CEO presentation Q3 analyst call

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Swedbank was founded in 1820, as Sweden’s first savings bank was established. Today, our heritage is visible in that we truly are a bank for each and every one and in that we still strive to contribute to a sustainable development of society and our environment. We are strongly committed to society as a whole and keen to help bring about a sustainable form of societal development. Our Swedish operations hold an ISO 14001 environmental certification, and environmental work is an integral part of our business activities.

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CEO presentation Q3 analyst call

  1. 1. S db k’ thi d t 2010 ltSwedbank’s third quarter 2010 results 21 October 2010 Michael Wolf, CEO Erkki Raasuke, CFO Gö B CROGöran Bronner, CRO
  2. 2. Continued financial improvementp • Net profit of SEK 2.6bn in Q3 • Baltic Banking net profit in Q3 of SEK 531m • Improved NII and stable net commission incomeImproved NII and stable net commission income Net profit performanceet p o t pe o a ce 2 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10
  3. 3. Result by business area Business highlights SEKm Profit before impairments Retail • Increased NII and seasonally lower costs g g 1 000 2 000 SEKm Profit before impairments Q2 10 Q3 10 • Increased market share in new mortgage lending • New in-principle framework agreement with 0 savings banks Large Corporates & Institutions -1 000 Retail Large Corporates & Institutions Baltic Banking Russia & Ukraine Asset Management Ektornet • Slow trading activity • Stable corporate lending volumes 2 000 SEKm Operating result Q2 10 Q3 10 Baltic Banking • NII supported by lower domestic rates • Deleveraging in Baltic Banking continues 0 1 000 • Deleveraging in Baltic Banking continues • Decreasing credit impairment trend -1 000 Retail Large Corporates & Institutions Baltic Banking Russia & Ukraine Asset Management Ektornet 3 Institutions
  4. 4. Improved NII Net interest income p • Retail showed increased volumes and improved margins • LC&I lower activity levels• LC&I lower activity levels • Treasury deficit reduced by funding mismatch effects 5 017 4 702 4 023 Retail LC&I Baltic Banking Russia, Ukraine Treasury, Other 102 24 146123 3 980 4 023 3 799 102 -113 711 45 918 24 146123 711 2 432 227 (SEKm) 4 -227 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10
  5. 5. Stable commission income Net commission income • Strong card and payment volumes L b k d t fi f• Lower brokerage and corporate finance fees 2 208 2 361 2 282 2 395 Retail LC&I Baltic Banking Russia, Ukraine Asset Mgmt, Other (SEKm) 2 310 -57 -21 -2 386 -9 19 4 387 387 1 131 5 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10
  6. 6. Supported by valuation effects Net gains/losses on financial items, fair value • Low trading activities FX l i Uk i pp y • FX losses in Ukraine • Funding related valuation effects in Group Treasury still high 809 Retail LC&I Baltic Banking Russia, (SEKm) 647 Banking , Ukraine Treasury, Other -5 -49 -41 -48 -92 574 223 48 92 256 87 35 260 -25 6 -25 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10
  7. 7. Expenses seasonally lower Expenses p y SEKm Q3 10 Q2 10 % Staff costs 2 261 2 282 -1 Variable staff costs 19 141 -87 Other expenses 1 958 2 000 -2 Total expenses 4 238 4 423 -4 0.56 0.54 0.57 0.57 0.55 C/I ratio 4 526 4 300 4 391 4 423 Retail LC&I Baltic Banking Russia, Ukraine Staff and other -114 -90 52 26 97 530 4 238 90 690 -52 626 -26 202 2 190 (SEKm) 7 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10
