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UBS N di Fi i l C fUBS Nordic Financials Conference
2 September 2010
Erkki Raasuke, CFO
Progress continued throughout Q2g g
• Net profit of SEK 1.6bn
• Improved credit quality
• Term funding YTD higher than ful...
Business achievements – highlights in Q2g g
• Higher mortgage new sales market shares in Sweden
• Increased corporate acti...
Result by business area
Q2 update SEKm Profit before impairments
Retail
Solid credit quality, higher customer activity 1 0...
Pressure decreasing
Net interest income
g
5 000
SEKm
4 023
3 799
62 89
4 000
4 500
Retail LCI Baltic Banking Russia
& Ukra...
Commissions back to pre-crisis levels
Net commission income
p
• Positive trend from Q1 2009
• Market leader in cards and p...
Term funding ahead of plan
Liquidity & Capital management
g p
• YTD, SEK 150bn in term funding of
which around SEK 50bn du...
Q2 development
Asset quality
p
• No impact of European sovereign debt crises
• Further stabilisation/improvement in the Ba...
Asset quality
Credit impairments significantly reduced
• Sweden very low levels
S ll i i R i d
p g y
8 000
SEKm
• Small re...
Basel 3 impact on Swedbank post July amendments*p p y
• NSFR is more or less in-line with proposed future minimum requirem...
Summaryy
• NII pressure decreasing
• Improved risk profiles on both the asset and liability side
• Term funding ahead of p...
New insolvency law in Latviay
Legal protection proceedings Insolvency proceedings
of legal entities
Insolvency proceedings...
Significant progress made – still work to be done
5Y CDS spreads
g p g
400
300
350
200
250
150
50
100
0
30/12/2005 30/06/2...
Will lending margin pressure decrease?g g p
• Swedbank has re-priced a larger part of liabilities compared to
peerspeers
S...
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UBS - Nordic Financials Conference 2010

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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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UBS - Nordic Financials Conference 2010

