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SEB Telephone Conference Presentation 2008 Q1

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  • 1. Annika Falkengren CEO Telephone Conference 2008
  • 2. A challenging start of the year! Itraxx 5-year senior finacials index spread development GDP 2008 Per cent USA Euro-zone Sweden 3,50 3,00 2,50 2,00 1,50 1,00 jan mar maj jul sep nov jan 2007 2008 Source: Datastream Source: Consensus Economics MSCI World index MSCI World Index (EUR) 130 120 110 100 90 80 2006-12-31 2007-03-31 2007-06-30 2007-09-30 2007-12-31 2008-03-31 2
  • 3. Highlights Q1 2008 Operating profit SEK 2.4bn More cautious customer sentiment Operating profit SEKbn Growing net interest income 4.6 4.6 4.2 despite higher funding costs 3.7 Fee income down 3.8 – Retail and Private Banking 2.4 – Capital markets MtM valuation losses SEK 0.9bn Cost control Increased credit losses in Estonia Q1-07 Q2-07 Q3-07 Q4-07 Q1-08 3
  • 4. Business mix and income development SEKbn 4.2 4.3 3.8 3.8 Net fee and Net interest commission income Q1-07 Q1-08 Q1-07 Q1-08 42% 40% 1.3 Net life Net 0.7 0.7 insurance financial income 7% income 8% -0.2 Q1-07 Q1-08 Q1-07 Q1-08 4
  • 5. Continued stable volume growth SEKbn Corporate lending Lithuania Residential mortgages SEB Group Private and Corporate lending Sweden 564 541 538 532 501 204 199 192 186 179 60 59 54 50 46 Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Net inflows Net fee and commissions Swedish mutual funds Q1, SEKm Custody and mutual funds Payments, cards, etc. 1,542 1,804 1,746 1,742 1,692 -3,091 -4,445 -5,079 -6,312 Q1-07 Q1-08 Q1-07 Q1-08 Robur SHB Nordea SEB Others 5
  • 6. Net interest income Group, SEKm Lending to the public SEKbn Q1 +8% yoy 1,200 1,000 4,223 +12% 800 3,767 Total NII 600 3,809 400 Customer Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 3,369 +13% 2005 2006 2007 2008 driven* Deposits from the public SEKbn Q1 +14% yoy 800 700 600 500 400 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2005 2006 2007 2008 Q1 2007 Q1 2008 * volumes and margins on lending and deposits 6
  • 7. Income deceleration in some areas Estonia and Latvia Trading and Capital Markets, Operating profit SEKbn 79 78 77 74 68 + corp fin intäkter I marknaden? FX Equities Capital Structured CPM Markets sales etc. Q1 - 07 Q4 - 07 Q1 - 08 Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Retail Sweden OMX Stockholm Average turnover by value SEKbn No of securities transactions Monthly turnover Average daily turnover 600 30 500 25 Q1 2008 – Q1 2007 Q1 2008 – Q4 2007 400 20 300 15 -30% -34% 200 10 100 5 0 0 Jan-07 Mar-07 May-07 Jul-07 Sep-07 Nov-07 Jan-08 Mar-08 7
  • 8. Bond investment portfolio Status and actions Portfolio valuations, SEKm Q4 07 Q1 08 Limited rating actions (10 of 740) -990 -872 Income Mark- to-market prices applied -407 -1,630 Equity Reduction of income volatility Total -1,397 -2,502 Q4 07 Q1 08 SEK bn Held for trading 37% (MTM over income) 46% 54% 63% Available for sale (MTM over equity) 8
  • 9. Cost development Flat costs on a comparable basis 4% total cost growth due to acquisitions, pensions and investments in IT Cost management program 2007 - 2009 Achieved Target SEK -625m SEK 1.5 – 2.0bn * 2007 2008 2009 2010 * 9
  • 10. Net credit losses Estonia and Latvia entering next stage Retail sales Credit growth in Estonia Year-on-year percentage change Loan growth, % mom Estonia Latvia Mortgages, % growth mom 6,0% 40 5,0% 30 4,0% 20 3,0% 2,0% 10 1,0% 0 0,0% Jan- Mar- May- Jul- Sep- Nov- Jan- Mar- -10 01 02 03 04 05 06 07 08 07 07 07 07 07 07 08 08 Collective provisions drive net credit losses, % Baltics SEB Group 0,80 0,60 0,40 0,20 0,00 2006 2007 Q1 2008 * * annualised 10
  • 11. Operating profit per division Q1 2008 vs. Q1 2007 SEKm ROE Change Excl. portfolio Q1 2008 vs. Q1 2007 losses Merchant Financial performance -50% (-5%) 10.8% (20.4%) Banking GTS +1% TCM excl portfolios -12% Corp.Banking - 2% Retail Banking 15.3% -11% Sweden -5% Estonia -96% Latvia +3% Wealth Lithuania +28% 22.2% -17% Germany -44% Management Cards +6% 17.3% -20% Q1 2008 Life Q1 2007 -42% 9.6% 0 1 000 2 000 11
  • 12. Key figures Change Excluding Q1 Q1 Q4 portfolios SEKm 2008 2007 2007 Q1 – Q1 Operating income 8,802 -14% -12% -5% Operating expenses -6,027 4% 2% -20% Operating profit 2,410 -42% -47% Net profit 1,848 -43% -51% Return on Equity, % 9.6 19.0 20.2 13.2 Cost / income ratio 0.69 0.57 0.59 0.62 Credit loss level, % 0.13 0.10 0.13 RWA, Basel I, SEKbn 909 796 892 Core capital ratio, Basel II 8.85 8.33 8.63 12
  • 13. The jury is still out… ● Continued financial turbulence? ● Slowdown in real economy? ● Falling capital expenditure? ● Hard landing in Baltic countries? ● Transparency renews trust? ● Resilience among consumers? ● Alignment of risk and pricing? ● Acquisition opportunities? 13
  • 14. Strong balance sheet Core capital Net liquidity position across maturities SEKbn 31 March, SEKbn 300 72,4 62,7 10.9 7.7 Hybrid 200 capital +9.7 quot;Book 55.0 61.6 equity quot; 100 0 1 week 2 weeks 4 weeks 2 months 3 months 4 months 5 months 6 months 9 months 12 months Mar 2007 Mar 2008 Core 8.3% 8.9% capital ratio 14
  • 15. Operational excellence (SEB Way) SEB Way – since launch 2006 38 % of all staff 180 transformations 100 navigators 550 Private Banking private clients Stockholm Net New Money (SEKm) 1 280 +130% 550 Q1 2007 Q1 2008 15
  • 16. Investments – the long-term view Add-on acquisitions One IT Roadmap IT Product Customer innovation acquisition 16
  • 17. Long-term objectives Customer Sustainable profit satisfaction: No 1 growth in chosen markets AA-rating Highest Return on Equity The leading bank in Northern Europe 17
  • 18. 18