  8. 8. Solid wholesale funding activity continues Liquidity & Funding Outstanding wholesale funding• YTD term funding of SEK 190bn, of which SEK 40bn during the third quarter (nominal SEKbn) 397 456 459Long-term, non- guaranteed • Remaining maturities of SEK 42bn in Q4, out of SEK 137bn in total maturities for the full year 2010 (nominal values) 180 173 35 163 Long-term, guaranteed* • SEK 159bn of central bank repos and guaranteed funding were redeemed during the first nine months of 2010 116 89 112 35 Short-term, Central bank repos• Average maturity of all wholesale funding of 28 months, 38 months for covered bonds (nominal value) 97 112 0 112 Short-term Short term, non- guaranteed** ( ) 61 0 Short term, guaranteed*** Q3 2010 Q2 2010 Q4 2009 * Issued with more than 12 month maturity 8 ** Including interbank deposits *** Issued with less than 12 month maturity
  9. 9. Third quarter 2010 results Income statement SEKm Q3 10 Q2 10 QoQ % YTD 10 YTD 09 YoY% Income 7 647 7 772 2 23 086 26 800 14Income 7 647 7 772 -2 23 086 26 800 -14 Expenses 4 238 4 423 -4 13 052 13 548 -4 Profit before impairments 3 409 3 349 2 10 034 13 252 -24 Total impairments 173 1 091 3 524 21 040 Operating profit 3 236 2 258 43 6 510 -7 788 Tax expense 638 672 -5 1 779 866 105 Profit attributable to shareholders 2 591 1 567 65 4 694 -8 707 Return on equity, % 11.3 7.0 6.9 -14.1 Cost-income ratio 0.55 0.57 0.57 0.51 Loan deposit ratio % 233 229 233 257Loan-deposit ratio, % 233 229 233 257 Core Tier 1 capital ratio, %* 13.4 12.7 13.4 9.9 Risk-weighted assets * 559.7 579.4 559.7 607.5 9 * Basel 2
  10. 10. Continues to improve Asset quality p • Asset quality indicators in the right direction Impaired loans– Impaired loans – 60 days overdue – Restructured loans All declining Restructured loans – Watch list W ll id d f ithi i ti bl• Well provided for within existing problem areas • Positive rating migration in Sweden, stable in the Baltic countriesg g , • Significant RWA reduction • Business activity increasing 10
  11. 11. Volumes Asset quality • CEE lending decreased partly due to SEK 7.5bn FX effect • Continued relative shift from corporate to private in Sweden 948 955 961 900 1 000 SEKbn Private C t 521 566 573 600 700 800 Corporate 427 389 97 251 163 150200 300 400 500 427 389 388 154 86 79 47 97 77 71 43 163 150 90 0 100 200 Q4 08 Q2 10 Q3 10 Q4 08 Q2 10 Q3 10 Q3 10 11 Sweden CEE Excl Estonia
  12. 12. Asset quality Credit impairments significantly reduced • Sweden small reversals B lti t i p g y 7 000 SEKm • Baltic countries – Credit impairments in Latvia R i i R i d Uk i 6 121 5 003 5 000 6 000 • Recoveries in Russia and Ukraine 4 000 5 000 2 210 963 2 000 3 000 963 120 0 1 000 -1 000 0 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 12 Retail LC&I Baltic Banking Russia & Ukraine Other
  13. 13. Provisions Asset quality • Provision ratio levels maintained Provision ratios Q3 1064 8% 65 9% 63 5% 30 000 SEKm Provision ratios Q3 10 Retail 87% LC&I 92% B lti B ki 61%6 922 5 135 4 684 4 104 3 606 62.9% 64.8% 65.9% 63.5% 63.9% 20 000 25 000 Baltic Banking 61% Russia 58% Ukraine 66% 21 889 23 028 21 068 6 922 15 000 Group 64% 15 582 20 882 21 889 23 028 21 068 958 2 504 3 311 3 953 4 603 5 000 10 000 958 0 Q3 2009 Q4 2009 Q1 10 Q2 10 Q3 10 Individual provisions Portfolio provisions Write-offs, gross, cum Provision ratio 13
  14. 14. Simplified core balance sheetp • High quality mortgage portfolio – low LTV • Limited impact under severe economic conditionsp • Strategy – preserve quality and AAA rating 1 200 1 400 SEKbn 800 1 000 400 600 0 200 Swedish mortgage lending 14 0 Assets
