Excellence

1 32

OK

OK

12

3

45

From To

Financial development SEKm

0

500

1,000

1,500

2,000

2,500

Q1-07 Q2-07 Q3-07 Q4-07 Q1-08 Q2-08

Operating profit Excluding portfolios

0500

1,0001,5002,0002,5003,0003,5004,0004,5005,000

Q1-07 Q2-07 Q3-07 Q4-07 Q1-08 Q2-08

Income excluding portfolios Income Expenses

High business activity…

0

1,000

2,000

Trading &CapitalMarkets

CorporateBanking

GlobalTransaction

Services

Q2 07 Q1 08 Q2 08

Merchant Banking: Operating IncomeSEKm

0

100

200

300

400

500

600

Merchant Banking

+26%


Trading and Capital Markets income by main product cluster, excl. investment portfolios

36%26% 28% 33% 38% 41%

49%44% 46% 64% 46%49%

8%22% 15% 11%3% 6%

7%11%8% 5%4%

Q1 - 07 Q2 Q3 Q4 Q1 - 08 Q2

Structured derivatives& Other TCMCapital Markets

Equities

FX

…in Trading and Capital Markets

4.7%

5.2%

5.4%

5.6%

8,9%

SHB

Glitnir

Carnegie

Morgan Stanley

SEB

Market Shares Nordic Stock Exchanges *Jan – June 2008


0

1,000

2,000


CorporateBanking

GlobalTransaction

Services

Q2 07 Q1 08 Q2 08


0

100

200

300

400

500

600

Merchant Banking

+26%


Swedish syndicated loans league (and bookrunner %)July 2007 – June 2008

* Source: The Nordic Stock exchanges** Source: Dealogic Analytics

17.6%

12.4%

5.6%

3.5%

3.0%

0 1 2 3

SEB

SHB

Calyon

RBS

ABN AMRO

EUR bn

…in Corporate Banking


0

1,000

2,000


CorporateBanking

GlobalTransaction

Services

Q2 07 Q1 08 Q2 08


0

100

200

300

400

500

600

Merchant Banking

+26%


…in Global Transaction ServicesCustody volume development

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

2004 2005 2006 2007 20080

25,000

50,000

75,000

100,000

125,000

150,000

Assets under custody, SEKbnNo of transactions/day

High business activity

0

1,000

2,000


CorporateBanking

GlobalTransaction

Services

Q2 07 Q1 08 Q2 08


0

100

200

300

400

500

600

Merchant Banking

+26%


Investment portfolio – SEK 126bn

11%89%

Investment portfolio valuations, SEKm

Q2 08

Held for trading (MTM over income)

Available for sale

(MTM over equity)

Accumulatedsince

Q2 08 Q3 07

Income -66 -2,707Equity -56 -2,384Total -122 -5,091

Accounting classification

Status and actions

Q2 08

Financial institutions

Composition

97.2% AAA rated after limited rating actions

Mark- to-market prices applied; no level 3 assets

Reduction of income volatility

9%

49%

42%Covered

bonds etc.

Structured credits

Near-term uncertainty

Long-term opportunities

MidCorpgrowth

● Grow Nordic, German and Baltic client base through focus on MidCorp segment● Implement cross-sell model throughout Nordics, Germany and Baltic countries

Expanded FI coverage

Nordic Expansion

● Expand sales, relationship management and analytical capacity● Fully leverage existing product platform

● Leverage SEB’s leadership in Nordic products by expanding institutional client base in Europe, US & Asia (including central banks, hedge funds and sovereign wealth funds)

Prioritising customer acquisition

Energy, oil & gas

● Build on existing expertise to expand position in energy, oil/offshore and shipping segments

● Continue developing commodities offering

International ● Improve business origination and subsidiary coverage at strategic locations



Germany


Concluding remarks

SEB in Germany

Retail Banking

Asset Management

Merchant Banking (incl. Commercial Real Estate)

SEB in Germany

-244 -226

-22

60136

74134

H1 05 H2 H1 06 H2 H1 07 H2 H1 08

Retail Germany: Operating profitSEKm

Distribution of German Operating profitJan – Jun 2008

9%

91%

807

189

843

H1 07 H2 H1 08

SEB in Germany: Operating profitSEKm

Retail

Other business

Munich

Frankfurt

Stuttgart

Leipzig

Berlin

Hamburg

Merchant Banking in Germany

Cologne

EssenDüsseldorf

Bremen

Hannover

Focus on export- oriented larger Mittelstand companiesMain competitors are domestic German banksCross-sale model with leading competence in FX, cash management derivatives and export and trade finance

Merchant Banking’s second largest marketCountry-wide sales forceIncreased profitability in 2007RoE in line with Merchant Banking globally.



Germany


Concluding remarks

SEB in the Baltic countriesOperating profit by country; SEKm

Accumulated profit since acquisition in 1998: SEK 11.5bn

Acquisition price: SEK 3.8bn0

1,000

2,000

3,000

4,000

2002 2003 2004 2005 2006 2007 H12008

LithuaniaLatviaEstonia

* Adjusted for sale of Baltic real estate

9% 10% 11% 13% 15% 18% 18%% of Group operating profit

*

Baltic countries: economic slowdown accelerates

-5

0

5

10

15

2002 2003 2004 2005 2006 2007 2008 (f) 2009 (f)

Estonia Latvia Lithuania

Annual GDP growthPer cent

The Baltics:Economic sentiment

deteriorating

Economic sentiment, index

75

85

95

105

115

125

-98 -99 -00 -01 -02 -03 -04 -05 -06 -07 -08

Estonia Latvia Lithuania

Jan 06 Jul 06 Dec 06 2007● Tightening of

credit policy incl. cautious property mgmt

● ROE priority > volume growth

● Further tightening of credit policy

● Volume restrictions● Collective

provisioning policy

● Concluding internal review of Baltic economies

● Increased capitalisation

● Overheating risks communicated

Phase I - Actions to manage overheating

0%2%4%6%8%

10%12%

2006 2007 2008

Credit growth per quarter

Priorities for managing overheating

Phase II - Actions to manage correction

Targeted credit portfolio reviewsJoint local and head-office work-out teamEarly conservative provisioning

Individual country approachFull integration in SEB Group to broaden product paletteDevelop relationships with existing and new customers

Asset quality

Business development

Priorities for managing recession



Germany


Concluding remarks

Looking ahead

● Strong capital and liquidity● Top line growth● Continued investments● Cost efficiency

ubs nordic financials sept 2008

Economy & Finance