  1. 1. UBS N di Fi i l C fUBS Nordic Financials Conference 2 September 2010 Erkki Raasuke, CFO
  2. 2. Progress continued throughout Q2g g • Net profit of SEK 1.6bn • Improved credit quality • Term funding YTD higher than full year maturitiesTerm funding YTD higher than full year maturities • Strengthened capitalisation to 12.7 per cent Core Tier 1 l t b b k Ti 2 b dapproval to buy back Tier 2 bonds 2
  3. 3. Business achievements – highlights in Q2g g • Higher mortgage new sales market shares in Sweden • Increased corporate activity • Continued strong deposit trendContinued strong deposit trend • Retail’s tailored service concept well received 3
  4. 4. Result by business area Q2 update SEKm Profit before impairments Retail Solid credit quality, higher customer activity 1 000 2 000 SEKm Q1 10 Q2 10 Large Corporates & Institutions Good credit quality, repricing continues, slower trading -1 000 0 Baltic Banking Improving asset quality, stabilised NII, Estonia back to profit -2 000 Retail Large Corporates & Institutions Baltic Banking Russia & Ukraine Asset Management Ektornet back to profit Russia & Ukraine Stabilising credit quality, continued restructuring i R i Institutions 2 000 SEKm Operating result Q1 10 in Russia Asset Management Stable earnings 0 1 000 Q2 10 g Ektornet Repossessed properties valued at SEK 1 010m, intake slower than the plan -2 000 -1 000 Retail Large Baltic Russia & Asset Ektornet 4 intake slower than the plan Retail Large Corporates & Institutions Baltic Banking Russia & Ukraine Asset Management Ektornet
  5. 5. Pressure decreasing Net interest income g 5 000 SEKm 4 023 3 799 62 89 4 000 4 500 Retail LCI Baltic Banking Russia & Ukraine Group Treasury and Other -34 41 62 -89 -204 3 000 3 500 2 500 3 000 1 500 2 000 500 1 000 NII Q1 10 5 0 NII Q1 10 NII Q2 10
  6. 6. Commissions back to pre-crisis levels Net commission income p • Positive trend from Q1 2009 • Market leader in cards and payments • Growth driven by Asset Management SEK Net commission income* 2 500 3 000 SEKm 1 500 2 000 0 500 1 000 0 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 6 * Excl non-recurring items
  7. 7. Term funding ahead of plan Liquidity & Capital management g p • YTD, SEK 150bn in term funding of which around SEK 50bn during the d t 456Total long- Outstanding wholesale funding (nom SEKbn ) second quarter • SEK 60bn in remaining term funding maturities to roll or replace in 2010 397 459 173 456 Total long- Total long- term, non- guaranteed maturities to roll or replace in 2010 • YTD around SEK 95bn of central bank repos and guaranteed funding has been 180 108 174 89 Central bank term, guaranteed* redeemed • Average maturity of wholesale funding further extended to 25 months 116 87 108 112Total short- term, non- repos further extended to 25 months (38 months for covered bonds) 61 97 28 0Total short- term, guaranteed*** guaranteed** Q2 2010 * 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 61guaranteed*** Q1 2010 Q4 2009 7 *** Issued with less than 12 months maturity, government fee of 50bp
  8. 8. Q2 development Asset quality p • No impact of European sovereign debt crises • Further stabilisation/improvement in the Baltic countries • Continued improved risk profiles on both the assetContinued improved risk profiles on both the asset and liability side S db k’ ili tl i d• Swedbank’s resilience vastly improved – ICAAP I t l t t t– Internal stress tests – Stress test of the Committee of European Banking Supervisors 8
  9. 9. Asset quality Credit impairments significantly reduced • Sweden very low levels S ll i i R i d p g y 8 000 SEKm • Small recoveries in Russia and Ukraine • Baltic countries 6 672 6 121 6 000 7 000 • Baltic countries – Few new problems – Property prices stabilising/increasing 5 003 4 000 5 000 – Insolvency and debt restructuring laws – Positive trend likely to continue 2 210 2 000 3 000 963 0 1 000 2 000 -1 000 0 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 9 Retail LCI Baltic Banking Russia & Ukraine Other
  10. 10. Basel 3 impact on Swedbank post July amendments*p p y • NSFR is more or less in-line with proposed future minimum requirements, and LCR is well ahead of minimum requirementsand LCR is well ahead of minimum requirements • The amount of Core Tier 1 capital expected to decrease less than 4%, and RWA expected to increase less than 2% compared with Basel 2RWA expected to increase less than 2% compared with Basel 2 • Swedbank has a leverage ratio with a substantial margin to the proposed minimum level of 3%minimum level of 3% 10 *Preliminary calculations
  11. 11. Summaryy • NII pressure decreasing • Improved risk profiles on both the asset and liability side • Term funding ahead of planTerm funding ahead of plan • Resilience vastly improved 11
  12. 12. New insolvency law in Latviay Legal protection proceedings Insolvency proceedings of legal entities Insolvency proceedings of private persons NOVELTIESNOVELTIES • LPP plan = business plan • Diminished possibility to use LPP in bad faith, to delay time • Debtor should be able to make factually all payments under agreements • Debtor’s property should be enforced in 6 months • Simplified procedure to cancel appointment of administrator, also with participation of secured • Debtor’s property should be enforced in 6 months • Simplified procedure to cancel appointment of administrator, also with participation of secured creditors • Possibility to restructure obligations of our clients by reaching an agreement that the client will make concrete payments to theall payments under agreements concluded with bank • Additional requirement to quality of the LPP plan – money flow, substantiation of incomes etc. • ‘Easier’ to initiate LPP with participation of secured creditors • Administrator by agreement with bank is entitled to sell property without auction, also the company as a whole an agreement that the client will make concrete payments to the bank. Other creditors will not be entitled to ask enforcement of this pledge • Possibility to check agreements concluded by debtors 3 years before proclamation of insolvency • Easier to initiate LPP as a whole SWEDBANK’S VIEWSWEDBANK’S VIEW Positive Improvement of speed and efficiency of proceedings Positive Improvement of speed and efficiency of proceedings Negative Efficiency of proceedings depends on the court practice. Amendments which are crucial for Swedbank:proceedings efficiency of proceedings Amendments, which are crucial for Swedbank: – If total liabilities exceed LVL 100th (EUR 142th), insolvency procedure lasts 3.5 years – If total liabilities do not exceed LVL 100th (EUR 142th), insolvency procedure lasts 2 years. Client has to repay the d t f th l th t h i d ft th l funsecured part of the loan that has remained after the sale of collateral covering 30% of his/her official income, but not less than LVL 60 (EUR 85) per month (i.e. 1/3 of min salary) Neutral (in total) Th l id iti lti t th i ti l ti f i l di b t it ffi i ill d d h i fThe new law provides many positive novelties to the existing regulation of insolvency proceedings, but its efficiency will depend on mechanism of implementation. In total the law changes are not expected to change the trend in credit impairments. 13
  13. 13. Significant progress made – still work to be done 5Y CDS spreads g p g 400 300 350 200 250 150 50 100 0 30/12/2005 30/06/2006 31/12/2006 30/06/2007 31/12/2007 30/06/2008 31/12/2008 30/06/2009 31/12/2009 30/06/2010 Swedbank SEB Handelsbanken Nordea Danske Bank DnB NOR 14 Source: Datastream Swedbank SEB Handelsbanken Nordea Danske Bank DnB NOR
  14. 14. Will lending margin pressure decrease?g g p • Swedbank has re-priced a larger part of liabilities compared to peerspeers Source: SEB Enskilda Equity Research Nordic banks long term funding broken down by time of issuance (based on ~3,000 bonds) Portion of pre-, post and mid-crisis funding matters  The two extremes:  Swedbank has only 30% pre-crisis funding and 50% mid crisis funding 80% 100% 120%  Handelsbanken has 60% pre-crisis funding and ony around 20% mid-crisis funding 0% 20% 40% 60% 0% Sw edbank DnB NOR Nordea SEB Danske BankHandelsbanken Pre-crisis Mid-crisis Post-crisis 15 EQUITY RESEARCH 10

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