  15. 15. Swedish mortgage lending funded by covered bondsg g g y • High quality mortgage portfolio • Limited impact under severe economic conditionsp • Strategy – preserve quality and AAA rating • Government guaranteed funding expected to be replaced largely by covered bonds 1 200 1 400 SEKbn 800 1 000 400 600 Government guaranteed 0 200 Swedish mortgage lending Covered bonds 15 0 Assets Liabilities
  16. 16. Other Swedish and Nordic lendingg • Stress test real estate related – very high resilience • Strategy – Improve risk adjusted return, increased diversificationgy p j 1 400 1 200 1 400 SEKbn 800 1 000 Other Sw private Other Swedish and Nordic corporate lending 400 600 Other Sw. private Swedish mortgage lending Government guaranteed 0 200 Swedish mortgage lending Covered bonds 16 0 Assets Liabilities
  17. 17. Other Swedish and Nordic lending funded with depositsg p • Stress test real estate related – very high resilience • Strategy – Improve risk adjusted return, increased diversificationgy p j • Funded with large deposit base 1 400 1 200 1 400 SEKbn 800 1 000 Other Sw private Other Swedish and Nordic corporate lending Swedish and Nordic deposits 400 600 Other Sw. private Swedish mortgage lending Government guaranteed 0 200 Swedish mortgage lending Covered bonds 17 0 Assets Liabilities
  18. 18. CEE lendingg • CEE lending decreased substantially since end 2008 • ICAAP stress test show significant resilience 1 400 g • Estonia to adopt the euro – becomes different risk category • Strategy – selective reductions, LTD restriction CEE 1 200 1 400 SEKbn 800 1 000 Other Sw private Other Swedish and Nordic corporate lending Swedish and Nordic deposits 400 600 Other Sw. private Swedish mortgage lending Government guaranteed 0 200 Swedish mortgage lending Covered bonds 0 Assets 18 Liabilities
  19. 19. Limited need of senior unsecured fundingg • Large and stable deposit base • High quality Swedish mortgage portfoliog q y g g p 1 400 CEE 1 200 1 400 SEKbn Equity CEE d it Subordinated debt Senior unsecured 800 1 000 Other Sw private Other Swedish and Nordic corporate lending Swedish and Nordic deposits CEE deposits 400 600 Other Sw. private Swedish mortgage lending Government guaranteed 0 200 Swedish mortgage lending Covered bonds 19 0 Assets Liabilities
  20. 20. Appendix 21
  21. 21. Impaired loans decreased by SEK 4bn Asset quality p y • Without FX effect down SEK 1.5bn • Underlying decreases mainly relate to the Baltic countries Impaired loans as % of gross lending 196 2 391 -4 088 40 132 40 328 42 719 38 631 40 000 45 000 SEKm Ukraine 67% Russia 24% 6 113 4 362 196 2 391 29 657 35 770 30 000 35 000 6 971 2 152 8 531 Lithuania 17% Latvia 27% 29 65715 000 20 000 25 000 12 907 6 971 Estonia 8.1% LC&I 0.3% Retail 0 2% 5 000 10 000 1 813 1 123 5 134 22 Retail 0.2%0 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 1 813 Q3 10
  22. 22. Loans past due 60 days – performance Q/Qp y p 250 EURm 100 150 200 50 0 50 00 -150 -100 -50 09 09 0 0 0 09 09 0 0 0 09 09 0 0 0 09 09 0 0 0 09 09 0 0 0 Q30 Q40 Q11 Q21 Q31 Q30 Q40 Q11 Q21 Q31 Q30 Q40 Q11 Q21 Q31 Q30 Q40 Q11 Q21 Q31 Q30 Q40 Q11 Q21 Q31 Estonia Latvia Lithuania UkraineRussia 23
  23. 23. Repossessed assets Asset quality p 2 500 SEKm 2 000 1 000 1 500 500 0 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 10 Real Estate Residential Real Estate Commercial Passenger & Commercial Transport Shares Other 24
  24. 24. Real estate prices Tallinn Riga* p 1 762 1 500 1 800 1 500 1 800 s 1 611 1 500 1 800 1 500 1 800 ns 616 600 900 1 200 600 900 1 200 Nooftransactions EUR/m2 822 600 900 1 200 600 900 1 200 Nooftransaction EUR/m2 0 300 0 300 Q4'06 Q2'07 Q4'07 Q2'08 Q4'08 Q2'09 Q4'09 Q2'10 No of deals Average price 0 300 0 300 Q4'06 Q2'07 Q4'07 Q2'08 Q4'08 Q2'09 Q4'09 Q2'10 No of deals Average price S S db k E t i L d B d S S db k Vilnius* 1 731 Source: Swedbank, Estonian Land Board Source: Swedbank 1 731 1 016 900 1 200 1 500 1 800 900 1 200 1 500 1 800 transactions EUR/m2 0 300 600 0 300 600 Q4'06 Q2'07 Q4'07 Q2'08 Q4'08 Q2'09 Q4'09 Q2'10 Nooft E No of deals Average price 25 g p * Data as of August 2010 Source: Swedbank, State Enterprise Centre of Registers
  25. 25. Liquidity & Funding Long-term fundingg g • SEK 42bn (nominal value) of remaining term funding maturities in Q4 • Continued focus on covered bonds with YTD issuance of SEK 164bn • YTD issued SEK 26bn in senior unsecured and structured funding • Average maturity of wholesale funding of 28 months, covered bonds of 38 months ( i l l ) Swedbank,long-term maturity profile (nominal value) • SEK 180bn (nominal value) in maturities during 2011 80 100 SEKbn, nom Swedbank,long term maturity profile (including Swedbank Mortgage) 40 60 80 0 20 40 - Q410 Q111 Q211 Q311 Q411 Q112 Q212 Q312 Q412 Q113 Q213 Q313 Q413 Q114 Q214 Q314 Q414 Q115 Q215 Q315 Q415 2016- 2626
  26. 26. Liquidity & Funding Remaining funding under the Swedish guarantee programmeg g g p g • Swedbank exited the guarantee programme on 30 April 2010 Currency distribution programme on 30 April 2010 • No issuance under the programme as of August 2009 USD 27% EUR 41% g • Outstanding guaranteed funding decreased during the third quarter by SEK 10bn to SEK 163bn (nominal value) CHF 5% SEK 25% SEK 10bn to SEK 163bn (nominal value), mainly due to FX effects JPY 2% Maturity distribution 2-3Y 6% 3-4Y 18% < 12 M 25% 1-2Y 51% 2727
  27. 27. Cover pool and covered bond funding sources Liquidity & Funding p g • AAA/Aaa Rating from S&P and Moody’s Total pool size SEK 626bn Geographic distribution Sweden 100% As per Q3 2010 • Unlimited domestic covered bond programme, through tap system Average seasoning 56 months Average LTV 1, 2 – WA LTV on property level 58% Non-performing loans 3 None • EUR 25bn EMTN covered bond programme SEK150b d ti MTN d p g Types of loans – Residential mortgages 90.8% – Public 2.3% Commercial 0 1% • SEK150bn domestic MTN covered bond programme • Unlimited Norwegian covered – Commercial 0.1% – Forest and Agriculture 6.8% Fixed /Floating interest loans 4 – Fixed 51% Unlimited Norwegian covered bond programme • Registered covered bonds – Floating 5 49% Average loan size SEK 413 441 Number of loans outstanding 1 514 910 Dynamic pool Yes • In addition to public deals, private placements are executed through all programmes mentioned above y 1 Index valuation as of 31 May 2010 2 Maximum LTV: Residential 75%, Commercial 60%, Forest and Agriculture 70% 3 Past due loans > 60 days are not eligible for the cover pool 4 Distribution by origination all programmes mentioned above 28 y g 5 Floating interest loans < 365 days Source: Swedbank
  28. 28. Swedbank Mortgage total loan portfolio of SEK 687bn 100% f l di i S d• 100% of lending in Sweden • 90% in residential lending • Average LTV of 46% (loan level) 61% (property level*) Cover pool 43% and 58%• Average LTV of 46% (loan level) 61% (property level*). Cover pool 43% and 58% respectively. 110 Lending distributed by collateralLoan-to-value*SEKbn Cooperative apartments 15% Commercial properties 0 2% 80 90 100 110 15% 0.2% Municipalities 2% Multi-family housing 15%50 60 70 Forest & Agriculture 7% 20 30 40 Single-family housing 61% 0 10 <30% >30-40% >40-50% >50-60% >60-70 >70-80% >80-90% >90% Single-family housing Cooperative apartments Multi-family housing (incl housing coop. ass.) Forest & Agriculture 29 *From Q3 2010 the LTV distribution in the graph is changed from ”loan level” to ”property level”

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